Honda plant brings hope to Indiana town

Nov 18, 2008 (Detroit Free Press - McClatchy-Tribune Information Services via COMTEX) -- HMC | Quote | Chart | News | PowerRating -- GREENSBURG, Ind. -- With the domestic automotive industry teetering on the edge of bankruptcy, Monday's grand opening of Honda Motor Co.'s Civic assembly plant in Greensburg was a dream come true for this town of 12,000 and for a state that has been hit hard by manufacturing job losses similar to those faced by Michigan.

"Right now, some of the other manufacturing in Indiana is kind of struggling," said Steve Butz, 41, who grew up in Greensburg and works in the purchasing and logistics department at Honda's new plant. "So this brings hope. Now there is hope for everyone here."

Earlier this year, as high gas prices decimated automotive sales for the Detroit Three, sales of the Civic, a car that has been a symbol of fuel economy and reliability since 1973, soared. So on Monday, as Honda celebrated the opening of its $550-million, nonunion plant, capable of producing 200,000 vehicles annually, the contrast between the healthy Asian automaker and its ailing domestic rivals caused workers and politicians alike to welcome the arrival of Honda.

Since 1999, the number of automotive workers employed in Indiana has declined from 105,100 in 1999 to 81,200 in 2007. And even though the starting hourly wage at the plant is $18.41, or roughly $10 less than an average Detroit Three worker, demand for these jobs was off the charts.

When Honda announced it was hiring 900 employees, 33,000 people applied. Honda eventually plans to employ about 2,000 at the plant, which started production in October.

Indiana Gov. Mitch Daniels said he remembers the moment Honda called him to say the company had picked Indiana.

"To me this was the corner, this was the turning point, that the world recognized" Indiana's capabilities, Daniels said at the plant's dedication Monday.

Together, state, county and local governments granted Honda tax incentives valued at about $73.6 million to lure Honda to Greensburg.

But for all the hope, Cierra Baker, 19, said noticeable change has yet to arrive. Baker, who lives in Greensburg, is a waitress at a nearby Chili's restaurant.

"You can't find any employment around here," Baker said. "They said it was going to be a big boom, and it hasn't made a big impact on anybody's life yet."

That may be because Honda has several plants in nearby Ohio. Only a few of Honda's suppliers have relocated to serve the new plant. Honda's engine plant in Anna, Ohio, is just more than two hours away. Honda said that out of approximately 150 Honda Civic suppliers, 61 are in Ohio, 21 are in Indiana and 17 are in Michigan.

Honda officials on Monday acknowledged the shaky nature of the economy and its domestic automotive rivals, who are lobbying the federal government for financial assistance.

"Honda would support measures that would maintain the short and long-term viability and stability of the automotive industry," said Jeffrey Smith, Honda's vice president of corporate affairs.

Smith said Honda does not have a position on whether the Detroit Three should receive government assistance, reorganize through Chapter 11 bankruptcy or follow some other alternative. "This consideration of support for the automotive industry is very understandable," Smith said. "It's a major industry that has a major impact on the United States."

Honda's sympathy for its domestic rivals was not shared by U.S. Rep. Mike Pence, R-Ind., who spoke to reporters after the Honda event.

"I am someone who believes that freedom to survive also means freedom of failure," said Pence, adding that also he opposed the passage of the $700-billion bailout legislation. "Going into bankruptcy does not mean that the companies would dissolve."

Over the past week, Michigan Gov. Jennifer Granholm and General Motors Corp. Chairman and CEO Rick Wagoner have argued that a bankruptcy would be disastrous for the automotive industry because it's unlikely that people would buy cars from a bankrupt company. Bankruptcy, they say, would mean liquidation.

But Pence argued that Americans recognize that companies often emerge from bankruptcy and understand that it provides companies a way to shed debt and costs and become healthy.

Honda Motor Co. President and CEO Takeo Fukui said the entire industry is facing challenges, but said the Civic has a history of being one of Honda's most compelling vehicles.

"Thirty-five years ago, the first Civic helped establish Honda in the U.S. auto industry," Fukui said. "It was the first car in the world to meet the U.S. Clean Air Act without the need for a catalytic converter," Fukui said. "I was a member of that development team. And I remember waiting in the EPA test lab in Michigan when an EPA inspector congratulated me."

In May, the Civic was the top-selling vehicle in the United States. While Civic sales fell in October, year-to-date sales have outpaced the industry as demand for smaller, fuel-efficient vehicles escalated with gas prices. Through October, sales of the Civic increased 2.1 percent to 304,297 for the year while industry sales declined 14.6 percent, according to Autodata Corp. The 2009 Civic gets a combined 29 m.p.g., according to fueleconomy.gov, a U.S. EPA Web site.

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