Thanks to Alan for telling us about this. Since it seems that this site only keeps articles for 1-2 days, I've posted a copy of the article here. Otherwise, you should check out the original link:
Honda betting on speed and efficiency
Believes it can go it alone with high-tech
manufacturing and smaller, flexible plants
GREG KEENAN
AUTO INDUSTRY REPORTER
Tuesday, October 10, 2000
ALLISTON, ONT. -- If Honda Motor Co. Ltd. is going to stay independent as its rivals merge, a field that once sprouted potatoes but now produces minivans and compact cars will play a key role.
Honda is betting the farm (including the one it bought in Alliston, where its two Canadian assembly plants now sit side by side) that new manufacturing technology and smaller, more flexible factories will enable it to thrive independently amid the consolidation frenzy that has swept the auto industry.
Company officials insist that Honda, which ranks ninth in worldwide production with about 2.5 million vehicles annually, can go it alone, even though its bigger competitors have much greater resources to finance expensive new technologies.
"We think size itself is not the most important factor," says Honda Canada Inc. president Shigeru Takagi. "What we believe is that we have to maintain speed, efficiency and flexibility."
All of these elements are on display at the two plants in Alliston, where about 4,000 employees will crank out 340,000 vehicles next year -- about one-third of Honda's total production in North America.
When full production is reached, 170,000 compact Civic and Acura EL cars and about 120,000 Odyssey minivans will come off the line.
Beginning this week, the first of 50,000 Acura MDX luxury sport utility vehicles will be built.
One way Honda made the factories more flexible was to develop a device called a general welder. The technology was engineered originally for just the minivans, but now operates in the Civic plant as well and replaces more expensive and more rigid tooling.
Under the old system, Civic body parts sat on assembly line fixtures called jigs until they were welded together. The jigs held welding guns that made the 100 to 200 welds that held the car's underbody together. There were separate jigs for each side of the car and different jigs for the three-door and four-door versions of the Civic.
Now, robots reach up and down and pick up roofs and side body panels, then whirl back around and weld them to the car's floor in a shower of sparks, producing a steel body in little more than minute.
"It was quite expensive to make the jigs -- and quite time consuming to change it over," says Charles Chadwick, vice-president of manufacturing for Honda of Canada Manufacturing Inc. "And every plant was different."
He estimates it took about 15 minutes to switch the welding jigs to different Civic models in the days when the cars were assembled without a general welder. In an auto plant, that kind of downtime represents serious money.
Now it takes just a few minutes, and all major Civic plants in the world are interchangeable.
It's also simple to switch from the Civic to another model such as the Accord if company officials decide to move production of that mid-sized model to Alliston from Marysville, Ohio, or Guadalajara, Mexico. Robots from Marysville can simply be shipped here and put on the line.
"All we have to do is change the fingers and reprogram the robots for an Accord floor," Mr. Chadwick says.
It's equally simple at plant 2, which is joined to Honda's original Canadian plant by a wide tunnel under an enclosed conveyor that carries stamped metal body parts for Odysseys and MDXs.
Plant 2 is the only plant in North America where minivans and SUVs are put together on the same assembly line.
"The changeover from Odyssey to MDX is a matter of minutes," Mr. Chadwick says. "When the MDX comes down, we just throw a switch."
That kind of flexibility is crucial so Honda can react nimbly to changes in the market and redesign or develop new vehicles to meet changing customer expectations.
The cause is helped by building duplicate plants in North America and around the world that make different vehicles using the same platform -- the undercarriage on which the vehicle sits and rides.
All major Civic plants, such as a sister plant in East Liberty, Ohio, are using the flexible manufacturing system, so the robots are interchangeable, Mr. Takagi says.
By 2003, once all the plants are converted, assembly costs across the company will be cut by about 100 billion yen ($1.4-billion), Honda Motor Co. president Hiroyuki Yoshino has said.
"Honda doesn't have the ability to go out and develop a platform for every vehicle," says Michael Robinet, director of forecast services for consulting firm CSM Worldwide Inc. of Northville, Mich.
So the East Liberty and Alliston Civic plants make cars off the compact platform, Marysville and Guadalajara build cars off the mid-sized Accord platform, and a new plant under construction in Alabama will utilize the minivan platform developed for Alliston's plant 2.
"They can flex back and forth," Mr. Robinet says. "If Marysville can't make enough Accords, they can flex down to Guadalajara."
This flexibility is "the pot of gold at the end of the rainbow," Mr. Robinet maintains.
Another key element in Honda's strategy is to start small and grow.
"With a small company mindset you can react quickly," Mr. Takagi says.
At Alliston, plant 2 is smaller than plant 1, even though it cranks out the biggest vehicle in Honda's fleet -- the Odyssey, which has a surface area 20 per cent larger than the Civic.
Honda was able to make the newer plant smaller in part by reducing the size of the paint shop. The vans and SUVs enter a paint bath on a 45-degree angle, versus a 30-degree angle for Civics in the plant next door.
The vans and SUVs are submerged more quickly, so they spend less time in the paint shop, which makes the plant more efficient.
Smaller assembly plants mean a lower investment in bricks and mortar. The original investment in the minivan plant was just $300-million and total investment at the two Alliston plants since 1986 now is $1.3-billion, for facilities that will turn out 340,000 vehicles.
DaimlerChrysler Canada Inc., by contrast, spent almost as much money in one shot -- $1.2-billion -- to renovate its Windsor plant for a new minivan for the 2001 model year. The Windsor plant produces about 350,000 minivans a year.
Honda and DaimlerChrysler AG produced the most profit per vehicle in 1999, according to an influential annual study of the industry called the Harbour Report, put out by consulting firm Harbour and Associates of Troy, Mich.
DaimlerChrysler led the way with worldwide profit per vehicle of $1,497 (U.S.). Honda was second with profit of $1,440 for every vehicle its plants turned out.
Maintaining strong profits will be another key to staying independent amid the consolidation wave, Mr. Takagi asserts.
The industry's merger mania started with Daimler-Benz AG and Chrysler Corp. in 1998, but since then has spread to Renault joining Nissan Motor Co. Ltd., Ford Motor Co. buying AB Volvo's car unit, and General Motors Corp. increasing its stake in Suzuki Motor Co. Ltd. and buying a chunk of Fuji Heavy Industries Ltd., which controls Subaru.
The consolidation is being driven by the need to spread the costs of developing new technologies -- such as more fuel-efficient and cleaner engines, and gasoline-replacing fuel cells -- over more vehicles. The enormous expense required is recouped more quickly if the technology can be used in four million or five million engines, versus 1½ million or two million.
GM, for example, can amortize its costs over about 8.3 million vehicles, while fifth-ranked DaimlerChrysler has a little more than half that volume, at about 4.8 million vehicles annually.