Buying Domestic: Is it Worth It?

Author: By Dan Searles and John Stohlman
Posted: Friday, May 15, 2009

One of Dan’s favorite stories is the one about the boy on the beach. It’s after a big storm and he is picking up starfish and throwing them back in the ocean. By and by, an old man walking the beach strikes up a conversation with the boy. “Son,” he explains, “there’s been a big storm. For a thousand miles in either direction there are starfish washed up on the beach.

What difference does it make for you to throw six, ten, or even fifty starfish back into the ocean?” The little boy picked up another starfish.  He considered it, looked up at the old man and, as he tossed the starfish into the ocean, said, “It matters to me and it matters to that one.” The old man smiled and began to help.

This story is meaningful on several levels and it is certainly applicable to our lives and current times. First, like the little boy, we should each do what we can to help others and ourselves.  Second, like the old man, we need to be willing to look at old problems with a fresh outlook.  That brings us to our question of the month:

I need to buy a new car.  And because of the troubles at the domestic automakers, for the first time since the 1980’s, I am considering a domestic make. I feel that purchasing a domestic car will help preserve more jobs at home than buying a foreign make.  A friend claims that foreign cars assembled in the U.S. create the same number of jobs. What say you?”
Signed, Trying to do the right thing in Maryland

While we applaud your patriotism, the first thing you need to do is consider the various models that appeal to you and research them. What does J.D. Power say about the car’s quality? How about Consumer Reports? Domestic models, like the Ford Fusion Hybrid, the Chevy Malibu (recently voted Motor Trend’s Car of the Year) and the all-new Dodge pickup, have gotten rave reviews for quality and workmanship. If, after your research, you like what you see, by all means, give the domestics a chance.

Dan recently bought a Buick Enclave and it’s a fantastic ride. Now, as to the part of your question regarding which purchase supports the most U.S. jobs, our research led us to the good folks at The Level Field Institute.  They measure jobs that take place “beyond the assembly line including engineering design, finance, and more.”

In a nutshell, their rating system helps you see how many U.S. workers are employed for every 2,500 cars sold in the U.S. Their research concludes that Ford employs, “87 Americans for every 2,500 cars sold,” followed by GM and Chrysler at 78 and 66, respectively. Among the foreign automakers, Honda leads with 44, followed by Toyota (42), Nissan (34), and Hyundai/Kia at 15. Buying a Ford, GM, or Chrysler product supports a lot more jobs than buying a foreign car. Case in point, buying a Ford supports almost six times more jobs than buying a Hyundai.

Having said that, if you want to support U.S. jobs, you need to buy cars manufactured by U.S. based corporations. But, in order to take care of yourself, you need to make sure that those companies have made a high quality vehicle that suits your budget
and taste.

Dan Searles and John Stohlman are CFP®’s, financial planners and Registered Representatives offering securities and advisory services through National Planning Corporation (NPC), member FINRA/SIPC, and a Registered Investment Adviser. Medallion Financial Group and NPC are separate and unrelated companies.
 
*National Planning Corporation does not endorse the opinions expressed in this column. The information here is not to be considered as financial, tax or legal advice. As with any financial, tax or legal matter, consult your qualified adviser before taking action. No investment strategy can ensure a profit or protect against a loss. As always, past performance is not indicative of future results.

Categories: Money Matters

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