Understanding Our New Business Strategies

There's been a great deal of positive attention to some organizational changes at Honda that took effect this month. These changes will strengthen and improve our efforts to bring innovative and affordable new Honda and Acura products to market.  But if there's one thing that I've learned through my career in the auto industry, it's that sometimes it's as important for people to understand why a company has embarked on a challenging new direction, as it is to know what the company is doing.

Some have interpreted our strategy as a wholesale shift of our operations out of Southern California. This is not the case at all.  This is an evolutionary step, that will efficiently group key executives under one roof to make high-level decision making close to the major operations in Ohio that are critical to new product introductions. But top executives remain in California as well.  And overall, with more than 2,500 Honda associates on our Torrance campus we expect fewer than 50 jobs will transfer to Ohio.  

In the face of today's hyper-competitive marketplace, Honda's operations here in our North America business region now have a greater responsibility within Honda's global organization.  To fulfill this new and larger role, we have taken steps to centralize decision-making and streamline the new model process. In this way, we will advance our ability to quickly deliver high quality and affordable products to our customers in this region and around the globe. 

One of the key goals of our organizational changes is to shorten the time from when we finalize a product design to when that all-new product reaches our customers.  After all, what seems like a good idea today, might not meet customer expectations tomorrow, if it takes too long, or the cost is too high, to bring that idea to market. So, we must accelerate our ability to introduce new models at more affordable prices to increase our competitiveness.

This strategy led to the organizational changes which serve to centralize decision-making for our North American regional operations in Ohio.  Why Ohio?  After more than 30 years of building and developing products in America, it is already the center point of our engineering capabilities.  We are leveraging our significant investments in Ohio where we have established two major auto plants, our North American purchasing operations, North American Engineering Center and our major R&D center. 

At the same time, our presence in California will remain robust and vibrant. The headquarters of our sales and marketing operations, and a number of other key operations that support them, remain firmly rooted in Torrance, California.  As one recent example, we just announced a new structure for our automobile advertising that will strengthen our marketing efforts with a Honda team in California at the hub of the strategy. 

In fact, we have Honda operations all over North America that will remain in their current locations and focused more than ever on their same core responsibilities.  This is especially true for our efforts to design, build and sell Honda and Acura products.

Our North American operations have been tasked with greater responsibilities within Honda's global business.  We already have 14 major production operations in North America, building a wide range of Honda and Acura automobiles, automobile engines and transmissions, Honda all-terrain vehicles, and power equipment products such as lawn mowers, mini-tillers and general purpose engines, using domestic and globally sourced parts.

Now, based on investments in just the past two years of about $2.5 billion, our North American auto production network is beginning to take a lead role in launching key global models like the future all-new generation of the Honda Civic.  Our plants here will prepare new models for production and share the production know-how with other Honda plants around the globe.  This is a big deal -- because in the past, this lead role was generally done in Japan.

We also have 14 R&D facilities in America that design and develop the majority of the light truck products that we build here.  These operations have taken on increased responsibility to create products that are just right for the needs of our customers in North America, and take even greater advantage of local parts sourcing and manufacturing.  This includes leading development of both the next generation Honda Civic for North America, as well as the Acura NSX supercar. This is a major component of our strategy to increase the speed of development, the affordability of our products, and the competitiveness of the Honda and Acura brands.

We also will be ratcheting up automobile exports from North America to markets around the world.  We expect to double last year's export total of almost 100-thousand units, so that in the coming years we will be a net exporter - meaning we will export more cars from North America than we import from Japan.

It's a bold plan that builds on the foundation we have established during the past three decades.  To make all of this work, we took action to streamline our corporate structure, which will help develop a common process across all of our sales, production, R&D and purchasing operations in this region.  And that is something that is not only increasing the competitiveness and stability of Honda in North America - it will improve the quality and affordability of our products for our customers.  And that is the ultimate “why” for these latest steps in our history in North America.

 

Michael Accavitti
Senior Vice President
American Honda Motor Co., Inc.

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