Honda's Celaya plant boosts Mexico factory presence

CELAYA, Mexico -- In opening its $800 million assembly plant here to build the 2015 Fit subcompact hatchback and crossover variant, Honda is joining a rapidly growing slate of automakers and suppliers in the central Mexican state of Guanajuato.

The Celaya plant will build about 200,000 units annually, and will boost Honda's annual North American production capacity to 1.92 million units -- representing 95 of all Honda and Acura vehicles now sold in North America.

The Honda Fit assembly plant will be mated to a $470 million continuously variable transmission plant, which will open in late 2015 on the same grounds, with initial capacity of 350,000 units, rising to 700,000 at its peak.

"Having a new overseas factory, with a new vehicle, and a new transmission factory, this is something we haven't done before, and this is a new challenge for us," Honda CEO Takanobu Ito said in a media roundtable. "The challenge is to make this into a highly profitable business."

Factory innovations

The Celaya plant boasts several factory innovations:

• Stamping times have been reduced by 40 percent thanks to a high-speed servo stamping press and quicker die changes. The new press was also recently installed at Honda's Marysville, Ohio, plant and will be added to its Alabama plant soon, Ito said.
• A new body-welding system reduces the number of robots and jigs needed, while increasing the number of weld points, to make a lighter and stronger body-in-white at a lower capital cost.
• Most water-based paints require three coats and three bakings. The Celaya paint shop is doing a "coat-bake-coat-coat-bake" process, eliminating a primer coat layer and one round of baking, for a claimed improvement in paint finish and a 40 percent reduction in energy consumption, Ito said.

"We have many factories in North America, and this new factory has the most new technology," Ito said. Several of the processes have already been "proven" at the Fit's primary assembly plant in Yorii, Japan.

With the opening of the plant, about 40 suppliers opened new operations or expanded existing ones, to support Honda de Mexico.

Just getting started?

About 80 percent of the 200,000-unit annual production will be for the United States and Canada, with the remaining 20 percent for Mexico. Of the 3,200 employees, about 20 percent are women, "a rather high percentage compared to most of our factories," Ito said.

Roughly 65 percent of the parts going into the Fit are sourced from Mexican suppliers; Honda could not provide a specific number for parts coming from the local supplier park.

The Celaya plant may just be getting started with its footprint. If demand warrants, Honda may realize, "Man, we have to make this factory bigger," Ito said through an interpreter. "The growth and success of this factory represents growth and success in North America."

Rerouting tracks

As part of getting its own rail spur, Honda is helping to pay for regional railroad tracks to be rerouted to a more peripheral route away from the city center. That project should be completed in 2015. Honda expects to use railroads to transport finished Fits to seaports on Mexico's Pacific coast as well as on the Gulf of Mexico.

"Celaya has a lot of good land here and good public safety, a place where we could get really good associates to work," Ito said. "They city of Celaya wanted us to develop. They wanted us to come. The state of Guanajuato had a plan for this … So this infrastructure could be created really quickly," Ito said.

Central Mexico has become a hotbed of automotive assembly of late. In December, Nissan opened a $2 billion plant in Aguascalientes, 150 miles to the northwest of Celaya, that will build about 175,000 Sentras annually. Next week Mazda will conduct a line-off ceremony in Salamanca, 25 miles to the west, for a plant that can build 260,000 Mazda2 and Mazda3 subcompact hatchbacks and a Toyota variant of the Mazda2 annually.

With Celaya's startup, Honda has invested $21 billion in North American manufacturing facilities, including eight automotive assembly plants.

The Celaya Auto Plant is Honda de Mexico's second auto plant. The first plant, located near Guadalajara, opened in 1995.