Honda Hires as Big Three Crash

As Big Three automakers beg for cash, Honda expands with new factory in Indiana.

ByChris Bury
November 19, 2008, 6:24 PM

Nov. 20, 2008— -- Detroit may be in the doldrums, but Greensburg, Ind., is celebrating its shiny new auto plant.

Honda Motor Co. opened a new factory in the town of 12,000 in October, bringing jobs and hope.

Honda CEO Takeo Fukui flew in from Tokyo for the plant's dedication ceremony Monday, eager to take advantage of the trouble American automakers are in.

"At Honda, we always understand that challenging times ... represent opportunity," Fukui said.

Honda's new plant in Greensburg represents the "other" American auto industry -- the U.S. plants owned by foreign carmakers. Unlike the American "big three" automakers -- GM, Ford and Chrysler -- the foreign-owned companies are not looking for bailouts. Instead, they are expanding to places like Greensburg.

"This is an American-made automobile. Hoosiers make it," said Adam Huening, news editor of the Greensburg Daily News.

More than 900 nonunion employees were hired to work in the plant and expect to turn out 200,000 Honda Civics per year, including some powered by natural gas. The plant, which costs $550 million, will likely grow to employ 2,000 workers.

Unlike the American big three, Japanese automakers are not saddled with enormous costs for retirees. Their younger, mostly nonunion American workers get paid far less.

At Honda, workers receive about $44 an hour, including benefits, while GM employees receive $73.

Despite the difference, workers still raced to apply for openings at the Honda plant. And unlike Detroit, which has seen demand drop for gas-guzzling SUVs, foreign automakers anticipate growing demand for more fuel-efficient cars.

"The Japanese have a much more competitive lineup of small cars," said John Casesa, an automotive analyst. "They're more famous for their small cars. Customers think of them first, and these companies still lead the world in quality, in technology, fuel economy and reliability."

In addition, Honda and other foreign makers have planned well in advance to accommodate a shift in consumer taste.

"Great companies continuously restructure to change with the times and to anticipate the future," Casesa said. "There isn't time for these [American] companies to turn themselves around [if] they only have two or three months of cash left."

The lessons are not lost on American automakers.

Ford is selling its half-billion-dollar stake in Mazda, and GM is cutting back on everything from the millions it spends on sports sponsorships to office supplies.

The American companies, too, are now building hybrids and scaling back on pay and benefits.

But some critics have said that to survive, American factories and work forces may need to be restructured to compete with the Japanese model.

At the Honda plant, one worker suggested that unlike Detroit, Honda and other foreign competitors are building fuel-efficient cars that people need today. The Civic is one of the top-selling cars in the United States.

In places like San Antonio, Georgetown, Ky., and West Point, Ga., 15 foreign-owned assembly plants and dozens of supporting factories have been built in the United States. Most of them are in southern states without auto union traditions, and like Indiana's new Honda plant, they are designed for flexibility.

"Asian automakers have a famously flexible and efficient production system," Casesa said. "They have very few job classifications in the plant, so they can employ fewer people to make the same number of cars that Detroit makes.

"They can move people from station to station and job to job," he said. "And they've also designed their assembly lines to build multiple products on the same line."

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