The debate about whether U.S. manufacturers (Jeep/Fiat in particular) are shipping jobs to China demonstrates just how reality-twisting the current campaign dialogue has become. The TV ads and campaign charges completely misrepresent a 35-year relationship between China and an American firm that ought serve as a model of cooperation between two economic giants.
Let's look at the actual Jeep-China record.
A disclaimer here. My father was a senior executive at Jeep and was closely involved with all of the firms that owned a piece of the corporation from the end of World War II until his retirement in the 1970s. I, too, have some history with the issue. I am a China scholar; I worked on China in the Army, and my research has to do with Chinese industrial development. As well, I was on the edge of the negotiations that led to AMC-Jeep becoming the first China/USA auto joint venture in the early 1980s.
In many ways, that venture was an extraordinarily successful operation. Negotiations started quietly in the late 1970s. The first production rolled off the Beijing assembly line in 1984. And by 1990, Jeep Cherokee was the sales leader in northern China.
The China-Jeep partnership began with the same kinds of obstacles we see today and it took the intervention of Deng Xiaoping himself to nudge the parties on both sides. Where to put the factory? How to avoid the resentment of Chinese workers? How to use not-quite-up-to-standard Chinese parts in an American car? The negotiations with the relevant Chinese ministries made for a steep learning curve for Jeep. But it turned out that there was an old factory on the edge of Beijing that was already producing one of those "socialist people's" cars. The Chinese ministry proposed shutting the old factory down and replacing it with an American assembly line.
The American side, seeing the delicacy of throwing Chinese out of work, proposed a different solution. First, Jeep and the most closely involved Chinese ministry would construct a new assembly line right next to the old Chinese line, and the two lines would run "parallel" to each other. This gave the Chinese side a chance to learn about the strange Americans, and the American side got time to observe its Chinese counterparts. I visited this unique factory a half-dozen times in the late 1980s and early '90s. Each time I came away with a sense of wonder at how much each side was learning from the other. It is a model that stands the test of time and would work beautifully today.
And another compromise: Instead of moving American production to China, Jeep decided to ship "kits," an entire automobile made in Toledo, almost completely finished but not yet assembled, and packed into a series of crates that shipped to China. Thus, instead of moving American production to China, the joint venture created a partnership that created jobs in both Toledo and Beijing.
The stories about the Renault-Daimler-Fiat foreign firms that owned pieces of Jeep and about sending both production and jobs to China are similarly fascinating. But the telling again mangles Jeep's wonderful history.
Of course we all know about the fabled Jeep of the "Willy and Joe" days of World War II. But less well-known is that almost from the end of the war until today, Jeep was really owned by other corporations, both American and foreign: Kaiser-Frazer, AMC, Chrysler, Renault and Daimler. Most recently, Fiat has become an active player in the company. Some of these outside firms have been more successful than others. But all have shared one goal: To maintain the relationship between the extraordinarily talented labor pool in Toledo and to preserve the Jeep brand and legacy.
So how did we come to a place where rumor is confused with reality? Where something good (joint cooperation and understanding) has been transformed in our public discourse to something odious? One might think that at least presidential challenger Mitt Romney would speak up. His father, George Romney, was, after all, CEO of AMC-Jeep before he ran for governor of Michigan. Mitt Romney grew up in the Detroit automobile and country club culture (as did I), where even distracted teenage sons of auto executives absorbed an understanding of the complex auto industry.
The fascinating story of the 35-year relationship between Jeep and China has gone missing, twisted by what both the president and Romney are saying about the issue. Jeep and China have a fascinating and important relationship that serves as an example of what two strong and proud nations (and their firms) can do when they decide to cooperate.
The political economist in me worries that our lack of knowledge and curiosity about the real Jeep/China relationship tells us more about the nature of current campaigning than we want to know.