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Why Made in America Still Matters: Car Guru Bob Lutz Makes the Case

Daily Ticker

This week marks the 2nd anniversary of General Motors' (GM) emergence from bankruptcy. And it's been nearly eight months since the company raised $20 billion in an initial public offering that reduced the U.S. government to a minority shareholder.

Despite the fact that the stock is trading below the IPO price of $33 a share, the U.S. auto industry as a whole does seem to be regaining some of its footing. The industry is hiring faster than other sectors of the economy, and it's growing more quickly than shipbuilders and health-care providers, among other groups, the Associated Press reports.

So as U.S. auto manufacturing heats up, it's time to explore again what it really means to be "made in America." (For previous coverage see: Cars Without Borders: Does "Made in America" Really Matter Anymore?)

Bob Lutz, former vice chairman of GM, stopped by The Daily Ticker to examine the matter and to help explain what it really means to be American-made versus made in America with a foreign plate. As you might guess, he dispels the notion that foreign carmakers that manufacture here in the U.S. -- like Toyota (TM) -- are really American. And likewise, he does not support the idea that U.S. autos made elsewhere are any less American.

"Here's basically the rule of thumb: if you look at a typical Japanese producer, even if they assemble in the United States, they import a lot of other cars, and if you look at their total sales volume it is probably 70% imported content and 30% U.S. content," he tells Aaron in the accompanying interview. "With the American producers like Ford (F), Chrysler and GM, it is almost exactly the opposite. It is 70% domestic content, 30% [content from] elsewhere."

Putting aside his decades-long allegiance to the U.S. auto industry as part of the top brass at both GM and Ford, he does point to evidence that "made in America" does still mean something and that "buy American" is a valid tenet. "The proof in the pudding was in the post-earthquake and post-tsunami period when Japanese-supplied cars dried up [in the U.S.], and the American producers just kept on producing and shipping," Lutz says.

For additional interviews with Lutz, see:

Former GM Vice Chair Blames 'Management Incompetence' — Not UAW — for Detroit's Demise)

Bring It Home!: There's No Excuse Not to Manufacture in U.S., Says Bob Lutz

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