Earthquake Impact on Honda Operations

Discussion in 'Honda Industry News' started by webby, Mar 23, 2011.

  1. webby
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    Earthquake Impact on Honda Operations

    Honda would like to express its deepest sympathy and condolences to the victims of the earthquake in Japan, and our sincere hopes for the earliest possible relief and recovery of the affected areas.

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    Japan

    Damage was widespread in the Tochigi area, where Honda has a number of operations. Honda Motor Co., Ltd. has confirmed the fatality of a Honda R&D associate at the Tochigi R&D Center, when a wall collapsed in a cafeteria. The associate was male, 43 years old.

    In addition, 17 Honda associates were injured in the Tochigi area from collapsing ceilings and other damage during the earthquake (initial reports put the number of injured at 30).

    Japan Operations
    • The suspension of automobile production, which began March 14, was extended today through Sunday March 27 at the following locations: Sayama Plant at Saitama Factory (Sayama, Saitama); Suzuka Factory (Suzuka, Mie).
    • The same March 27 timing applies at the Kumamoto Factory (Ozu-machi, Kikuchi-gun, Kumamoto), where motorcycles are produced.
    • Concerning operations in Japan from March 28 on, Honda will make decisions based on the status of the recovery of Japanese society as a whole, as well as our supply of parts. We deeply regret any inconvenience this may cause our customers, and request their understanding during these challenging times.
    • Honda is cooperating with electricity conservation efforts and rolling blackout measures, prioritizing the relief and recovery of affected areas. Our decision to resume production could be affected by the needs of Japanese society as a whole.
    • Honda has made contact with all Tier 1 suppliers in Japan and is collecting information from them regarding the status of their operations.
    Aid

    With the hope to contribute to the earliest possible relief and recovery of affected areas, Honda will provide the following aid:

    • From Honda in Japan, 300 million yen (approximately $3.7 million) toward the relief and recovery effort
    • A total of 1,000 generators (gasoline-powered and home-use gas canister-powered), along with 5,000 gas canisters. Honda also will dispatch its staff to explain the use of this equipment.
    • The Honda family of companies in North America will establish special matching gift programs for their associates for donations to the Red Cross to aid the victims of the earthquake and tsunami in Japan. Donations from associates will be matched on a dollar-for-dollar basis, with no personal or corporate donation limit. Honda employs more than 29, 000 associates in North America.
    • Many Honda dealers have reached out to express their heartfelt concern and support regarding relief and recovery efforts in Japan. American Honda Motor Co., Inc has established a special website to accept donations to the Red Cross from its automotive, motorcycle and power equipment dealers who wish to contribute in this way.
    North American Operations

    Honda has confirmed the well-being of all Honda associates on assignment in Japan from North America.

    On March 17, certain U.S. news reports inaccurately suggested that Japan-based production of vehicles intended for sale in the United States would be suspended until May. This is not what we communicated. Honda has announced a suspension of Japanese production only through March 27.

    There is no immediate impact on Honda's operations in North America. More than 80% of Honda and Acura products sold in the U.S. are produced in North America, and the vast majority of automotive parts for Honda automobiles manufactured in North America are sourced in the region.

    Honda's U.S. and Canadian and Mexico Honda plants are continuing normal output of finished vehicles. In addition, we are continuing to monitor the long-term impact of the events in Japan on Honda auto production in North America because some auto parts are supplied from Japan.

    The following vehicles we build in North America are supported primarily by our base of 600-plus North American first-tier suppliers:

    Marysville, Ohio Honda Accord, Honda Accord Coupe, Acura TL, Acura RDX

    East Liberty, Ohio Honda CR-V, Honda Element, Honda Accord Crosstour

    Greensburg, Ind. Honda Civic Sedan, Honda Civic GX natural gas

    Lincoln, Alabama Honda Odyssey, Honda Pilot, Honda Ridgeline

    Alliston, Ontario Honda Civic (Sedan, Coupe, Si) Acura MDX, Acura ZDX, Acura CSX (The CSX is sold only in Canada)

    El Salto, Mexico Honda CR-V

    We currently have adequate inventory of products supplied from Japan.

    Honda Fit, Insight, CR-Z, Civic Hybrid, Acura TSX and Acura RL are produced in Japan for the North American market. Honda produces a small percentage of CR-Vs in Japan for the U.S. as well.

    Honda's operations in North America and globally will do everything they can to support the recovery of Honda's operations in Japan.
     
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    Honda, based in Tokyo, will extend closures at its two auto-assembly plants in Japan until April 3, said Tomohiro Okada, a company spokesman. The factories are in Sayama, Saitama prefecture and Suzuka, Mie prefecture. Among Japan’s automakers, Honda imports the fewest autos to the U.S. from its home market, sourcing more than 80 percent of U.S. sales from North American plants in 2010.
    Honda plans to resume production at a motorcycle plant in Kumamoto, southern Japan, on March 28, Okada said.
     
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    Honda can guarantee that its Ohio plants will run as normal until Friday. After that, the picture gets hazy.
    The automaker has told employees that some lines may be idled as soon as next week because of delayed orders from suppliers in earthquake-damaged Japan. The company has had no further information since the initial announcement Friday evening.


    Honda has not said what lines may be interrupted or for how long. Those questions will begin to be answered in the next few days, said spokesman Ron Lietzke.
    The lack details makes it difficult for outside observers to know what to expect from Honda and other companies affected by the earthquake, said Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates.


    "It has created another level of anxiety about the situation because the full impact or ramification hasn't been fleshed out," he said.


    More than 80 percent of Honda vehicles sold in the North America are assembled on the continent, with the largest share of production at the plants in Marysville and East Liberty, according to company reports. Of all the parts that go into those vehicles, more than 80 percent come from sources in North America.
    The upcoming delays are because of the small share of parts that come from suppliers based in Japan. Some of those companies suffered severe damage in the March 11 earthquake and tsunami.
    "It really doesn't take much to shut down an assembly line when you run out of one component," Schuster said.



    Many of the suppliers serve multiple automakers, so several companies are announcing temporary shutdowns. General Motors idled truck factory in Louisiana and Ford plans to idle a plant in Belgium, according to media reports.


    Honda halted production in several Japanese plants right after the earthquake and some of them have yet to resume. In addition, the company's main research and development office in Japan will be inactive for the next few weeks.

    The most popular models, such as the Accord and Civic, are almost all built in the United States, but several less popular ones come exclusively from Japan, including the CR-Z, Insight and Fit, among others.
    Honda employs 13,500 workers in Ohio, including at the two assembly plants, an engine plant in Anna, a transmission plant in Russells Point and several support offices. The company's top executive for North American manufacturing is based in Marysville, as is a research and development office.
    For now, Honda dealers aren't worried about running out of cars, either the ones produced in Japan or in the United States.


    "Honda, the company that they are, will work things out," said Jim Erwin, new car manager at Roush Honda in Westerville.


    His dealership's main concern is the humanitarian crisis in Japan, he said.
    He has 500 cars on his lot and another 200 being shipped, so he won't need to worry about shortages for weeks, if not longer. If there are prolonged gaps in U.S. production, the inventory will be dramatically reduced, he said, but he is confident that any interruption will be short.
     

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