JAPAN'S HONDA: INTO THE FAST LANE. It's selling US-made Accords back home as it sets out to become a truly global company
| Suzuka, Japan
AT Honda's sprawling Suzuka factory, a white-jacketed worker puts the finishing touches on a bright red Integra. Across the ocean, in Marysville, Ohio, another Honda worker drives a gleaming Accord Coupe off the line. The two cars could well cross paths somewhere in the middle of the Pacific, as the Integra heads to an American dealer and the Accord to a Japanese showroom.
Honda's decision to export its American-made cars to Japan and elsewhere seems at first a stunt aimed at attracting favorable publicity in the United States, but Honda insists that it is a natural consequence of its corporate philosophy of looking at the world market as one. This outlook, Honda officials say, has governed the company since its early days when its entrepreneur founder, Soichiro Honda, began making motorcycle engines in 1946.
``Mr. Honda said that without becoming a worldwide company, you cannot become a winner,'' recalls senior managing director Tetsuo Chino. ``So in our organization, the world-oriented mind is very important. We treat the Japanese market as just one of the world markets.''
Honda represents the leading edge of a trend toward multinationalization among Japanese corporations.
It was among the first to move plants overseas to get closer to their markets. Honda set up a motorcycle- and then an auto-production facility in the US long before the threat of protectionism and the high yen made that an obvious move.
With this latest decision, Honda appears to be entering the next stage of multinationalism: creating an international division of labor to make products that are marketed globally.
``These are steps in Honda's plan to establish a truly global network,'' announced Tadashi Kume, president of Honda Motor Company, at a New Year's press conference.
Honda started setting up overseas plants in the early 1960s, and the company now has 65 plants in 34 countries, making products from portable generators and motorcycles to automobiles.
Critics argue that Honda's globalism is simply a case of making a virtue out of a necessity. Honda did not start making four-wheeled vehicles until 1963, when auto giants Toyota and Nissan already dominated the domestic market.
From the beginning Honda looked to foreign markets, particularly the US, where it already had extensive experience selling its motorcycles. Honda's experience is similar to that of electronics leader Sony.
Both are ``postwar'' companies, founded by strong-willed men who came from outside the prewar structure of zaibatsu, or large conglomerates. They have built their markets by producing high-quality new products that often define entirely new markets.
``Honda's evolution reflects an exceptionally clearsighted management,'' writes Geoffrey Wilkinson, a Tokyo-based industry analyst with the American securities firm Salomon Brothers.
``Throughout its history, Honda has demonstrated a willingness to take radical steps in pursuit of growth,'' he says.
This has been exemplified, he says, by Honda's engineering triumphs, such as the low-emission, fuel-efficient CVCC engine, which was built to penetrate the US auto market in the energy crisis of the 1970s.
Honda's popularity has been built on its reputation for superior engineering and styling.
``Its evolutional styling comes from its global perspective,'' says Benjamin Moyer, an analyst in Merrill Lynch's Tokyo office.
``Honda is the only Japanese company which designs a new model based on what can attract consumers of the world,'' Mr. Moyer says. ``Most Japanese carmakers only think about the Japanese market first, and then target the foreign market with domestically popular models.''
For example, the Accord Coupe that Honda is exporting from the United States to Japan was built specifically for the American market. But now Honda hopes to sell 50,000 a year in Japan based on its ``unique, exotic feeling.''
Honda's aggressive overseas expansion sets it apart among Japanese makers.
Mr. Chino, who heads all North American operations, recalls that when Honda decided to establish its first production facility in the United States in the beginning of the 1980s, other Japanese manufacturers reacted with ``laughter - `Honda, they're crazy people.''' They held the assumption that Japan's high quality standards could never be maintained with US workers. But Honda drew confidence from its experience with the motorcycle production it began in Ohio in 1979.
Analysts contrast Honda with the industry leader, Toyota, which still commands a 43.2 percent share of the domestic auto market.
``Toyota is, by nature, a lot more conservative company,'' says Moyer. ``Its goal is to remain the leading auto manufacturer and it feels it assumes certain responsibility in staying that way.''
``We are the GM of Japan,'' a senior Toyota official said when asked why Honda was so far ahead in producing in the US.
``We have a responsibility to Japan.''
Whatever the reason, Honda has sped ahead of its Japanese competitors overseas as a result. Since last year, it has ranked fourth in car sales in America, standing behind only the ``Big Three'' US makers.
Honda's first US plant, which opened in 1982, already produces 360,000 units a year. This year, the company announced it will build a second plant, adding 150,000 more cars a year, starting in the summer of 1989.
Last year Honda opened a second sales network in North America, called Acura, to market the Legend and Integra models. With these higher-priced luxury cars, Honda is going upscale, challenging such makers as BMW and Mercedes for the ``yuppie'' market.
Honda also leads the way in using locally produced auto parts. The domestic parts content of the Ohio-made cars is 60 percent and will be 75 percent by 1991 - comparable, officials say, to US makers. Honda is expanding its Ohio engine plant, which will turn out half a million engines a year. Similar expansion is under way in Canada.
Honda is now moving to break into the European market, where it lags behind other Japanese companies, through a joint venture with British-maker Austin-Rover. The joint venture will next year begin producing a new ``YY'' car for Europe, after its debut in Japan later this year.
When it comes to domestic auto sales, Honda officials acknowledge their relative weakness, but say their problems are not due to being a latecomer but to the closed nature of the Japanese market, in which large established companies control the distribution channels.
``Often American people complain about so-called nontariff barriers,'' says Chino.
``I think Honda is one of the victims of nontariff barriers. When we entered the auto business, none of the dealers would handle a Honda car.''
Honda had to slowly build up a distribution network based on its motorcycle dealers. It still lags far behind its larger rivals.
But in the last few years, Honda has served notice that it is paying more attention to the domestic market.
``The company's prime target now seems to be to increase the domestic share while maintaining its lead in the US,'' comments Yoshihide Kondo of Daiwa Securities. Honda does not expect to increase exports of autos from Japan beyond the current level, because of increased overseas production and the impact of the high yen.
While foreign sales are still more than twice those in Japan, Honda has added 50,000 sales a year in Japan for the last three years, the highest rate of growth in the industry. This year Honda became No. 3 in total passenger car sales in Japan, even though its market share is still only 7.8 percent.
``To maintain a competitive position in Japan,'' says Takashi Matsuda, the director in charge of domestic sales, ``we have to focus on increasing in the domestic market.''
Honda is building up its sales network, Mr. Matsuda says, by adding 200 sales outlets this year and 1,800 more salesmen. Honda's key market remains young people who are attracted by the company's image of youth and creativity. ``But we also have to concentrate on the family generation,'' Matsuda adds, by offering the kind of products that will appeal to car buyers in their mid-30s.
Tetsuo Jimbo contributed to this report from Tokyo.
The world's fastest assembly line
The process of manufacturing an automobile in this vast factory resembles a marvelous mechanical ballet.
Unadorned car doors float quietly above on overhead conveyer belts. They dip down to the floor, sliding into the gentle grasp of a robot.
Lightly the arched fingers of the robot caress the doors, and send out golden sparks as they weld the doors to the cars' side panels. The welded frames, after being layered in paint, pass into human hands.
Down and around the floor they flow, as men in white jump suits run back and forth alongside. Seemingly without rest, the men put the cars together, bolting and drilling.
This is the fastest assembly line in the world, according to the Honda company. A finished car rolls off every 42 to 47 seconds, 2,800 a day. Fifteen years ago, a car was completed every two minutes and only 300 were made a day.
Five years ago, it took 3.3 people to make one car - now it takes 2.05. The jump in productivity is largely due to robotization, but in that time, not one worker has lost his job, Honda says.
Despite the speed, the atmosphere is amazingly relaxed. Takehisa Suzuki, general manager of the engine plant at Suzuka, says working conditions at Honda differ from the rigid environment of other Japanese automakers such as Toyota. There, the company has ``strict standards like how to step forward to the line for a better effect. Our standards are made by the employees themselves. Our corporate culture, which respects the freedom of the employee, might be more successful than others.''
Mr. Suzuki himself rose through the ranks. He started out at the age of 15, in 1954, in Honda's Hamamatsu factory making engine parts. By the age of 24 he was a foreman; at 34, a department manager; and at 46, a plant manager.
The extent and rapidity of his career rise is typical of Honda, where the spirit of Soichiro Honda, the entrepreneur founder, lives on strong. A maverick, Mr. Honda believes in rewarding creativity, no matter what the person's age or background. At Toyota, says Suzuki, ``if I entered as a high school graduate, there would be a different route of promotion. Only if I graduated from university could I become a manager.''
Suzuki fondly remembers the old days. One day he was playing shogi, a Japanese type of chess, during a break. As fellow workers gathered around and behind him, he heard one making cracks about his moves. ``I looked back and it was Mr. Honda. He was just like one of us.''
Critics say the company is losing its openness to innovation as it grows larger and more bureaucratic. Company officials acknowledge there is a constant battle to maintain the communication they had before. But Suzuki says things haven't really changed. ``We call ourselves the largest `small-medium-sized company.'''