Establishing Honda of America Manufacturing / 1980

A Manufacturing Base in America, Land of the Automobile

Establishing Honda of America Manufacturing / 1980

Gaining an Edge in the Global Competition

Honda found itself surrounded by an atmosphere of upheaval in the 1970s, both in Japan and abroad.

Yet, that situation had actually arisen much earlier-in the mid-1960s when, along with advancing industrialization and motorization, air pollution had become a serious social issue. The Clean Air Act of 1970 passed by the U.S. Congress resulted in even stricter regulations regarding tailpipe emissions. Moreover, the Clean Air Act had influenced the Japanese government to tighten its own policies.

Photo

A view of the entire HAM plant at Marysville, Ohio, in the American Midwest. The building at the front is a motorcycle plant, which began operating in September 1979. The auto plant is in the rear.

Accordingly, auto manufacturers had to comply with such demands, and with no time to waste. Company President Soichiro Honda put out a call to action on behalf of researchers at the R&D Center, saying, "This allows latecomers like us to line up at the same starting line as our rivals." His encouragement extended to all Honda associates. "Now is the chance," he said, emphasizing his view of the matter in several issues of the Honda Company Newsletter.

In August 1971, the U.S. government announced its policy in protection of the dollar. This was the result of a shift in the yen toward the floating-exchange-rate system, which had prompted the actual value of the yen to rise, bringing about a crash in the Japanese stock market.

At Honda, where exports to the U.S. and other countries made up 60 percent of total revenues, the impact was tremendous.

"We must use new ideas to change our way of doing business," stated Executive Vice-President Takeo Fujisawa in the September 7, 1971, issue of Nihon Keizai Shimbun. "Otherwise, we’ll continue to feel the impact of outside forces. In fact, we’re already having difficulties with our conventional method of rapidly increasing the number of exports by employing technologies, mass-producing and streamlining. We have to come up with a newer, more suitable method."

The New Honda Plan (NHP), proposed by the senior managing director Kiyoshi Kawashima, was implemented in April 1972 as a company-wide effort to build a corporate structure that would allow rapid response to changing situations in a flexible manner. The "Global Production Strategy," was one such project promoted to all corporate divisions.

Kiyoshi Kawashima assumed the post of company president in October 1973, effectively replacing Honda founders Soichiro Honda and Takeo Fujisawa. Immediately afterward, another incident took place that rocked the global economy to its very foundation: the first oil crisis, triggered by the war in the Middle East. However, it was more than a direct hit to business. It also gave rise to serious questions concerning the entire global population. The oil crisis was an especially heavy blow to the Japanese economy, which, despite almost 100 percent dependence on foreign petroleum, had been riding a wave of high economic growth. The oil crisis, however, served as an opportunity for Honda to establish the idea of decentralizing its manufacturing bases and becoming even more global. Indeed, it led the company to give serious consideration to the creation of a system that could offer a steady supply of products without being affected by changes in global dynamics.

At the same time, Honda had a long-standing policy to build products in the market where they are sold. Through this policy, Honda also can contribute to the local community through employment and paying taxes. The policy is based on Honda’s corporate philosophy of "The Tree Joys" - the "joy of buying", the "joy of selling" and the "joy of creating." To realize this policy, the NHP Global Production Strategy Project team began analyzing the possibility of local motorcycle production in the U.S. - the biggest single Honda market in the world.

Therefore, a feasibility study was conducted in the fall of 1974, at the request of Kiyoshi Kawashima. There were feasibility study tours of American manufacturing plants, and cost comparisons between the importation of completed cars and local manufacturing. However, it was a big question whether such products manufactured in the U.S. would possess the same quality as those built in Japan, as was the issue of profitability.

"Okay, I understand," said Kiyoshi Kawashima. "Let me hold onto this project for the time being. But keep the research data handy so that it can be used whenever the need arises." He then decided to forego the manufacture of motorcycles in the U.S., ending the NHP’s study. However, he could not seem to forget the idea of establishing a manufacturing base in the U.S. that would allow motorcycles to be made locally.

Believing that one-way exports would not last indefinitely and that thinking in terms of profit only would never allow him to make up his mind, Kawashima decided he should weigh such a decision with great care.

The Challenging Spirit of Honda

A System that Fosters Expertise
  1. A System that Fosters ExpertiseA System that Fosters Expertise
  2. The R&D Center Goes Independent / 1960The R&D Center Goes Independent / 1960
  3. Employing the "My Record" Project and Expert Certification  / 1960Employing the "My Record" Project and Expert Certification / 1960
A Dream Come True: Car Builder for the World
  1. A Dream Come True: Car Builder for the WorldA Dream Come True: Car Builder for the World
  2. Launching the S360 and T360 / 1962Launching the S360 and T360 / 1962
  3. Entering the Auto Market at Last / 1966Entering the Auto Market at Last / 1966
  4. Introducing N360 / 1967Introducing N360 / 1967
  5. Launching the Honda 1300 / 1968Launching the Honda 1300 / 1968
  6. Introducing the CVCC / 1972Introducing the CVCC / 1972
  7. Announcing the Civic / 1972Announcing the Civic / 1972
  8. Introducing the Accord / 1976Introducing the Accord / 1976
Marketing Globally, Producing Lacally
  1. Marketing Globally, Producing LocallyMarketing Globally, Producing Locally
  2. Establishing American Honda Motor Co. / 1959Establishing American Honda Motor Co. / 1959
  3. Establishing Belgium Honda / 1963Establishing Belgium Honda / 1963
  4. Establishing Honda of America Manufacturing / 1980Establishing Honda of America Manufacturing / 1980
A Refreshing New Development
  1. A Refreshing New DevelopmentA Refreshing New Development
Products Emerging From Technology and Innovation
  1. Products Emerging From Technology and InnovationProducts Emerging From Technology and Innovation
  2. The Oval Piston Engine / 1979The Oval Piston Engine / 1979
  3. The Hondamatic Transmission / 1968The Hondamatic Transmission / 1968
  4. The Car Navigation System / 1981The Car Navigation System / 1981
  5. The Airbag System / 1987The Airbag System / 1987
  6. Four-Wheel Steering System (4WS) / 1987Four-Wheel Steering System (4WS) / 1987
  7. The VTEC Engine / 1989The VTEC Engine / 1989
  8. The ME Engine (G100 / 150 / 200 / 300 / 400 Series) / 1977The ME Engine (G100 / 150 / 200 / 300 / 400 Series) / 1977
  9. The ZE Engine (GX110 / 140 / 240 / 270 / 340 Series) / 1983The ZE Engine (GX110 / 140 / 240 / 270 / 340 Series) / 1983
  10. The Dream CB750 FOUR / 1969The Dream CB750 FOUR / 1969
  11. CG125 / 1975CG125 / 1975
  12. Road Pal / 1976Road Pal / 1976
  13. City / 1981City / 1981
  14. The NSX / 1990The NSX / 1990
  15. Odyssey / 1994Odyssey / 1994
  16. Honda EV Plus: The Dream of an Electric Vehicle / 1988Honda EV Plus: The Dream of an Electric Vehicle / 1988
  17. The E300 Portable Generator / 1965The E300 Portable Generator / 1965
  18. The HR21 Lawn Mower / 1978The HR21 Lawn Mower / 1978
  19. The F200 "Komame" Mini-Tiller / 1980The F200 "Komame" Mini-Tiller / 1980
Production Technology: The Essence of Creative Manufacturing
  1. Production Technology: The Essence of Creative ManufaturingProduction Technology: The Essence of Creative Manufaturing
  2. Establishment of Honda Engineering / 1974Establishment of Honda Engineering / 1974
  3. The World's Smallest Welding Line / 1982The World's Smallest Welding Line / 1982
  4. Transfer Lines for Modular Components / 1981Transfer Lines for Modular Components / 1981
  5. An Automated Line for Painting and Coating / 1988An Automated Line for Painting and Coating / 1988
A Neverending Passion for Racing
  1. A Neverending Passion for RacingA Neverending Passion for Racing
  2. Completion of Suzuka Circuit / 1962Completion of Suzuka Circuit / 1962
  3. Returning to the World Motorcycle Grand Prix / 1979Returning to the World Motorcycle Grand Prix / 1979
  4. Formula One Entry: The Initial Phase / 1964Formula One Entry: The Initial Phase / 1964
  5. Formula One Entry: The Second Phase / 1983Formula One Entry: The Second Phase / 1983
  6. Entry to Champ Car Racing / 1994Entry to Champ Car Racing / 1994
  7. The Birth of Twin Ring Motegi / 1997The Birth of Twin Ring Motegi / 1997
Creativity - The Way to Work Harder, Play Harder
  1. Creativity – The Way to Work Harder, Play Harder Creativity – The Way to Work Harder, Play Harder
  2. Holding All Honda Idea Contests / 1970Holding All Honda Idea Contests / 1970
People and Society Coexisting in Harmony with Nature
  1. People and Society Coexisting in Harmony with NaturePeople and Society Coexisting in Harmony with Nature
  2. Establishment of Honda Taiyo, Kibo-no-Sato Honda and Honda R&D Taiyo / 1992Establishment of Honda Taiyo, Kibo-no-Sato Honda and Honda R&D Taiyo / 1992
  3. Creating Hometown Forests / 1977Creating Hometown Forests / 1977
  4. Hosting "Orei-no-kai" / 1991Hosting "Orei-no-kai" / 1991

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