Plant construction is expected to start within a few months, with the opening due in autumn 2008. It is expected to create 1500-2000 jobs.

Indiana fought off competition from neighbouring Ohio and a late bid by Wisconsin with more than $140m in incentives. But Honda executives suggested it was the sheer enthusiasm that the small town of 10,000 residents showed for the bid that determined the outcome. Activities included letter-writing campaigns by local citizens and a photo of 100 Greensburg residents posing in an H formation, which was sent to the Honda board of directors in Tokyo.

“It’s the first time we’ve ever seen this kind of display from an American community,” said Koichi Kondo, head of Honda North America.

The announcement of the deal was regarded as a coup for the mid-west, which has been losing out on foreign auto plants to southern competitors for the past decade. “It is a coup that will not only affect the community of Greensburg, Indiana, and Honda’s suppliers in Ohio, but will also have a [ripple] effect in the entire mid-west,” said Jay Baron, chief executive of the Center for Automotive Research in Ann Arbor, Michigan.