Opening operations in the United States “was not the expected or typical decision at the time,” said Rick Schostek, senior vice president of Honda North America. “We did not set out to be a net exporter. What we did set out to do was become self-reliant in North America.”
President Obama’s State of the Union address on Tuesday focused on his economic agenda for the coming year. One piece of that — trade agreements under negotiation with Asia-Pacific nations and Europe — faces a tough battle on Capitol Hill amid broad skepticism over whether past trade agreements have helped the middle class.
A coalition of labor, environmental and other groups from the heart of Obama’s Democratic base sent the president a letter Monday opposing the Trans-Pacific Partnership (TPP). On Tuesday, conservative Republicans restated their opposition to legislation that would let Obama move any future pact quickly through Congress.
Opponents of the Pacific pact are focusing heavily on Japan’s involvement, particularly on the tense history between the two countries when it comes to automobiles and the controversial policies that Toyko has used to lower the value of its currency. Although Japan has been under intense international pressure not to intervene in its currency markets — it last did so in 2011, to strong U.S. criticism — members of Congress, major manufacturing and labor groups, and others are pushing for rules in any trade deal that would limit its ability to do so.
That demand has posed a problem for the administration: A trade agreement with such a rule might not pass muster with the other countries involved in the talks; one without it might not clear Congress.
In that context, any data that put U.S.-Japanese trade relations in a different light are welcome news to supporters of the agreement.
Schostek said he expected Honda’s exports to actually grow faster than its U.S. domestic sales in coming years, giving the company’s North American operations a vested interest in U.S. trade policy and efforts to open markets abroad. Like most major auto companies, Honda followed the produce-where-you-sell model in its decision to invest in U.S. manufacturing capacity, just as companies such as General Motors have invested heavily in places such as China.
In 2013, Honda’s 10 U.S. plants produced more than 1.3 million cars — a record — and almost all of them were sold in the United States. But according to the company, 108,705 of those vehicles were exported, mostly to countries in Central and South America, the Middle East and Russia. For the first time, that export figure eclipsed the number of cars — 88,537 — Honda imported here from Japan.
The figures do not include vehicles imported from or exported to Canada and Mexico, numbers that could change the overall outcome.
With the administration intent on increasing U.S. exports, Honda’s success in using the country as an export base could bolster the argument that open markets and open borders can boost U.S. employment. Honda employs about 28,000 people in the United States.
The export news, however, is not the whole story, said Stephen Biegun, vice president for government affairs for Ford Motor, one of the chief proponents of tough currency rules in the TPP.
Ford posted strong profits as well on Tuesday, and Biegun said the fact that Honda’s U.S. operations had a good year says nothing about why Japan itself imports so few autos from this country — just a few thousand a year.
The reason for that is disputed. Japanese officials say, for example, that American cars are too big for local tastes, while companies such as Ford argue that local regulations, the price advantage of a lowered currency over the years and other factors have helped keep American autos out of Japan.
The U.S. firms want those issues addressed in any trade agreement that includes Japan. The potential for nations such as Korea and China to join the pact in the future has made that argument all the more intense.
“All global manufacturers export here, manufacture here and export from here,” Biegun said. “That is what a normal market looks like.”