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30 Years Later, Honda’s Future Bright… But Not Without Bumps

Tuesday, November 27, 2012 at 11:30 AM

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30 years ago this month, Honda became the first Japanese auto-maker to start production on U.S. soil. Its conversion of an Ohio cornfield into a factory chugging out waves of Honda Accords was seen as both revolutionary and foolhardy. Honda has survived and prospered, but lately it has come under increasing pressure in a tightening race for the top slot in midsize sedans. Ideastream’s Brian Bull reports:

Photo Gallery

Unpainted shells of Honda vehicles shuttle through a row of robotic welders (photo by Brian Bull) Honda technicians do final test and checks on each car before sending them out of the factory (pic by Brian Bull) Marysville plant manager, Jeff Tomko, in the standard uniform for all Honda workers (pic by Brian Bull) Honda vehicles wait to have their electronic systems tested and fine tuned (pic by Brian Bull) A Honda line worker scans a subassembly, for tracking purposes (pic by Brian Bull).

Inside the Honda plant in Marysville, Ohio, a virtual conga-line of Accords rotate through the welding line. Once the line stops rolling, dozens of insect-like robotic arms fall upon them.  Golden sparks erupt across the floor like fireworks.

“This new Accord has about 2500 spot welds,” says plant manager, Jeff Tomko.

Like every Honda worker – or “associate”—Tomko wears a white jumpsuit with his name stitched in red lettering on the chest.  Since starting with Honda 26 years ago, he’s seen the company grow tremendously.

“Just here at Marysville, we’ve got 4,400 associates, and within the Ohio area, we have more than 13,000,” says Tomko. “If you add our suppliers on top of that, it’s a really big impact not just in our community, in Ohio, but in North America and globally.  And with our recent investments of more than $2 billion here locally, we’re going to continue to grow.”

Not many saw a future for Honda back in 1982, when it opened its first American plant.  Foreign car makers were seen as a threat to the nation’s jobs and manufacturing reputation. So Honda’s Marysville venture was considered a bold move. In fact…

“It was a downright reckless move,” says Paul Ingrassia, deputy editor-in-chief at Thomson-Reuters. 

Ingrassia has covered the automotive industry for 30 years. He says early on, Honda was a third tier Japanese car maker, dwarfed by Toyota and Nissan in its home market.  But in the U.S., where American-made cars were getting poor consumer reviews and foreign cars were gaining in popularity, Honda saw opportunity… and took it a step further. 

“The company decided that, `Gee…they’ll probably be some protectionist sentiment, and to counteract that protectionist sentiment, we’ll need to actually build cars in the U.S. and employ American workers,’” says Ingrassia.

“And what Honda did, was prove that American workers can build great cars.”

Honda’s first line of U.S. built Accords rolled out in November of 1982, and it’s mostly been a smooth ride since. By replacing the executive-worker system with a more inclusive team model, and fostering innovation among employees, it changed the culture of the auto industry. Its Accord has remained one of the top-rated and top-selling cars ever. Honda also inspired Nissan and Toyota to open plants in America, shortly after opening its Marysville plant. 

But Ned Hill, an economist at Cleveland State, says Honda’s trailblazing has put it at a competitive crossroads.

“There was a period of time where Honda was getting complacent,” says Hill.  “In fact in the past, they only looked at Toyota, they were the big brother in Japan.  Well, they’ve put Ford and GM in the exact same place as Toyota right now.”

Hill says besides cars like the Ford Fusion, Chevy Cruze, and Toyota Camry giving Honda tough competition, there are new, higher fuel efficiency standards enacted by the White House, and ongoing consumer demand for more comfortable, affordable cars. Hill says if Honda wants to stay ahead, it’ll need to retain its edgy, bold corporate culture. Honda’s already revisiting its Civic design, after tepid reviews of its 2012 model. Two other recent setbacks aren’t helping, says Mike Accavitti, Honda’s Vice-President of Automobile Marketing: 

“Last year, Honda was hit by two unprecedented natural disasters.  First, the great Japan earthquake-slash-tsunami.  Followed by some serious flooding in Thailand.”

Accavitti says despite this disruption in production and supply chains, Honda expects end of the year sales to be up 25 percent from 2011. And Honda still aims to boost North American production, to where 90 percent of its cars are made here. But while the outlook is good for Honda’s line of vehicles, it’s learning to share the road with competitors who’ve watched the company grow…and have taken notes.

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Economy, Regional Economy/Business - Analysis and Trends, Transportation, Technology

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