(What’s Left of) Our Economy: Auto Journalism from Fortune that’s a Lemon

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automotive, Cars.com, Department of Transportation, Detroit automakers, domestic content, Fortune, free trade, globallization, journalism, Made in America, manufacturing, NAFTA, North American Free Trade Agreement, Trade, {What's Left of) Our Economy

Memo to journalists at Fortune: If you want to run an “Aha!”-type item based on a new report or study, at least read the whole document – and report all its main findings. Because apparently no one involved in its coverage of the latest Cars.com index of American-made cars and light trucks followed this rule, its readers were denied crucial facts and context.

Here’s how Fortune led off the post in question: “The phrase ‘made in America’ has always pulled at the hearts and wallets of loyal, red-blooded consumers, and never more so than in the automotive space. But according to research released Monday, the car company that qualifies as most American is….the Toyota Camry.” 

And in case you have any doubts about the main point Fortune wanted to make, here’s what the magazine concluded after spotlighting two more “surprises” about declining domestic content in vehicles sold in the U.S. market: “Globalization is here.” If you think this it’s coincidental that this observation came on the heels of a knock-down drag-out fight in Congress on trade policy, I’ve got some turnip truck tickets to sell you.

More damning evidence that Fortune was looking for a chance to score some cheap rhetorical free trade points comes from what the magazine ignored in the Cars.com study: its observation – based on official U.S. Transportation Department data – that “Detroit has the bulk of cars with high domestic content. GM, Ford and Fiat Chrysler Automobiles build 37 of the 57 U.S.-assembled cars with 60 percent or higher domestic content. Foreign-based automakers are responsible for dozens of imported cars with zero percent domestic content, according to the National Highway Traffic Safety Administration [NHTSA]. Detroit automakers have just two cars below 5 percent….”

Moreover, had Fortune bothered to look at the latest set of government statistics and Cars.com’s observations, it would have spotted some important differences. For example, Cars.com found that “The Toyota Camry took the top spot this year, as 2014’s top vehicle,” with 75 percent of its content coming from either the United States or Canada. (NHTSA weirdly has never distinguished between the two.) But in April, Washington reported that nine models were at the 75 percent mark, and six came from the Detroit automakers.

And had Fortune gone to the source, it also might not have written that “A Chrysler hasn’t shown up [on the 75 percent list] since 2012.” The NHTSA data place the Dodge Grand Caravan in that select company.

Fortune is of course free to like free trade as much as it wishes – though an intellectually honest publication would at least mention that government decisions like the pursuit of the North American Free Trade Agreement have shaped automotive (and other manufacturing) production patterns at least as much as “globalization” – a term whose combination of sweep and vagueness inevitably implies… inevitability. But it shouldn’t be free to cherry pick findings it likes and present the slanted results as straight news.

(What’s Left of) Our Economy: Is Walmart Really Changing its Offshoring Spots?

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assembly, competitiveness, Made in America, manufacturing, manufacturing renaissance, offshoring, procurement, productivity, sourcing, trade policy, wages, Walmart, {What's Left of) Our Economy

Walmart is such a huge player in the U.S. economy that any evidence of the retail giant markedly shifting its sourcing strategy toward buying American-made goods could be significant positive for domestic manufacturing. And an article in the excellent publication Manufacturing & Technology News reports signs that such a shift is in the making.

At the same time, there’s a big cautionary note included in the piece indicating that whatever manufacturing gains result from more Walmart domestic sourcing would represent a decidedly pyrrhic victory.

Among the encouraging facts presented in the August 31 article: According to the company’s website, its Made in the USA manufactured offerings have increased from 500 to 15,000, and the number of domestic manufacturers selling it goods has quadrupled. Moreover, in the 18 months since Walmart announced its intention to purchase $250 billion in additional American-made goods by 2023, the company says that suppliers have begun moving production back state-side.

Some caveats must be kept in mind here. For example, by “goods,” Walmart could also mean not only manufactures, but farm products sold by its grocery operations. Also, Walmart’s claim that it’s now selling American-made television sets shows that its definition of Made in the USA also includes “assembled in the USA” – which adds much less value to the U.S. economy.

But there’s a much bigger problem. Walmart execs keep telegraphing to reporters that they now understand the importance of U.S. job creation – especially for working class Americans – because without adequate incomes, these folks increasingly can’t afford to shop robustly even at low-price stores like Walmart. That dawning realization is of course not only encouraging, but also hugely ironic, since Walmart’s massive overseas sourcing over the years has pushed so much manufacturing output and so many industrial jobs abroad to begin with.

At the same time, Walmart CEO insists that the company “will not change its strategy of generating low margins on high volume,” and the article made clear that “the China price” (and other third world prices) will remain the standard governing Walmart procurement policy.

That would be fine if U.S.-based manufacturers could meet this challenge overwhelmingly by improving their productivity. Trouble is, although manufacturing still leads the American economy in productivity by a wide margin, there’s no evidence showing any acceleration recently in the sector’s efficiency gains when measured by the broadest productivity indicator – multifactor productivity. In fact, according to the latest available Labor Department data, multifactor productivity in manufacturing has been improving at a slower rate since the Great Recession began (0.4 percent compounded annually through 2012) than before the downturn 1.9 percent from 2000 to 2007).

Moreover, other Labor Department figures make a strong case that, rather than taking that productivity-enhancing “high road” to maintaining and improving efficiency and therefore competitiveness, U.S.-based manufacturers are taking the “low road” of cutting wages. These data show that inflation-adjusted wages in American manufacturing have fallen nearly 13 times faster than wages for the entire American private sector during the dreary recovery that ostensibly began in mid-2009.

Worse, as long as Walmart and the rest of American business retain the option of overseas sourcing, they’ll have strong incentives to stay on the low road even if they use more domestic suppliers – by holding a totally credible offshoring threat over their heads. As a result, even if firms such as Walmart deserve considerable credit for good intentions, there’s still no reasonable denying that a genuine U.S. manufacturing renaissance will remain impossible until the offshoring option is eliminated – which will require a top-to-bottom transformation of U.S. trade policy.