Do you remember when the United States government saved Chrysler Corporation from bankruptcy? In 1980, Chrysler Corporation was facing bankruptcy and needed the United States government to guarantee loans for $1.5 billion in order to save it. Back then $1.5 billion was a lot of money. Now $1.5 billion is spare change for Daimler Chrysler, the merged name for Chrysler and Mercedes-Benz. Twenty years ago Chrysler was bailed out so that the United States would have three major domestic auto manufacturers here with hundreds of thousands of well-paying jobs preserved.
Last year, German automaker Mercedes-Benz acquired Chrysler, even though Chrysler was a more profitable corporation than its German acquirer. Although Chrysler was well on its way to abandoning manufacturing jobs in the United States, the merger with Mercedes has done nothing to slow down the process. In fact, production in Austria of Chrysler cars has been increasing at a rapid pace. While there is nothing wrong with manufacturing overseas to fulfill demand there, doesn't it make more sense to increase production in the United States and export cars and trucks to Europe? Aren't there economies of scale when all production of a single model is achieved on one assembly line?
Chrysler manufactured 152,000 cars in Canada during the first eleven months of 1999. The Chrysler 300M, the Chrysler Concorde and the Chrysler LHS are all manufactured north of the border.
Why does Chrysler produce so many cars in Canada? Well, in the early 1960s very few American cars were made in Canada. In response, Canada passed a law requiring that for every car sold in Canada, one would have to be assembled there. In the mid 1960s this law forced all major American car manufacturers to open plants there. We are now stuck with the consequences of this pre-NAFTA law.
And now NAFTA has opened the floodgates from Mexico. Chrysler's Mexican workers make as little as $1 per hour. Of course it does not pass this savings on to the consumer as its top-of-the-line Sebring Convertible carries a top-of-the-line price. Chrysler's Sebring convertible, as well as the Chrysler Stratus, are manufactured in Mexico. Mexico's production for Chrysler Corporation is growing by leaps and bounds. More than 300,000 vehicles were produced by Chrysler in Mexico, including more than 50,000 Sebring Convertibles, 17,000 Chrysler Stratus models and more than 200,000 Dodge trucks.
The only American-made vehicle with a Chrysler nameplate is the Chrysler Town & Country minivan, which sold 75,000 units in 1999. So Chrysler, not counting Dodge, Plymouth or Jeep, produced twice as many vehicles in Canada as in the United States, and nearly the same number in Mexico.
Chrysler, who bought Jeep in 1988, is starting to have Jeeps made overseas as well. While most Jeeps are still made in the USA, Chrysler built 35,000 Grand Cherokees in Austria in 1999. Those Austrian-made Grand Cherokees are sold in Europe. The same plant that manufactures Jeeps, also manufactures Chrysler minivans and Mercedes vehicles. I anticipate increased production at this Austrian plant.
Chrysler also has licensed the Chinese to make Cherokees in China. We should manufacture all Jeeps in the United States so that we can increase our exports. After all Jeep, which originally was spelled GP, for General Purpose, was a U.S. Army vehicle. That Jeeps are now made in China and Austria seems peculiar, particularly since Chinese-made four-wheel drive Jeeps could be used in a military exchange with the United States in Taiwan or Korea.
In contrast, Oldsmobile, Lincoln and Saturn have always made all of their vehicles in the United States. And none of those automakers have ever been saved from bankruptcy by Uncle Sam. Chrysler owes America its very existence and should strive to keep jobs here rather than moving production to Mexico, Canada, Europe and China.
Joel D. Joseph is chairman and founder of the Made in the USA Foundation, dedicated to promoting American products in the United States and around the world. Write P.O. Box 5402, Washington, DC 20016; phone 202-822-6060; email madeusafdn@mindspring.com.