Annual Report 2002
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The Green Factory Concept
The Green Factory concept is designed to facilitate the efficient use of resources and to eliminate industrial waste at Honda plants worldwide. As part of this initiative, we are further revising production processes and creating an advanced manufacturing system that is both flexible and environmentally sound, thereby enabling us to supply products that redefine concepts of vehicle quality.

THE NEW MANUFACTURING SYSTEM
Over the past few years, we have made fundamental changes to production processes at manufacturing facilities worldwide – beginning with our principal Japanese automobile manufacturing facilities in Suzuka and Saitama and major plants in the United States, Canada and the United Kingdom – as part of an overall drive to raise quality, efficiency, flexibility and environmental soundness. To this end, we sought to make the most of our accumulated expertise and experience by actively canvassing ideas from our production-line associates. One such idea led to the use of industrial robots for welding, a move that has increased speed, body precision and durability, while simultaneously reducing energy consumption. Another associate suggestion resulted in the adoption of waterborne paints, improving the work environment for line associates, shortening process times and improving vehicle finishes. Associate input also led to a reorganization of the assembly process into functional process zones and the use of subassembly lines to manufacture modular parts. This change has contributed substantially to improvements in product quality and production efficiency.

The renovation of production processes has had a far-reaching positive effect. Changes implemented on the Suzuka Factory's No. 1 line, for example, halved specific investment for the introduction of new models, as well as halved initial investment for line installation when the line was revamped in May 2000. The modifications to production processes on the line since that date have slashed lead times by an average of 30%; increased flexibility, enabling the line to accommodate a maximum of eight models; and reduced carbon dioxide (CO2) emissions by approximately 20%. As a result of enhanced efficiency, we will reduce the number of production lines at our Suzuka Factory to two, from the current three, while maintaining the same capacity, by the end of fiscal 2003.

ENVIRONMENTALLY SOUND FACILITIES
We are also taking decisive action aimed at eradicating industrial waste from our production facilities. In July 2000 – well ahead of the original schedule – we succeeded in completely eliminating the output of industrial waste requiring disposal as landfill from all our domestic manufacturing facilities. We have also set stringent voluntary emission targets and are stepping up efforts to achieve steady reductions in air and water pollutants and ensure effective management.

Thanks to New Manufacturing System processes and a multifunctional, integrated and synchronized production line, the Hosoe Plant – a new outboard engine facility at the Hamamatsu Factory in Japan – boasts 40% fewer CO2 emissions than the previous outboard engine facility and zero wastewater discharge.

In production and development, we are taking measures to improve the efficiency of overall energy and resource use, including the installation of high-efficiency cogeneration systems. In fiscal 2002, we achieved a 15% reduction in energy consumption per unit of production at our domestic factories, compared with the fiscal 1991 level. By fiscal 2011, we intend to increase this percentage to 30%.

We are also expanding implementation of the Green Factory concept at manufacturing facilities overseas.

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