Talk about a one-two punch. Just last summer, as soaring gasoline prices forced consumers to rethink their preference for large, fuel-hungry vehicles, Honda Motor Co., like most of its automotive OEM competitors, saw demand for SUVs and pickup trucks dry up. Then, last fall, the credit crisis and souring economy conspired to undercut consumer spending further. Suddenly, Honda and other car makers found they were spending a lot of money making product for which there was little demand.
"In the current market, the changes have all come so fast," says Honda spokesman Ron Lietzke. "We had to be agile enough to quickly shift product levels based on what people want to buy."
Fortunately for Honda, the company, over the past decade, has been laying the groundwork for reacting with agility. Honda, as part of what it calls a New Manufacturing System, designed its North American plants in places like Marysville, OH, and Lincoln, AL, to use common processes and equipment. The company replaced inflexible hydraulic welding systems with programmable robotic welding systems that can be easily used to produce a wide variety of cars and light trucks. And Honda cross-trained plant workers and deployed visual management systems, allowing workers to quickly shift from building one design to another.
As a result, Honda will be able to react relatively quickly to the unprecedented changes it faces. The company in November 2008, cut back production of its Pilot sport-utility vehicles in its Lincoln plant by 8,000, or 32%, and planned an additional 22,000-unit cut of Pilots and Odyssey minivans in the first quarter of 2009. At the same time, Honda took steps to shift production of most of the V-6 Accord sedans for the North American market from Marysville to Lincoln, which had never made Accords before. That will open up more capacity in Marysville for production of four-cylinder Accords and engines.