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Honda of America has a large presence in Central Ohio. The earthquake in Japan has had a just-announced effect on the local plants, causing what is hoped to be a short-term parts shortage. The production shifts have been cut back in order to preserve parts inventories. Some employees will experience a reduction in their hours worked and wages, hoped to last for a short period of time. Some of that time is expected to be taken up with cleaning and maintenance. Staff will also be allowed to take vacation days. The local economy, however, has become increasingly dependent on Honda employees and their spending for its economic health … So too my rental business.
As the recent Great Recession really hit some of its depths, the local Honda plants for the first time since coming to Central Ohio in the late 1970s and early 1980s shut down production lines and offered early retirement packages to its longer term employees. We have a number of tenants who either work at Honda or work for a Honda support company. One, for example, works food service at the Honda plant for a separate contractor. Another works as a long-term temporary at the Honda plant. Both remain long-term tenants. The long-term temporary had worked at the Honda plant for over 10 years but always for the temporary firm, never becoming an actual Honda staffer. Naturally, she was among the first laid off. She was also brought back on at Honda, among the last to be brought back to the plant when it returned to three shifts after several months. During her lay-off, she was late with her rent during the third month of her time off work for the first time in her long relationship with us.
As she remains a tenant and still a temporary worker at the Honda plant, I fear she will among the first to lose hours and may again fall short of funds. We worked with her then and we will work with her again, if necessary.
We also have a number of tenants who work for the related business growth that Honda has brought to the community. For example, the community over the past several years has added a Lowe’s and a Home Depot, several modest sit-down restaurants and sports bars, fast food restaurants, and related growth in a few additional commercial strip malls and small shops. We have tenants who work in the restaurants. If the Honda plant reduces hours and paychecks are cut, employees are likely to cut eating out at the local restaurants as a short-term fix.
We are less concerned about a couple of our tenants who work at the local hospital as aides and janitorial staff. Unless there is a plant closure, the hospital serves the overall population, a population that has grown in part because of Honda’s growth. The area is not likely to become like Detroit in the near-term.
Ultimately, we found it important the last time Honda suffered through a shut-down to communicate with our tenants and to be sure to follow-up immediately on any late rents. Those tenants that have otherwise paid on time and who communicate to us their situation are likely to be given every opportunity to keep their unit, even if their rents are late. We also can direct some of the tenants to local charities and churches who provide short term rent help and financial contributions to struggling families. The Salvation Army, for example, in the community has helped our tenants make their initial deposit payments and can help with a month’s rent from time to time.
We will be keeping our eye on the news coming from Honda. One hope is that perhaps some of the production may shift from Japan to the local plans ultimately as Japan struggles to rebuild from the awful tragedy. This might bring growth to the area over the longer term. Honda may find it imperative to expand their parts production to a number of locations in the future to offset the risk of a catastrophe like this in the future taking down a single site of production of key components. The local plants could benefit from such a possible strategic change. And if the plants benefit, the local economy will benefit. Our business interests will benefit, as well.
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