Video: A Conversation with Dean Robert Dolan and The New York Times' Micheline Maynard
Award-winning author discusses her new book, "The Selling of the American Economy: How Foreign Companies Are Remaking the American Dream."
ANN ARBOR, Mich. — The success of foreign companies in the United States has provided the country with jobs, economic stimuli, innovation and competition yet still spurs controversy, even in this era of free trade.
Micheline Maynard, adjunct lecturer at Ross and senior business correspondent for the New York Times, explores those trends and their consequences in her new book, The Selling Of The American Economy: How Foreign Companies Are Remaking The American Dream.
In a discussion with Ross Dean Robert Dolan, Maynard noted that foreign investment in the United States has a long history but still "touches a raw nerve in this country." For example, many consider Honda a foreign car. Yet Honda's most popular models here are built in Ohio by American workers using a vast majority of American-made parts.
"How could you say that wasn't an American car?" she said. Maynard, in working on her last book, The End of Detroit: How The Big Three Lost Their Grip on the American Car Market, wanted to know more about these Honda workers, their communities, and the state that fought hard to get the plant.
What she found was a common trend throughout industrial America. European, Chinese, and Indian companies, looking for a slice of the American consumer's wallet, followed the lead of the Japanese automakers and set up operations here.
While some bemoan situations where American icons come under control of a foreign company -- such as Anheuser-Busch's sale to Belgian beer giant InBev -- these companies provide jobs, spur economic development in many communities, and create some healthy competition.
Maynard noted that motivations for foreign investment can vary. At first, Japanese automakers "were using their American plants to neutralize this fear of buying a foreign car."
European firms often face high taxes and strong unions in their home markets. "They come here and it's like a clean sheet of paper," she said. "They get to start over again."
But mostly, these companies are looking to tap what is still a huge consumer market. Even though the U.S. is suffering through the worst recession since the Great Depression, it's still a rich, consumerist country, she said.
One consequence of increased foreign investment is the incentive bidding wars that emerge among the states hoping to land a big operation. Dolan pondered whether some of the tax incentives offered are worth it. He noted that in one case, a state was offering incentives that came out to about $147,000 per job created.
Maynard said there are times when such incentives are good investments, and some where the payoff isn't apparent. Ohio's courting of Honda paid off in a big way. In the late 1970s, then-Gov. James Rhodes traveled to Japan to meet with Honda. The result of that relationship today is 25,000 jobs.
The formerly little town of Georgetown, Ky., is now booming thanks to Toyota's decision to build an assembly plant there.
On the other hand, the jury is out on how well incentives worked to lure Toyota's truck plant to San Antonio. The Japanese automaker has had trouble getting that plant to full capacity.
Dolan and other questioners probed the Michigan economy in particular, as the state has been hard-hit by the decline of the auto industry. Maynard said Gov. Jennifer Granholm faces a challenge because of the state's image as a car state and union state.
The state has had some success getting foreign companies, particularly automotive and industrial firms, to set up large tech centers. Maynard said Michigan should leverage its natural resources and engineering expertise.
"I don't think she (Granholm) is ever going to get the big foreign assembly plant that has gone to the southern states," she said.
The state also needs to learn how to live with a smaller population and smaller auto industry. In 1950, the city of Detroit had a population of about 2 million people and 200,000 of them worked in the auto industry. Today, the population is about 800,000 and about 20,000 work in the auto industry, she said.
It's very unlikely the auto industry will rebound to the point where it can grow and sustain a larger population or offer a good living to workers who only hold a high school diploma.
"The realization has to happen first before the rebuilding can begin," Maynard said. The state needs a leader, not a committee, to take stock of what Michigan has and what it can be, she said.
Nationally, the growth of foreign investment in the United States always runs the risk of being stymied by protectionism, a risk that can rise during a recession. The stimulus bill had a "buy American" provision that was later weakened, but still offended important trading partners, such as Canada.
The tendency in a recession is to "pull back in and protect yourself," Maynard said. But she also sees signs that won't happen on a big scale. First, the "cash for clunkers" applied to all vehicles, not just U.S.-made names. Japan attempted a similar program that excluded foreign vehicles, but later backed down and applied it to all cars.
"That was a very important moment," she said of the U.S. decision to include all vehicles. "I have some optimism that even if things continue to be bad, we won't turn in the way we once had."
Maynard said she's very interested to see what will happen next with the American economy and how places like Michigan will remake themselves. World War II basically lifted America out of the Great Depression and its after-effects. After the war, the country looked inward and rebuilt the country.
But she said the United States can't reinvent itself by way of war or by turning inward. Maynard said she finds a welcome can-do attitude in today's business school students.
"I'm very encouraged when I talk to business school students by how much entrepreneurial spirit is out there," she said. "People aren't waiting to be rescued by a big company."
About Micheline Maynard
Maynard is a former Knight-Wallace Fellow at the University of Michigan and an adjunct faculty member at Ross. She joined the Times in 2004 as a reporter in the Business Day section, covering the airline industry. Known as Micki, she was named Detroit bureau chief in October 2005, where she directed the Times' coverage of the automobile industry. She became a senior business correspondent in 2008, covering transportation issues. She also contributes regularly to the dining, travel, and sports sections of the paper.
In 2009, Maynard was named the 11th winner of the annual Nathaniel Nash Award, which honors a Times reporter who excels in business and economics coverage. She has won the Publisher's Award six times.
Maynard has written four books, including the acclaimed The End of Detroit: How the Big Three Lost Their Grip on the American Car Market, which foresaw the collapse of Detroit carmakers.
Prior to joining The New York Times, Maynard wrote for Fortune magazine and had been a staff writer or bureau chief at USA Today, Newsday, U.S. News & World Report, and Reuters. She began her career as a legislative correspondent for United Press International in Lansing, Mich., and served as an intern in the White House Press Office.
In addition to her Knight-Wallace Fellowship at U-M in 1999-2000, Maynard also was named a media fellow by the Japan Society of New York (2002) and a Knight-Bagehot Fellow in Business and Economics Journalism at Columbia University (1989-90). She holds an undergraduate degree from Michigan State University and a graduate degree from Columbia.
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