November 17, 2008 / 10:52 PM / 11 years ago

Honda opens new U.S. plant as Detroit seeks bailout

GREENSBURG, Indiana (Reuters) - The rest of the country may have been debating the possible bankruptcy of America’s iconic automakers on Monday, but in southeast Indiana more than 1,000 U.S. workers were cheering the opening of Honda’s newest assembly plant.

As a shiny Honda Civic sedan rolled up beside Indiana’s governor and Honda’s president, Greensburg Mayor Gary Herbert posed a question designed to remind Americans that the U.S. auto industry extends beyond Detroit.

“Is this Civic an American-built automobile?” Herbert thundered, smiling at a sea of white-suited workers who seemed very pleased to have landed high-paying jobs in an industry where layoffs are common.

“Yes,” came the shouted reply from hundreds of voices.

The rise of Honda’s mammoth new car plant in America’s farming heartland is a stark contrast to the layoffs and plant closings announced in recent months by General Motors Corp, Ford Motor Co and Chrysler LLC.

But for the Honda workers here, their jobs — with a starting wage of $18.41 an hour — are just as much part of the U.S. auto industry as those at their imperiled Detroit competitors. They just don’t get as noticed.

“GM has laid off and cut back how many people and Honda is building a plant. What is Honda doing right? Maybe they should look at this model and learn something instead of getting a bailout,” shrugged new Honda worker Larry Giles, 41.

According to 2007 figures compiled by the Center for Automotive Research, foreign automakers including Honda, Toyota and Nissan employed some 113,000 workers in the United States, about half of the 239,000 employed by Detroit’s Big Three.

Like much of the country, Honda workers in Indiana have been watching the debate over the proposed $25 billion rescue plan of GM, Ford and Chrysler with mounting frustration.


“I don’t think they should be bailed out at all,” said paint shop worker Tony Mitchell, 38. Hired by Honda in July after being laid off from his job at an American faucet-maker, Mitchell said his job was “a dream come true.” And he doesn’t like the precedent set by a bailout of Honda’s competitors.

“It says that if you get in another bind three years down the road someone is going to bail you out again,” he said.

Officially, Honda is far more circumspect about prospects for an industry rescue plan.

“Honda would support measures that would maintain the stability and viability of the auto industry,” Honda spokesman Jeffrey Smith said in an interview, noting that parts suppliers were heavily integrated throughout the industry.

That the so-called foreign “transplants” are keeping their heads down as Congress debates the future of their U.S. competitors comes as no surprise to economist Sherry Cooper, executive vice-president of BMO Financial Group in Toronto.

“The politics around the transplants is nothing like the politics around the U.S. auto industry. Yet everyone recognizes they create jobs, they certainly add to economic prosperity in the U.S.,” Cooper said. “But with the Big Three there is almost a symbolism attached to them, especially GM.”

Cooper said it is too simplistic to say a bailout of Detroit is bad for the Japanese automakers — because they, too, rely on suppliers that may go out of business if one of the Big Three fails. Besides, she said, the transplants seem to cope well even when the playing field is not level.

While the Big Three once dominated the U.S. market, their market share has declined to about 48 percent through October, compared to about 35 percent for Honda, Toyota and Nissan combined, according to industry figures.

In Greensburg, at least, that share may be poised to rise.

“Every car I buy will be a Honda from here on in,” said Honda worker Brian Hopkins, 40, with a laugh.

In downtown Greensburg, realtor Melanie Hartman also celebrated the prosperity Honda has brought to her town. Home rentals are up, and she thinks sales will pick up in the spring when an additional 900 workers are set to begin at the plant.

“Our economy here is better than most of the country,” said Hartman, who opposes a Detroit bailout.

“The American people still look at those Big Three as closer to their heart,” she said. “The younger generation will go for the price and efficiency and (Honda) is what appeals to them. Then it will change.”

Additional reporting by David Bailey in Detroit; editing by Mohammad Zargham

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