Ontario wins Honda engine sweepstakes

Honda Motor Co. Ltd. will build a $154-million engine plant near Alliston, Ont. — its first engine plant in Canada and a major investment that continues the winning streak in the thriving Ontario automotive sector.

The new operation, near the company's vehicle assembly plant about 90 kilometres northwest of Toronto, will be up and running by 2008 and employ about 340 people when it reaches full production of 200,000 four-cylinder engines annually, Honda Canada Inc. officials announced today.

The investment in Ontario is part of a North American expansion unveiled at the auto maker's annual meeting in Japan.

It includes a new assembly plant somewhere in the United States that will boost the number of assembly plants on the continent and production capacity to about 1.6 million vehicles a year.

The Ontario government plans to provide funding for up to 10 per cent of the infrastructure costs associated with building the new Honda engine plant, Ontario Economic Development Minister Joe Cordiano told reporters this morning at Queen's Park.

He said the funding, which will help cover the cost of building roads and sewers, is necessary because otherwise, Honda would not consider the sight.

Mr. Cordiano described the proposed plant as an important assembly operation that will create critical mass and the opportunity to spin off more jobs for manufacturing parts for the auto sector.

"It's a real job creator,” he said.

Mr. Cordiano said the dollar value of the Ontario government's contribution has not yet been determined because the final land assembly is not yet complete. He said the funding will not come from the Ontario Automotive Investment Strategy. Rather, he said, the government will fund "greenfield” operations for the auto sector on a case by case basis.

Honda's statement comes on the heels of an announcement by parts maker Linamar Corp., which will spend $1.1-billion during the next five years to create 3,000 jobs in Ontario, as well as the decision by Toyota Motor Corp. to build an assembly plant — now under construction — in Woodstock, Ont.

Honda thinks highly of the Ontario work force and its employees in Alliston in particular, according to sources, and most of its other assembly facilities have engine plants nearby.

The auto maker also holds Canada in high regard because of strong support from the federal government during a trade dispute in the 1990s over the issue of North American content in Civic sedans assembled in Alliston.

Honda's production of about 390,000 vehicles a year in Alliston, including the Civic sedan, ranks it third in assembly in the country behind General Motors of Canada Ltd. and DaimlerChrysler Canada Inc.

The auto and auto parts industry — with shipments worth about $100-billion annually — is the engine of the Ontario economy. The lion's share of the 149,000 people employed in the Canadian industry work in the province, where all of the country's assembly plants are located.

Industry sources said Honda needs to expand its engine-making capacity because it now is operating at full output and any increase in vehicle assembly must be accompanied by a boost in North American-made engines.

Honda will also begin developing two new vehicles, including an inexpensive hybrid model, and will create a version of its European diesel engine for use here, the sources said.

It's the latest expansion by Japan-based auto makers, which have been grabbing market share in the United States and Canada at the expense of the once-dominant, Detroit-based three, Ford Motor Co., General Motors Corp., and the Chrysler division of DaimlerChrysler AG.

Honda, Toyota and other Asia- and Europe-based auto makers now hold slightly less than 50 per cent of the North American market and have topped the 50-per-cent mark at least once in Canada.

Any Honda expansion means more market share will be taken away from Chrysler, Ford and GM because the market is expected to remain flat or grow only modestly for the rest of the decade, said Sean McAlinden, vice-president of research at the Center for Automotive Research, an industry think tank in Ann Arbor, Mich.

Honda sold 1.65 million units in North America last year and forecasts sales to rise to 1.72 million units in the current year. The company now has annual production capacity of 1.4 million units in North America with five plants, meaning Honda must import autos to meet North American demand.

In addition to the assembly plant in Alliston, Honda has two plants in Ohio, and one plant each in Alabama and Mexico.

By Jim Mateja
Tribune auto reporter
Published May 17, 2006, 9:54 PM CDT


With its North American production at capacity, Honda said Wednesday that it will add another Midwest plant that will produce 200,000 vehicles annually starting in 2008.

The $400 million plant will employ 1,500 workers, with Indiana, Michigan and Ohio considered the leading candidates. It will give Honda capacity to build 1.6 million units in the U.S. in 2008, up from 1.4 million now, said Dick Colliver, executive vice president of American Honda.

Honda's goal is to boost sales 34 percent, to 4.5 million vehicles worldwide, by 2010, with the U.S. accounting for 2 million of that.

Honda has two plants in Ohio, one in Alabama and one each in Canada and Mexico.

Colliver wouldn't talk about a potential site or say what vehicles would be built at the new plant, though the new low-cost, high-mileage Fit and compact Civic sedan are the top candidates.

Officials from Ohio and Indiana have held talks with Honda, but they wouldn't discuss any incentives offered, citing competitive reasons.

In addition to the plant news, Honda said it will add a gas/electric vehicle smaller than the Civic for the 2009 model year.

Honda also said it would discontinue the two-seat Insight in September. It was the first hybrid introduced in the U.S.

Honda Motor Co. is looking at a site near Columbus, Ohio, for an assembly plant, according to The Plain Dealer newspaper in Cleveland.

The 1,060-acre site is about 45 miles southwest of Columbus, near the small town of Octa, the newspaper said Friday. Five property owners in the area recently signed options with the state development agency to sell their land, the paper said.

The Japanese automaker said Wednesday, May 17, that it plans to spend $400 million to build an assembly plant in the United States. The plant is scheduled to begin operating in 2008 with annual capacity of 200,000 vehicles.

Honda built its first two U.S. assembly plants northwest of Columbus, in Marysville and East Liberty, Ohio. The Octa site would let Honda draw on its existing management and training operations in the region.

A site in Van Wert, Ohio, west of Lima, also is being looked at by Honda, the newspaper said.

Economic development officials in Ohio and Indiana have said that Honda was scouting sites in their states.