IBJNews

Honda returning to full production despite sales declines

Back to TopCommentsE-mailPrintBookmark and Share

Honda Motor Co.’s reputation for world-class manufacturing may belie a slipping emphasis on design just as the automaker’s North American factories—including a huge plant in Indiana—are preparing to return to full production.

Consumer Reports’ decision this month to pan the Civic, a onetime favorite, shows Honda may need to focus as much on design as it does factory accolades and ramping up after Japan’s March earthquake and tsunami, said Jim Hall, who runs automotive consulting firm 2953 Analytics Inc. in Birmingham, Mich.

“Customers don’t care about how the cars are made,” Hall said. “They care how they drive and how they look. If you are doing an exceptional job building a mediocre product, that impresses the industry but not the buyer.”

Honda, the Japanese automaker that is most reliant on American sales, has sold 2.6 percent fewer vehicles this year in the United States and posted three straight declines in quarterly net income. Hyundai Motor Co.’s U.S. sales jumped 23 percent this year because of gains by its new Elantra compact and Sonata sedan, rivals to Honda’s Civic and Accord.

Tokyo-based Honda is counting on resuming full assembly at its North American plants by September and further improving quality to revive sales. The company’s Greensburg plant in Indiana, which opened in 2008 and produces the Civic, is rated one of the world’s best by J.D. Power & Associates.

The Indiana plant, about 50 miles southeast of Indianapolis in Decatur County, received J.D. Power’s “platinum” award, tying two Toyota Motor Co. factories, based on Power’s 2011 survey of initial quality for new vehicles. Honda factories in Suzuka, Japan and East Liberty, Ohio, also earned Power awards.

In Indiana, Honda plans to add a second assembly shift Oct. 24 and hire 1,000 workers, doubling employment, said Fred Payne, the factory’s manager of corporate affairs.

At full capacity, Honda produces about 100,000 cars a year at the Greensburg plant. A second shift will double that capacity to 200,000 vehicles a year.

The question for some automotive engineering and styling experts is whether Honda is focusing on the right issues beyond production. Consumer Reports on Aug. 1 said it can’t recommend the 2012 Civic, citing a rough ride and noise. The Yonkers, N.Y.-based magazine previously criticized Honda’s CR-Z and Insight hybrids and Accord Crosstour and Acura ZDX wagons.

The Civic’s exterior “is miserably absent of character,” said Eric Noble, president of The Car Lab, an auto-industry consulting firm in Orange, California. “With the previous version, the styling was polarizing, but it did very well in terms of sales. I just don’t see that happening this time.”

Honda’s manufacturing capabilities are “exceptional,” said Jeff Liker, a professor of engineering at the University of Michigan in Ann Arbor who studies factory efficiency. “But it does seem that recently there have been surprisingly many slip-ups in product development.”

Honda took exception to the Consumer Reports decision and says its vehicles, not just factories, are winning awards. The automaker had seven models finish with the highest ratings in J.D. Power’s annual survey of initial vehicle quality.

“We realize that our customers and fans hold Honda to a very high standard,” said Jeffrey Smith, Honda’s assistant vice president for corporate affairs at American Honda, said in an e-mail. Smith said he’s confident Honda’s “products will meet this challenge."

U.S. sales of the Civic slid 9.7 percent in the first seven months of 2011, to 141,577, while Ford Motor Co.’s Focus rose 7.3 percent, to 112,913, and Hyundai’s Elantra gained 56 percent, to 118,482. General Motors Co. has sold 147,620 of its new Cruze model during the same period, and it was the best-selling car in the U.S. in June.

Honda’s success in the 1980s and 1990s was fueled by founder Soichiro Honda’s push for “relentless innovation,” said John Shook, chairman of the Lean Enterprise Institute in Brookline, Mass., and a former Toyota engineer.

“Honda was almost a kind of Steve Jobs figure for the company,” Shook said, referring to Apple Inc.’s CEO. “Perhaps it’s not fully overcome the loss of his influence, really pushing hard for innovation.” Soichiro Honda was involved with the company until his 1991 death.

Honda’s CR-V remains the top-selling sport-utility vehicle in the U.S. for a fourth year, with deliveries up 17 percent through July.

A new version of the compact crossover built in East Liberty, Ohio, goes on sale this year. The Odyssey minivan that was revamped last year is still recommended by Consumer Reports, and Honda is accelerating production at its Alabama plant.

In Marysville, Ohio, a shift on one of two lines eliminated in 2008 will be restored late this year, said Ron Lietzke, a spokesman for the company’s U.S. production unit.

In Greensburg, plant officials are making dramatic changes to the production process. Improvements result from changing the production line’s layout and modifying assembly techniques and not from advanced equipment, said George Grahovac, manager of Greensburg’s parts material department.The plant also is developing simpler production techniques that Honda is adopting elsewhere.

The factory is a “culmination of everything we’ve learned over the past 30 years,” Lietzke said.

New methods include teams of only five workers at an assembly station, compared with 10- to 15-person teams at other Honda plants, and managers working from desks all along the open, paperclip-shaped line, Grahovac said. Those allow immediate reaction when something is wrong, he said.

Liker, the Michigan professor, doesn’t doubt Honda’s factory innovations. It’s the design that needs work, he said.

“They could do a fabulous job in all respects, Liker said. “Except for what the car looks like.”

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Hello Dear Are you tired of Seeking Loans and Mortgages,have you Been Turned down constantly By your banks and Other Financial Institutions or Micro Finance scheme. This is let you know with 100% guarantee that we Offer loans ranging from $1,000 Minimum to $1,000,000.00 Maximum at 3% interest rate per Month. We give out LOANS for developing business. a competitive edge/business expansion. email address: michealscottloan124@gmail.com We offer the following kinds of loans and many more; * Personal Loans ( Unsecured Loan) * Business Loans ( Unsecured Loan) * Consolidation Loan * Combination Loan * Home Improvement * Xmas Loans for contact to seek for loan email this email address: michealscottloan124@gmail.com Thanks

  2. My name is Mr Henry Josh and i live in the USA California and life is worth living right now for me and my family and all this is because of one man sent by GOD to help me and my family, i once had a life filled with sorrow because my first SON needed a kidney transplant and all our savings were going towards his medications and this normally leaves us with no money to pay our bills or even put enough food on our table and our rent was due and no funds to pay these bills and life felt so unfair to me and every night my wife will cry herself to sleep every night until one day, i was browsing through yahoo answers and i saw a striking advert of a man that gives out personal loans and that the offer is opened to all and i have heard so many things about internet scams but at this point of my life, i was very desperate and ready to take any risk and at the end of the day, i applied for this loan and from one step to another, i got my loan within 12 hours through bank transfer and you know, it was all like a dream and i called Mr Daniel Jones A Man who is the GOD sent lender i found and said, i have received my loan and he smiled stating that to GOD be the glory and i was so shocked as i have never ever seen anyone with such a GOD fearing and kind heart and today, i am the happiest man on earth because by GOD’S grace, my SON kidney transplant was successful and today he is healthy, i and my family are living very comfortable and happy and if you are in my former situation or in serious and legitimate need of a loan, you can reach this GOD sent lender via fidelityloanfirm@outlook.com

  3. Greetings to everyone reading this comment!!! I am Greg William by name. I am out here to recommend the effort of Mark Oscar,I was in need of a consolidation loan amount of 50,000 and as soon as I got in contact with Mark Oscar Loan Firm on Wednesday last week and on Friday last week as well I receive an alert from my bank(Royal Bank of Scotland Group) that the fund was transferred,I want everybody on this site to contact Mark Oscar now via email on how to get a loan because I got my loan from them and I am very happy,so contact them now. Oscarloanfinance@hotmail.com Thanks!!!!!!

  4. Elected officials, like Mourdock, get vested in 8 years. It takes 10 years for all other public employees, most of whom make a lot less money. So much for the promise to finish out his term.

  5. Great state treasurer and a good man!! Just curious if the folks who didn't quite understand his quote would like to tell my daughter-in-law that God didn't intend her! Mourdock's comment was correct but twisted and the article didn't mention that his opponent and the press let the impression stand that Mourdock meant that the rape was intended. Stupid people!!

ADVERTISEMENT