2nd Gear: Honda’s Gonna Make More Big Cars

Honda’s role in Ohio’s history is one that I have studied a lot. Honda’s own website dedicates a lot of writing to the preliminary agreements that brought them into Ohio.

Some conservatives have learned the wrong lesson about foreign automakers and unions... often because Honda’s success story as it is repeated is incomplete.

Here’s the lesson that I learned. Sorry for lack of brevity.

I grew up in Ohio near the Jeep plant in Toledo, later lived south of Dayton a stone’s throw from the GM Moraine plant. This is a state which did very recently, and still does to a lesser extent, have plenty of dues-paying UAW members who are accustomed to high-paying jobs.

Honda chose to enter the US automotive industry in union states because that’s where the experienced autoworkers are. I visited the Honda Marysville Assembly plant as a kid. This is the city where American Honda was started and where more Honda Accords have been made than anywhere else since 1982. It’s one of the most advanced plants in North America, and they pull from the same labor pool as the Big 3. As mentioned in this article, Honda also has another factory in East Liberty, Ohio where they build CR-Vs and Acura RDXs.

It was a crazy decision to build in Ohio. Ohio workers were recalcitrant toward American management. The memories of the 1972 strike in Norwood were damning evidence of the decadence of American workers. Volkswagen had failed to build cars successfully in Westmoreland in PA, another part of the industrial midwest. Why would the Japanese try in this area? Why not try the Sun Belt right off the bat?

Soichiro Honda’s choice to start in the heartland of its rival came from the quixotic desire to build a long-term, earnest, top-to-bottom commitment to a superior car and proving that it could be done under his management with the same experienced, well-meaning workers who failed to make a superior car under American management. They already worked in GM or Ford or Chrysler plants and they knew the shit that was going on there. Honda hired the best people it could, paid them competitive wages and benefits, expected a lot out of them, and in so doing headed off demand for a union.

For most other transplants (BMW, M-B, Toyota, and others), the story was different. They all chose the South, an area where there was almost no auto production 25 years ago. Foreign automakers typically chose it because labor is relatively cheap, Americans are relatively well-educated, and so they can afford to make a plant where their job is the best-paying one in town. And so it remains that way. I’m glad to see that the non-union workers are so far satisfied with the pay and benefits and conditions! But that too is a decision empowered by unions: the Japanese and German automakers have domestic unions that are often required by law to exist and provide a counterbalance to management. Foreign unions help American autoworkers by ensuring that our wages are not held so low that desperate unemployed people will still take them and depress the wages of the autoworkers of the home country of the company. Do you think that if Japanese and German unions did not pressure their management to prevent using cheap American labor as an alternative to expensive German labor, that the managers would somehow employ more Americans? Automakers don’t have jobs just lying around, they have to build cars to a schedule of production and they need a set number of people to do it- the lack of unions in the home country would just have lower wages from the beginning and be more profitable as a result. Profit that workers would never see, and eventually they wouldn’t be able to buy new cars, and the vicious circle would be complete. Sigh.

Some, including some of my friends and family in Ohio, still see it as a fair bargain. They’ll run the risk of slightly lower wages if the system can promise them jobs. This is the Trumpian gamble that millions of Americans were taking.

But what I contend is that there are not in any meaningful numbers hidden jobs in the US economy where we could be making something if only wages were a little cheaper- wages would have to get a lot cheaper and if you want to live in abject squalor competing with the Chinese for what goes into Walmart shelves, be my guest, but most Americans don’t want that as an alternative. The choice is not for a slight tweak to the trade policy and more jobs come flooding in with a slight increase in price. The choice is- we make everything here that we import from certain countries and pay the huge extra cost and destabilize relations with that country, or we don’t start a trade war that we aren’t going to win.

The lesson of Japanese and other foreign automaking in the US is this- a successful industrial company anywhere, whether it starts or eventually acquires an adversarial relationship between management and labor, will one day pass from its original benevolent starting point into one where the company is treating its workers unfairly. And the only thing the workers can do is unionize. It has happened in every nation eventually. The thing that prevents unions from becoming necessary in some regions is merely the fact that some unions already exist in that market, keeping wages higher for the whole population, because the union wages are used as a negotiating tool by the non-union employees of other companies doing some similar kind of work.

You cannot succeed in revitalizing an industry just by trade deals. If we assume that Americans can build everything, we’re going to have to accept huge price increases and scarcity, because Americans very often cannot build things productively no matter the laws in place. A policy of autarky leads to North Korean or Francoist Spain levels of scarcity.

Back to the US, I think that the UAW is being duped by Trump in the same way it was duped by Reagan. But that is their right. The UAW management has seen that union members came out for Trump, and they are going to try and work with him for the benefit of their members. That is what they exist to do.

My advice to union members and those who are actually feeling the hurt of deindustrialization (I know some of you personally) is to stay aligned with organized labor and don’t let yourself be divided from fellow working-class Americans. Accept diverse people and try to get them on your side. Cheer on the successes of unions in other countries, because when those workers have your solidarity, they will organize themselves, and get increases to their own wages. High wages in other markets means that America is more competitive and that means more jobs here- exactly what you wanted in the beginning.