Why Toyota, Datsun may bear 'made in USA' tag before long

"If you're going to sell automobiles in the United States, build them in the United States," Douglas Fraser, president of the United Automobile Workers (UAW) , has been telling Japanese auto manufacturers during four days of talks in Tokyo this week.

There is a good possibility it will happen.

The UAW wants the Japanese to take a leaf from the economic books of West Germany's Volkswagen. Last year, of the 214,000 VW Rabbits sold in this country , more than three-fourths were built in a New Stanton, Pa., plant by UAW-contract workers. None of the 1.7 million Japanese cars sold in the US were produced in this country.

But if there is a change, it will likely be less a result of Mr. Fraser's persuasiveness on his mission to Tokyo than of Japanese recognition that if they continue to build up huge trade surpluses by selling too many cars on the American market, a reaction in this country could cause serious problems for Japanese exports as a whole.

A former head of the Council of Economic Advisers, Paul W. McCracken, now a professor at the University of Michigan, said in Detroit Feb. 11 that major Japanese automakers will be turning out cars in US plants within the next few years.

"The 1980s won't be very far along before all Japanese carmakers are building automobiles in the US," Mr. McCracken told the Detroit Economic Club. Japanese companies have been competing hard for a bigger share of the US auto market, while keeping down sales of US cars in Japan -- a one-sided policy that, Mr. McCracken says, "will not fly into the 1980s."

With the US auto industry in its worst sales slump since the early 1970s -- and with between 150,000 and 200,000 auto workers idled by indefinite layoffs -- protectionist sentiment is growing in the industry.

Speaking before a meeting of the National Automobile Dealers Association in New Orleans Feb. 11, top officers of General Motors, Ford, and Chrysler agreed that US trade policies should be reviewed quickly -- and tightened -- if Japanese companies do not agree either to voluntary restrictions on exports to this country or to increase use of American-made parts in their cars.

Meanwhile, US Ambassador Mike Mansfield has warned the Japanese that continuing vigorous exports to the US could result in tensions between Japan and the US and a backlash against all Japanese exports.

The UAW opposes trade barriers of any kind against foreign-made cars except as a last resort. The union fears, along with many in the industry, that setting quotas or levying a higher tariff on cars made overseas would invite reprisals against US export of cars and trucks, farm machinery, and aircraft. All are made under UAW contracts.

The union says there is a better alternative: foreign automakers whose sales in this country exceed 200,000 units a year should be required to produce a substantial part of their cars for the US market in American plants. The union has proposed legislation that would require this.

One Japanese company, Honda, already has announced plans to open an assembly plant in Marysville, Ohio, next year. Japanese newspapers report that Nissan (maker of Datsun cars and trucks) and Toyota also are "thinking about manufacturing cars in the United States" but neither will confirm plans to do so. Meanwhile, Volkswagen is expected to announce in April plans for a second US plant.

Last year, Toyota sold 630,000 cars and trucks in the US, Datsun 570,000, Honda 350,000 and Mitsubishi 195,000. Although Japan had promised to limit auto exports to the US to 1977 levels, according to Mr. Fraser, the Japanese industry last year exceeded 1977 sales by half a million cars.

altogether, import sales, led by the Japanese, rose 16.4 percent in 1979 to 2 .3 million units. Sales by US companies barely exceeded 8 million, down 12.1 percent from the 9.1 million level of 1978.