The Honda Vote
Don't fret about 'offshoring' in Anna, where foreigners are bringing good jobs
ANNA, OHIO--Most of the 1.2 million engines produced each year at the sprawling Honda factory here go into Hondas: the Accord, the Civic, the Odyssey minivan. But last year the Japanese automaker got a new marquee customer for its Ohio power plants: General Motors. The world's biggest automaker tapped Honda to provide 50,000 high-output V-6 engines for the new Red Line version of the Saturn Vue SUV--a 250-horsepower V-6 that's similar to the one in the top-tier Accord.
The "offshoring" of U.S. jobs is a familiar story by now, especially in the auto industry, as GM, Ford, Chrysler, and their myriad suppliers have sought cheap labor in Mexico, China, and other locales. But while the Big Three have been shipping work overseas, foreign-based carmakers have become more Americanized than ever--and found ways to reap the biggest profits in the industry while still paying high wages to U.S. workers.
Asian and European auto companies and their suppliers now employ 216,000 Americans in manufacturing jobs, nearly one fourth of the industry total. The same companies have also been eagerly hiring well-paid American engineers and technical specialists, especially as they try to sell more profitable SUV s and pickup trucks--uniquely American products. Honda's new role as a supplier to GM further blurs the distinction between foreign and domestic brands. The once tiny footprint of foreign-based carmakers "is much more than tokenism," says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "It's strategic planning."
Yet the domestication of foreign automakers remains obscured by the furor over outsourcing. In April, when Democratic presidential candidate John Kerry was discussing hybrid-electric cars like the Toyota Prius and the Honda Civic hybrid, he quipped, "I don't want Toyota and Honda to be the seller of these cars" --evidently unaware that Honda is one of Ohio's biggest employers. The Japan-baiting was meant to appeal to domestic unionized auto workers. But in central and western Ohio, where about 16,000 nonunion Honda workers live, the comment may have backfired. "I heard from multiple people complaining," says Eric Phillips, head of economic development for Union County, where Honda's Ohio operations are headquartered. "It was not taken very well in this area."
One reason the role of foreign automakers is not center stage is that their arrival was largely a ploy to avert trade restrictions. In the early 1980s, as Japanese brands gained a toehold in the U.S. market, Honda, Toyota, and other importers agreed to assemble some cars in the United States in lieu of tariffs or other penalties. The initial impact was minimal. When Honda opened its first U.S. car factory in 1982--an Accord plant in Marysville, Ohio--engines and most other major components were shipped from Japan.
But as auto production has become more sophisticated, business strategy--rather than trade politics--has dictated a larger presence in the world's most profitable market. In the '80s and early '90s, Honda executives in Japan decided that providing local jobs and contributing to the community were essential to building brand image in the United States. Cheap land and energy offered advantages unavailable in Japan. Building cars in dollars instead of yen would help reduce foreign-exchange risk. It is now less expensive to build an Accord here than to ship it from Japan.
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