International Pension Divestment In Ohio: What About Honda?

CINCINNATI (TDB) -- Japanese motor vehicle manufacturer HONDA apparently does some business in Iran through an affiliate. Two Ohio lawmakers plan to offer a bill that forbids state agencies from holding investments in companies that have dealings with terrorist states -- a designation that fits the Islamic Republic of Iran.

Is it possible the bill could do serious damage to Ohio's prospects of drawing in international corporations with far-flung affiliates and operations and units that trade around the globe? And is it possible companies that do nothing to help terrorists would get caught up in a bit of anti-Iranian legislation? For example, would the bill -- which has not yet been introduced -- risk damaging Ohio's close relationship with Honda, one of the state's corporate jewels? Would it mean that Ohio cannot invest in a major company with a major presence?

JMZ at Writes Like She Talks is following the issue. Right now, there seem to be more questions than answers. Whatever happens at the Statehouse must be sure to guarantee that it does not rip a hole in Ohio's economic development programs, or cast the state as negative on foreign investment. In a global economy, Ohio lawmakers must tread with caution.

In 2004, there was a gala that celebrated Honda's arrival and growth. Some of the details of the state's laudatory package follow:

"A recent study by Honda highlighted the economic impact of Honda in Ohio:

"Honda currently employs 16,000 Ohioans.

"Since 1979, Honda has invested $6.1 billion in its Ohio facilities.

"Honda purchases $7 billion in parts and materials from Ohio suppliers annually, $2 billion of which goes to Honda facilities in other states.

"There are 154 Honda suppliers in Ohio. There are Honda suppliers in 52 of 88 Ohio Counties

"Honda suppliers employ nearly 41,000 Ohioans."

Former Democratic Gov. Dick Celeste, who served from 1982-1990, took part in the 2004 fete, noted the importance of the economic relationship and pointed out that Ohio had invested heavily in Honda, an investment that paid off handsomely.

“Clearly, Honda has found success in Ohio and Ohio has found success in Honda. Ohio’s investments in Honda over the years have been repaid many times over.”

"Investments by the State include $27 million in direct incentives and $64.4 million in related roadwork improvements. For every dollar in direct incentives, Honda has invested $226 in its Ohio operations."

Bruce Johnson, who was economic development director under Bob Taft, also was effusive about the Tokyo-Ohio ties. His remarks:

"Honda is proof that strong relationships, targeted incentives and continual nurturing can combine to produce a significant return on investment. The presence and growth of Honda of America over the last 25 years is the perfect economic development success story, demonstrating how good things result from investing in good companies. Johnson called Honda’s decision to produce its new Acura SUV in Ohio good jobs news, pointing out that both the engine and transmission would also be produced in Ohio."

Ohio Pension Divestment Bill: Will It Chill The State's Busness Climate?

CINCINNATI (TDB) -- Rookie State Rep. Shannon Walker Jones may be on the verge of filing a bill that blocks Ohio from investing in companies that do business with Iran. One of those companies, the giant German multi-national Siemens AG, has been No. 10 on the list of major employers in Warren County, a SW Ohio community that Jones represents in the Ohio House. JMZ at Writes Like She Talks has been thinking about foreign corporations and terrorist states, too.

Meanwhile, there also is evidence in state files showing that Ohio has made low-interest loans to Siemens in order to keep jobs in the state. In January 2006, the Ohio Department of Development issued the following statement:

"Siemens Energy & Automation, Inc., located in Norwood (Hamilton County), will receive a $3 million R&D Investment Loan Fund loan at an interest rate of two percent for a 10-year term to purchase equipment and make improvements to their Norwood facility. Siemens AG is one of the largest global electronic and engineering companies in the world, and an industry leader in medical, power, automation and control, transportation, information and communications, lighting, building technologies, water technologies and services, and home appliances. The $8.5 million project is expected to retain 327 jobs within the first three years of the project’s initial operation.

"The 166 Direct Loan program provides loans for land and building acquisition, expansion or renovation, and equipment purchase. The Innovation Ohio Fund Loan (IOF)assists existing Ohio companies develop next generation products in industry sectors that include: advanced materials; instrument, controls and electronics; power and propulsion; biosciences; and information technology."

But Jones, R-Springboro, issued a press release last week with State Rep. Josh Mandel, R-Lyndhurst, promising legislation to mandate that the state of Ohio divest investments from corporations doing business in the Islamic Republic of Iran. The implication is that the foreign firms are threats to the U.S., and are less than admirable world citizens. That seems to clash head on with Ohio's public policy of trying to court Siemens and even promote expansion.

Jones and Mandel said huge sums of state pension dollars are being invested in companies with ties to states that sponsor terrorists. Jones contends the divestment measure would be sound fiscal policy and a strong stand against terrorism. In a way, she wants Ohio to have a backdoor foreign policy of its own: Do business with people we don't like and we won't do business with you.

Their plan would prohibit state agencies from investing assets in any corporation doing business in the Islamic Republic of Iran and require government agencies to undertake a program to eliminate any investments prohibited by the bill within one year of the bill's effective date. Mandel said Missouri and California have started to address this issue through legislation, and that the measure he and Jones intend to introduce for Iran-free funds in Ohio would be the nation's most aggressive Iran divestment policy.

But the measure could hugely embarrass foreign firms that have invested in Ohio and put people to work. For example, Siemens has several operations around Ohio and overall is the 88th largest employer in the state. At last count, it had about 3,200 workers in Ohio. It is nearly the same size employer as Bowling Green State University. And it was tied with Owens Corning of Toledo, a company that is a household word in the Glass City.

Some information about the Munich-based multi-national's division in Warren County is HERE. A recent Ohio Department of Development research report about the state's top employers is
HERE.

The question: Will the Jones-Mandel measure scare off foreign companies whose U.S. subsidiaries have put Ohioans to work? Does the proposed divestment policy harm the efforts of economic development officials who try to recruit companies? Should Ohio have its own foreign policy?

Bottomline: the Jones-Mandel proposal appears well-intentioned. But there could be unintended consequences if foreign multi-nationals decide Ohio has a hostile climate.