States already competing for Honda's proposed sixth U.S. auto plant have an added incentive to pursue a deal with the expanding carmaker after Honda's CEO said on Tuesday that the new plant will start small but leave room for growth.
The statement comes a week after Honda Motor Co. Ltd. announced that as part of its North American expansion it would invest $400 million to build a new plant by 2008.
The new facility would employ 1,500 people at full capacity to make 200,000 cars. Reports indicate that the company is looking for at least 1,000 acres of land.
Our policy is always to start small and grow bigger, because we don't want to be in a situation where we are producing more than we can sell. In that sense 200,000 vehicles is small, Honda Chief Executive Takeo Fukui said in an interview with Reuters.
Fukui said that additonal revenue and growth will not depend on the expectation of more U.S. or global demand but on the current strong sales of Civic sedans and Fit subcompact cars. The new plant would boost Honda's U.S. production of autos to 1.6 million.
Honda did not say last week where the new plant would be located but it has been working with state government officials for the past year about expansion.
Since the announcement last Tuesday, a trio of neighboring midwestern states vying for the new plant have publicized their plans to lure Honda. Indiana and Ohio have emerged as frontrunners, with Michigan considered a distant third.
Ohio is hoping that Honda, which inquired into Lt. Gov. Bruce Johnson's office about the matter several months ago, will want to expand its presence in the state. Honda already manufactures cars, engines and trasmissions at four locations within 45 miles of each other near Columbus.
On Monday, Ohio Gov. Bob Taft identified two possible locations it is presenting to try to persuade Honda. Both are within 45 miles of the current operations.
In Indiana, Gov. Mitch Daniels said last week after the Honda announcement that the state has been discussing locations for the plant with the carmaker for the past year, acknowledging the out of state competition.
The governor said that one of the state's proposals for development of land could take place along Interstate 74 - which would put the plant near the Indiana/Ohio border - within 100 miles of the existing Honda locations.
Meanwhile in Michigan, the Columbus Dispatch reported Tuesday that state officials already visiting Japan for unrelated trade issues last Friday met with Honda to present their plan, which included two undisclosed locations.
An analyst interviewed for the story said that Michigan may not be the best fit for the new plant since any location within the state could be too far away from the existing auto-part suppliers that Honda relies on for manufacturing in Ohio.