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Honda to build a new factory in Indiana

Honda Motor Co. will build a $550 million auto assembly plant near Greensburg, Ind., as part of a $1.18 billion global expansion, company officials said Wednesday.
Honda plans to build a new U.S. plant in Indiana. Koichi Kondo, president of Honda North America, says four-cylinder models (such as the Accord EX sedan) will be produced there.
Honda plans to build a new U.S. plant in Indiana. Koichi Kondo, president of Honda North America, says four-cylinder models (such as the Accord EX sedan) will be produced there.
/ Source: The Associated Press

A $550 million Honda Motor Co. assembly plant will help the Japanese automaker meet a growing North American hunger for its cars and help invigorate a state hit hard by manufacturing job losses, officials and analysts said.

The southeastern Indiana plant — part of a $1.18 billion global expansion — eventually will produce 200,000 vehicles annually, increasing Honda’s North American production to 1.6 million a year.

In 2005, American Honda sold 1.5 million Honda and Acura cars and light trucks, and the continent accounts for about half Honda’s annual global sales, the company said. Honda officials expect its sixth North American plant will help meet that growing demand.

“We believe that the great state of Indiana has what we need to continue that success: an outstanding community of people, excellent transportation systems and the necessary infrastructure to support industry,” Koichi Kondo, president of American Honda Motor Co., said during Wednesday’s announcement in Greensburg.

Four other states — Ohio, Michigan, Wisconsin and Illinois — vied for the plant and its 2,000 jobs after Honda announced in May it would build a plant in the Midwest.

But Indiana, which has lost 98,000 industrial jobs since 2000, persuaded the company to build on 1,700 acres west of Greensburg, midway between Indianapolis and Cincinnati on Interstate 74.

Gov. Mitch Daniels, who returned to Indiana early after an 11-day trade trip to Asia, welcomed Honda officials.

“Honda is going to feel right at home in Indiana, and you are going to love Greensburg and this part of our state,” Daniels said.

Indiana offered $141.5 million in incentives to the company, which included tax credits and abatements, training assistance and a promise to expedite the long-sought interchange upgrade at U.S. 421 onto I-74, state officials said.

Many analysts had believed Ohio had the edge for the new plant because of its existing Honda facilities. Honda turns out 680,000 vehicles a year at two Ohio plants. It also has an engine plant and transmissions plant there, as well as 150 supplier locations — nearly four times as many as Indiana.

Ultimately, that might have worked against Ohio, Gov. Bob Taft said Wednesday.

“The large number of Honda suppliers and plants that already exist in Ohio may have resulted in our being victims of our own success,” he said.

The company also has one plant each in Alabama, Canada and Mexico.

Indiana welcomed the factory, saying its jobs will help boost the state’s economy.

“The Indiana comeback is under way,” Daniels said.

Though Honda expects to hire 2,000 workers, the number could end up being far more, said John Sullivan, director of Purdue University’s Center for Advanced Manufacturing. Toyota initially said it would hire 1,300 people at its Princeton plant when it broke ground 10 years ago, he said.

Today, it has about 4,700 workers.

An operation like a Honda plant typically generates jobs at supplier plants, which will be located within 500 miles — close enough for just-in-time deliveries of parts, Sullivan said.

Retailers and restaurants will also benefit from the working spending their earnings, Sullivan said.

“I think that that part of Indiana is in need of high-paying jobs, and I think you’ll see quite a transformation,” he said.

Christy Kinker, who owns Christy’s Cakes and Confections in Greensburg, hopes Sullivan is right. She displayed a hand-drawn sign in the window that read, “Welcome Honda.”

“We’re just excited about the business,” the 30-year-old Decatur County native said Wednesday. “We hope it will help the small mom and pop businesses and bring more money to the area.”

Honda’s Kondo was enthusiastic about the company’s first Indiana plant and noted that all drivers in this year’s Indianapolis 500 used Honda engines.

“I’d like to point out that there was not one engine failure in the race,” he said. “With the racing spirit in mind, today I am happy to be able to say, ’Honda and Indiana, start your engines.”’

Construction will begin in the fall and be completed in 2008. Kondo declined to say which vehicles would be produced, although the cars would be four-cylinder models. The Anna, Ohio, plant, about 100 miles away, will provide the engines.

Honda and its larger rival, Toyota Motor Corp., have been rapidly expanding their North American manufacturing capacity to keep up with demand even as U.S. automakers General Motors Corp. and Ford Motor Co. are cutting thousands of jobs and closing plants as their market share declines.

Honda already has options on land near Greensburg, a community of 10,500 people 50 miles southeast of Indianapolis. Planning officials were to meet Wednesday to discuss rezoning the area for the plant.