If buying domestic is important to you, you need tools to help you identify truly American-made products in a sea of domestic and foreign brands with ambiguous origins. The Kogod Made in America Index is such a tool.
American University’s Kogod School of Business says its index reflects automobiles’ nations of origin more accurately than the standard American Automotive Labeling Act (AALA) data published by the National Highway Traffic Safety Administration.
Former auto mechanic Frank DuBois, currently an associate professor of international business at the Kogod School of Business, created the index out of frustration with AALA data that he believes constitutes a flawed measure. The DuBois’ Kogod index takes a deeper look, using data from the AALA, automakers’ annual reports, and Form 10-K filings to the US Securities and Exchange Commission.
Automobile mobiles are ranked based on:
- Profit Margin: Where the automaker’s global headquarters is located
- Labor: Where the car is assembled
- Research and Development
- Inventory, Capital, and Other Expenses: Location of assembly
- Engine and Transmission: Location of production
- Body, Interior, Chassis, Electrical, and Other: Location of production
- National Highway Traffic Safety Administration AALA “Domestic Content” Score
What is so problematic with AALA scores, notes American University, is that they allow carmakers to round up 70 percent to 100 percent in their determinations of local content.
AALA also loses accuracy (and credibility in DuBois’ book) by treating all cars in a particular line equally, despite the fact that different cars in the line have different percentages of American-made content.
The Honda Accord provides an excellent example of this number fudging. Whereas six-cylinder models have Japanese engines and transmissions and are assembled in Japan, the AALA scores them as containing 65 percent American-made content, according to WND.
Next time you’re in the market for an American-made car, look beyond the AALA window sticker about the car’s domestic content. Instead, look to the Kogod index for a more realistic picture of where your car came from.
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