Tuesday, July 22, 2008

Buy American - but what is American? Part II

From an article today about the new Chevrolet Camaro coming in 2010:

Most of the engineering for the Camaro was done in Australia, where rear-wheel-drive cars are more common than in the United States. The cars will be produced in Canada, however.

It didn't mention where the parts themselves are being built but it wouldn't surprise me if much of them are produced in Brazil and other countries, with final assembly in Canada.

So what is American about this car, besides the corporate headquarters ?

This is the model for American companies nowadays ... the corporate and financial center in the US, where most of the main decisions are made, e.g. build a Camaro or not ? And virtually all the remaining design, development, manufacturing and final assembly done outside US borders.

This model can't hold. At some point the corporate headquarters must shift to lower-cost and lower-tax countries. This will be a lot harder to accomplish as taxes and politics are heavily involved, but the inevitable inertia of this off-shoring process is for companies to seek the lowest cost in everything , including taxes and financial aid .

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