Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Executive Update Date: Tue, 10 Nov 92 12:43:39 EST Message-ID: <11.1992Nov10.124340@AmeriCast.com> 11/10/92 TITLE Executive Update Made In America: Honda's High-Risk Bet On The U.S. Its Decade As Transplant Has Brought Benefits But No End To Pol- itical Heat Paul A. Eisenstein In Marysville, Ohio Hidden under the heavy tarp, it's hard to make out much more than a faint outline. But one thing's clear: This prototype is the im- age of the future for Honda Motor Co. The shape and size seem to match long-standing rumors that Honda is designing a minivan based on the same platform as its next-generation Accord sedan. If true, the vehicle would give Competition Honda its first foothold in the booming American minivan market, which is expected to grow to 1.5 million units a year by the mid-90s. But there's something even more significant about the prototype in final tests at Honda's Marysville, Ohio, manufactur- ing complex. While company officials won't confirm the vehicle is a minivan, they do acknowledge that it is their first truly Amer- ican vehicle, designed at Honda's new styling studio in Califor- nia and engineered in Ohio. "Self-reliance is something we talk a lot about here," said John Adams, an executive with Honda En- gineering, one of several U.S. subsidiaries based at Honda's manufacturing and engineering center here. Straddling two coun- ties, this 20-square-mile complex is transforming Honda into what many company officials like to think of as America's newest auto- nomous car company. The transformation began 10 years ago this month when the first Accord rolled off the Marysville assembly line. It was a half- billion-dollar risk for Honda. By November 1982, it was obvious that the Japanese had critical advantages over their Big Three rivals in terms of productivity and quality. But Honda was con- vinced it could "make the same quality car in any country," re- called Noboru Hashimoto, now senior vice president in charge of Honda's U.S. research and development unit. U.S.-Made Accords Popular Hashimoto says both internal and external audits have found that the American-made Accords are essentially equal to those still being imported from Japan. American buyers agree. Honda rolled up sales of 399,297 Accords last year, and the vehicle is on its way to becoming the best-selling car in the country for the third year in a row. U.S. production has proven to have another advan- tage. As the dollar weakened against the yen, the U.S. plant be- came an increasingly cost-effective investment. In the past de- cade, Honda of America Manufacturing Inc. and the automaker's other subsidiaries have invested nearly $3 billion in Ohio. The capacity of the original Marysville plant has been doubled so that it can produce up to 360,000 Accord sedans, wagons, coupes - and maybe minivans - a year. A newer plant has been added on the other side of the complex, in East Liberty, and is rolling out 180,000 subcompact Civics each year. There is also a motorcycle plant in Marysville that produces such bikes as the Honda GoldWing#m#cq#m#. And 40 miles away, in Anna, Ohio, a plant makes engines and transmissions, two of the most expensive auto com- ponents. With those engines and transmissions and purchases of other U.S.-made parts, Honda has been steadily increasing its domestic auto content in recent years. If not for the small number of Accords still imported from Japan, the vehicle would now be classified as a "domestic" under federal guidelines. But Honda's conversion into an American company is much broader- based. The design studio in California is aimed at developing products particularly geared to the American market. In Marys- ville, a new R&D center is already undergoing a significant ex- pansion. American Designer Input The input of American designers and engineers can be seen on several products in the Honda lineup, including the Accord sta- tion wagon and the newest Civic, a coupe codenamed the NX. "Roughly 50% of the coupe was developed by the Japanese side, roughly 50% by the U.S. side," explained Charles Baker, an execu- tive engineer with Honda's American R&D unit. "In all of this, it's step-by-step (as) we demonstrate our abilities." The vehicle under the tarp, Honda insiders say, is an even more uniquely American vehicle, though it will still be based on a Japanese- designed chassis. If it proves a success, it is possible the U.S. operation could eventually receive complete responsibility for a new vehicle. Other Japanese automakers also have been busy set- ting up shop in North America. "By the mid-90s, we expect the transplants will have capacity to build over three million vehicles a year," said automotive con- sultant William Pochiluk at Autofacts Inc. The transplants have permitted the Japanese to circumvent restrictive import quotas that were recently cut to 1.6 million passenger cars a year. Expansions Postponed But the transplants have worsened the problem of industry over- capacity, especially with the North American new-car market in a deep slump. The domestics thus have been lobbying Congress not only to cut imports but also to limit or bar the opening of further Japanese transplants. Fearful of stirring up more "Buy American" sentiment, the Japanese have cut back on plans to further expand their North American manufacturing capacity, at least for the moment. But Pochiluk and other analysts believe these are just temporary, politically expedient gestures. As the economy recovers, more transplants likely will be added, and they probably will focus on truck production, targeting the only seg- ment of the market where the Big Three still hold the lead. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM