Come expand with us, Honda is telling its suppliers. But don't spend much doing it.
The automaker wants to put another 220,000 vehicles into production over the next two years. That would push its annual North American output above the 1 million mark.
But to hold down manufacturing costs, Honda wants its parts suppliers to match its increase with little or no new investment in their factories.
How to do it? Two words: Improve productivity.
Teams of employees from Honda of America Manufacturing Inc. in Marysville, Ohio, are visiting the company's suppliers. Their twin missions: Identify efficiency bottlenecks on supplier production lines, then help fix them so the supplier can make more parts without investing more or hiring more workers.
'We're trying to take a much broader look at overall supplier plant efficiency,' says Rick Mayo, Honda purchasing manager. 'Not just at the efficiency of one press, but how does their entire press department run? How does their entire welding department run?'
Honda supplier Mark Acosta called the automaker's approach refreshing.
'They don't want to put themselves in the position of being responsible for other people's plant expansions, for other people having to go to the bank to borrow money,' says Acosta, who is automotive sales vice president for Honda's supplier of door-impact beams, Century Tube Corp. in Pine Bluff, Ark. 'I wouldn't want that responsibility, either.'
Honda has been helping suppliers become more efficient for most of this decade. But this year, Honda is picking up the pace to meet its new forecasts. The company has targeted 50 to 60 suppliers for capacity increases, Mayo says.
'With our new models, we've underestimated what they will sell,' says Mayo, referring to the new Accord that began production last summer, as well as a new Odyssey minivan that will go into production soon in Canada and a new Acura TL sedan that will be built in Marysville.
'When we go out, we're looking for ways to use existing equipment, to minimize investment but help the supplier find greater efficiency,' Mayo says.
The campaign has been under way since last year and will go on into next year, he says.
Doug Chamberlain, Honda's assistant manager of supplier development, notes that some of Honda's suppliers have never reached their full production capacity because of bottlenecks or other problems. 'We'll go in and help them get to their original quoted efficiency and beyond,' Chamberlain says.
The efforts do not always yield big capacity gains. But Honda officials say the results often increase with time. Getting a parts maker to think more about productivity has a lasting effect, agrees Honda supplier William Brown, international and transplant business development manager for Wabash Technologies Automotive Products Group in Huntington, Ind.
The company's Wabash Magnetics unit began supplying Honda with speed sensors for the 1996 model year. Last year, in preparation for this year's increases, a Honda team helped boost Wabash's output by about 5 percent, Brown says. It was a small initial gain, he admits, but it laid the groundwork for more Honda production. Wabash is now starting up its fourth Honda product, preparing for the new models.
'We've been able to economize our floor space,' Brown says. 'We've been able to add more Honda volume into the same area. There weren't a lot of immediate, radical improvements to make here, but we were a new supplier, and it was a long-term approach to learn.'
Brown recalls that when the Honda personnel arrived at Wabash, they asked questions in enormous detail. They wanted to know exactly what kind of solder the factory used, for instance. Then they wanted to know how Wabash went about selecting that solder and what its temperature characteristics were. They visited the plant almost weekly, dealing directly with Wabash employees on how they did their jobs. They examined how material flowed through the machines. They looked at labor costs and process times.
The visitors also zeroed in on Wabash's injection-molding operation. There, they observed, when a rotary press operator needed to change a part mold - roughly the size of an ice chest - he had to stop working. He had a supervisor summon a press setup man to retrieve another mold from a nearby storage rack. The procedure took 30 to 40 minutes.
Honda recommended moving the other mold onto the work table. Now, when the operator wants to make the change, he removes the top, rotates the table 90 degrees to engage the new mold and puts a new top on. The procedure takes only a few minutes.
Wabash is now using Honda's efficiency ideas on its bigger customers. Honda accounts for less than $12 million of Wabash's $120 million in annual sales. General Motors alone obtains some 200,000 sensors a day from the Indiana plant.