Corporate / Investing In America
Remarks by Vice President of Honda Manufacturing of Alabama Mike Oatridge at CAR Management Briefing Seminars
About four weeks from now, we will begin mass production of the all-new 2011 Honda Odyssey, the fourth generation Honda minivan and the third version to be built at our factory in Lincoln, Alabama.
We call this new Odyssey "an American Odyssey" in part because it is the first Odyssey to be designed, developed and manufactured entirely within the U.S. But it also reflects the fact that the large minivan is today a vehicle that uniquely targets the needs of American customers.
The idea of an American Odyssey also recognizes the journey Honda has been on to advance our U.S. R&D operations, now in their 35th year. And in Alabama we are approaching the 10th anniversary of our production operations. Indeed, quite a journey.
The current Odyssey has been widely recognized as the benchmark vehicle in its segment and it's been America's best-selling minivan for the past two years.
But this all-new Odyssey is designed to raise the bar and provide our customers with an even higher level of family-friendly utility, fuel-efficiency, safety and performance in combination with dynamic styling both inside and out.
Meeting our own high targets for this new Odyssey by adding new value, ensuring high quality and controlling costs, has been the focus of our new-model development efforts over the past several years. But at the same time, we made it a priority in Alabama to improve the processes used to build Odyssey from the perspective of the associates who make it.
I hope I will make clear in the next few minutes, we view these as complementary, not conflicting, points of focus. A product that is easier to build for our associates, one that incorporates their input at the most fundamental levels of its design, has far greater potential to be a truly superior product for our customers.
Now, I have a unique vantage point in this project. My career began at our Allison, Ontario, factory, in 1989. Early on, I spent much of my time focused on new model work for the Civic. For about a year, I bounced between Ohio and Canada, developing the processes to build a new two-door Civic Coupe. At that time, we were launching the Civic simultaneously at both our East Liberty, Ohio, and Alliston, Ontario, plants.
In the early 1990s, a recession hit. It wasn't as severe as the most recent economic shock, but it brought a new challenge for Honda. How do we control excessive inventory by slowing production but do so without layoffs?
This challenge served as a catalyst for a number of advancements, including the creation of our flexible manufacturing system as a critical tool for adapting more efficiently to rapidly changing market conditions. In the midst of this crisis, a decision was made to enter the light truck market.
This led to what we called the Maple Project, which included the creation of second plant in Canada, hence the term "Maple."
It was a challenging assignment that included the first global trial of our flexible manufacturing system, and the introduction of an all-new, second-generation Odyssey, which was Honda's first home-grown light truck product. This created many challenges for us, with larger components such as sliding doors, vastly increased build complexity, new technologies and new suppliers.
The vehicle was being developed in Japan, where I ended up living for a couple of years. So, we had our own Maple Project office in Japan. Again I learned the importance of communication and the value of having someone physically at the spot to work with R&D. This assignment gave me the chance to understand the design of the new Odyssey on a fundamental level, and to serve as the liaison back to Alliston.
There was one day when I was at our Sayama plant in Japan that I got a call to head to the R&D offices right away. By the time I got there, the development team was pouring over news reports about brand new IIHS crash-test protocols.
Even though we were mid-way through the development process, now we were being challenge to adapt the design to these new standards. But because I was at the spot ... and we had all of the groups working there together we had the ability to communicate quickly and to develop effective countermeasures. And we were able to keep to our original development schedule. This project turned out to be a bright spot in my career because I learned that lean, efficient and customer-focused manufacturing comes about as a result of good communication and team effort.
This focus on collaboration between manufacturing and R&D continues to be a guiding force in the launch of new models at Honda. And it is the pathway to what I mentioned earlier as our dual priorities to create products that meet the needs of our customers, while ensuring that the processes used to build them are easier for our associates in the factory.
As I said, the second Canada plant was born out of the 1990s recession mind set. So, while it was a daring decision in a difficult economy, it turned out the new light truck plant was almost immediately too small to meet growing demand for light trucks from the moment it opened in 1998.
So, a year later, we announced plans to build a new plant in Lincoln, Alabama, our sixth auto plant in North America, which would help increase and eventually take over Odyssey production. And I went there ten years ago to help establish it.
The history of our Alabama plant is one of continuous challenge and flexibility to meet ever-changing customer demand. We started with production of Odyssey and its V-6 engine in 2001, and had to ramp up very quickly to keep up with record demand. Just three years later, with hot new products and increasing demand, we opened a second line in Alabama, which doubled capacity and allowed us to take on production of the Pilot SUV - again creating a dual-sourced vehicle with Alliston's Plant 2.
What came next further demonstrated the value of our early and deep investment in flexible manufacturing capabilities. During the recession that followed the Lehman Shock, you could sense the worry that many of our associates in Alabama were experiencing.
Since many had previous experience in the textile industry, there was an expectation of layoffs that were sweeping the auto industry in the downturn. And I fully realize that this was a challenge that was shared equally by everyone in this room.
But we managed our business very carefully and strategically, with a focus on our customers and our own people. Our flexible manufacturing system, which has been installed across all Honda operations, was a key component of our strategy.
Fortunately, there isn't much of a learning curve with Honda's system from the standpoint of technology. It's simply a toolbox full of tools. But these tools are only useful if you know how to use them and, fortunately, we do. Based on teamwork between plants and our flexible system we added new models in Alabama to optimize our North American capacity to meet customer demand in the most efficient manner.
First, we moved production of the Ridgeline from Canada to Line 1 in Alabama alongside Odyssey. This allowed Alliston to build more Civics, which were in high demand. Then, we brought in a passenger car - the Accord V6 Sedan to be built on Line 2 alongside the Pilot. This was the first time for our light truck plant to build a car. This validated the flexibility that we knew we had in Alabama but had never fully utilized until this economic crisis came along.
As the entire U.S. market dropped to historic lows in sales and production, we took a surgically precise approach to factory downtime. We had more than 65 non-production days, mostly on Fridays and adjacent to holidays. And we let our associates make their own decisions - to use paid time-off, take the time without pay, or come to work as scheduled.
In this way, we used the downtime to fundamentally strengthen our organization. Since most associates still came to work, this provided a great opportunity for us to find ways to improve our operations and have the time to make those changes so we would be ready when the market came back.
It was during these times that many of our associates understood what kind of company Honda really is. We gained respect and understanding from how we handled ourselves and how we communicated openly and directly with our associates about the challenges we faced about why we were responding the way we did and how it would impact them.
Through all of these experiences, we matured and transitioned from a plant that just executed to someone else's plan to a tightly knit team of associates who analyzed problems, developed countermeasures, and took an active role in shaping their own workplace. And that brings me back to the creation of this new generation Odyssey minivan, which both tested and proved out the maturity of our associates and our capabilities as a team.
This was a completely different kind of challenge compared with the two previous versions of Odyssey. As I said earlier, when the plant opened in 2001, Odyssey was transferred from Canada along with its basic production layout. Our focus was on building the product based on someone else's legwork.
The next generation of Odyssey, launched in 2004, was our first full-model change. The Japan R&D team was really strong but, unfortunately, HMA was still a young company. While the '05 generation Odyssey has been an outstanding vehicle in the marketplace there are certain aspects of its manufacturability that are problematic for our plant.
The next major model change we had in Alabama was with the current generation Pilot. The second generation Pilot we launched in 2008 was a project started in Canada, not Alabama. So, this 2011 Odyssey was really our first opportunity to take the lessons we've learned and put them into practice at the very beginning of development.
From the start, our team in Alabama was very focused on integrating the voice of its associates into the new-model design process. To create that relationship and at-the-spot communication between R&D and Manufacturing, we embedded several manufacturing associates in Honda R&D's Ohio new-model center from the earliest stages of development. This was a year before they issued their first drawings, which provided the chance to learn about the conceptual ideas for the new product and how it would impact the plant.
Engineers on both sides were very willing to work as a team, with a strong focus on delivering the best product for the customer. They fully accepted the manufacturability of the product as a strategic advantage in making a better Odyssey for the customer.
On the factory side, we also took a very proactive approach to the development of the new-model operations standard. A process team was established with trainers recruited from within each of our five assembly areas. We had a team of trainers who were passionate and knowledgeable in a detailed way. These are folks who work every day at the spot. They know the people on the line and their specific concerns so they could reflect critical issues in specific and focused change requests.
In the past, we would begin writing our operations standards after the first prototypes were built. But this time, associates from the floor helped write the operations standards before we built our first prototype. This allowed our process team and trainers to make a vehicle geared to their actual process flow, not to a hypothetical concept or to a process based solely on the original design concept.
Further, once we started running training models in the plant, there was a plan to get feedback on the process and parts. During build events, an associate walked the line, talking to associates after each process, and logging every concern at the spot. This resulted in greater buy-in from associates as they realized how serious we were about reflecting their voices in the build process.
A key focus throughout this process was ergonomics for the associate. Making things more ergonomically friendly, reducing the stress of a given process has been a long-standing commitment within our North American manufacturing plants.
A product that is easier for our associates to build is obviously good for associates but it's also good for our customers because easier-to-build vehicles allow our associates to place an even greater focus on quality.
Generally speaking, there are two solutions to resolving ergonomic issues - design changes and equipment process changes. And I'd like to share a few examples of both.
For instance, with the current Odyssey, the associate uses a rubber mallet to ensure the rear quarter glass is properly fitted. This is because of the high push force need to set the glass in place.
We knew this was a process that had to be changed for the new Odyssey. So, our associates used advanced technology to generate data that would help R&D better understand the issues. The technology involves a special glove, which is equipped with a sensor that is worn by an associate to measure push force.
When we brought R&D engineers to the spot, they immediately agreed the process needed to be fixed. Not only could they see it but to justify the change, they now they had the hard data which, we all know engineers love!
Based on the data, we were able to collaborate with R&D and our supplier to develop a new attachment clip that is not only easier to set, but makes an audible click when the clip is engaged. This allows the associate to more easily confirm that the glass is set correctly and greatly improves the ergonomic situation. This is only one of many examples where we focused on matching design with process to increase safety for the associate and quality for the customer.
Another example of a significant design change where we enhanced both quality and ergonomics is the new headliner design. A minivan headliner, as you can see, is a very large and complex part, with a wiring harness and garnishes to accommodate lighting, overhead HVAC and entertainment systems. This can require a lot of overhead assembly work.
The size of the current Odyssey headliner required that we ship them horizontally, which reduced truck density and added to shipping costs. When we saw the original design spec for the new headliner, we could see that it far exceeded our target for both improving ergonomics and increasing packing density. But because this issue was identified early on through associate involvement, we were able to collaborate on a modified design.
Certainly, R&D could have pushed back and stuck with their original concept but they respected our desire for a more efficient, associate-friendly and quality-up part. The new design uses a shorter one-piece headliner and a larger plastic garnish where the headliner meets the rear tailgate. As a result, it will be installed through the windshield opening instead of from the rear of the vehicle.
Further, the process of attaching the wiring harnesses and HVAC and other systems was moved to a supplier as a subassembly. The headliner now comes to us as a more stable component, and without the requirement for overhead work. Since it's a heavier part, we also added a lift-assist device.
Finally, the new design enables us to ship the part vertically reducing costs and CO2 emissions because of fewer truck shipments. That's a win-win-win for the customer, our associates, and the environment.
I want to share one last example with you because it concerns an improvement we achieved with the aid of virtualization technology.
The new Odyssey has a keen focus on dynamic exterior styling, which includes not only the distinctive lightning bolt belt line, but also a more cab-forward design. This pushes the top of the windshield back 60mm and pulls the bottom touch point forward 55mm. This made the instrument panel assembly much larger and more cumbersome to handle.
With the current model, the panel goes straight in to the vehicle through the side door opening. But through the use of virtualization software, we determined early on that the new instrument panel was too large to move easily through the door. This was significant because it allowed the discovery and countermeasure activity much earlier, where it was easier and more efficient to manage.
Using virtualization, we developed a process to rotate the panel forward. As a result, the panel can fit through the door and be installed in a manner that is more ergonomically friendly for our associates. And our customers get a product with more dynamic styling.
Collectively, the tools at our disposal today have great potential to bring everyone to the spot, both virtually and in the real world. But as the old saying goes, it's always easier to do a job if you have the right tools.
But in a process as complex as building a new automobile, one of the tools that we can never forget is the tool of communication. Throughout my Honda career, it has been proven to me again and again that associates at the spot are the experts. They have the ultimate responsibility to fit all the puzzle pieces together for the customer.
And that's the fundamental story of the new Odyssey. It begins and ends with a large team that demonstrates good communication, a sense of shared purpose, and a challenging spirit, all grounded in a clear and focused vision for the customer.
And the end result is an all-new "American Odyssey" that is the pride of our associates who build it and, most importantly, for the customers who will enjoy it.
Thank you for your time and your attention and I look forward to taking your questions in the panel discussion. Thank you!