Honda Having Big Impact In Gadsden

The Honda plant in Lincoln – just about 30 minutes away from downtown Gadsden – is making a substantial impact on Etowah County with jobs and services at the plant coming from here, a top company official said.

Rick Schostek, senior vice president of business operations for Honda Manufacturing of Alabama, told the Gadsden Kiwanis Club last week that employment at the plant now exceeds 4,400. About 20 percent, or almost 900, of the employees are from Etowah County.

Including about 1,500 contractors and vendors on site each day, the daily work force at the Lincoln site is almost 6,000 – “a little bit of a small city,” Schostek said.

The company’s payroll is about $200 million annually and that about $40 million goes to employees from Etowah County. In response to a question, he said the average hourly wage at the plant for assembly line workers is about $23.50.

“In 2004 Honda purchases in Gadsden and Etowah County totaled more than $15 million,” Schostek said. “Business partners range from Osborn Trucking and Thompson Industrial to Motion Industries and Gadsden Tool.”

While a first-tier supplier has not located in Etowah County, second-tier suppliers have. In addition to suppliers, transportation and logistical services for the plant are provided in part by firms here. The plant has 3.1 million square feet – an area big enough for 17 Wal-Mart Supercenters. Honda suppliers have located in the state since Honda announced in 1999 it would be locating in Lincoln. This represents $400 million in capital investment and almost 4,000 jobs.

The city of Gadsden, the Etowah County Commission and Rainbow City were among the cities and counties in the state that contributed to the incentive package the state offered to attract Honda.

Schostek said HMA paid $4.7 million in education taxes last year. The company has given more than $2.5 million to local charities and non-profits in the state, he said. Since 2003, he said, the company has awarded about $200,000 in grants and sponsorships to organizations in the county and that employees have given more than $31,000 to the United Way of Etowah County.

He said the plant is producing about 1,200 Odyssey minivans and Pilot SUVs each day along with about 1,200 engines. At full production that will increase to 1,300 a day, or about 300,000 vehicles and engines a year.

He said with the 2005 models the Lincoln plant became the sole worldwide production site for the Odyssey, which accounts for about two-thirds of the plant’s production. The vehicle can be produced on either of the two production lines at the plant.

He said the plant has the flexibility to change production to increase or decrease the number of Odyessys or Pilots to meet demand.

Schostek said sales of the Odyssey are up 16 percent over last year and that Pilot sales are up 19 percent.

He said worldwide Honda sold about 3.2 million vehicles last year and that Alabama produced about 10 percent of that amount.

He said while that is a large number, the world’s largest automakers – General Motors, Ford, Toyota and Chrysler – are each expected to build between 5 million and 8 million vehicles this year.

“That’s OK,” Schestek said, “I told you the industry is competitive. And Honda still prefers the role of the smaller, independent scrappy competitor. We have long followed a philosophy of building products close to the customer. In this way we can better serve our local customers, contribute to the local economy and grow together with the local community.”

He said those steps were used to build the company when it was founded more that 50 years ago.

Schostek said he has been reading of efforts to attract high-tech, bio-tech and other “industries of the future” to the state and he understands and appreciates those efforts.

“But I’m also here to tell you two things that I know are true for Honda and the auto industry,” Schostek said. “First, manufacturing is alive and well in Alabama and, secondly, manufacturing is a high-tech enterprise.”

A $70 million expansion is under way for the engine plant, and Schostek said that will produce about 100 jobs by the fall of 2006. He said the expansion will allow the company to perform machining operations for engine crank shafts and connecting rods.
By Andy Powell
Times Staff Writer