U.S. carmakers see Midwest dominance fade
By Sharon Silke Carty, USA TODAY
BURLINGTON, Iowa — On the banks of the Mississippi River here, farmers and local business owners gather Thursday evenings in the summer to hawk fresh corn, grapefruit-size tomatoes and homemade soaps.
The farmers unload their goods from the backs of Ford (F), Chrysler (DCX) and Dodge pickups. Once the tables and pop-up tents are in place, it's like a tailgating party.
In the middle of it all is Terris Cooper, owner of T Coop's House of Bagels and Bistro, who sells baked goods from behind his white Toyota Avalon. His is the only foreign-branded car in the lot, which doesn't surprise him.
Foreign automakers with manufacturing plants in the USA
Plant location Vehicles made there
BMW
Spartanburg, S.C. X5 and Z4
Honda
East Liberty, Ohio Civic and Element
Lincoln, Ala. Odyssey and Pilot
Marysville, Ohio Acura TL and Accord
Hyundai
Montgomery, Ala. Sonata and Santa Fe
Mitsubishi
Normal, Ill. Eclipse, Endeavor and Galant*
Warren, Mich. Raider*
Nissan
Canton, Miss. Infiniti QX56, Altima, Armada, Quest and Titan
Smyrna, Tenn. Altima, Frontier, Maxima, Pathfinder and Xterra
Subaru
Lafayette, Ind. Baja, B9 Tribeca, Legacy and Outback
Toyota
Fremont, Calif. Corolla and Tacoma
Georgetown, Ky. Avalon, Camry and Camry Solara
Princeton, Ind. Sequoia, Tundra and Sienna
U.S. automakers with plants in Mexico and Canada
DaimlerChrysler
Brampton, Ontario Chrysler 300, Dodge Magnum and Dodge Charger
Windsor, Ontario Dodge Grand Caravan, Chrysler Town & Country and Chrysler Pacifica
Saltillo, Coahuila, Mexico Chrysler PT Cruiser and PT Cruiser convertible
Toluca, Mexico state, Mexico Dodge Ram quad, regular and megacab and Dodge Ram SRT10
Ford
Oakville, Ontario Ford Freestar and Mercury Monterey
St. Thomas, Ontario Crown Victoria and Mercury Grand Marquis
Hermosillo, Sonora, Mexico Ford Fusion, Mercury Milan, Lincoln Zephyr
General Motors
Oshawa, Ontario Chevrolet Impala, Chevrolet Monte Carlo, Buick LaCrosse, Pontiac Grand Prix
Oshawa, Ontario Chevrolet Silverado, Chevrolet Silverado SS, GMC Sierra, GMC Sierra Denali light duty
Ramos Arizpe, Coahuila, Mexico Chevrolet Cavalier, Pontiac Sunfire, Buick Rendezvous
Silao, Guanajuato, Mexico Chevrolet Suburban, GMC Yukon XL, Cadillac Escalade EXT, Chevrolet Avalanche, Cadillac Escalade ESV
Toluca, Mexico state, Mexico Chevrolet Silverado and Chevrolet and GMC commercial trucks
* — Shares space with Chrysler.
Source: USA TODAY research
"That's because I live in town. The rest of these guys are farmers," Cooper says, laughing. The farmers, he says, feel compelled to buy American cars out of a misplaced solidarity with blue-collar autoworkers. "They think you're hurting the working man by driving a foreign car." But his car was made in Kentucky, he argues. "Who am I hurting?"
Attitudes about buying American cars are changing in the Midwest, once easy pickings for domestic automakers. And that could spell trouble for Detroit.
General Motors (GM) and Ford Motor face tough times, with their North American auto operations losing more than $3 billion combined so far this year. The last time they were in such a crunch, in the early 1990s, "Buy American" became a rallying cry, and in the Midwest, it was almost taboo to drive anything else.
But now, it's hard to tell if many people care. "We don't have people marching down the street saying 'Buy American.' There's no collective group rally of people saying we need to do that," says Steve Delaney, editor and publisher of Burlington's daily newspaper, The Hawk Eye.
U.S. automakers' stranglehold on much of the Midwest is eroding. From 2000 to 2004, their share of the Midwest market fell from 78.6% to 71.2%, according to R.L. Polk & Co., which tracks auto registrations. Asian automakers' share went from 17.6% to 24.2%. The Midwest — North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri, Wisconsin, Illinois, Indiana, Ohio and Michigan — is Detroit's biggest market. On the East and West coasts, Detroit vehicles make up about 50% of sales; in the South, they make up about 60%.
The automakers say what's happening in the Midwest isn't much different from what's happened all across the country: Asian automakers are aggressively opening dealerships and entering new segments — most notably, SUVs and pickups.
George Pipas, Ford's director of sales analysis, says any time a competitor opens a dealership, it leads to a decrease in market share.
Stopping the fall-off in heartland sales won't be easy for U.S. automakers, which face two problems:
• Asian automakers have branded themselves as quasi-American companies that are creating jobs in the USA while Detroit automakers continue to cut them. The fact that one of the traditional domestic companies, Chrysler, is now part of German-owned DaimlerChrysler further confuses the issue.
• With the economy stagnant in many parts of the Midwest, feeding job-security fears, Japanese automakers' reputations for cars that have high quality and low-cost maintenance are a lure to buyers.
Fuzzy borders
For a long time, it was clear what an American-made car was: Ford, GM and Chrysler were based in Michigan, used unionized American labor and relied on homegrown suppliers for parts. But thanks to 1994's North American Free Trade Agreement — which made it easier for U.S. automakers to build cars in Canada and Mexico — and to a push by Asian automakers to build cars in the USA, the lines aren't as clear anymore.
William Ealey, a retired Caterpillar line worker and World War II veteran, is a Buick man. Volunteering to take tickets at a demolition derby at the Christian County Fair in Taylorville, Ill., Ealey wears a T-shirt emblazoned with the American flag and the slogan, "Taking Pride in the United States of America." He acknowledges a bias against German- and Japanese-made cars because of his time in the war, when both groups were unequivocally the enemy.
His definition of an American-made car: one manufactured within U.S. borders by American employees of U.S.-based companies. "The rest of that stuff, it's not American," says Ealey, who drives a 1999 Buick Century.
When told that his Century actually was made in Canada, Ealey is visibly surprised. He pauses a moment, sets his jaw and says it doesn't matter. "They're American. They've always been American."
But it's that kind of border crossing that makes buying an American car seem like less of a civic duty for many. Japanese companies, most associated with the auto industry, accounted for 94,000 jobs in Michigan and Ohio last year, according to Japan's consulate general in Detroit, and are growing at time when other companies are shrinking.
Toyota is planning a new technical center in suburban Detroit. South Korea's Hyundai is attracting attention for its new plant in Alabama, thanks in part to a massive ad campaign showing how red, white and blue the factory is.
What really makes a car American? "I don't know, because I don't understand the entire picture," says Jack Raleigh of Decatur, Ill., a domestic-car owner. "You look at the Hyundais made in Alabama and the Toyotas made in Tennessee, and those are American jobs. And the American automakers, they're closing plants and taking away jobs. So I don't know."
Says David Shepherd, a Ford, Chrysler, GM and Toyota (TM) dealer in Fort Scott, Kan.: "It's pretty hard anymore to identify the national origin of a product by its name. ... There really isn't a truly American-made and manufactured vehicle like there may have been at one time. That has changed attitudes."
"The whole identity of a product is much less clear than it used to be," says David Cole, chairman of the Center for Automotive Research. "It reflects a true global integration of the auto industry. We are in an integrated economy, and that's life." Cole doesn't think U.S. automakers will resort to flag-waving anymore. "They just don't think it's appropriate, they don't think it will resonate that well. I think they believe that day has passed."
Tight pocketbooks
Shepherd opened his Toyota dealership in Fort Scott in 1988, after he learned people were going to Kansas City to find cars that were more reliable than the domestics they were driving. In the heart of the Little Ozarks, Fort Scott's economy relies on the fluctuating farming and tourism industries.
People here tend to buy used cars because they can't afford new. When they do buy a new car, quality is an issue, Shepherd says.
While the domestic automakers are catching up in that arena, the message hasn't gotten through, he says. "When we became a Toyota dealer, there was a huge quality gap. That gap has closed dramatically to the point where, in some cases, probably the domestics have surpassed Toyota. But the psychological gap for many folks still exists."
In the Springfield, Ill., area, farmer Stan Schutte says money is tight. Smaller farmers are being squeezed out by international operations, and manufacturing jobs are hard to come by. Job uncertainty affects the way people approach buying a car.
"Sometimes, a car is the biggest purchase you'll make in your life," he says. People turn to Japanese cars because "they're cheaper, more reliable. That's just the way it is."
Paul Ballew, GM's director of global market and industry analysis, says it could take until the end of this decade for perception to catch up with the domestic automakers' quality gains. "To get that message along, it's a drip-drip-drip effect," Ballew says. "To break through, it takes awhile. You have to be patient. You have to stick to your message."
Because they tend to hang onto their cars for years, people in the Midwest have long memories.
More than a decade ago, Springfield resident Marilyn Ferry says she was backing out of her driveway in her nearly new Mercury Villager minivan when the engine sputtered to a stop. Ferry, who still had payments left, thought the problem could be fixed. She says the dealer said it could, but only if she paid for a new engine. The experience soured her on U.S.-made cars.
She bought a used Honda Odyssey minivan, which has lasted since 1995 with only regular oil changes and no other issues.
"It isn't that I'm anti-American. I just really wanted a stable car you can count on," says Ferry, who is relying on the Odyssey to last for at least another year. "I think American cars have improved, but I'm not sure I want to take that risk."
Ironically, Ferry's Mercury minivan was designed by Nissan and powered by a Nissan-made engine, but built at a Ford plant in Avon Lake, Ohio.
Spotty loyalty
At the fair in Taylorville, Miss Christian County makes a tour, stopping to pet a prize pig and giving a hug to an adoring 8-year-old fan. Tabitha Spinner, 20, arrived at the fair in an Oldsmobile Alero, not surprising, because only three cars parked on the dirt lot were foreign brands.
"I like American cars. I think everybody should drive American cars," she says.
It might seem like a bit of politicking, but Spinner lives in the heart of one of the remaining bastions for Detroit automakers. Christian County is populated with 11 times more acres of corn and soybeans than people. Folks here like their Ford, Dodge and GMC trucks. Anything else is considered unpatriotic and damaging to the American way of life.
That's how it used to be in most of the Midwest, even in the big cities. Neighbors would chide drivers of non-American-made cars, and small-business owners feared offending customers if they were seen in a Honda.
But that's changing.
Just 25 miles north of Taylorville in Illiopolis, Ill., the Prairieland Dance Club meets every Wednesday night for a couple of hours of line dancing and socializing. Dance club president Suzi Morrow and her husband have never felt compelled to buy a car simply because of where the parent company is based. Morrow's brother-in-law is a car salesman, so the family bought cars at a discount from wherever he worked. In the 1980s, Morrow was one of the few people in her neighborhood to own a Japanese car.
People talked.
"They would be critical," says Morrow. "They would act like the Ford or Chevy they were driving was a more reliable and better car. They would say things like, 'You drive a Jap car?' or some of the even more unsavory descriptions of people from Japan." It made her uncomfortable, even when people tried to act like it was all just good-natured ribbing.
Now, Morrow's Toyota Sienna minivan has plenty of company in the Prairieland parking lot. Of 21 cars, nine are foreign brands. She'd be surprised if anyone made a derogatory comment toward her or her car now. "I'm glad those days are over," she says.
What's the best deal?
Bill Shea, owner of Shea's Gas Station Museum on historic Route 66 in Springfield, says buyers are growing immune to a brand's national origin and are just looking for the best deal.
That might be true. According to J.D. Power, domestic market share bounced back significantly for the first half of the year, thanks to GM's "Employee Discount For Everyone" promotion. GM's program was so successful in June that Ford and DaimlerChrysler matched it in July. The employee-pricing plans were scheduled to end Monday, but Ford and GM are extending discounts on 2005 models until Sept. 6, and Chrysler is extending the deal indefinitely.
The gain in market share "is all based on incentive," says Tom Libby, Power's senior director of industry analysis. He expects a reversal of that trend after the promotions end.
The success of the employee-discount deals, like the growing popularity of foreign brands in the Midwest, would be no surprise to Shea. "People don't care what the name on it is," says the 83-year-old World War II vet. "You could put my name on it or your name on it, and they don't care. It's all about the price."
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