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Honda Responds To New Entries In Midsize Sedans
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30 years ago this month, Honda became the first Japanese auto-maker to start production on U.S. soil. Its conversion of an Ohio cornfield into a factory chugging out waves of Honda Accords was seen as both revolutionary and foolhardy. Honda has survived and prospered, but lately it has come under increasing pressure in a tightening race for the top slot in midsize sedans.
Inside the Honda plant in Marysville, Ohio, a virtual conga-line of Accords rotate through the welding line. Once the line stops rolling, dozens of insect-like robotic arms fall upon them. Golden sparks erupt across the floor like fireworks.
â€œThis new Accord has about 2500 spot welds.â€
Like every Honda worker â€“ or â€œassociateâ€â€”plant manager Jeff Tomko wears a white jumpsuit with his name stitched on the chest. Since starting with Honda 26 years ago, heâ€™s seen the company grow tremendously.
â€œJust here at Marysville, weâ€™ve got 44-hundred associates. And within the Ohio area, weâ€™ve more than 13-thousand. If you add our suppliers on top of that, itâ€™s a really big impact not just in our community, in Ohio, but in North America and globally. And with our recent investments of more than 2-billion here locally, weâ€™re going to continue to grow.â€ Says Tomko
Not many saw a future for Honda back in 1982, when it opened its first American plant. Foreign car makers were seen as a threat to the nationâ€™s jobs and manufacturing reputation. So Hondaâ€™s Marysville venture was considered a bold move. In fact, says Paul Ingrassia
â€œIt was a downright reckless move.â€
Ingrassia is deputy editor-in-chief at Thomson-Reuters, and has covered the automotive industry for 30 years. He says early on, Honda was a third tier Japanese car maker, dwarfed by Toyota and Nissan in its home market. But in the U.S., where American-made cars were getting poor consumer reviews and foreign cars were gaining in popularity, Honda saw opportunityâ€¦ and took it a step further.
â€œThe company decided that, `Geeâ€¦theyâ€™ll probably be some protectionist sentimentâ€™ and to counteract that protectionist sentiment, weâ€™ll need to actually build cars in the U.S. and employ American workers.â€™ And what Honda did was prove that American workers can build great cars.â€ Says Ingrassia.
Hondaâ€™s first line of U-S built Accords rolled out in November of 1982, and itâ€™s mostly been a smooth ride since. By replacing the executive-worker system with a more inclusive team model, and fostering innovation among employees, it changed the culture of the auto industry. Its Accord has remained one of the top-rated and top-selling cars ever. Honda also inspired Nissan and Toyota to open plants in America, shortly after opening its Marysville plant.
But Ned Hill, an economist at Cleveland State, says Hondaâ€™s trailblazing has put it at a competitive crossroads.
â€œThere was a period of time where Honda was getting complacentâ€¦in fact in the past, they only looked at Toyota, they were the big brother in Japan. Well, theyâ€™ve put Ford and GM in the exact same place as Toyota right now.â€
Hill says besides cars like the Ford Fusion, Chevy Cruze, and Toyota Camry giving Honda tough competition, there are new, higher fuel efficiency standards enacted by the White House, and ongoing consumer demand for more comfortable, affordable cars. Hill says if Honda wants to stay ahead, itâ€™ll need to retain its edgy, bold corporate culture. Hondaâ€™s already revisiting its Civic design, after tepid reviews of its 2012 model. Two other recent setbacks arenâ€™t helping, says Mike Accuvitti Hondaâ€™s Vice-President of Automobile Marketing:
â€œLast year, Honda was hit by two unprecedented natural disasters. First, the great Japan earthquake-slash-tsunami. Followed by some serious flooding in Thailand.â€
Accuvitti says despite this disruption in production and supply chains, Honda expects end of the year sales to be up 25-percent from 2011. And Honda still aims to boost North American production, to where 90-percent of its cars are made here. But while the outlook is good for Hondaâ€™s line of vehicles, itâ€™s learning to share the road with competitors whoâ€™ve watched the company growâ€¦and have taken notes.