From Belgium to Brazil

<< 1. The Shocking State of Motorcycles in Developing Countries
<< 2. Engine concepts drawn up overnight
<< 3. Creating a Useful Bike for Developing Countries
<< 4. Fulfilling the Expectations of a Growing Region
<< 5. From Belgium to Brazil
<< 6. The Decision to Build in Manaus
<< 7. The First Factory Manager-34 Years Old
<< 8. High Inflation: The Challenge of a Crisis

Kensuke Fukatsu, then section manager of the No. 2 Business Affairs Section, the KD Technology Office, had just returned to Japan from his stint working at Belgium Honda in March 1974, when he was promptly assigned the task of building a motorcycle factory in Brazil.

"The personal belongings we had sent from Belgium had not yet arrived in Japan," remembered Fukatsu, "when I was told by Hiroshi Suzuki, the head of the Technology Office (later the president of Brazil Honda), to go to Brazil immediately."

According to Koichiro Yoshizawa, head of the Foreign Affairs Division, "The Brazilian economy had been on a real growth trend since the second half of the 1960s throughout the '70s. People spoke of Brazil as a 'shining star' among the world's developing countries. Furthermore, a colleague stationed there had submitted his opinion that there was great potential for future growth in Brazil's motorcycle market. That's why we wanted to build a production base in Brazil to meet the future demand throughout Central and South America, regardless of whatever challenges it might have meant."

Honda had considered expanding its production bases overseas during the early 1970s. By 1974, when Fukatsu returned to Japan from Belgium, a full-scale operation to realize the Honda policy of "producing products in the markets where they are sold" had been implemented, the initial task of which was to identify potential markets. Therefore, in addition to the work on behalf of Brazil, many other projects were launched, such as those destined for Italy, Iran, and Nigeria.

Honda officially started its Brazilian operations in November 1971, when Honda Motor Do Brazil was established, importing and selling motorcycles under the management of Osamu Iida. Fearing that the Brazilian government might impose a ban on imports of completed motorcycles due to a lack of foreign currency, Iida had wanted to build a motorcycle manufacturing plant in that country. Therefore, with the approval of Executive Vice President Kihachiro Kawashima and Yoshizawa, he obtained a 1,487,700 square-meter plot of land for $1 million in the suburban São Paulo district of Sumare.

The launch of the Brazil Factory Construction Project in April 1974 meant that Fukatsu, the project's director, would make repeated trips between S?o Paulo and Tokyo. Recalled Yoshizawa of the factory's construction, "Having learned from the bitter experience in Belgium, I asked Mr. Fukatsu and others to start by building a small factory."

Iida and Fukatsu negotiated with the Brazilian government to build a factory on their land in Sumare. However, strict conditions were then imposed in all areas, including the percentage of parts that had to be obtained locally and the investment amount. Because the area was already designated as industrial, new competition was not being welcomed. Therefore, ultimately, they had no choice but to give up, abandoning their Sumare Factory project at the beginning of 1975.

Ironically, more than twenty years later, in September 1997, Honda established an auto production factory which was completed on the Sumare site by reinvesting the profits gained locally in the motorcycle business. With that, the new auto factory began producing the Honda Civic.
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