The End of Detroit (26 page)

Those who make it all the way through have to be truly committed. Honda, which originally planned to hire 2,000 people at its Lincoln plant, received 29,000 requests for job applications. About 16,000 people returned them, and out of that number, 5,000 were invited to come for the training program. Some 3,000 completed the program, yielding the 2,000 people who eventually were hired by the factory. “You want the ones with drive and determination and stick-to-it-tiveness,” Sheridan said. The rigorous process “does allow you to hire the best people,” he added.

But getting hired is only the first hurdle. The Honda employees do not set foot on an assembly line for the first two months. First, they are sent back here for further instructions on actual assembly equipment sites. Here, they do what are called practice builds, getting a sense of what their workspace will be like, understanding just how much stamina will be needed to stay on their feet eight hours a day. At the same time, Honda managers are learning about their new employees—in ways they didn’t anticipate. Though Honda had the experience of having opened plants in Marysville, East Liberty, and Ontario, the plant’s human resources managers still had to adapt to Alabama life. “What hasn’t changed is the Honda philosophy, starting with Mr. Honda’s vision,” said Kathy Jones, senior vice president of business operations. “But we have to be sensitive to the Alabama community. It’s different in Lincoln versus Marysville.”

One of the first lessons the Honda managers learned was the proper way to deal with the enormous hospitality that the state wanted to offer. As the plant site was being acquired, the state assumed that Honda would want to be right next to the freeway, like the Mercedes plant and the Nissan factory that was built over in Canton. They were about to buy up a strip of land next to Interstate 20, where Honda could put up a big sign declaring the plant’s presence, when the Japanese company said no thanks. Instead, the Honda plant sits, virtually hidden from passersby, behind careful landscaping. There is still nothing on the highway that denotes the plant’s presence. “We spent a lot of time politely declining. Some who came before us had been a little more aggressive,” Jones said in an indirect jab at Mercedes’s high profile. “We don’t want to give the impression that Alabamans have to learn Japanese customs. We’d rather learn how Alabamans do things.”

In the same way, the plant has made many efforts to make its employees feel at home. Honda’s plants in the United States and Canada are nonsmoking, but in recognition of the fact that the South is a place where many people smoke, there are tables outside the plant’s doors where workers can have a cigarette during their breaks. “We could have had a no-smoking policy, but that would have placed a big burden on our employees,” said Andy Ritter, a division manager in the administration department. Likewise, the cafeteria features generous portions of southern specialties, from strawberry shortcake smothered in whipped cream to mounds of pork barbecue and Frisbee-sized slabs of chicken fried steak. It isn’t institutional food, either. “We found out that food is a little more important here than in the Midwest,” said Ritter, noting that a typical meal is “meat and three sides” of vegetables or starches. “We knew we had to have big portions.” Other sensitivities have shown up in the work schedule. Honda learned that it should not hold meetings on Wednesday nights, known as “church night” throughout the region, set aside for Bible study and services. The auto company decided that it would observe the Martin Luther King Day holiday, because of its particular significance to Alabamans, even though it does not give workers at its other factories that holiday off. Since Honda had to make up the lost workday, it decided to keep the plant open on Good Friday, which is not as widely observed in Alabama as it is in Ohio.

The same low-key approach applied when Honda selected the plant. Honda was determined not to see a repeat of the circus that had surrounded the selection of Vance for the Mercedes factory. It had no aversion to incentives themselves. Since any number of states were vying for the plant, the company would have been silly not to have taken advantage of offers to acquire a site, clear the land, build roads and provide a training facility and the like. But Honda manufacturing executive Koki Hirashima was sensitive to the plight the state found itself in with Mercedes when the state fell behind on an incentive payment. Hirashima, in fact, was distressed to learn that the state was going to give Honda a tax abatement on the land it had obtained for the plant. He feared that the state’s education system might suffer without the tax revenue Honda expected to pay. Instead of accepting the abatement, he asked how much the state was going to give Honda in tax breaks, and sent a check for double the amount. “Honda didn’t base its decision on the incentive package, which was a bit of a mystery to them,” Jones said of state officials. “They were ready for us to throw our weight around.”

Unknown to the state, Honda had all but decided on Alabama from the beginning. Though it looked at expanding its operations in Ohio, it decided that it had pretty much drained the state of available workers. Plus, the UAW was constantly hovering, and there were fears that should Honda’s business there grow too large, it would be impossible to keep a personal connection with every worker, opening the door for an organizing drive. Honda gave consideration to a site in Indiana, but its real interest was in Alabama. Very quietly, it began scouting the state in January 1998, in a project it called Bingo. “It was a project to lose rather than win,” said Carroll “Lew” L. Watson, the mayor of Lincoln. The mayor, who has been in office for over 30 years, is an old-fashioned public servant who answers his own office phone at 7:40
A.M.
, personally handles disputes over citizens’ water bills, and knows the security guards at the International Motor Sports Hall of Fame at the Talladega Speedway by name. He found out about the search when state officials began coming up dry in their quest to find a package of land that would be suitable for the plant. They looked up near Huntsville, and had nearly settled on a piece of property in a town ironically called Spring Hill. But “every site they found, something came up,” said Watson.

He got a call from Theodore Von Cannon, president of the Birmingham Metropolitan Development Office, asking if he could come up with 1,500 acres. Watson is a real estate appraiser as well as the Lincoln mayor. He can tell you the selling price and assessed value of everything in Lincoln, where a sprawling brick house with a four-car garage sells for $350,000, with annual taxes of $1,200. Watson knew exactly where to go for the parcel: his distant cousins, who owned a stand of farmland within a few blocks of Lincoln’s main drag. Town residents now talk about life “before Honda and after Honda,” he said. Watson personally knows what the plant has meant to the hamlet. One evening, he heard from a young woman for whom he had done an appraisal so that she could refinance her mobile home. The mother of two had been stretching to make ends meet, working a minimum-wage job. This time, she had phoned to ask Watson if he could come back to appraise the value of a tract of property that sat behind her trailer. “I’ve just gotten a job at Honda,” she said. “It’s more money than I’ve ever made in my life. I’m going to be able to buy this land.”

The $158 million Honda package was put together without Bronner’s involvement, but he did step in at the end when it looked as if the state was going to lose its chance at landing the $1 billion Hyundai plant in 2002. Project Beach, as that plant was called, had come down to the wire, with both Alabama and Kentucky in hot pursuit. Earlier, Hyundai had eliminated Mississippi and Ohio from its consideration list. Kentucky, eager for another auto plant nearly 20 years after it had landed Toyota, had put together a package worth $125 million, while Hyundai’s bid was worth $118 million.

But the difference in price wasn’t the only deciding factor. Hyundai was anxious to get started right away, and Alabama had a clear advantage, securing options on 1,600 acres of land that Hyundai could access immediately. Kentucky, meanwhile, had found 1,500 usable acres but was stymied in its attempt to secure a final parcel of land owned by the Howlett family. Its 111-acre parcel was appraised at $800,000, but the family was holding out for much more. In what became a nasty, public spat, the state began eminent-domain proceedings and then decided to negotiate. It reached agreement to pay $6 million for the land, but the argument had soured Hyundai on the Kentucky site. Meanwhile, the Alabama bid had a last-minute sweetener: Bronner came through with $10 million in free advertising on the television stations owned by the RSA and in its 300 community newspapers. It was an offer that Hyundai found to its liking, and Alabama had its third assembly plant. At a news conference announcing the deal, Hyundai chief executive Kim Don-Jin praised the Alabamans’ effort. “The state government of Alabama has shown a far more enthusiastic attitude toward luring Hyundai’s auto plant investments than its Kentucky counterpart,” Kim said. The package, which covered 2,000 jobs, drew little complaint in Alabama.

The Texas market could always be summed up in two words: pickup trucks. And for generations, pickup trucks from Detroit. This is where Toyota executives in the United States took their skeptical Japanese bosses back in the 1980s, when they were trying to make a case for Toyota to build a bigger pickup truck, alongside the little Tacoma. Bob McCurry, the executive in charge of Toyota’s sales operations, desperately wanted to see Toyota get into the market, tired of watching droves of Toyota sedan buyers defect to Big Three companies. (It was the same trend that would spur Nissan’s product development teams years later into pushing for the Titan.)

But the pickup was a hard sell, because the Japanese market, where development and production of the pickup would take place, simply didn’t have big trucks. Moreover, Toyota officials were gun-shy over trade issues. Lee Iacocca, the Chrysler chief executive, had been incredibly vocal in his denouncement of Japanese companies’ exports to the United States. “They were sensitive about entering another market, even though it was an important market,” McCurry said. But Fujio Cho, in charge at Georgetown, took a group of visiting Japanese officials to a Dallas Cowboys football game and walked them through the parking lot. They found themselves in a sea of pickup trucks, driven to the game by affluent fans who loved their trucks. Even if they had a car in the garage, they enjoyed getting into their pickups on the weekends for their favorite pastimes, none inspiring more passion than a Cowboys game. That scene helped convince the Japanese executives that Toyota needed to get into the truck market.

However, McCurry didn’t win his battle completely. The original Toyota pickup, the T-100, introduced in the 1990s, lacked the size and power of the big Detroit iron from Chevrolet and Ford and Dodge. The T-100 was a “political truck” deliberately dulled down in order to keep Toyota from a barrage of criticism. “It was a truck, but it was not a
truck,
” McCurry said. But as with the original Lexus ES 250, or the first Odyssey that Honda sold in the United States, the T-100 was a placeholder. McCurry didn’t give up on his push for a genuine big truck, and in 1998 Toyota began building its first real full-sized truck, the Tundra, in its sparkling new plant in Princeton, Indiana. Though the Tundra was smaller than the biggest Fords and the brawniest Dodge Rams, it was functional. It also got a great write-up in
Consumer Reports.
That recommendation was enough to win back some Toyota buyers who had previously bought trucks from Detroit companies, giving Toyota additional time to accumulate pickup expertise. In 2003, Toyota introduced an extended-cab version of the Tundra, its biggest yet, as Nissan was preparing to brave the market with the Titan. Even that Tundra was just a warm-up, because Toyota has bigger plans for the pickup truck market later this decade.

In 2002, Toyota announced that it would build a small truck factory in Baja California, its first Mexican plant. Then, in February 2003, it announced yet another plant. This one would be in San Antonio, deep in the heart of not only Texas but truck country. If all goes well, and Toyota hits the mark with the next version of the Tundra, and the two factories come up to speed and expand in the way that Toyota plants are wont to do, Toyota could end up selling 500,000 pickup trucks a year. Where would it like to sell a lot of them? Texas. “The plant down there is driven as much by market considerations as anything,” said Dennis Cuneo of Toyota’s North American manufacturing operations. “If we’re accepted as a Texas truck, we think that will help us across the country and to really be accepted as a full-size pickup truck.”

This time out, Toyota’s American executives aren’t going to let the pickup be developed in Japan. The bulk of the work on it will be done in the United States, at the Toyota Technical Center in Ann Arbor, Michigan, directed by a young chief engineer named Chris Nielsen. Although the engineers there had a great deal of input in the Camry, as well as the Solara coupe, the pickup will mark the first time that Toyota has ever entrusted such a critical project to its North American operations, said Cuneo. Toyota also will have key advice from Kurt Ritter, the former general manager at Chevrolet, who oversaw its pickups and SUVs. Ritter left in spring 2003 to join Toyota’s ad agency. The move angered GM, and Ritter subsequently opened his own consulting firm. His only client is Toyota.

Meanwhile, the San Antonio plant, like all things at Toyota, will fulfill more than just one role. With 65 percent of the area’s population of Hispanic descent, the plant will serve as an opportunity for Toyota to attract young Spanish-speaking managers that it can train and deploy to its operations in Mexico, Central America and South America. It will also give Toyota direct experience working with Hispanic employees, who it hopes can give it even more understanding of the Hispanic market. With the nation’s population shifting dramatically, and with Hispanics now becoming the single biggest nonwhite ethnic group, Toyota wants to be able to stretch beyond its traditional customers, Cuneo said. It believes that San Antonio, in addition to its sales experiences in California, where the market is 40 percent Hispanic, will be a key force in helping it to understand what these important buyers want.