New law to require tally of car's U.S. pedigree

August 07, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

What's an American car?

That's a seemingly simple question that turns out to have a complex answer. Is it a Ford Escort, a car that's made in Mexico? Or a Plymouth Colt that's assembled in Japan.

How about a Toyota Corolla built in Fremont, Calif., or a Honda Ac cord built out in Marysville, Ohio.

A new law will try to straighten out the confusion beginning Oct. 1. This is when the American Automobile Labeling Act goes into effect.

It will require manufacturers to place a sticker on the window of vehicles listing the combined percentage of parts coming from the United States and Canada.

Under guidelines established by the National Highway Traffic Safety Administration (NHTSA), the act also will require automakers to disclose:

* Other countries that contributed more than 15 percent of the vehicle's parts and the percentage each contributed.

* The country from which the engine originated.

* The country from which the transmission originated.

* Where the vehicle was assembled.

The regulations apply to all new cars and light trucks with a

gross vehicle weight of 8,500 pounds or less, said Tim Hurd, a spokesman for NHTSA.

"This covers just about every vehicle that the average person would buy," he said.

The legislation was introduced by Sen. Barbara A. Mikulski, who described it as a "consumer bill," not part of the "Buy America" movement.

"People who want to buy American don't know how to do it," she said at the time the legislation was proposed.

The act has come under criticism in recent days, primarily from the American International Automobile Dealers Association, in Alexandria, Va., a trade group representing 10,000 dealers selling what are commonly called imported cars.

Paul R. Donnellan, director of Congressional relations for the dealer group, called the regulations a "Buy American Act" and asked rhetorically: "What will this do to international trade if France, Germany and Japan follows the U.S. lead?"

Mr. Donnellan also criticized the act for not including labor when calculating the U.S. content of a car. "This is a slap in the face," he said, to the 35,000 assembly workers at the seven Japanese-owned auto plants in the U.S.

He said the original legislation was to include labor in determining the U.S. content of a car, but this was dropped because it favored the Big Three domestic car makers.

Like most legislation, the Auto Label Act involved compromise, said George Leventhal, legislative director for Sen. Mikulski. Such was the inclusion of Canada in determining the percentage of parts.

Mr. Leventhal explained that including Canada was a compromise made on behalf of the domestic automakers, primarily General Motors Corp., which have had plants in Canada for a long time, to gain House of Representatives support for the act.

Automotive News, an industry trade publication, blasted the new law in an editorial, calling it "a pile of confusing nonsense" and "woefully anti-Japanese."

Ms. Mikulski responded, saying, "Foreign automakers are blowing smoke. They want American customers, but they don't want to play by American rules.

"American customers want to know where their cars are made. And they have a right to know. If foreign carmakers had more plants here in the United States and used American parts, they'd be OK," she said.

"We would happily take a Honda plant in Hagerstown or a Mercedes plant in Maryland. And then they could have a 'Made in America' on their labels, too."

Mr. Donnellan charged that a so-called "roll-up/roll down" formula for calculating domestic content is distorted.

He used the hypothetical example of a Delco radio and said that if its U.S. content was 69 percent, General Motors could count the full value of the radio toward its domestic content in a car because it owns the Delco factory.

But, on the other hand, he said that if Toyota bought the same radio from the Delco factory it could not count any of the value toward U.S. content in its cars because it does not own the Delco factory.

Mr. Donnellan said that the regulations have a threshold test that allows a manufacturer buying parts from an outside source to get 100 percent credit of a part's value if it has 70 percent U. S. content. But if the U. S. content of the part is less than 70 percent the auto manufacturer gets no credit for the part unless it owns the plant where it's made.

Mr. Leventhal said the "roll-up/roll-down" provision of the law is "more favorable to GM [which owns a large number of parts plants] than Toyota. We don't deny that.

"But GM participated in the legislation. Where was Toyota? They were not there. They just wanted to kill the whole bill. This is legislation that the American people wanted," he said.

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