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| Executive Vice President Kihachiro Kawashima made an announcement on October 11, 1979, regarding the building of a Honda motorcycle factory in the Midwestern U.S. state of Ohio. |
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Honda’s impending full-scale exportation of Civic cars and CVCC engines to the U.S. was to occur at a time in which the American auto industry was suffering the effects of the first oil crisis, which had made consumers wary of the cumbersome “gas guzzlers” being offered by Detroit. In fact, the U.S. makers still had no consensus concerning a technology that would meet the requirements of the Clean Air Act. It had not yet developed reasonably priced economy cars, leaving that segment of the market open to European and Japanese models, which gradually began populating the country. In the meantime, the American factories began trimming back their operations, laying off increased numbers of employees.
The American expansion of Civic sales would therefore necessitate a larger number of dealerships. Increasing the number of imported cars--Civics, in particular--would require countermeasures against the future import regulations that would likely be imposed.
Thus, Honda President Kiyoshi Kawashima’s goal—the manufacture of automobiles in the U.S.—agreed with the realities of an entire economy, society, and auto industry. He knew the key to Honda’s continued growth was to pursue the potential of local production in America.
Suzuki left Japan in January 1976, flying to the U.S. in order to accomplish his mission. Following an exchange of opinions with Hirofumi Nakamura, the general manager of American Honda Motor Co., he held talks with American managers, seeking their comments regarding the manufacture of automobiles stateside. Based on their own rather unpleasant experiences with the intrinsic quality problems of contemporary American-made cars, though, the U.S. managers did not agree that it would be a good idea for Honda to do so. Actually, they all said that “rather than think of doing something so difficult, we should send more and more cars from Japan while the Civic is riding high in sales.” Accordingly, the conclusion drawn from the discussion was to study the feasibility of U.S. manufacturing, with emphasis on the achievement of consistently high quality levels:
1) What type of management structure would enable the production of quality cars?
2) What type of location should we choose in order to secure an environment in which cars of outstanding quality could be produced?
The spring of 1976 found Suzuki in the midst of sales negotiations with Ford regarding CVCC engine units. Lee Iacocca, president of Ford Motor Company , had much to say in praise of the Accord, which Honda had just begun selling in the U.S., albeit in limited numbers.
“I drive [an Accord] myself on the commute to work,” Iacocca said, expressing a desire for those engines to be supplied to Ford. “You have my congratulations for making such a wonderful car.”
The negotiator from Ford also assured Suzuki that if Ford were to come up with a manufacturing plan for Accords, then annual sales of 600,000 units, including station wagons, could easily be achieved.
Suzuki in turn said he was studying the possible manufacture of cars in the U.S., and asked for permission to tour Ford’s main plants. Iacocca promptly introduced him to Ford’s vice-president in charge of production, and that same day, they had a discussion. The vice president then referred Suzuki to the most highly rated facility among the many that Ford operated. Significantly, that evaluation was based mostly on the quality of its employees. Therefore, following that meeting he visited the plant, in which the methods of communication between the management and production crew were well established. Suzuki was impressed, but he also knew the plant would present certain limitations in terms of knockdown production.
The knockdown system was in fact a prominent part of American auto manufacturing, in which the main car assemblies were transported via railroad from Detroit, Michigan. The manufacturing systems made use of multiple-variety, small-volume production, employing buildings and facilities that had long since reached their maximum depreciation.
At the same time, Honda Engineering (EG) was becoming increasingly confident in its manufacturing technologies, which featured welding machines and robots for reduced presswork and a dramatic integration of welding processes. Through this system, beginning with a stamping process that boasted a technology for the rapid changeover of dies and cutting heads, Honda was already at the point at which real cost-performance could be achieved using a sensible scale of production.
Suzuki’s tour of the Ford plant therefore facilitated a clearer perspective of what hardware should be brought to the U.S., i. e., the types of cars that should be made and what Honda should do in terms of production. In fact, he was starting to think that Honda was competent enough to manufacture cars in America, the fabled Land of the Automobile.
In his travels across the U.S., Suzuki was keenly aware of how those involved in service industries, including hotels and restaurants, could offer such sophistication of hospitality. He could not dismiss the fact that America’s true greatness was to be found in the friendliness and cheerfulness of its people, and in the inherent pleasures of that environment.
Therefore, he knew it was not a matter of people intentionally producing bad cars. Rather, it was because the management systems deprived workers of their natural motivation to excel. The auto factories themselves were no exception.
Suzuki also became aware of the differences in environments and lifestyles he had observed among the different regions of the country. He knew he had to consider such factors when choosing a site for plant construction. |
