Our Perspective: The Role of Free Trade in Enabling Honda’s Success in America
Free trade agreements have been a hot topic among both Democrats and Republicans during this political season, and it is likely to remain a contentious issue in the months to come. Regardless of our political backgrounds or affiliations, it is important to understand the role that free trade and trade agreements have played in the Honda's history in the United States and what it means for the company today.
Free trade allows for the unhindered movement of resources and products, including the movement of capital, production, parts and materials, technology and services, with limited exceptions. At a high level, free trade enables companies to compete in any market, leveling the playing field for head-to-head competition. For consumers, it means more choice, more innovation and better prices.
The U.S. has long embraced free and open trade, and it is this history that gave Honda the opportunity to open its first shop in the U.S. 57 years ago. It started with motorcycles that were produced in Japan, introducing a new product to Americans– motor scooters targeted to the mainstream market. Subsequently, by the 1970s, as three auto companies continued to dominate the market in the U.S., it became clear that the quality of the vehicles was not at the level consumers wanted. This market provided little consumer choice and no demand for American-made vehicles abroad. Honda was the first Asian vehicle manufacturer to recognize the opportunities that open markets create. The company's founders fostered a new international automobile business in this country, employing Americans, utilizing domestic suppliers and sharpening competition for the benefit of all. Today, Honda operates more than 70 facilities in the U.S., including 12 manufacturing plants, provides a paycheck to 29,500 U.S. associates, and purchases parts from almost 600 U.S. suppliers.
The ultimate beneficiaries are not only those who are employed by international companies, but also their customers. By giving manufacturers like Honda the opportunity to shop the world and freely import components, we are able to produce products using the best quality components developed by the unique talents from around the globe, and to do so at lower prices.
The intense competition among the companies building cars in the U.S. has raised the bar for the entire industry. The result is American-made world-class vehicles that are able to compete in any market. A new export market has been created – Honda alone has distributed throughout the world more than a million vehicles built in Ohio, Alabama and Indiana; millions of general purpose engines and power equipment units built in North Carolina; and hundreds of thousands ATVs built in South Carolina. Our trading partners – like us – have agreed to tear down barriers to trade, allowing us to compete in their markets just as we are able to compete in this market. Free trade is good for workers and consumers everywhere.
Opponents of free trade argue that the policy has resulted in the loss of 5.6 million U.S. manufacturing jobs between 2000 and 2010. While it is true that there are fewer U.S. manufacturing jobs, the principal cause is not free trade, but rather increased manufacturing productivity that comes from the advancement of manufacturing technology. Studies show that 85 percent of manufacturing job loss in the U.S. is due to this greater efficiency. Moreover, the jobs lost to companies relocating overseas tend to be lower paying, manual jobs while the new manufacturing jobs here require more advanced skills and pay more.
It is not an understatement to say that Honda would be a very different company if we did not have opportunities to access the U.S. market with our investment, technology, and ability to compete on even terms. Free trade has made a difference for Honda associates, our customers and our company.
Edward Cohen Vice President Government & Industry Relations Honda North America, Inc.