A World Class Industry: Honda in Alabama and the Rise of the Foreign-Owned Auto Sector

On 25 April 2000, top officials of Honda Motor Company broke ground on their plant in Lincoln, Alabama, located 40 miles east of Birmingham. Honda Manufacturing of Alabama (HMA) was designed to employ 1,500 workers and produce 120,000 vehicles a year, although these targets were soon surpassed. By 2019, the plant employed over 4,500 people and built around 350,000 vehicles a year, making it one of the biggest foreign-owned auto assembly plants in the US. Experiencing continuous growth, HMA became, in the words of vice president Mike Oatridge, one of Honda’s ‘most important plants’. Alabama, a state long maligned for its poverty and history of racial injustice, had succeeded in attracting what one official termed a ‘world class industry’. ¹

The Honda plant is also significant because it is part of the foreign-owned – or ‘transplant' – automotive sector. ² For over four decades, this sector has grown steadily, at a time when the domestic manufacturers – Ford, General Motors, and Chrysler – have cut workers. Long dubbed the ‘Big Three', they also became known as the ‘Detroit Three’. ³ In October 1977, Honda forged the way by locating a plant in Marysville, Ohio. Although the facility initially made motorcycles, Honda soon announced plans for car production, and Marysville became the first successful automotive transplant. ⁴ In 1980, Nissan located a major plant in Smyrna, Tennessee, while in 1985 Toyota established an US$800 million factory in Georgetown, Kentucky. From there, other Japanese, German and Korean automakers followed suit. By 2012, foreign auto manufacturers and suppliers employed 323,000 workers in the US, most of them in the South, where production costs were lower. Six years later, Automotive News – a respected industry publication – reported that 49 per cent of the vehicles made in North America were produced in foreign-owned plants, which were on track to monopolise the market. ⁵

The rise of this major industry deserves close examination, but – perhaps due to its contemporary nature – it has not received it. Most scholars have focused on the Big Three, whose northern plants have a longer history, especially as sites in the climatic labor struggles of the 1930s and 1940s. ⁶ Other works explore the 1950s and beyond. This period is pictured as the industry’s ‘heyday’, although studies also reveal discontent among workers. This led to related research on the domestic industry’s decline, which started in the 1970s. These works document the devastating psychological and economic consequences of job loss, especially in Michigan, the industry’s base. Overall, the American car industry remains indelibly associated with the domestic firms – all of them Detroit-based – rather than with the country’s ‘other' automakers. ⁷

Work on the transplants is emerging. In the 1990s, social scientists contributed management-driven studies looking at Japanese production practices and how they were transferred to other locations. At the same time, reporters sketched the foreign-owned industry’s rise. ⁸ Book-length works on the industry, however, were rare. A concise overview was provided by Robert Perrucci’s, Japanese Auto Transplants in the Heartland (1994), but it only explored Japanese factories in the 1980s. In a similar vein, Michele Hoyman’s compact Power Steering (1997) examined early transplants. In 2016, a book on the sector by sociologist A. J. Jacobs was more detailed, but it again overlooked HMA. Aimed largely at policy makers, The New Domestic Automakers contained valuable industry data but little material on human agency, especially why companies chose certain locations and how local communities reacted. By looking at these questions – and uncovering the human story behind them – this article makes a fresh contribution. ⁹

The industry’s rise in Alabama – which came after the initial wave of growth – has been particularly overlooked, partly because images of the state have been slow to shift. As a pathbreaking article by three economists has observed, there is a ‘surprising dearth' of scholarly literature on Alabama’s carmakers, which have become a ‘pillar' of the state’s economy. In 2015, over one million vehicles were built in Alabama, making the state the fifth largest producer of cars and light trucks in the US, as well as the fourth biggest exporter. Automobiles were Alabama’s top export, accounting for around one-third of the total. Two decades earlier, however, Alabama had never built a vehicle. A remarkable transformation, HMA was at its heart. ¹⁰

The plant deserves more attention. At the time, Honda’s arrival in Alabama attracted national and international attention. For London’s Financial Times, which dispatched a reporter to Alabama, the factory epitomized how the South was ‘slowly transforming itself from an agricultural economy to a more sophisticated, industrial one’. Corporate Location and HR Magazine – both British publications – also investigated Honda’s arrival, as did northern US newspapers such as the Detroit Free Press and the Columbus (OH) Dispatch. Since this initial interest, however, the plant has dropped off the media – and scholarly – radar. ¹¹

Some inside observers noticed the plant’s innovation, pointing out that HMA had a number of features that made its story significant and distinctive, especially compared to other foreign-owned plants. As Automotive News outlined, HMA was ‘radically new’, especially as engines and vehicles were produced together, rather than in separate factories, the industry norm. HMA’s ability to switch models was also pacesetting. Unlike most auto factories, it produced a wide range of models, including the Odyssey minivan, the Pilot Sport Utility Vehicle (SUV), the Accord sedan, the Ridgeline pickup, and the Acura MDX, a luxury SUV. Few other transplants made luxury vehicles, which were built to a higher standard, in the US. The plant would also use more domestic content than other transplants and be led by more American managers than other Honda plants, particularly Marysville. Overall, the News thought that the factory represented a ‘new chapter' in the history of the US auto industry. ¹²

Given the scale of Honda’s plans – and the company’s record of growth in the US – HMA had tremendous economic and symbolic value. ‘A successful automobile assembly plant is one of the most potent sources of economic growth available to a community,' summarized a Honda site consultant. For economic developers, auto plants were the holy grail, prizes that defined their careers. ‘The car industry has always been an interesting industry group that economic developers in Alabama, in the South, always wanted,' summarized local business recruiter Dara Longgrear. ‘It was quite clear that no industry has the spinoff effect that automotive has.’ Studies showed that auto assembly plants generated nine jobs, the highest ratio of any industry. The prospect of a new facility led to high-level political intervention, especially when a company as large and successful as Honda was involved. When the plant was announced, it produced a ‘media frenzy’, attracting many outside observers. ¹³

The Honda story is also significant because it reveals much about the impact of globalization at the local level. While contentious, globalization is – as Andrew McKevitt has noted recently – a ‘ubiquitous buzzword' that has influenced a huge amount of scholarship. ¹⁴ Honda’s story complicates broader assumptions about globalization, which respected economist Jagdish Bhagwati has called a ‘defining issue' of our times. As Bhagwati has outlined, within the field of globalization studies the phenomenon has attracted polarizing reactions. Bhagwati is a prominent defender, asserting that globalization has produced economic growth and helped poorer nations. Others argue that it has proceeded too fast, undermining local rights, feeding mounting social inequality, and damaging the environment. Most of this literature, however, focuses on the underdeveloped world, and begins with the assumption that capital moves from the rich world to the poor to exploit workers there. Honda’s story – and that of the other foreign automakers – demonstrates another important aspect of globalization. In this case globalization entailed the shifting of capital and production from a wealthy country to a poor area of the wealthiest country, with complex consequences that highlight the messiness of any positive-negative dichotomy. As such, this study builds on the conceptual analysis of social scientists such as Arjun Appadurai and Ilf Hannerz but adds a fresh – and much-needed – empirical case study that is informed by human agency. This story also complements recent historical work that has shown how the rest of the world has influenced US history. ¹⁵

The first scholarly examination of the Honda story in Alabama, this article addresses two questions – why did the company locate in the state, and what impact did it have on it? Most observers have seen Honda’s move as a reflection of a US$158 million incentive package. The state, charged labor economist Sean McAlinden when HMA was announced, had acted to ‘buy' foreign automakers. This interpretation was heavily influenced by the costly subsidies – valued at between US$300 and US$439 million – used to entice Mercedes-Benz to Vance, Alabama, in 1993. Vance was Mercedes’ first North American plant, and few had expected the company to pick Alabama. The move influenced perceptions of the state’s auto industry. According to Automotive News, the industry’s growth in the Crimson State reflected ‘aggressive state incentives and image marketing'. Alabama, added another prominent observer, had lured foreign automakers with ‘huge subsidies'. More than two decades later, this view remained dominant. Such a poor state, it was assumed, could not have lured foreign automakers any other way – and had few natural advantages. ¹⁶

This article draws on new sources, including archival collections and interviews with key participants, to challenge this argument. It is rare for industry executives to talk about this topic – especially on-the-record – making the insights gathered here unique. ¹⁷ Transplant companies also required employees to sign non-disclosure agreements not to talk to the media or academics, making it difficult to penetrate the wall of silence surrounding the industry. Using the new sources gathered here, I argue that rather than incentives, Honda’s move reflected other factors, including the location of the site, the availability of a willing and trainable industrial workforce, and the personal intervention of Governor Siegelman, a unique – and somewhat tragic – figure who ended up being evicted from office on politically-charged corruption allegations pushed by his Republican adversaries. Union avoidance – rarely mentioned in writing – was also very important. As a key insider concluded, incentives were no more than a ‘secondary factor', outweighed by other influences. ¹⁸

The roots of the plant went back further than Honda’s announcement in May 1999, which media accounts focused on. ¹⁹ In the long term, the factory was a reflection of the automaker’s growth in North America. In 1970 Honda Motor Company – which was founded two decades earlier by engineer Soichiro Honda – began selling cars in the US. Helped by high fuel prices, Honda’s sales rose from 9,509 units in 1971 to 353,291 in 1979. The company became the fastest-growing automaker in the US, making North American production viable. Marysville began making Accord sedans in November 1982. Assembly plants in East Liberty, Ohio, and Alliston, Ontario followed, along with an engine plant in Anna, Ohio. The company also manufactured engines and all-terrain vehicles in North Carolina and South Carolina, providing important southern precedents for HMA. ²⁰

As sales surged, demand for another US plant grew. By 1997, Honda was selling more cars in North America than it could make. Further expansion in Ohio – where three factories employed 13,000 people – was constrained by a shortage of workers. By this time, Honda noted that the Odyssey minivan, which had been launched in 1998, was ‘flying out of dealerships'. The company could retail twice the number of Odysseys that Alliston could build, and demand for SUVs was also growing. Managers acknowledged the need for a new North American plant, especially after Honda sold more than one million vehicles in the US in 1998, a record. ‘Increasingly, we have been unable to satisfy all of our prospective customers due to such overwhelming demand,' admitted vice-president Thomas Elliott. ²¹

Honda formed a secret team to search for a plant site, specifically to build the light trucks that would define HMA and make it so different from the company’s operations in Ohio. Comprised of three American executives – there would be much less Japanese involvement than in Marysville – the group liaised with consultants. Codenamed BigSite, the team initially considered 26 US sites, most of them east of the Mississippi river (within one day’s delivery by road of the majority of US consumers). While details of the states involved were confidential, vice-president Bob Schwyn admitted that there was ‘big competition' to land the plant. Along with Alabama, Georgia and Illinois were strong contenders. ²²

Although the press did not report on the search until April 1999, new records show that it began earlier. According to Porter, White, and Company, the Birmingham consultants hired to find a site, the story began 16 months before. At that time, American Honda engaged industry consultant Harry A. Henshaw to locate a North American site. Henshaw asked Porter and White to ‘assist' in the process. According to private documents, Honda’s ‘location criteria' included ‘labor force characteristics', along with proximity to transportation, universities, and ‘cultural amenities'. It was also important to have a large site, and to avoid extreme weather and seismic activity. Following ‘extensive analysis and many site inspections', the list was narrowed to four locations, each in a different state. ²³

Alabama satisfied Honda’s criteria well – and for non-financial reasons. The state offered several locations, including a 2,000-acre site in St. Clair county. It provided plenty of space but was further from the Interstate. In contrast, the Lincoln site was very close to Interstate 20, which connected Atlanta and Birmingham, and had easy access to Interstate 65. It was also positioned on the Norfolk Southern rail line, linking Washington DC to New Orleans. During the selection process, Norfolk Southern provided Honda with comprehensive site information and engineering plans. ²⁴

In interviews, Honda managers stressed the importance of infrastructure and site factors. Honda ‘primarily' wanted access to the Interstate system, recalled HMA communications manager Ted Pratt, along with ‘abundant natural resources'. The Lincoln site was near large electric and natural gas lines, while Logan Martin Lake provided an ample supply of water. Excellent freight access was also crucial. ‘Logistically for us to be able to ship cars onto that rail line was a good site,' explained Schwyn. ²⁵

Other reasons drew Honda to Lincoln. Managers liked that the city offered a 1,350-acre site. As Steve Sewell of the Economic Development Partnership of Alabama (EDPA) recalled, land was ‘a huge factor' in this deal. In a competitive and fast-changing industry, a big site allowed Honda to grow, switch models, and build engines as well as cars. According to American Honda, the company also chose Lincoln because of its ‘excellent' transportation links, along with an ‘outstanding community of people' and the ‘necessary infrastructure to support industry'. The North American management team – especially those from Ontario or Ohio – liked the area’s warm climate, which also had logistical advantages. As Honda stored few parts on-site, it relied on deliveries from suppliers – most of them US-based – and could not afford snow-related delays. ‘We are two hours away from disaster, at any time,' admitted Pratt. ²⁶

Along with the site, having sufficient and qualified labor was also more crucial than was reported. ‘Incentives, it’s not going to make the deal, or not make the deal,' summarized Billy Joe Camp, the former director of the Alabama Development Office. ‘You’ve got to have a site, a workable site … and your people have to be trained.' Illustrating the point, Honda liked the Lincoln area because plenty of suitable labor was at hand, particularly industrial workers. This was a big point of difference from Honda’s plants in central Ohio, where it had been attracted by an agrarian workforce. In Marysville, the company even specified that it wanted ‘land only' and preferred the ‘southern half of Ohio', rejecting efforts to steer it to an industrial site in Cleveland. In Alabama, the situation was quite different, reflecting the greater involvement of American managers in staffing the plant. Early in 1999, Goodyear Tire and Rubber Company – one of the area’s biggest employers – said it would close most of its Gadsden operations, eliminating 1,320 jobs. ‘With an aging Goodyear plant shutting down at Gadsden, Honda officials won’t have to look far for workers at the new auto plant it is expected to build in Talladega County,' explained the Gadsden Times. In nearby Anniston, Fort McClellan was also scheduled to shut. As a result of these closures, the Lincoln area lost about 3,000 jobs. Birmingham’s history as an iron and steel making center was another bonus, providing more displaced industrial workers. HMA knew it was in a strong position. ²⁷

Alabama was more industrial than many observers realized, and its textile heritage was also attractive to Honda. At its peak in the 1930s and 1940s, the textile industry provided one third of manufacturing jobs in Alabama, with most mills concentrated in the area around Huntsville, Gadsden, and Decatur. Starting in the 1970s, however, imports and automation caused job losses. In the decade after the passage of the 1993 North American Free Trade Agreement (NAFTA), employment in the southern textile industry halved, with around 400,000 jobs being lost. By the time that Honda looked at the area, northern Alabama was home to thousands of unemployed textile workers. ‘We had had a meltdown of the state’s textile industry because of NAFTA,' explained State Finance Director Henry Mabry. ‘We needed a replacement industry.' ²⁸

Displaced textile workers suited Honda. Textile jobs paid poorly, and workers were used to industrial discipline. Largely due to corporate resistance, organized labor had also failed to take hold in the industry. Local people were ‘used to working hard', summarized Honda worker Renee Simmons. ‘That’s a normal way of life for us, and we appreciate what we’ve got. We pay attention to rules and do what we’re told.' Interviews confirmed that the area’s millworkers were an important attraction for Honda. ‘The textile industry was imploding,' recalled Ted Pratt, ‘and there were a lot of people out of work, and they were able to move. As that textile plant closed, they were able to walk right into Honda.' New HR manager Linda Bailey even came from Russell Corporation in Alexander City, a former textile giant. Bailey and Pratt were proud that HMA gave jobs to many former textile workers. ²⁹

The lack of unions in Alabama was also important. In 1999, just 9.7 per cent of Alabama’s workers belonged to unions, compared to 21.6 per cent in Michigan and 13.9 per cent nationally. A right-to-work law (which banned compulsory union membership in any workplace) had been in place since 1953. While the coal, iron, and steel industries had once had a significant union presence in the state, by the 1990s these industries were in sharp decline. Alabama’s leaders, particularly the ascendant Republicans, were also hostile to organized labor. ³⁰

For Honda, these considerations mattered. The company had faced union organizing efforts in Ohio, which did not have a right-to-work law. The United Automobile Workers had called an election in 1985, and had also filed unfair labor practice charges and threatened a boycott of Honda products. While the election was abandoned, Honda disliked the UAW’s attention, and the presence of unionized Big Three plants in the state also piqued executives – and kept wages up. ³¹ This history influenced the move to Alabama, where the situation was very different. Looking at the state, executives admitted that they liked its ‘favorable atmosphere' and ‘good workforce', euphemisms for non-unionism. In Georgia, officials even charged that the proximity of unionized Ford and GM factories in Atlanta had deterred Honda. Downplaying this, Honda spokeperson Jeffrey Smith insisted that the union issue was ‘not really a factor' in the firm’s decision. ³²

There was more to the situation, however. According to a detailed account in Corporate Location, Honda executives covertly researched ‘recruitment issues and levels of unionisation' at different sites. The company’s unique ‘just in time' production system made it vital to avoid labor disputes, and managers also worried that union work rules would hurt operations. In Alabama, officials knew that the issue mattered to Honda. At the site, noted Department of Transportation director Mack Roberts, ‘there were no labor unions to be involved, and I think this went a long way'. Local leaders were also very accommodating. ‘The labor-force here has never been as attracted to collective bargaining and union type activities that you might find in other cities,' explained Talladega attorney Clark Carpenter, adding that this ‘impressed' Honda. ³³

In retrospect, company officials and the governor also acknowledged that union avoidance was important. ‘It’s Honda’s philosophy … we don’t believe a union is needed, because we believe in direct communication with our associates,' noted Ted Pratt. Alabama was thus attractive because it ‘didn’t have a whole lot of UAW workers'. Union avoidance, added Governor Siegelman, was not just an operating philosophy for Honda – it explained its decision to locate in Alabama. ‘They were very consistent, they said: ‘We are not opposed to unions but we’re not looking, we’re not going to make it easy.’ It was important to them to have people who wanted a job, and they would come to work, and wouldn’t complain about it once they’d got a good job.' Although he was a Democrat, Siegelman helped Honda by refusing UAW demands to reserve jobs for its members. Some state officials went further, stressing union avoidance in negotiations with Honda. ‘We used that as a strength of the state, that we were an employment at will state, that we were a Right to Work state,' admitted Mabry. ³⁴

Written sources illuminated these recollections. According to the papers of site consultants, one of Honda’s main criteria was ‘Labor Requirements', including ‘union/non-union issues'. The firm prepared a profile of an ‘ideal' work force for their client, and the Lincoln area fit the bill. ³⁵ In 2002, a detailed article on the plant in HR Magazine also quoted Honda officials who admitted that they liked ‘the low profile of labor unions' in the Lincoln area. Some northern newspapers uncovered similar evidence. The Columbus (OH) Dispatch, for example, reported that Honda liked the ‘non-union climate' in Talladega County. The absence of unionized car plants also gave Alabama an advantage over its competitors, particularly northern states. According to industry sources, Illinois was closely considered but lost out because Honda did not want to be near other car plants. The Prairie State was home to three unionized car plants, showing that it was the presence of the UAW, rather than auto plants per se, that dissuaded Honda. Confirming this, Alabama was home to Mercedes-Benz’s factory yet Honda still chose Lincoln. In the spring of 1999, an organizing campaign at Mercedes petered out, something that state officials sold to Honda. ³⁶

Personal contact also helped to secure HMA. Although it had landed Mercedes in 1993, Alabama had to work to get another car plant. Competition for any new facility was intense, and Alabama was still, as the Financial Times observed, often viewed by outsiders as ‘a place of poverty and seething racial tension'. For many, the Birmingham area was indelibly associated with the city’s violent response to civil rights protests in 1963 – inadvertently helping to pass the landmark 1964 Civil Rights Act – rather than with global industry. This was a city – and state – that looked in, not out. ³⁷ Many felt that the state had only lured Mercedes because of the massive subsidies authorized by Governor Jim Folsom, Jr, a deal that was widely-criticized, especially by outsiders. ‘O Governor, Won’t You Buy Me a Mercedes Plant?' ran a mocking headline in the New York Times, summing up the prevailing narrative. Siegelman, however, was able to attract Honda – and more jobs – with a smaller financial outlay. His role – and differences between Mercedes and Honda that reporters missed – explained the outcome. ³⁸

A Democrat who won a landslide over Republican Fob James, Jr in 1998, Siegelman took a keen interest in industrial recruitment. Even as governor-elect, Siegelman sent Honda a welcome message and met with company executives. The project, he explained, was ‘probably larger than anything that has happened in my lifetime'. The economic impact promised to be greater than Mercedes, partly because Honda carried out more work in-house than its German competitor, using more domestic content. For Siegelman, Honda was also a priority because it would reduce Alabama’s dependence on low-wage jobs, a central policy goal. As a result, the governor wanted to ‘do everything humanly possible, and politically possible' to make Honda choose Alabama. ³⁹

To land the deal, Siegelman made some important changes. He overhauled the Alabama Development Office – the key state economic recruitment agency – appointing investment banker Kenneth C. Funderburk as Director. Funderburk, who forged partnerships with business groups, reported that they felt ‘more confident' about state programs. The governor also met with private sector organizations, particularly the EDPA and the Birmingham-based Metropolitan Development Board, both of whom were secretly recruiting Honda. Educated at Georgetown and Oxford universities, the outgoing and urbane Siegelman was no Alabama stereotype, and was well-placed to attract international investment. He traveled regularly to Japan, where the state had an economic development office, forging personal bonds with Honda’s executives. In warm correspondence, Siegelman described his relationship with the company’s leaders, especially CEO Hiroyuki Yoshino, as a ‘friendship' that would ‘last forever'. ⁴⁰

Looking back on the recruitment of Honda, Siegelman stressed that personal bonds were vital. ‘I did a lot of travelling, and it made a big difference,' he recalled. ‘So much of particularly Asian culture is built on mutual respect and personal relations.' The governor prepared assiduously for every meeting, even learning Japanese phrases from an instructor. Realizing that small touches meant a lot, Siegelman also met Honda executives on the tarmac when they came for site visits, the only governor to do so. ‘I think it also signals a stronger commitment to the company,' he recalled. ‘You are developing what that personal relationship means, it means a lot.' While Siegelman’s comments need to be critically assessed, others confirmed that his attention to detail was extensive. House Speaker Seth Hammett recalled that he accompanied the governor on several trips, signalling to the company that favourable legislation could be passed. State officials also grasped that social visits with Honda executives, while officially off-record, were vital. A wine lover, Siegelman learned to toast in Japanese. When company officials visited Alabama, the governor even arranged for the Department of Transportation to clean up the routes they travelled. Crews picked up trash, mowed grass, painted, and performed other tasks. ‘We’d really spruce up the state,' recalled DOT director Mack Roberts. ‘I mean it was immaculate, on these routes that they’d take.' ⁴¹

In the closing stages, the governor was heavily involved. Understanding the importance of confidentiality, Siegelman termed the project ‘Operation Bingo', refusing all public comment despite press speculation. He also mobilized local officials. On the morning of Monday May 3, 1999, for example, Siegelman called 75 lawmakers from Talladega, Calhoun, St. Clair, Etowah, and Jefferson counties to the state capitol, persuading them to borrow US$15 million in bonds to lure an anonymous firm. Earlier in the day, the governor met with senators from the same counties, securing their support. Many involved in negotiating with Honda – including those who were not supporters – stressed the importance of these initiatives. According to consultant Jim White, Siegelman was the ‘closer … on behalf of the state'. ⁴²

Siegelman also put together an incentive package, but it was much smaller than Mercedes had received. Then, Folsom had even agreed to purchase US$75 million worth of Mercedes vehicles for use by state employees. Honda also received less than Hyundai, which was subsequently attracted to Montgomery by a US$252 million package, for a similar number of jobs. Other transplants around the same time also received more incentives; in 2000, for example, neighboring Mississippi lured Nissan to open an assembly plant in Canton by offering US$501 million in subsidies. ⁴³ At the heart of the comparatively-minuscule US$158 million Honda deal were more targeted concessions, including a commitment of US$30 million to cover the costs of finding and training the plant’s workforce. The money paid for the Honda Training Center in Lincoln, which featured modern classrooms and replicas of Honda equipment. The state also carried out improvements to roads near the plant, widening highway 78 and constructing a bridge over the rail line. The cost of buying the land and preparing the site totalled US$72.7 million, while Honda also received US$55.6 million in tax breaks. As A.J. Jacobs has noted in sociological studies of other factories, incentive packages were sometimes secondary to Japanese automakers because their own national contexts prohibited them. More important were workforce skills and availability and environmentally clean sites. HMA illustrates these broader themes and throws light on the human story behind them. ⁴⁴

While the incentives grabbed the headlines, those close to the deal insisted that the most important commitment was relatively small. ‘We had numerous problems with the site … we had sink-holes, and it was terrible, it was a real nightmare,' recalled Mabry. Sink holes had been a problem in northern Alabama for some time; they were related to the area’s concentration of carbonate rocks that were susceptible to dissolution by groundwater. The problems at Honda, however, were kept private. Honda attorney W. Lee Thuston put the cost of filling the holes at US$10 million, an unanticipated expense that the state met – at Siegelman’s urging. A little-known detail – and a minor expense in the big picture – it proved significant. ‘The most important incentive turned out to be all the concrete that was poured into the ground to fill in the sinkholes,' summarized White. ⁴⁵

As Honda’s willingness to stick with the site showed, personal connections also mattered for the company. Siegelman stressed that Honda’s decision-makers liked the area’s serenity and atmosphere, deeply-individual reactions. ‘We flew them over different proposed sites and they fell in love with this one site at Lincoln because there was a big, huge, beautiful oak tree that attracted their attention, and they said: “This is the spot where we want”,' he recalled. Honda executives were ‘impressed' by the ‘beautiful' area, added Billy Joe Camp. Executives fell in love with Lincoln after viewing it ‘very clandestinely' from the air, agreed Pratt. Some were also ‘race fans', making the proximity of the Talladega Speedway – a famous NASCAR venue visible from the air – a powerful drawcard. The recollections confirm the importance of place in site selection, especially as key decisions were made by people. ⁴⁶

For other reasons, incentives were less important than they had been at Mercedes. Unlike the German firm, Honda located in a state that had a significant automotive presence. While Vance was Mercedes’ first North American plant, Honda also ran several factories on the continent, reducing the need for subsidies. State and company officials stressed that Honda was a different case. ‘They were not as interested in incentives,' recalled White. ‘We weren’t looking, and we don’t look, for handouts because we want to be able to operate and do the right thing,' added Bailey. ⁴⁷

Executives were not swayed by big incentive offers. Although negotiations were confidential, other states reportedly offered Honda subsidies that were equally – if not more – generous than Alabama. According to the Atlanta Constitution, Georgia proposed a free site northeast of the city, more than US$20 million in road improvements, a new worker training center, tax breaks, and encouragement from top officials. As Honda vice-president Richard Colliver noted, however, the company did not ‘hold a contest on incentive packages' because other factors were more important. Governor Roy Barnes also did not talk directly with Honda about the offer. By establishing personal contact with Honda executives, Siegelman gained the upper hand. After losing out, Georgia’s officials even proposed a team – led by the governor – to ‘court automakers personally'. ⁴⁸

Other little-known factors favored Alabama. Bailey stressed that the state was a ‘very strong market' for the vehicles that the plant made. Executives looked at sales numbers, observing that minivans – HMA’s original product – sold well in the Deep South, especially Alabama. The region had some of the cheapest fuel in the country, plenty of space, and a cultural preference for large vehicles. This was all attractive to Honda, which had pioneered ‘localization' (producing cars close to the market they were sold in). Several automakers, including BMW and Mercedes, had recently established plants in the Deep South to build light trucks (SUVs, pickups, and minivans), causing the region to be dubbed ‘sport utility alley' by an industry analyst. Prior to Honda’s announcement, Toyota also built a SUV and pickup factory in Princeton, Indiana, while GM announced plans to switch its Arlington, Texas, factory to make light trucks, the booming segment of the US market. In this sense, Honda shaped – and followed – broader trends. ⁴⁹

The political and fiscal climate in Alabama was also very different when Siegelman negotiated with Honda. Over the previous five years, there had been a backlash against the Mercedes deal; in 1994, for example, a high-profile education package failed to pass the Alabama legislature, leaving public schools poorly-funded while Mercedes enjoyed generous subsidies. Many questioned the state’s priorities, contributing to Folsom’s defeat later that year and his replacement by James, who criticized the deal. The Republican, recalled Henry Mabry, was ‘quite upset with the financial package that Mercedes received'. Once in office James tried to scale back Mercedes’ subsidies, especially in worker training, and when Honda came on the scene another large package was not viable. ‘The state did not have a lot of money,' recalled Siegelman. ⁵⁰

On the morning of 6 May 1999, there was widespread celebration as the news of Honda’s decision broke. In a press conference in Birmingham, Siegelman applauded as American Honda managers proclaimed that they would build a 1.7 million square foot plant in Lincoln. The factory gave Alabama ‘prestige and a worldwide reputation that honors us', asserted the governor. Locally, the official reaction was glowing. ‘Glad You Came,' summarized the Talladega Daily Home. ⁵¹

As diggers prepared the site, a protracted hiring process began. Demand quickly exceeded supply. The first 1,200 jobs, for example, attracted more than 30,000 applicants, while the start-up of the second line drew a further 24,000 hopefuls. Relatively high pay – combined with the poor state of the local economy – explained this response. According to industry data, HMA workers earned 67 per cent more than the state average. Because Honda wanted to hire from a 50-mile radius, the five counties nearest the plant, all of them former textile and steel areas, benefited the most. In 2019, the vast majority of Honda’s employees still came from these places, chiefly Calhoun (23 per cent), Talladega (22 per cent), and Etowah Counties (20 per cent). ⁵²

Reflecting its catchment area – Alabama was a Deep South state with a significant black population – HMA’s work force was diverse. While the company refused to release employment data, a plant tour confirmed that at least a quarter of employees were African-American, and many women also worked on the line. This was a big contrast with its plants in central Ohio. Honda had learnt from its experiences in the Buckeye State, where it had been forced to pay US$6 million in back pay to blacks and women denied jobs at the Marysville plant between 1983 and 1986. Marysville had been influenced by Japanese practices, where few women held jobs in car plants (in the 1980s labor laws still banned them from working in factories at night). ⁵³ In Marysville, there were hundreds of Japanese managers, and they ran the plant for at least the first decade of its life. The Alabama story was different; top managers were American, and the black population was much bigger. In 2019, out of 4,500 HMA employees, fewer than 100 were Japanese, and most were on short-term contracts. ⁵⁴

Although they paid well, HMA jobs were more demanding than was widely reported. Workers stood all day, could not leave the line, and had a set time to perform their tasks. Many applicants who saw the pace and repetitiveness of jobs at Honda quit. ‘We explain it up front, so there’s no surprise,' summarized Lee Hammett, who headed the state-run training program. ‘About 15 per cent drop out.' Illustrating its arduous nature, the program was described by Hammett with military connotations. ‘If they survive till the end,' he explained, ‘it tells Honda something special about them.' Honda manager Dan Barker termed the training ‘amazing', as it delivered hardened applicants with few illusions. ‘They understand the pace,' he noted. ⁵⁵

Not all transplant workers accepted their conditions. Complaints of excessive workloads and high injury rates had blighted the sector since the 1980s, spurring labor organizing. ⁵⁶ AT HMA, even plant supporters such as Clark Carpenter, who did legal work for Honda, admitted that there had been ‘rumblings' of union activity, partly because the jobs were ‘hard work'. In 2008, Automotive News reported that some HMA workers supported the UAW. Although pay was good by local standards, workers were upset about workloads, favouritism in promotions, and high medical insurance premiums. Around 500 employees attended UAW meetings. ⁵⁷

The barriers to organizing, however, were immense. The plant was placed in Lincoln to minimize union influence, and political and economic elites opposed the UAW. Demand for jobs was high, and many workers appreciated higher pay. Honda also undercut organizing sentiment with its personnel policies; all employees, for example, wore the same white uniforms with their first names embroidered on the pocket, fostering egalitarianism. In addition, while domestic automakers had repeatedly cut jobs, Honda had never had a layoff, an advantage it sold to workers. During the Great Recession of 2008–2009, in particular, the Big Three haemorrhaged staff, with GM and Chrysler having to be rescued from bankruptcy by US$17 billion in federal loans. In contrast, Honda laid off very few workers, and had a reputation for not closing plants once they were open. Honda, along with Toyota, was also the first company to institute flexible production methods to American car plants. Rather than performing one task repeatedly, HMA workers were trained to carry out multiple jobs, and were rotated every two or four hours. While conditions could be harsh, this helped increase worker satisfaction compared to the Detroit Three, where most workers did the same task all day. ⁵⁸

Speaking out was also risky. ‘Now that I’m in the paper, I know I will not advance,' commented union supporter Mychal Boyd. Compounding the problem, workers’ ability to protest fell overtime. By 2016, up to half – the company would not release exact figures – of HMA workers were ‘temporary'. Hired by agencies, they earned much less than permanent employees and had no benefits. In the wake of the 2008 global financial crisis, as the industry became cut-throat, most automakers – including the Big Three – hired more temps. Under US labor law, they could not vote in labor board elections, undermining solidarity. At HMA – unlike Marysville – a union vote was never called, and there was much less UAW influence, even though workers were not as contented as boosters claimed. After steady membership losses, the UAW was also much weaker in the early 2000s than it had been two decades earlier. ⁵⁹

In the wider community, Honda’s arrival also created little-known difficulties. Securing the land for the plant, for example, involved compromises. Just before Honda’s announcement, the Talladega school system sold options on 75 acres of property to the county’s economic development authority for US$8,000 per acre. The state used the land to construct Honda’s training center. The school board consequently had to find another spot for its elementary school. Meeting Honda’s work force needs also placed costs upon local authorities, especially as the company preferred workers without automotive experience. Schools and vocational colleges had to ensure that applicants could meet Honda’s ‘strict' requirements. ‘This time, Honda is the customer that must be satisfied,' summarized the Anniston Star. The authorities faced a huge task, as it was already difficult to meet demand for skilled workers. There was also opposition from existing employers, particularly paper and chemical firms. Major Alabama industries, they disliked that Honda was poaching their workers, and worried that they would have to pay them more. As HR Magazine reported, almost all of those hired by Honda had full-time jobs. ⁶⁰

Following the plant announcement, there was also concern about managing growth. A 7 May headline in the Talladega Daily Home – ‘Can area handle influx of newcomers?' – captured these worries. Locals feared that the schools would be overcrowded, that traffic would increase, and that fire departments would be unable to protect new homes. Tensions played out on the ground. ‘Some folks think it’s a panacea for Lincoln,' summarized Methodist minister Perry Wood. ‘It’s not. There are some costs for those benefits.' Illustrating this, several local businesses – including a café and garage – were bulldozed so that roads near the plant could expand, while local landowners had to coexist with Honda’s new railroad line. Elided by plant boosters, these downsides were important. ⁶¹

The cost of the incentives also needs to scrutinized. While Siegelman passed his incentive package, there was dissent. The governor’s 21st Century Fund Act, which created a special account with tobacco settlement income and established a public corporation to spend the money on industrial recruitment, was opposed by some senators. ‘Our first likely action will be to make sure we don’t short-change existing programs for children with new programs,' commented budget committee Chair Roger Bedford. Although the House passed the legislation in April, senators pointed out commitments for 70 to 75 per cent of the tobacco money to go to Children First, while Medicaid would get 15 to 20 per cent. Lobbying behind the scenes, Siegelman negotiated a compromise, securing an amended bill that allowed for the first US$60 million of tobacco revenue to go to Children First. Medicaid received 70 per cent of the remainder, economic development 25 per cent, and the general fund 5 per cent. In an earlier version, economic development got the money first. According to Bedford, these changes largely addressed critics’ concerns. ⁶²

In parts of Alabama, social needs were acute. The most neglected area was the Black Belt, a string of 17 counties in the south-west of the state that were heavily African-American. ⁶³ Some activists – including politicians from the area – argued that incentives should be used to bring industry to the Black Belt, one of the poorest parts of the US, rather than more prosperous areas. In October 1999, Talladega County’s jobless rate of 5.6 per cent compared favourably to 14.3 per cent in Wilcox County and 16.3 per cent in Butler County. State leaders also recognized the importance of spreading development to rural areas, especially the Black Belt. In correspondence with Siegelman, Funderburk discussed the need for a ‘refined incentive package' that would hold ‘great promise and potential for rural Alabama in particular'. This could offer ‘a very nice platform for you as Governor to really assist these distressed areas.' After the HMA announcement, Siegelman intimated that an auto plant might locate near Selma, the iconic town that – despite its progress in black voting rights – remained overwhelmingly poor. These plans never came to fruition, partly because the Black Belt lacked the interstate access prized by corporations. The area remained poor, and in Dallas County – where Selma was located – the poverty rate jumped from 24.4 to 27.9 per cent between 2000 and 2017. It remained stubbornly high in several other Black Belt counties, including Wilcox and Butler. This overlooked side of the deal undercuts some of Siegelman’s achievement, suggesting that he was taking care of middle-class voters more than the working poor who badly needed assistance. ⁶⁴

Bringing growth to parts of Alabama, HMA reflected broader patterns. As a state history has noted, between 1990 and 2010 Alabama ‘developed booming pockets of prosperity within a broader landscape of economic stress'. The 2010 Census confirmed that many rural areas were stagnant, with growth concentrated in counties adjacent to Montgomery, Huntsville, Mobile, and Birmingham, the biggest cities. Although its benefits spread to some rural counties, HMA contributed to these trends. ⁶⁵

In areas near the plant, there were considerable gains. HMA suppliers clustered in counties north and east of Birmingham, which experienced steady economic growth. Between 1999 and 2017, median household income in Talladega County jumped from US$25,777 to US$39,219 a year, while the poverty rate fell. Lincoln grew rapidly. Between 1990 and 2010, its population doubled, rising from around 3,000 to over 6,000. By 2019, the town – which was economically depressed and lacked even a traffic light before Honda came – had attracted restaurants and internationally-owned hotels. Two new high schools were also being built. ⁶⁶ HMA connected Lincoln to the world, revealing much about how globalization broke down local cultures and connected disparate communities. The changes that occurred in the small town were representative of broader trends in an era when capital became internationalized, showing that they affected communities in rich as well as poor countries. In 1973 12 percent of the world’s economic output entered into international trade, but by 1996 this had increased to nearly 24 per cent. Like Lincoln, many small American towns would never be the same. ⁶⁷

When the state as a whole is examined, the industry’s economic contribution is clear. In 2010, the Center for Automotive Research documented that the industry employed 178,739 people in Alabama, 6.8 per cent of the labor force. A few years earlier, the Encyclopedia of Alabama estimated that the industry’s real output (the total value of goods and services) was a whopping US$4.6 billion. Widely regarded as an integral part of US culture – car ownership fuelled suburban sprawl and was central to the American Dream – the industry also had great symbolic value. Auto making, summarized labor leader Christian Sweeney, was ‘the iconic US industry, and it’s a paradigm for lots of others … it’s important to us.' Other critics acknowledged the significance of the industry’s growth. According to the Arise Citizens Policy Project, an anti-poverty group, Alabama had achieved a ‘stellar record of industrial recruitment', and celebrations of new car plants were ‘well-deserved'. The auto factories, added University of Georgia professor Jim Cobb, were a ‘big point of pride' for Alabama. ⁶⁸

Other automotive facilities were recruited by Siegelman, placing Alabama at the heart of the new global industry. In 2000, he negotiated a US$600-million expansion of the Mercedes plant, creating 2,000 jobs. Siegelman also recruited a Toyota engine factory to Huntsville and helped convince Hyundai to locate its first US assembly plant in Montgomery. A sprawling facility, Hyundai’s factory was the first auto assembly plant in southern Alabama, bringing benefit to poorer parts of the state (including some Black Belt counties). Siegelman was personally involved in these deals; to recruit Hyundai, for example, he met repeatedly with Chairman Mong-Koo Chung, who praised his ‘extraordinary' efforts. ⁶⁹

Heading into the 2002 election, Siegelman was expected to do well. As the Tuscaloosa News commented before the vote, the governor had an ‘exceptionally successful record of economic development.' Despite this, Siegelman lost a closely-contested – and controversial – election to Republican Bob Riley. The outcome was marred by allegations of vote tampering, particularly in Republican-dominated Baldwin County. ⁷⁰ After placing a donor on a state board, Siegelman was later convicted for bribery and fraud. Some prominent observers – including the New York Times – saw the move as a ‘political hit' to remove Alabama’s ‘most prominent Democrat' in a state dominated by Republicans. The scandal overshadowed the successes of Siegelman’s administration, especially in the automotive sector. As a result, he has received little credit for recruiting a massive amount of automotive investment. ⁷¹

HMA was particularly significant. Prior to its arrival, most observers felt that the landing of the Mercedes plant was a fluke, and doubted Alabama’s global competitiveness. Even state papers joked about ‘Bubba Benz and pickups with star-shaped hood ornaments'. Securing more auto factories – and especially a second big plant – was vital. Only after Honda was Alabama truly ‘on the world stage', thought Elmer Harris, the former president of Alabama Power. ‘This says we have arrived,' added business leader Ted vonCannon. ‘We’re not second to anyone, and I don’t know if we could have said that a few years ago.' The move brought Alabama broader attention. The state began to be described as ‘The Detroit of the South' or the ‘New Detroit' by outside observers, including respected industry publications. ⁷²

HMA became the major player in Alabama’s auto industry. By 2016, it employed 4,500 workers, more than Mercedes in Vance (3,800 employees), Hyundai in Montgomery (3,600 workers), or Toyota in Huntsville (1,200 people). The plant’s impact went well beyond Alabama; in 2019, for example, HMA’s 713 suppliers were located across North America, including 557 in the US and 156 in Canada and Mexico. A zero-landfill facility, HMA was also environmentally significant, recycling or selling all its waste. Honda’s total investment in the site was US$2.6 billion. Honda built a close relationship with its local suppliers, placing a high value on what A. J. Jacobs termed ‘quality, collaboration, loyalty, and … long-term success' rather than cost, which was stressed more by the Big Three. ⁷³

Reflecting this, HMA led the industry in its use of domestic content, making this plant particularly significant. In 2018, federal data showed that the Lincoln-made Odyssey had the highest level of domestic content of any car or light truck made in the US. The vehicle derived 75 per cent of its parts from the US and Canada (how domestic content was defined), with both its engine and transmission made in America. In contrast, the Ford Mustang, often seen as a symbol of the American car, had a domestic content level of 56 per cent. The domestic content of Cadillacs – an iconic American brand – was also less (between 39 and 57 per cent). Other HMA-made vehicles had high levels of domestic content, with the Ridgeline coming in at 75 per cent and the Pilot at 70 per cent. Many HMA suppliers were also local, reflecting Honda’s unique just-in-time flexible manufacturing system, as well as its determination to be seen as ‘American'. All of the transmissions for the Lincoln-made vehicles, for example, were made in Tallapoosa, Georgia, just 60 miles away. Seats were made by TS Tech in a re-purposed textile mill in Boaz, Alabama, illustrating the links to the area’s industrial heritage. As HMA’s American managers proudly pointed out, many former textile workers were employed by TS Tech. All engines were made on-site. ⁷⁴

HMA also sold more of its vehicles in North America than other transplants, particularly European ones. This reflected its longstanding philosophy of, as an internal company history put it, ‘building products in the market where they are sold’. In 2019, just 10 per cent of HMA’s vehicles were exported. In contrast, BMW’s big factory in South Carolina exported 70 per cent of its output, making the brand the largest exporter of cars from the US by value. Mercedes vehicles built in Alabama, meanwhile, were sent to 135 countries. In many ways, HMA was unique. Honda built 85–90 per cent of the cars it sold in the US in North America, the highest of all automakers, exceeding US FTA and NAFTA requirements. In Lincoln, shipments were limited by the fact that the plant did not produce right-hand drive models and the fact that most of its products were, as Ted Pratt admitted, ‘so big'. HMA’s emphasis on vehicles that were too large for many markets – particularly European countries – was also uniquely American. The Pilot, for example, was an eight-seat SUV that weighed over 4,000 pounds. In 2019, all of the vehicles made at HMA were powered by six-cylinder engines, resisting the trend toward engine downsizing that had swept Europe – and most major markets. ⁷⁵

Honda was also a platform for investment beyond the car industry. Between 1999 and 2018, Alabama attracted more than US$30 billion in foreign direct investment through projects involving 90,000 jobs. Key prizes included a Boeing rocket plant in Morgan County (2006) and a huge ThyssenKrupp steel mill (2007) in Mobile County. The state shot up international investment rankings, securing praise from many sources. ‘The world is getting smaller, and that’s something that’s easy to see in Alabama, which has become established as an international destination for business,' summarized a global business publication in 2018. ⁷⁶

In other ways, the auto industry changed Alabama. Prior to its arrival, the state was struggling. Between 1980 and 1990, Alabama’s population stagnated, barely rising from 3.9 million to around 4 million. In 1990, New York Times journalist Howell Raines returned to his native state, noting that while its neighbours had flourished, Alabama remained ‘dirt poor and backward'. The state was particularly overshadowed by Georgia and its booming capital, Atlanta. Things began to shift when car plants arrived. Many auto workers experienced uplift, working one job – rather than two or three – for the first time. Because car-making was one of the best-paid manufacturing industries, it helped move Alabama away from its historic dependence on low-wage jobs. While Alabama remained a poor state, the industry brought real change, particularly to the areas around the plants. Highlighting the swing in fortunes, between 2000 and 2018 the state’s population increased more rapidly, from 4.44 million to 4.89 million. ⁷⁷

Despite a climate of uncertainty, transplant car makers in the US are adapting to important pressures, including climate change. In 2019, Mercedes announced that it would build a US$1 billion battery plant in Vance, placing the state at the heart of its global environmental plans. In neighboring Tennessee, Nissan had been building electric cars since 2012, with many exported. HMA, however, was again rather different. It made conventional products – and thrived. It said much about the distinctive nature of the US market – one in which large SUVs and pickups were the booming segments – that the plant grew by building large V-6 vehicles. Managers also stressed that Honda’s manufacturing system was flexible, adding that if consumer demand in North America was demonstrated, smaller cars – including electric models – could be built at HMA. ⁷⁸

In the spring of 2019, HMA celebrated its twentieth anniversary, an occasion marked by a typically understated celebration. As it did so, the industry’s growth showed no sign of abating, especially in Alabama. New assembly plants – and suppliers – also continued to arrive. A few months earlier, Toyota and Mazda declared that they would build a US$1.6 billion joint venture near Huntsville, creating 4,000 jobs. The move was celebrated by President Trump, who tried to take credit for the sector’s growth (ignoring the fact that his trade policies also hurt foreign automakers). Even before the announcement, Alabama tied with Tennessee as the fifth-largest producer of vehicles in the US, and around half of all vehicles built in North America were made in transplants. Surveying the new Toyota-Mazda factory, Automotive News declared that the sector’s rise showed ‘no signs of letting up', while AL.com suggested that Alabama was ‘the auto capital of the South'. ⁷⁹

Much remains to be learnt about America’s ‘other automakers', as the Christian Science Monitor called them. While US auto firms have been ‘throwing bolts' in recent decades, the transplants have been ‘roaring ahead'. Despite this, the Detroit Three monopolizes popular and scholarly attention. As big as its domestic counterpart – and growing – the foreign-owned sector deserves more exploration, particularly of how plants were recruited and how they changed the states they moved to. A key part of a ‘world class industry', HMA is integral to this new history, especially given its industry-leading levels of domestic content and its strong record of growth. ⁸⁰