While General Motors is deciding where to eliminate some of its North American factory capacity, Honda North America Inc. faces the opposite problem.
If production plans pan out for 2007, Honda could be straining capacity at its key Ohio assembly plants, where six vehicles will be built instead of the current four.
That could force the Japanese automaker to do something it doesn't want to do: import more cars from Japan. Or it could push Honda to do something else it isn't eager to do: add another U.S. production line.
The company will decide after launching U.S. production of two new models, says Ed Miller, spokesman for Honda of America Manufacturing Inc. in Marysville, Ohio.
An eye on capacity
"We're always looking at our capacity situation to see whether there should be an increase," Miller says.
But new capacity represents a risk because it requires the permanent step of hiring workers, he says. Honda prides itself on never laying off workers, Miller says.
Yet Honda will bump up against mathematics quickly. Its big Marysville plant can build 440,000 vehicles a year. Most of that is consumed by the Accord sedan and coupe. What is left over serves as the sole world source of the Acura TL.
In 2006, Marysville will get a new crossover vehicle. The unnamed Honda model will be based on the RD-X concept vehicle. Unless Accord or TL sales decline, the new vehicle will put the Marysville plant into an overcapacity scenario.
Honda's East Liberty, Ohio, plant can produce 240,000 vehicles a year. That plant builds the Honda Civic and Element.
East Liberty volume was reduced to 750 vehicles a day this year as the current Civic cycle ended. But this year a redesigned Civic will enter production, possibly pushing the plant to full volume.
|Squeezing in more models|
|PLANT||CAPACITY||NAMEPLATES, 2005||NAMEPLATES, 2006|
|Marysville||440,000||Honda Accord, Acura TL||Accord, TL, Honda crossover|
|East Liberty||240,000||Honda Civic, Element||Civic, Element, Honda CR-V|
The automaker will complicate the East Liberty equation by moving production of the CR-V to the plant. Production of the SUV is being moved from the automaker's Swindon, England, assembly plant, where about 60,000 units are built yearly.
If sales of those three nameplates hold to traditional volumes, they will be competing for limited capacity during the Civic's critical U.S. launch in 2006 and beyond.
Miller says the company's first option in that case will be to import more Civics and Accords from Japan to relieve pressure.
But Masaki Taketani, director of Asian market forecasting for CSM Worldwide in Troy, Mich., says Honda's Japanese plants don't have a lot to give. "Honda is already running at 95 to 98 percent of capacity in Japan," he says. "Their plants are very flexible all over the world. And it would be easy for them to get Civics or Accords from Japan. But there is only so much you can do."
Stepping up Japanese imports is not something Honda is eager to do. Its strategy is to "build where you sell."
Taketani predicts Honda will have to expand capacity at its newer assembly plant in Lincoln, Ala., where Odyssey minivans and Pilot SUVs are built.
A Japanese press report this month claimed Honda is drawing up such an expansion plan, but the company says that is not true.
Miller also downplays the odds of yet another capacity solution -- importing more Accords from Mexico. Honda already brings about 14,000 Mexican-made Accords a year into the United States. The plant in El Salto produces only about 30,000 Accords a year. Miller says there are no plans to expand it.
You may e-mail Lindsay Chappell at [email protected]