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.

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“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.