New yen headache hits Honda Accord in U.S.
Ohio factory to do double duty for export units
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TOKYO -- Virtually all Honda Accords sold in North America are built locally -- a nifty hedge against currency fluctuations. Yet the strong Japanese yen threatens to undercut U.S. sales of the Accord in another way.
The problem: The Ohio factory that makes Accords will soon churn them out for export to places such as Russia and South Korea, possibly restricting product flow to American dealers.
Normally those cars would come from Japan, but Honda has suspended Accord output at home so it won't lose money on exports. The Japan-built vehicles are getting hit by the yen's unfavorable exchange rate against the dollar and other currencies.
So Honda's Marysville, Ohio, factory will have to do double duty, Shoji Matsui, the Accord's large project leader, told Automotive News.
"Due to consideration of the exchange rates, this time we are making exports to different destinations. For example, Ohio output currently goes to Korea, Taiwan, Saudi Arabia or Russia," Matsui said in a Nov. 22 interview. "Ohio is in a tight spot."
But a fix is in the works.
Starting in November, Honda began expanding capacity at Marysville to accommodate the extra load. The build-out will continue through January, Matsui said.
Capacity conundrum
Matsui declined to say what the target capacity is or give a percentage increase. A spokeswoman described the changes as tweaks to improve efficiency, such as increasing line speed.
"Ohio is at full capacity," Matsui said. In November, December and January "we will working to expand capacity."
Honda targets annual Accord sales of 350,000 units in the United States after the September launch of the ninth generation. Accord output at Marysville has surged 72 percent to 336,179 units through October to meet demand.
The production puzzle is the latest conundrum facing Honda and other Japanese automakers as they bump against limits in North American capacity. The companies see local production and even exports from North America as a hedge against the yen.
"We are trying to expand our capacity," Matsui said of the redesigned Accord. "But we have some supplier issues, too. We might expand our lines, but maybe they can't keep up with us."
Matsui said a new friction welding process, which bonds steel to aluminum in the subframe to save weight, could emerge as another bottleneck in expanding output.
Honda's Sayama plant north of Tokyo, the factory where the Accord's manufacturing processes were tested and developed, made a batch of 600 Accords for the United States in August. After that, Accord production stopped, Matsui said.
Other overseas plants
Honda halted output at Sayama partly because the company doesn't plan to sell the nonhybrid Accord in Japan and partly because Honda wants to avoid the exchange rate penalty on exports.
Honda is looking at other ways to clear the U.S. bottleneck.
If the yen weakens against the dollar, Honda could restart Accord production in Japan. That would take some export pressure off Marysville. But Matsui said it is anyone's guess on when exchange rates will reverse course.
A better solution would be to hand off some of Ohio's export load to other overseas plants, Matsui said.
Honda plans to begin making the redesigned Accord in Thailand next year. That could soak up some of Marysville's export obligations. But Honda has doubts about how well a made-in-Thailand Accord would be received by customers in such markets as Russia or South Korea, Matsui said.
Honda has been stepping up exports from North America in recent years as the yen climbed against the dollar.
Accord exports totaled 20,000 units in the fiscal year ended March 31, excluding shipments to Canada and Mexico.
You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on 
