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NewsTalk

Welcome to the archives for NewsTalk, an IBJ blog published from November 2007 through December 2010.

Hyundai hole in Indiana

August 9, 2010

Indiana’s success with courting Japanese automakers is legendary. Subaru, Toyota and Honda assembly plants have made the state look like a shining jewel by Rust Belt standards while Detroit automakers fight for their lives and continue to struggle to get back their market dominance.

But Hyundai has steered around Indiana. The rising Korean industrial giant and its sister company, Kia, have chosen the South, locating plants in Alabama and Georgia in recent years. Last month, Hyundai said it would build a $90 million power transformer plant near its car plant in Montgomery.

The transformer plant isn’t huge compared to the $550 million Honda plant southeast of Indianapolis in Greensburg, but it also might be just a start for Hyundai. The plant could be expanded.

Why does Hyundai keep avoiding Indiana? Secretary of Commerce Mitch Roob says it’s because Indiana isn’t even under consideration because it’s not a right-to-work state, meaning all workers can be forced to pay union dues if their co-workers vote for a union.

Roob’s remark raises the question of whether a charge at passing right-to-work will emerge in the next General Assembly. Don’t be surprised if it does. If Indiana adopted a right-to-work law, the state would instantly become more competitive, but unions claim average wages would slide.

Some observers criticize the focus on sweepstakes projects like Honda. Having 100 plants with 200 workers is more stable than one with 2,000, they contend, and resources spent chasing big projects could be better allocated to helping startups, which have potential for explosive growth.

One reason Indiana and lots of other state still like huge manufacturing plants is that they employ a lot of people who don’t have four-year degrees, and Indiana is famously short on college-educated workers. The plants also attract parts plants, which in turn hire hundreds or thousands more workers, also largely without bachelor’s degrees.

What are your thoughts about Hyundai, and the state’s continued efforts to lure auto plants?

 

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