Indiana

It was announced last week that Indiana has won the battle for Honda, which will build a major plant in Greensburg sometime in the near future. Lawmakers from Ohio and Illinois also sought to attract the Japanese firm to their state, but in the end the Hoosier state won out. Last week's Chicago Tribune (subscription may be required) downplays the significance of tax incentives.

While Indiana officials confirmed promising Honda $141.5 million in incentives, Larry Jutte, a company executive, rejected the idea that handouts were a factor.

"It wasn't a matter of incentives offered; that was never a consideration. It was a matter of logistics, the human factor, the infrastructure and the location," Jutte, senior vice president of manufacturing for American Honda Motor Co., said in a telephone press conference from the winning site.

He said the decision was based on being in close proximity to suppliers of parts, particularly the key component for an automotive assembly plant, a source of 4-cylinder engines from Honda's operation in Anna, Ohio."

The Tribune also did a Q & A (unavailable online) with Indiana Governor Mitch Daniels on his courting of Honda. In dealing with Honda, Daniels mentioned that "[i]ncentives were almost a footnote. It was the last thing Honda brought up. You will always talk incentives, but if you start with incentives, it's a losing hand."

Asked for advice on how states should attract major employers, Daniels suggested to "[b]uild the best sandbox you can--low costs, low taxes, excellent infrastructure."

I don't think that the sandbox analogy is quite appropriate, but the tools he mentions are right on. When lawmakers concentrate too much on offering complicated tax schemes to attract business, they lose sight of the bigger picture.