Honda is restructuring its Swindon, England, assembly plant to add capacity and flexibility and make it more profitable.
The changes are a response to unfavorable monetary exchange rates that have driven several automakers to shift production outside the UK. Honda favors local production regardless of exchange rates. But a strong British pound against the euro is a severe challenge to that policy.
Since last autumn, Honda of the UK Manufacturing has simplified its production systems at Swindon, but simultaneously increased flexibility. Volumes of individual models can be altered faster and less expensively.
Honda increased capacity by 100,000 units per year when Swindon added a second assembly line in September.
When Accord production in the UK stops later this year, the process will be simplified. Honda will no longer build five different models on a single line - the four- and five-door Accord, five-door and Aerodeck Civic, and the CR-V sport-utility.
The new assembly line will build three- and five-door versions of a new-generation Civic. The original line will be devoted to the new CR-V, including versions for Europe and the USA.
'We are going for simplicity and reduced complexity,' said Mike Godfrey, chief corporate planning engineer. 'But we are maintaining the flexibility to increase volumes of one model and to reduce those of another.'
Godfrey said it would be possible to switch models between the two assembly lines. Because of sizing issues, though, it would be easier to move the Civic onto the CR-V line rather than the reverse. But even that could be done reasonably quickly, he claimed.
Key to this flexibility is Honda's so-called New Manufacturing System that replaces model-specific production equipment and processes with more universal ones.
For example, the tooling that locates body parts for spot welding is programmable. It can self-adjust when the schedule indicates a change of model, in an operation that is almost entirely automatic. The greater flexibility means that model changes within a production line and from one line to the other can be carried out quickly and cheaply.
'The new tools certainly provide the flexibility to adapt to the unknown models of the future,' Godfrey said.
The changes weren't cheap.
Honda spent £120 million (186 million) to modernize the existing line with a capacity of 150,000 units per year.
It spent £130 million on the new line, including body, paint and assembly shops, which added a further 100,000 units per year capacity. Anticipated plant production for 2002 is 185,000 units.
An additional investment of about £1 million is planned for this year with the setting up of a facility for laser-welding tailored blanks.
Itochu and TWB previously supplied weight-saving blanks - sheet metal blanks with different thickness or coatings that are designed to minimize scrap during stamping. Honda already has in-house facilities for tailored blanks at its assembly plants in Japan, the USA and Canada.
Honda expects to reduce costs with the same process at Swindon. The capacity of the new laser-welding facility will be 460,000 tailored blanks, intended primarily for door panels.
Traditionally, Swindon has used few modules. It still doesn't.
With the new line, Honda of the UK Manufacturing again studied the potential of modules and decided against changing previous practice.
'We couldn't get the combination of expertise and cost to satisfy Honda standards,' said Michael McEnaney, director of business administration. 'When you have modules, a single supplier becomes responsible for a range of technologies. For example, a full dashboard assembly is not just a molding, but all the electronics and functionality too. We couldn't find the right mix of expertise and cost.'
In addition, Honda believes that modularity and flexibility do not mix well.
'Using modules coming in from a supplier park immediately imposes constraints on your flexibility,' said Honda spokesman Chris Rogers.
With Honda's current initiative to harmonize component supply across its global manufacturing network, modules would only add further complication, said McEnaney.
Swindon's current supplier base is largely in the UK with 116 of the total 150 being located here.
But Honda is moving toward a global supply base, particularly in Asia and North America.
'The supply base will move into India and further into Asia in the months and years to come,' Godfrey said.
Honda is trying to establish Asia as the central source for engine components such as camshafts and crankshafts.
'We already have several plants in Asia, Thailand and China manufacturing motorcycles. They have been for years. Suppliers are already well developed in this region,' he said.
Like with modules, Honda tends not to outsource. But Honda uses an outside supplier for warehouse management at Swindon. That could be extended to the activities associated with getting parts to line side.
'This is a process that does not add value and is not core business so it could be outsourced,' Godfrey said.
'We have no current plans to outsource anything else.'
Despite the Swindon plant's focus on flexibility, build-to-order is not a top priority. Swindon production is organized around the economic batching of orders, and current efforts are aimed at reducing the batch sizes to 30.
'The sales department would like us to produce batch sizes of one, but manufacturing engineers favor 120,' Godfrey said. 'So we are working toward a compromise.'
About half of the Swindon output is likely to exported outside Europe, so building vehicles exactly to order would have little impact on delivery times.