Japanese Investment in Indiana Big Issue in Gubernatorial Race

When the Japanese come to town in the Midwest to announce the opening of an auto plant, they are typically met by a frenzied celebration.

But in Indiana, they have been met instead by political controversy, seemingly built upon latent American fears of a Japanese invasion of the nation’s industrial heartland.

In this fall’s tough gubernatorial race here in Indiana, the central issue of the campaign has become the new, $500-million Subaru-Isuzu joint venture auto plant, now under construction just outside Lafayette.

Evan Bayh, the 32-year-old Democratic candidate for governor and son of former Indiana U.S. Sen. Birch Bayh, has turned his Republican opponent’s support for huge subsidies for the Subaru-Isuzu factory into the key issue in the race, while also drawing out anti-Japanese sentiment among the state’s conservative voters.

In dramatic television commercials that are now saturating Indiana’s airwaves, the Bayh campaign blasts Lt. Gov. John Mutz--the Republican gubernatorial candidate who has headed up the state’s economic development efforts for the past eight years--for giving $55 million in taxpayer money to “the Japanese.” At issue is $55 million in state subsidies and tax breaks for Subaru-Isuzu that Mutz helped arrange.

The Japanese auto companies have repaid that kindness, the commercial continues, by hiring a Japanese construction company--rather than an Indiana contractor--to build the facility.

Throughout the ad, words and images repeatedly hammer home thoughts of “Japan” and “the Japanese.”

Bayh campaign officials, pleased as they watch their candidate open up a double-digit lead in the polls, now give much of the credit to the attacks on the Subaru-Isuzu deal.

“That has been a major issue in the campaign, and it’s one of the main reasons we’ve been competitive in the race,” said Bayh press secretary Fred Nation.

‘Darker Side’

But the Mutz campaign has fought back, charging Bayh, Indiana’s elected secretary of state, with inflaming anti-Japanese sentiment for political gain.

“All you have to do is listen to or watch the ad--they mention the word Japan or the Japanese four times in the space of 30 seconds,” said Mutz spokeswoman Jan Powell.

“We have never said that Evan Bayh is racist, but he is appealing to the darker side” of voters, added Powell. “He has taken a poll and found a fear of foreign investment, of Japanese investment, perhaps left over from the war, that we know is out there.”

Bayh campaign officials deny any racist intent, however. “It’s not racism we’re appealing to, but a concern and fear over foreign ownership of industry,” says Nation. He adds that Bayh has pledged to live up to the state’s existing commitments to the project, despite figures showing that Indiana will be paying more per job in subsidies than any other state that has landed a Japanese auto assembly plant.

“We’re not anti-Japanese,” Nation insists.

Why then, Powell asks, hasn’t “Bayh said a word about the Dutch or other European plants in the state?”

Personal Charges

This is not the first time that one of the Japanese “transplant” U.S. auto plants has become a political football. In 1987, Democrat Wallace Wilkinson was elected governor of Kentucky after criticizing the previous Administration’s willingness to give big subsidies to land Toyota’s assembly plant.

But the Indiana race seems to be the first time in which one of the Japanese factories has become the central focus of a major statewide campaign, prompting television ads and counter-ads.

It is also an issue that has evoked increasingly personal charges here. After Bayh went on the attack against Mutz’s deal with Subaru-Isuzu, the Mutz campaign pointed out that Susan Bayh, Evan Bayh’s wife and an Indianapolis lawyer, was the attorney of record representing Subaru-Isuzu in a 1987 rate case before the Indiana Public Service Commission, which regulates electric and energy rates charged by the state’s utilities.

“We of course believe that his wife is entitled to her own views; we just happen to believe that her opinion of the project was more correct than her husband’s,” says Mutz spokeswoman Powell.

So far, officials at the joint venture have laid low in the midst of the controversy, hoping it will all blow over once the election is over.

“There is no corporate response to this,” says Christine Miller, spokeswoman for the Japanese venture. “The minute we make any comments, we will get sucked so badly into this campaign, and we’re just interested in making cars.”