BY JAMES HANNAH
The Associated Press
Sunday, May 21, 2006; 1:58 PM
-- One state has a long history with Honda Motor Co. The other, a more favorable tax structure. Both have quality work forces and good transportation systems.
As Ohio and Indiana officials seek to persuade the Japanese automaker to put its sixth North American auto plant in their state, experts say it could be a tossup as to who has the advantage.
"It's a tough call," said David Cole, president of the Center for Automotive Research in Ann Arbor, Mich.
Eager to ramp up production in the part of the world that produces half of its growing profit, Honda Motor Co. said Wednesday that it will build a $400 million plant in the Midwest as part of a $1.18 billion global expansion. It did not say which states are being considered.
Officials from both Ohio and Indiana say they are in the running for the plant, which will be built by 2008, employ 1,500 workers and produce 200,000 vehicles a year.
Honda says it is in the final stages of securing a site in the Midwest, but won't identify the location of potential sites or what will be built at the plant.
The new plant would boost North American production capacity from 1.4 million to 1.6 million vehicles a year for a company whose profit more than doubled to a record $1.9 billion in the first quarter.
Cole said Honda wants a site with easy access to major highways, rail lines and utilities. And he said the automaker looks for large tracts of land so there is plenty of buffer area around the plant.
Engines for the plant will be supplied by Honda's engine plant in the western Ohio village of Anna. The engine plant will be expanded as part of Honda's initiative.
"I believe Ohio has the advantage," said James Rubenstein, professor of geography at Miami University who has written several books on the auto industry. "Honda's corporate behavior is to assemble vehicles very close to where the engines are."
Indiana Gov. Mitch Daniels says his state has been negotiating with Honda over sites in southeast Indiana between Indianapolis and Cincinnati, about 100 miles from the Anna engine plant. Ohio Lt. Gov. Bruce Johnson would not identify potential sites in Ohio. Neither governor would detail any incentives their states were offering the automaker.
Honda employs 16,000 workers in Ohio, where it has been operating since 1979. It turns out 680,000 units a year, the most of any Ohio automaker, which also includes General Motors Corp., Ford and Daimler-Chrysler.
Honda builds Accords and Acuras in Marysville near Columbus and Civics and Elements at a factory in East Liberty. Besides the engine plant in Anna, Honda makes transmissions in nearby Russells Point. The operations are all within 45 miles of each other.
Rubenstein said Honda may be hesitant to locate the new plant in Indiana because Toyota and Subaru already have a presence there.
"There has been a longstanding reluctance on the part of Japanese carmakers _ at least in the Midwest and upper South _ to compete with each other for the incentives and subsidies they are going to need," he said.
In Indiana, Toyota and Subaru employ 7,000 workers and account for 62 percent of the vehicles manufactured in the state. Toyota has 4,700 employees at its two assembly plants near Evansville, while Subaru employs 2,300 workers at its factory in Lafayette. The work force there will increase to 3,300 next spring when the Subaru plant begins producing Camrys for Toyota.In addition, GM produces trucks in Fort Wayne, and AM General turns out the Hummer in Mishawaka in northern Indiana.
"Indiana has a long tradition in manufacturing and a skilled work force to bring to Honda," said John Sullivan, director of Purdue University's Center for Advanced Manufacturing.
Sullivan said Honda's decision may come down to the financial incentives offered by the two states.
"With the current (Indiana) administration, these sorts of things are a very big priority," he said. "I think they will be very aggressive."
Associated Press writer Ashley M. Heher in Indianapolis contributed to this report.