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Transcription

f i f t y y e a rs
of
American Dreams
of
american dreams
Fifty Years
Fifty Years
of
American Dreams
4077 PICO BOULEVARD
2 fif t y y ea r s
of
a mer ica n dr ea ms
LOS ANGELES, CALIFORNIA The original headquarters of American Honda Motor Co., Inc.
Foreword
In recognition of the 50th anniversary of American Honda Motor Co., Inc., we are pleased
to bring you these stories about the history of Honda’s first five decades in America.
With a tremendous spirit of innovation, teamwork and determination, Honda associates,
past and present, have challenged conventional thinking with new technologies, products,
and business strategies in the effort to create new value for our customers and society.
Certainly, on the occasion of our anniversary, we face difficult economic times.
But we must view even these hardships within the context of the many challenges Honda
has faced during the past 50 years in America.
This passage of time only makes our core beliefs more important. Our values are
not simply a treasure, but something we must put into action every day. In that spirit,
the stories in this book not only document our past, but must help guide our future.
To our dealers, business partners, and friends in the community, we say “Thank you”
for helping to build and to sustain Honda in America.
To our family of current and former associates, this book is intended to capture the
spirit of your efforts to meet the needs of our customers in America.
On behalf of my predecessors and the current management of American Honda,
it is my fervent hope that we have succeeded in honoring your efforts. Thank you.
Sincerely,
Tetsuo Iwamura
President & CEO, American Honda Motor Co., Inc.
June 2009
fif t y y ea r s
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a mer ica n dr ea ms 3
It is said that if even two people are involved in an event there will be two different
versions of its historical telling. Multiply this by the thousands of Honda associates who
have been part of the 50-year history of Honda in America and you have many different
versions of history to consider.
Certainly, the editors of this book have made every effort to document and verify the
stories told on these pages as being both accurate and appropriate accounts. However,
it was not possible to interview every current and former Honda associate involved in
each event or activity, so this book is not intended as the definitive history of American
Honda Motor Co., Inc., or of Honda in America.
We hope this book conveys the can-do spirit of the company and its people.
Most importantly, it was our goal to do so.
The Editors
This book is intended for use by Honda’s internal audiences, with distribution limited to
Honda associates, dealers and business partners. The public sale of this book is prohibited.
© Copyright 2009 American Honda Motor Co., Inc. All rights reserved
4 fif t y y ea r s
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Contents
Fifty Years 1959 | 2009
1959 Entering the “Land of the Automobile”
8
1960–1969
You Meet the Nicest People on a Honda
14
1970–1979
A Positive Force for Change
32
1980–1989
Breaking New Ground in America
50
1990–1999
From Challenge Comes Opportunity
70
2000–2009 A Tale of Two Decades
86
The Challenging Spirit
Introduction
106
Sales
Serving Customers in America
110
Manufacturing
Building Products in America
134
Research and Development Creating Products in America
144
Teamwork
Associate Teamwork in America
154
Community
Community Partnership in America
164
fif t y y ea rs
of
FiftyYears
Fifty
Years
Few images remain from the early days of the
founding of American Honda. Here,
General Manager Kihachiro Kawashima (far right)
poses for the camera with the first group of
associates in front of the Pico Boulevard office.
From left to right are Takayuki Kobayashi, Ed Brooks,
William Hunt, Mr. Yamagishi, Robert Moore, Ken Uyeki
(the first associate hired), and Mr. Kawashima.
6 fif t y y ea r s
of
1959 | 2009
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W
ith no existing market
for its products and with
little knowledge of the American
customer, Honda entered the
“land of the automobile” with
a few essential tools – passion,
determination, and a dream.
< Honda 50 (Super Cub)
get ting sta rted 9
entering the “ land of the automobile ”
Honda in 1959 | An Overview
A meri c a in 1 9 5 9
Economy
Dow Jones Industrial
Average reaches a new
high of 678.10 points
U.S. gross domestic product
surpasses the $500 billion mark
(exceeding $14 trillion in 2009)
Detroit responds to growing import
car sales, which are expected
to reach 10% of U.S. market
Politics
“The Right Stuff” — The first
seven U.S. astronauts selected
for Mercury space program
Eisenhower administration
initially recognizes Cuban
government of Fidel Castro
Alaska and Hawaii
become the 49th
and 50th states
C u lt u re
Barbie doll, pantyhose, the microchip,
and Nikon 35mm single-lens reflex
camera are new products
“The Day the Music Died” —
Buddy Holly, Ritchie Valens, and
the Big Bopper killed in plane crash
Westerns are the most popular
TV genre, as Bonanza joins
Maverick and Gunsmoke
S P O R TS
Lee Petty wins the
first Daytona 500
stock car race
L.A. Dodgers win the
first World Series
played in California
10 fif t y y ea r s
of
The American Football
League is established (would
merge with NFL in 1970)
The establishment of the first overseas subsidiary of Honda Motor Co., Ltd.,
was a momentous event for a company that itself had been founded
only 11 years earlier. Yet there were no major headlines when American
Honda Motor Co., Inc., was incorporated on June 11, 1959. The news was
dwarfed by another significant accomplishment.
O
n the isle of man, in the middle of the Irish
Sea separating Great Britain and Ireland, Honda
for the first time entered the world-famous Tourist
Trophy (TT) races in 1959. Only five years earlier,
Honda company founder Soichiro Honda had boldly
declared his intentions to compete in — and win —
what was then the world’s most prestigious motorcycle
race event.
It would take two more years for his company to
meet Mr. Honda’s famous challenge to win the title.
But, in the same month, June 1959 — within just days
of the race — Honda had taken the second of its two
giant steps onto the global stage.
It was Takeo Fujisawa, senior managing director and
co-founder of Honda Motor Co., Ltd., who led the effort
to establish a sales operation outside Japan. Fujisawa
and Mr. Honda visited Europe before dispatching sales
assistant Kihachiro Kawashima to research Southeast
Asia and the United States as potential markets.
After completing market surveys, Kawashima
recommended expansion in Asia, where he found that
motorcycles and mopeds imported from Europe were
already in use for basic transportation. America, the
“land of the automobile,” as Kawashima described
it, “didn’t come across as a country that had really
accepted the motorcycle.”
In fact, the entire U.S. motorcycle industry
generally sold no more than 60,000 units
annually — mostly larger bikes with engine
displacements of at least 500cc. Americans who rode
motorcycles were typically race enthusiasts, people
who loved the outdoors, or — at least in perception —
roguish young men in black leather jackets. The latter
image was made popular by the movie The Wild One,
a landmark film of 1950s rebellion starring Marlon
Brando and Lee Marvin as rival gang leaders.
E
VER THE VISIONARY SALES LEADER, Fujisawa
was undeterred by the challenging U.S. market.
“On second thought,” he told Kawashima, “let’s
do America. To succeed in the U.S. is to succeed
worldwide. To take up the challenge of the American
market may be the most difficult thing to do, but it’s a
critical step in expanding the export of our products.”
Despite suggestions from Honda Motor board
members to rely on a trading company to launch U.S.
sales, Fujisawa was determined that Honda should
develop its own sales network. Honda would create
a wholly owned sales subsidiary in America, with
Kawashima, just 39 years old, as its general manager.
To establish the new business, Honda sought
$1 million in capital funds. The request was denied —
not by Honda management, but by Japan’s Ministry of
Finance, which then controlled the flow of currency
out of Japan. The Japanese government had such little
confidence in the venture that it approved capital of just
part one of a conversation with
Kihachiro Kawashima
$250,000 — and on the condition that only half of that
money be taken out of the country in cash.
Kawashima knew that climate was an important
factor in the sales of motorcycles and therefore selected
Los Angeles as the home for his new company. Los
Angeles was also home to a large Japanese-American
population, a comforting factor for the leader of a
new company with roots in Japan. In fact, many of the
earliest American Honda associates came from this
local community.
With a new storefront office on Pico Boulevard,
and just eight employees, American Honda opened
for business on September 11, 1959. Kawashima had
established the ambitious monthly sales goal of
1,000 units of the Dream, the Benly, and the Honda 50
(which was known as the Super Cub in Japan). Most of
the early marketing efforts were aimed at attracting
dealers willing to sell Honda products, but the reaction
from existing stores was mostly one of curiosity.
After driving the neighborhoods of Los Angeles
and knocking on doors for three months, Kawashima
and his team found that the year had come to an end
with a mere 1,732 Honda motorcycles on the streets
of Los Angeles.
Reflections
“
. . . surprisingly, we found out
Cub became popular . . . it was
a ‘motorcycle that doesn’t
look like a motorcycle.’”
Kihachiro Kawashima, the first general manager of
American Honda Motor Co., Inc., served in the position
from 1959 to 1965. He remained in a leadership position
after returning to Japan and became president of
American Honda in 1973, a title he held concurrently
with the title of executive vice president of Honda
Motor Co., Ltd. Mr. Kawashima passed away in 2001.
This interview was conducted in 1998 in conjunction
with the 50th anniversary of Honda Motor Co., Ltd.
Were you surprised to get the assignment
to start American Honda?
I was 39 years old when I went to the U.S. I can’t believe I was
so young to get that position [laughter]. If I were to stay in Japan,
I would have been only a manager by then; or rather an assistant
manager, probably. I was surprised at why I was able to be in this
position. I myself thought I would only help with the preparation
or procedure to enter the country, like applications and things;
and that the person who actually goes there to do the job would
be an executive who is privileged to receive U.S. dollars, to be
honest. But Fujisawa told me, “You are going.” So I felt, How dare
you give me such an important task? I honestly didn’t know if I
could take such a huge responsibility.
(insert ch a get
pter
ting
titlsta
e her
rted
e) 11
a conversation with kihachiro kawashima
What did you think when you
first visited the United States?
I thought that this is the “land of the automobile.”
They [Americans] can’t live without cars, because
there was no elaborate rail system running throughout
the country like in Japan. I also got the feeling that
motorcycles would only be a luxury item in that
country. I was thinking that the nations that needed
motorcycles as a method of transportation were
countries in Southeast Asia, not America. Americans
would only consider motorcycles as a leisure-time
product, and not a daily transportation device.
When you came to the United States,
you established your own sales distribution
company rather than working through a
trading company. What led to that decision?
At that time there was a Japanese way to export
through trading companies. Fujisawa-san [Honda
Motor co-founder Takeo Fujisawa] didn’t say
not to use a trading company, but his intention was
very strong. Some people in the company thought
we should use a trading company, but Mr. Fujisawa
didn’t listen to them at all. He said, “Business will not
grow without our own sales network. If we employed
a trading company, they would be left alone to do their
work, at their own pace.” He made the decision to do
it by ourselves, to build a subsidiary and create our
own market. Fujisawa-san’s concept was, “Let’s go
there and do our business ourselves.”
12 fif t y y ea r s
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How did your competition
receive you?
When I first went to the U.S., there was a thing
called the Motorcycle Dealer Association. This was
an association of importers and wholesalers of Italian,
German, British, and French motorcycles. I visited
them to pay a courtesy call and I was told, “Welcome.
Mr. Kawashima. The size of the American market has
been 50,000 units a year for the last several years.
So, 50,000 units is the size of American market. Your
entry into this market will not make the market any
bigger. Your entry will mean a decrease in our shares.
Even though our share will be smaller, we will not say
no to you because you came all this way. But I don’t
think things will go so well for you. You better go home
before you lose too much money.”
I thought, It is true that the market size is 50,000
units. However, let’s say . . . if we take 10 percent of
that . . . we only need to sell 5,000 units a year, or
500 units a month. We will start our business from
there and then we will create more market on our own.
How much did people know
about the Honda brand when you
first came to the U.S.?
Zero. In Europe, we were racing. We were not winning
yet, but we had competed in several races already. So,
people at least knew the name Honda. But the U.S. was
maiden territory. Most Americans thought there was no
way that the Japanese could make anything good. They
thought, It’s not going to be easy to bring something
from Japan to sell in the States, because you guys lost
the war. That was their response. It’s not funny, but it’s
true. In addition, Japanese businesses had acquired
the reputation that products made in Japan would be
cheap and no good. So it wasn’t strange to receive an
impression from people in general that we can’t make
a decent motorcycle.
Did you like the West Coast
from the beginning?
Many Japanese companies that established branch
offices in the U.S. were in New York. If they chose the
West Coast, it was San Francisco. They didn’t consider
L.A. much. I decided on the West Coast after traveling
all over the States. I liked it there, especially because
they don’t have rain in L.A. due to its location as a part
of a desert. That’s why I thought L.A. is perfect. Also,
there were about 300,000 Japanese descendents
living in California at the time. I felt a sense of affinity to
them and I felt that I could lean on them. There was no
particular reason to choose L.A. It was just my instinct.
Fujisawa-san did not make any objection, he only said,
“L.A.? That’s great.”
How did you go about
establishing the first office?
I don’t have good sense in accounting. I thought that
we were going to have to be rooted here to stay in
business. For that reason, instead of renting, I decided
to buy a place for our office. I spent about $100,000
out of the $125,000 we had just on the space alone.
Afterward, we only had $20,000 to $30,000 left to
conduct our business [laughter]. Even the bank said,
“You have some nerve, don’t you?!” After that, I had
to borrow money from the bank to buy a truck, due
to a shortage in funds. In the back of my mind, I had
a feeling that I’ll be burying my bones in the U.S.
How did Americans react to the arrival of
Honda products to the United States?
I found out later on that Americans were very
surprised to see the precision of the Japanese
motorcycle. At that time, European brands had to
put an oil pan underneath their motorcycles while
they were displayed in the showrooms. But Honda
motorcycles didn’t leak any oil at all, so it was good
news to them; like they almost had goose bumps.
Shortly after you started
business, you had a problem
with some products, right?
We sold some units, and I thought maybe we can start
to see a road to our bright future, then we had some units
with burned-out engines. It was quite a shock. Plus, we
already had our next shipment on a ship coming across
the Pacific Ocean. It was a disaster. We couldn’t do
anything but call an engineer in a hurry. However, they
[the R&D engineers] said there is no way it could have
happened because they did an endurance test with a full
spin during a bench test. Unfortunately, there must have
been a difference between the bench test and actual
running on the highway. It did burn. The engineer was in
shock and we considered whether or not to repair them
by having those parts sent to us.
But here is a good side of Honda, because of
Mr. Fujisawa’s decision. He didn’t say: “Fix them locally
in the U.S.” Instead, he made it clear: “Return all units to
Japan immediately, including the ones that are there.”
We didn’t even unload them from the ship. We just sent
all the units back. Had we made any repairs locally, a
bad reputation would have come back to haunt us that
“Honda sells repaired products.” So, even though we
had to send some back due to the engine burnout issue,
we gave a good impression about our products. The
dealers thought the countermeasure that we took when
the trouble happened was appropriate. This type of
approach in the early stages gave Americans a shock
in a good way.
So, what products
did you have left to sell?
Since we sent the Dream and the Benly back to Japan,
we didn’t have anything else to sell. But surprisingly,
we found out Cub [Honda 50] became popular; it
became a unique item in the eyes of Americans. The
Cub was nice-looking and it was a “motorcycle that
doesn’t look like a motorcycle.” How this began was
that dealers had a Cub in their storefront. General
customers were interested in the Cub, even though
the storeowner didn’t have confidence in selling them.
So we decided to sell the Cub, and it sold well. The
sidekick sample product, Cub, became a hit. That is
the true story. In that way, we discovered that maybe,
this will become our main product. For that reason,
we focused on the Super Cub on the advertisement.
We were very lucky to have Super Cub when young
people were interested in motorcycles back then.
Shipment by sea takes a long
time, but wasn’t it expensive
to receive parts via air?
We were thinking we must provide good after-sales
service. We thought that to do our after-sales service
the right way it’s not good to have a reputation of
missing parts or parts arriving late; it doesn’t matter
how expensive the shipping fee is, or how many we
have in stock. Just get the parts. I think we had a large
amount of unused stock. That’s also why we needed
to have a sense to “make money off parts.” We were
one of Pan Am’s biggest customers on the West Coast.
Their vice president came to visit us one day. He was
a nephew of Eisenhower or something.
How did you decide the principles for
American Honda’s sales activities?
I was involved with domestic sales in Japan at the time
of its establishment. Using that experience as the base,
I developed a business in the U.S. My principle was to
“be directly connected with retail stores by making
our own sales network without using wholesalers as a
middleman” and “create our own customer list so that
we can always understand our customers.”
Due to a limitation in our funds and a lack of
strength at the beginning, we first developed business
in 11 Western states as our target. Once we got to the
point where we made enough money, then we were
able to step up to develop in all states.
But I believed we could not create a big sales
network if we linked only with existing motorcycle
shops, because there was a limit to them. In order
to introduce the motorcycle as a public product
in the U.S., we had to create a new network; so we
started to look for stores. I called the Chamber of
Commerce about our willingness to sell motorcycles;
we developed our presentation and asked them to
please gather people who would be interested in doing
business with us. Hobby shops, sporting goods stores,
people who were willing to sell new motorcycles
welcomed our new breed of motorcycles. That’s how
we became a new breed in the motorcycle industry
in America.
get ting sta rted 13
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14 fif t y y ea r s
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A
s a youthful American
president brought
excitement and glamour to
the White House, so did the
Honda brand employ a youthful
and fun spirit that invigorated
the motorcycle industry.
< Honda CB750 Four
1960 – 1969 15
you meet the nicest people on a honda
Honda in the 1960s | An Overview
A meri c a in t he 1 9 6 0 s
Economy
Housing and computer industries
top the automobiles, chemicals,
and consumer durables sectors
By the end of the ’60s,
the average American
income had increased 50%
Efficiency and productivity create
longest uninterrupted economic
expansion in U.S. history
Politics
Cuban Missile Crisis — President
Kennedy pulls U.S. back from brink
of nuclear war with Russia.
“I have a dream” — the civil
rights movement culminates
in Voting Rights Act
Vietnam War protests play out
on college campuses, bring
down Johnson administration
C u lt u re
Beatles spearhead British
music invasion, while Motown
defines R&B sounds
“Turn on, tune in, drop out” —
counterculture leads to freedom
of expression and Woodstock
A
n easy-to-ride, step-through design that
appealed to men and women alike, the Honda 50
(Super Cub) was “a motorcycle that didn’t seem like
one,” in the words of American Honda’s first general
manager, Kihachiro Kawashima.
A unique marketing campaign helped ignite
sales and established the Honda 50 as an “it” product
and Honda as a fun and youthful brand. The “Nifty,
Thrifty, Honda Fifty” ads that appeared in the popular
periodicals of the day, including Life magazine and
“One giant leap” — John Glenn
becomes first American to orbit earth,
Neil Armstrong first on the moon
UCLA Bruins begin record run in
1964, winning 10 NCAA basketball
titles in 12 seasons
First group of
Honda
dealers visit
Japan and
meet Honda
co-founders
Soichiro
Honda and
Takeo
Fujisawa
61
16 fif t y y ea r s
of
Reader’s Digest, led American consumers to reconsider
the motorcycle’s place in society and to view Honda
motorcycles as a desirable form of transportation.
Encouraged by the effectiveness of its marketing
effort, the company next launched the legendary
“You Meet the Nicest People on a Honda” advertising
campaign, which pictured Americans from all walks
of life aboard the Honda 50. The largest campaign
ever undertaken by a motorcycle company, it included
advertising on the nationally televised 1964 Academy
Key Products and Events
S P O R TS
Boston Celtics (nine titles) and
Green Bay Packers (five titles)
dominate the decade
Boxer Cassius Clay wins Olympic
and professional boxing crowns,
then becomes Muhammad Ali
Honda entered the 1960s needing to develop a broader market for all motorcycles,
as well as a customer base for its own two-wheeled products. Accomplishing these
goals was a major test of whether Honda products and the customer-oriented
philosophy that helped the company surmount its competition in Japan would
prove successful on a global scale.
“Caravan
CB77 Super
tours” recruit
Hawk 305
(above), CB72 potential
motorcycle
250, and
dealers
CL72250
Scrambler
motorcycles
Honda
opens 10
Dealer Service
Schools
Parts
distribution
center opens
in Racine,
Wisconsin
62
First major
U.S. dealer
reception
held for
Soichiro
Honda and
Takeo
Fujisawa in
Los Angeles
F190 tiller
Honda
charters
Pan Am jumbo
jet to deal
with service
parts
shortage
63
Launch of
“You Meet the
Nicest People
on a Honda”
ad campaign
American
Honda moves
headquarters
and parts
distribution
center to
Gardena,
California
Parts
distribution
centers open
in Portland,
Oregon, and
Pennsauken,
New Jersey
64
Awards. The impact was immediate. Celebrities were
willing to be photographed on the Honda 50, and the
Hondells reached the Billboard Top 40 with the song
“Little Honda.”
With its product reputation established, Honda
also took the industry lead in safety education. It
funded and produced the highly regarded safety film
The Invisible Circle, which was distributed free of
charge through the National Safety Council.
A
s America’s perception of the motorcycle
changed, Honda achieved a new sales record of
267,640 in 1964. But both before and after this success,
American Honda faced challenges that threatened its
success in the U.S. market.
In 1960, just as Honda sales began to reach several
hundred units per month, a quality problem jolted the
company. A small number of engines on the core Dream
and Benly models overheated and seized up on Honda
Honda Trail
Major
U.S. dealer 90 motorcycle
reception
for Honda
co-founders
Soichiro
Honda
and Takeo
Fujisawa
in Chicago
Honda
products
showcased at
Japan exhibit
at the
New York
World’s Fair
(for two
years)
G-30 general
purpose
engine and
E-300 (above)
and E-40
portable
generators
Honda
produces
The Invisible
Circle
motorcycle
safety film
The Hondells
release the
song “Little
Honda”
customers. Taking quick action based on advice from
Honda Motor co-founder Takeo Fujisawa, Kawashima
pulled both models from dealer showrooms and
returned them to Japan for repairs. The dealers were
so impressed by Honda’s response that the company
quickly earned a reputation for engineering excellence
and a commitment to customer satisfaction.
In the mid-’60s, as America became mired in the
war in Vietnam, Honda’s business also slumped. The
step-through look of key Honda products lost some
appeal as customers sought more aggressive styling.
Sales suffered further as larger numbers of young men
went off to fight in Southeast Asia, or encountered
difficulty in obtaining loans at home.
As unsold products were stockpiled in a warehouse,
American Honda canceled production orders to Japan,
leading Fujisawa to make an emergency trip to Los
Angeles. By 1968, annual sales had fallen steeply, from
more than 260,000 to 155,000 units. While American
World’s first
4-stroke
marine
engine,
the GB30
CB450 Super
Sport
motorcycle
65
Los Angeles
Mayor Sam
Yorty holds
special
ceremony at
City Hall to
hail Honda’s
success
Honda begins
selling power
equipment
through
motorcycle
sales network
Parts
distribution
center opens
in Houston,
Texas
66
Honda began working with Honda R&D in Japan to
create new products tailored to American tastes, the
C100 also was fitted with a conversion kit to replace
the step-through design with a more traditional look.
A
s the decade concluded with America
basking in the afterglow of its successful effort to
put a man on the moon, Honda, too, took a giant leap
forward with the introduction of four all-new products
engineered specifically for American riders. Led by
the popularity of its most powerful motorcycle ever,
the CB750, within a year Honda’s annual sales would
exceed 600,000 units.
Further, in December 1969, an auto sold in the
state of Hawaii signaled the dawn of a new era. With the
sale of an N600, American Honda was officially in the
automobile business. And a new Automobile Division
was soon established to set up sales for the entire
United States.
Honda
launches first
“Holiday
in Japan”
sales contest
F50 tiller
67
N600 debuts
at Southern
California
International
Auto Show
Mini Trail 50,
the
motorcycle
for the youth
market
68
69
Honda’s first
large
motorcycle,
the CB750 Four
Pilot program
that leads to
the National
Youth Project
Using Minibikes
(NYPUM)
established in
Los Angeles
First national
motorcycle
dealer
convention
held in
Las Vegas,
Nevada
Automobile
Division
established,
first N600
sold in Hawaii
1960 – 1969 17
part two of a conversation with
Kihachiro Kawashima
Reflections
“
The local operation
should not mindlessly
sell products made
by the head office,
but should actively
communicate what
kind of product
they want.”
You had two challenges: to convince
dealers to sell your products and to convince
customers to buy them. Which came first?
Kihachiro Kawashima, the first general manager of American
Honda Motor Co., Inc., served in the position from 1959 to 1965.
He remained in a leadership position after returning to Japan
and became president of American Honda in 1973, a title
he held concurrently with the title of executive vice president
of Honda Motor Co., Ltd. Mr. Kawashima passed away in 2001.
This interview was conducted in 1998 in conjunction
with the 50th anniversary of Honda Motor Co., Ltd.
Los Angeles Mayor Sam Yorty (right)
presents Honda Motor Co., Ltd.
President Soichiro Honda (center)
and Kihachiro Kawashima with a
commendation at a special ceremony
recognizing American Honda for
basing its headquarters in the
Los Angeles area.
18 fif t y y ea r s
of
I was told by Mr. [Takeo] Fujisawa [Honda Motor
co-founder Fujisawa] that there are two targets you
must focus on when you place advertising: One is to
motivate consumers to want to buy, and another thing
is to motivate stores to want to sell. His words made
such sense to me. But we decided first to promote
motorcycles as a consumer product before making an
effort to stimulate dealers’ interest in selling. Based
on this idea, I first thought of advertising. At that time,
the motorcycle industry in the U.S. placed ads only in
trade magazines. Therefore those ads were viewed by a
very limited audience. We thought that wasn’t enough.
So I said, “Let’s put our ads in magazines read by the
general public,” and I thought about putting ads in the
largest magazines such as Life, Time, Esquire and the
Saturday Evening Post. It took a substantial amount
of money to make people want to buy and dealers to
want to sell at the same time. But this is what I learned
from Fujisawa: “Don’t hold back when you are in a deal
that counts.” So, we put a one-page full-color ad in Life
magazine in 11 Western states. I think it was $70,000 to
$80,000 per page. This happened to be the time when
sales of Cub started growing. So, we somewhat had
the guts to do it. Sure enough, the ad had a positive
impact. Consumers’ eagerness to buy was stimulated.
And dealers started to see some customers, and they
thought of investing more money in their stores. Also,
this business was relatively easy for them to make a
profit. The ability to easily make a profit leads to the
eagerness to sell. And the fact that this product did
not require too much service also led to stimulate
the eagerness to buy.
How did you decide to sponsor
the Academy Awards?
The Academy Awards was the biggest and most
memorable event in my life from my time in the U.S.
The story begins with the selection of an ad agency
called Grey, which was a top agency in the U.S.
As American Honda started to have more money
after sales began growing, we decided to advertise
throughout the U.S. We put together a relatively large
annual budget for advertising.
Several ad agencies, including Grey and some
other agencies, came to make presentations. After
a long discussion, [Kiyohiko] Okumoto and Naito [a
Honda associate] were in love with “You Meet the
Nicest People,” and we decided to go with it. I had to
somewhat compromise. But that became a great hit!
I heard that Fujisawa, who had his own unique view on
advertising, got a kick out of this one. Fujisawa told
me that he wanted to use it in Japan as well.
We put that ad in newspapers and magazines.
We did a lot of them on billboards in L.A., San Francisco,
and some other cities. We dared to spend a lot of
money. It was a great hit. It gave people the idea
that those who ride motorcycles are not unpopular
motorcycle fanatics . . . they are the nicest people.
It created the mood that made it easier for women to
buy motorcycles for young people. Or to say it more
proactively . . . they wanted to buy. As a result, sales
exploded even more.
Encouraged by this result, Grey proposed us to
participate in the broadcast of the Academy Awards
on national television. I asked about the cost and they
said $100,000 a minute, therefore a total of $300,000.
I could not say yes or no for a while. I guess the ad
agency had confidence because the ads had been very
well-received in magazines and on billboards. They
came back again with the proposal, and I thought
more about it. I was taught, “There aren’t so many
opportunities to win the game.” So I said, “OK. Let’s
do it.” To be honest, I was shaking a bit inside.
But then Grey went to talk to the Academy Awards
organizer about Honda’s sponsorship, and they were
told, “A motorcycle company?” So, they did not get
a yes answer and the decision was suspended. In
addition, it was a foreign company. Both a motorcycle
company and a foreign company were firsts for an
Academy Awards sponsor. But Grey convinced them
by saying, “This is a promising company that will
definitely grow in the future.” And this is how we got in.
The ad sure received a terrific response. As soon
as the Academy Awards was over, some top-tier
companies in the U.S. approached us, saying, “Let
us use your product for our business“ or “Let us use
your products for our sales promotion” and offered to
purchase in large volumes, such as 100 units. There
were several major companies that made such offers,
including DuPont, Gillette, and Coca-Cola.
Who was the primary customer
for the Honda 50?
Our motorcycles were bought the most by young
people and students. It took time to walk from home
to school and between campus to campus or
classroom to classroom, so they used a motorcycle.
That’s why consumer financing was a lifesaver for
students. Those students who could not afford a
car, those whose schools did not have parking lots,
nothing was more convenient than motorcycles for
commuting between campuses and classrooms.
Students borrowed money from financial companies,
and the Cub sold like crazy. Therefore, the motorcycle
was becoming the typical product kids wanted to
have in the process of growing up, along with a car
and a camera. However, the conventional motorcycle
was seen by mothers as a dangerous toy. Therefore,
mothers disliked the fact that their kids wanted
motorcycles. However, Super Cub was said to be a
“motorcycle which is un-motorcycle-like,” and mothers
compromised if it was a Honda. So the trend was
created to buy the Cub for a birthday or Christmas
gift. Mr. Fujisawa always said, “Motorcycles have to
be accepted by women in order to become a public
product.” I think he already had his own image of the
Super Cub back then.
1960 – 1969 19
a conversation with kihachiro kawashima
The local staff at American Honda
sometimes had their own ideas — such
as the Trail bike — right?
They came to me once and said, “We understand
Super Cub’s beauty, but why don’t we utilize this unit
for other things, like hunting?” They did not think of
the product as the end. They thought there may be a
new business to develop from the product. I am not
sure if they thought about it on their own or if they had
requests from customers or dealers, but they came
to us and asked to modify [the Honda 90] and make
this kind of motorcycle. It was going to be driven in the
mountains where cars cannot reach. It was going to be
used on rough roads and to go up and down steep hills.
So we asked the R&D center in Japan if they could do
it, but the answer was, “It is not possible in terms of
durability.” So, they wouldn’t make it, no matter how
many times we asked.
Then, our local staff asked, “Can we remodel it
and sell this on our own?” We decided to try it. So,
we remodeled some units locally by taking some
things out, changing gears, and adding a leather bag
next to the handles to put hunting rifles. We sold a
good number of them. Then, the head office and R&D
decided to make some in Japan as well [laughter].
Eventually, R&D agreed to build the Hunter Cub
[Trail 110]. This instilled R&D with an understanding
that American Honda would not be a company that
will be OK only with products developed by R&D,
but it would be a company that comes to them with
various local demands.
20 fif t y y ea r s
of
The local operation should not mindlessly sell
products made by the head office, but should actively
communicate what kind of product they want or how
they can sell more — regardless of whether or not
R&D would accept it. In this way, American Honda
set that kind of example and, therefore, I think local
subsidiaries established after American Honda started
to say things.
I think this characteristic of American Honda
was cultivated from this kind of thing. I may sound
a little presumptuous, but I think this incident pulled
the trigger.
At one time, Honda set up its own
demonstration stores, right?
We made two good sample stores that were a pretty
good size in Phoenix, Arizona and San Francisco, based
on the concept that “A motorcycle shop should have
class.” The salespersons wore suits with a tie, and
mechanics wore clean white uniforms. They made
sure when customers came in they could ride the
motorcycle and found out if they were a beginner or
not. There was also a place for a test ride next to the
shop. When we first started, we were just selling with
an attitude like “When in Rome, do as the Romans
do.” Stores didn’t have an atmosphere for the ladies
to come in; that was not good. When the Cub became
our main product, we made two sample stores to
show “Motorcycle shops should have class.” We let
the staff from our dealers visit the sample stores and
tried to teach them how to create a store that will be
accepted by the public. Both stores had to shut down
due to the [franchise] laws after a couple of years,
because manufacturer-owned retail shops will create
competition in sales, and normal retail [franchise]
stores will have a disadvantage.
What was the secret behind
Honda’s successful cultivation
of the American market?
To do business, there has to be a good product.
There has to be an appropriate organization. There
have to be people who can take action. In that sense,
I was privileged to have good products. There was
Cub. I had great staff. But the biggest thing behind our
success was Honda’s philosophy to establish our own
sales network. We could directly manage retail shops.
We could do it with our own hands. I think that’s what
was behind the success of sales in the U.S.
Many Japanese motorcycle and automobile
makers are doing business in the U.S. now, but only
Honda has a free hand to draw its own sales/marketing
strategies, especially pricing, as well as service
strategies. In the case of Toyota, there is a distributor
in the Southeastern region around Florida. So, they
cannot implement their sales/marketing strategies
without talking to the distributor. Nissan had Itochu
in the East and Marubeni [trading companies] in the
West, if I remember correctly.
Only Honda had a free hand to do business.
This was the strongest driving force of Honda in
an overseas market.
innovative approach to marketing
Selling Honda to America
Credit for Honda’s early success is most often given to the company’s engineering prowess. But just as critical to
Honda’s place in American society in the 1960s was its innovative approach to marketing its products and the brand.
You Meet the Nicest People on a Honda In 1962,
when American Honda sought out a new advertising agency
to support its sales efforts, it was presented with a proposal
by Los Angeles-based Grey Advertising. The agency pitched
the company a marketing campaign under the theme
“You Meet the Nicest People on a Honda.” The result was the
campaign showcased above by (left to right) General Manager
Kihachiro Kawashima, Kenneth Hahn, of the Los Angeles County
Board of Supervisors, Honda Motor Vice President and co-founder
Takeo Fujisawa, and Kiyohiko Okumoto, who would go on to
become the second general manager of American Honda.
The campaign showed average middle-class Americans —
businessmen, housewives, college students, and teenagers —
astride the Honda 50 in print and broadcast advertisements
(upper left photo). A large exhibit (lower left)
took the story to motorcycle shows across
the country. Honda aggressively placed the
ads on radio and billboards and in many
of America’s most prestigious
magazines of the day, including
Life, Look, the Saturday Evening
Post, and Reader’s Digest.
1960 – 1969 21
building relationships
Dealers Enjoy “Holiday in Japan”
In 1962, American Honda began the “Holiday in Japan” dealer
sales contest, a program the company used to introduce dealers
to Honda and to establish stronger dealer relationships.
U
p to 50 dealers were treated to
the all-expenses-paid trip to Japan
each year. Dealers qualified for the trip
not only by increasing their sales volume
over the prior year, but also through
the appearance and cleanliness of their
showrooms and service areas, and
their use of merchandising, advertising,
and point-of-sale materials.
One of the key goals of
these trips was to show the
dealers Honda’s advanced manufacturing capabilities. “When
we went to Japan in ’62, they had
a lot of American machinery
and they were very modern at that time,”
said Helen Musselman, an early Honda
dealer in Tucson, Arizona. “The reason I
say that is when we came back after going
to Japan, we were going to the Midwest,
and we went through the Harley factory,
which we had never done. It was like day
and night, the difference. They [Harley]
didn’t have assembly lines. They pushed
from one station to the other station. So
it was quite different, and it amazed us for
the Japanese to be that much advanced
like they were. It was really something.”
George Gonzalez, another early
Honda dealer in Baton Rouge, Louisiana,
recalled his experience with Soichiro
Honda. “When I first went to Japan,
22 fif t y y ea r s
of
I was so enthused about the way people
had their interest in that product,”
he said. “I was in a plant one day with
Mr. Honda, and he was going down
the assembly line. He asked one of the
employees to step back, and he got in
and did his work. And we’d scoot a little
further down the line, he would
do it again. So he proved that he knew
all phases of his own product.”
American Honda chartered
a Japan Airlines plane for the
dealers, who also visited many
beautiful and historic sites in
Japan. During the trip there
were several professional photographers
taking photos that would be incorporated
into personalized albums for the dealers
when they left Japan.
Included in the festivities was a party
in Kyoto attended by company co-founders
Soichiro Honda and Takeo Fujisawa, and
a “sayonara party” in Tokyo at the Palace
Hotel. “There would be Tankõ Bushi
dancing,” said Hirobumi Nakamura, then
director of motorcycle sales, referring to a
traditional form of Japanese folk dancing.
“Mr. Honda was very good at those things.
He was very social. Mr. Fujisawa wasn’t
that kind of personality, but Mr. Honda
was very active in those parties and the
dealers enjoyed it.”
Dealers enjoyed a mixture of tourism and learning about Honda during their Japan holiday.
dealer receptions
Honda Founders Visit America
Visits to America by Honda Motor Co., Ltd., co-founders Soichiro Honda and
Takeo Fujisawa were always big occasions. They personally hosted major dealer
receptions in the days before American Honda held national dealer meetings.
T
he first occasion for a formal
visit by Honda co-founders Soichiro
Honda and Takeo Fujisawa was a
December 1962 reception held at the
Ambassador Hotel in Los Angeles, which
followed the first over-the-counter sales
of Honda common stock through U.S.
brokerage firms.
In mid-1964, the co-founders
returned for a two-week stay that
included a visit to American Honda’s
new Gardena headquarters, and a
trip to Chicago to attend a reception
with 450 Honda dealers at the
Continental Hotel.
In December 1966, Mr. Honda
returned to the U.S. for a global
conference on emissions in Washington,
D.C. A reception was arranged for some
200 dealers from states in the Northeast
at the Carlyle Hotel in New York. At that
time, the parts center in New Jersey
was virtually an eastern headquarters
for American Honda. Yo Masuda,
then manager of the facility, handled
arrangements for Mr. Honda. “Each
dealer within a 200-mile radius was
invited, and everyone we talked to was
so glad to be a part of it,” recalls Masuda,
who later served as vice president of both
the Parts and Export Sales Divisions. “I
was elected to be the driver. I remember
driving up the turnpike to New York, and
the other passengers had fallen asleep.
Mr. Honda leaned forward to talk to me,
probably to make sure I stayed awake.
I had met him before, but I can’t say he
remembered me. He was such a great PR
person, he knew everybody.”
The Great Entertainer Honda Motor co-founder Soichiro Honda (center) and American Honda’s first general manager, Kihachiro Kawashima,
(right) have fun with legendary racing promoter J.C. Agajanian at this December 1962 dealer reception in Los Angeles. Mr. Honda treated everyone
as his customer. He worked hard to make sure dealers and guests were happy — even if it meant donning a cowboy hat!
Honda’s Hawaiian Roots
Many of the early American Honda associates
were Japanese-Americans from Hawaii,
including Ken Uyeki (top), the first associate
hired by General Manager Kihachiro Kawashima
after a meeting in Japan. Tak Ageno (lower
photo, at right) worked for three decades in
accounting and finance. He joined the board
of American Honda in 1981. “There was a big
migration from Hawaii to Los Angeles,” said
Ageno. “I was working at a bank in Los Angeles
when I joined American Honda in 1960. As we
needed people, we’d ask our friends if they
knew anyone.” At one point in the 1960s, half
of his 30-person staff in accounting were of
Hawaiian descent.
“I hired Monta Watanabe because I knew him
from high school in Maui,” said Ageno. “Monta
hired Willie Tokishi because they had a family
connection. You couldn’t do that today, but
everyone worked extra hours even though
they didn’t get paid for overtime. The company
was very fortunate to start the business with
employees who were very loyal and motivated.”
1960 – 1969 23
new headquarters
American Honda Moves to New Gardena Home
Honda’s U.S. headquarters relocated from Pico Boulevard in Los Angeles to
its new home at 100 West Alondra Boulevard in Gardena, California, in 1963.
Far right: American
Honda associates were
excited about their new
home in Gardena, which
brought all of Honda’s
Los Angeles-based team
together in one location
(near right).
A
dedication ceremony
for American Honda’s new
headquarters attended by more than
650 dealers, associates, local officials,
and media was held on September 12,
1963, four years and one day after the
start of Honda’s U.S. sales operations.
The new 58,000-square-foot
building reunited American Honda’s
sales offices and parts warehouse in one
location. It provided warehousing for
parts imported from Japan and destined
for the company’s approximately
24 fif t y y ea r s
of
Takeo Fujisawa (right), company co-founder and
managing director of Honda Motor Co., Ltd., is
welcomed by Kenneth Hahn, a member of the Los
Angeles County Board of Supervisors, at the opening
of American Honda’s new Gardena headquarters.
800 U.S. motorcycle dealers. Honda’s
Gardena facility would continue to
expand over the years, ultimately
covering an entire industrial block with
multiple buildings housing virtually all
of the company’s national sales, parts,
service, and administrative operations.
Just weeks prior to the opening,
a fire erupted in the new Gardena parts
warehouse, apparently caused by an
unattended cigarette that rolled onto
cardboard packaging. “I went to
Mr. Kawashima to apologize,” recalls
Matt Matsuoka, then parts manager.
“Mr. Kawashima ran American
Honda with an iron hand. I was very
nervous to talk with him, but he said
simply, ‘Please make that a lesson to
be more careful and see that it doesn’t
happen again.’ ” The fire caused more
than $50,000 in damage, but associates
worked through the night to clean it
up, to recover metal parts that weren’t
damaged by the heat, and to air out the
facility quickly so that the scheduled
grand opening wouldn’t be ruined.
academy awards strategy pays off
Hollywood Helps Boost Honda Brand
Taking a major gamble, in 1964 American Honda purchased a quarter-share in the sponsorship of the Academy Awards. At more than
$2 million, it was by far the largest and most expensive advertising campaign in the history of the U.S. motorcycle industry.
Dean Martin
B
acked up by full-page color
ads in Life, Sports Illustrated,
Esquire, Playboy, and other popular
magazines, Honda’s two 90-second
television commercials aired on the
broadcast of the 36th annual “Oscars”
in 1964 that drew a record 150 million
viewers. Consumer response to the ads
was immediate and widespread. In the
days that followed, dealers across the
country were flooded with customers
interested in learning more about
Honda’s fun, fuel-efficient, and familyfriendly motorbikes.
Honda also employed a Hollywood
agent for $1,000 a month to gain access
to some of the biggest stars of the day.
Celebrities who were spotted riding
their Hondas on studio lots and at posh
vacation resorts included Elvis Presley,
Ann-Margret, Dean Martin, Jerry Lewis,
Rock Hudson, Steve Allen, Natalie Wood,
and Janet Leigh. Many more celebrities
were photographed riding or sitting
on a Honda. The courtship of Hollywood
helped establish Honda as both
the trendy motorcycle of choice and
an iconic presence in American
popular culture.
Ann-Margret
1960 – 1969 25
taking industry leadership
Taking the Lead in Safety Education
As Honda became America’s top-selling motorcycle brand, the company
took the lead in promoting motorcycle safety, including a unique safety
film and the formation of an industrywide safety group.
would rent motorcycles while on shore
leave, with little or no
riding experience. At
the suggestion of the
Long Beach Police
Department, Matsuoka
pursued the creation
of a safety film that
ultimately led to
The Invisible
Circle. The “invisible
circle” represents
the amount of space
American Honda General Manager Hirohisa “H.G.” Nakamura (left) and
around the bike that a
Matt Matsuoka (center) present the first The Invisible Circle safety film to
a representative of the Los Angeles Chapter of the National Safety Council.
rider should maintain
from other vehicles.
ontinuing to expand its
Matsuoka’s use of television director
leadership position in the
Murray De’Ately and location filming in
U.S. motorcycle industry, in 1965
San Francisco and Yosemite National
American Honda took on the challenge
Park pushed the film over budget, to
of promoting motorcycle safety. “We are
$50,000. Okumoto was understanding
the leader in motorcycle sales,” American about the cost, but not about the product.
Honda Motor Co., Inc., General Manager
“He was very much disappointed.
Kiyohiko Okumoto told Matt Matsuoka,
He said, ‘The film shows too many
then head of Honda’s Public Relations
accidents,’ ” said Matsuoka. “After a year
Department. “We must take leadership
of production, I almost dropped dead.”
in motorcycle safety.”
Matsuoka went to De’Ately and
Going “to the spot,” Matsuoka
told him the news. “I’m a film producer,”
discovered a growing problem with
said the director. “I’m not making a
motorcycle accidents in Long Beach,
sales film, I’m making a safety film.
California, where many young sailors
The reason you show different types
C
26 fif t y y ea r s
of
of accidents is so it will stay in the minds
of young people that these are the things
not to do.”
Emboldened, Matsuoka went back
to Okumoto — who gave the go-ahead to
finish the film. Endorsed by the National
Safety Council, the near 30-minute color
film follows a young beginner cyclist
learning the do’s and don’ts of riding,
with a focus on both motorcycling fun
and safe riding practices.
Honda distributed more than
1,000 copies of the film free of charge
to schools, police departments, the
armed forces, and other organizations
interested in motorcycle safety.
Motorcycle Safety Foundation
T
he major motorcycle
companies created the Motorcycle
Industry Council (MIC) in 1969 to
promote motorcycle riding, with
Honda playing a leadership role in
the organization’s establishment.
Honda then led that organization in
an important
new direction in
1972 — promoting
motorcycle safety.
American
Honda General
Willie Tokishi
Manager Hirobumi
Nakamura, who succeeded Hirohisa
“H.G.” Nakamura, thought the industry
should help customers learn to ride
more safely. “Without safety, we have
no future,” he told Willie Tokishi, then
manager of Sales Planning, who would
become manager of Motorcycle Safety
in 1974. Nakamura instructed Tokishi
to attend an MIC meeting in Columbus,
Ohio, to propose that Honda would fund
50 percent of the money required to
establish a safety promotion group,
if the other MIC members would fund
the balance.
“No one could give me an answer
right there,” recalls Tokishi. But the
MIC members subsequently agreed to
the idea. The nonprofit Motorcycle Safety
Foundation (MSF) was born.
The MSF promoted numerous
motorcycle safety initiatives, including
standardized means for motorcycle
training, the upgrading of motorcycle
licensing preparation and instruction
programs, and research into the causes
of motorcycle accidents. Rider education
courses and certification programs were
established across the country, with
thousands of certified trainers.
By early 2009, 37 years after
the MSF was established, more than
4.5 million Americans had graduated
from MSF rider training courses,
including those conducted at American
Honda’s four Rider Education Centers.
Tokishi recalls a cherished comment
shortly after the MSF was established
and the industry recognized the value of
the initiative to its future. “John Harley
of Harley-Davidson said, ‘Thank you,
Honda. Without Honda, we would not
have motorcycles in America.’ ”
a mutual love affair
Honda Becomes a Cultural Icon in America
Within their first decade on American soil, Honda motorcycles had become ubiquitous. They earned a place in America’s heartland as well as on its more
trendy coasts. They were popular among celebrities and valued by ordinary Americans. Honda, now recognized for products that offered the highest
quality, reliability, and fun-to-ride spirit, was sought after and sung about. It had made motorcycling an acceptable and practical mode of transportation.
Lift Off! Apollo 12 astronauauts returned from
the moon to receive Honda 350 motorcycles —
a gift from Honda Motor President Soichiro
Honda — delivered by American Honda’s third
general manager, Hirohisa “H.G.” Nakamura
(third from left in near photo), in Houston,
Texas. From left, astronaut Alan Bean, American
Honda Public Relations Manager Matt Matsuoka,
Nakamura, an unknown Honda associate, and
astronauts Dick Gordon and Charles “Pete”
Conrad (on bike). The astronauts had visited a
Honda factory in Japan as part of a world tour
after the space flight. Later, Bean and his wife,
Leslie, joined Mr. Honda at Cape Kennedy, Florida
to witness the launch of Apollo 15 (far right).
Start Your Engines Long before
Honda power took to the Brickyard, Honda
motorcycles were the “official field vehicles”
for the 1965 Indianapolis 500 (near right),
both for race officials and for the Firestone
and Goodyear race teams.
Heartland Traditional American
organizations made Honda bikes their
official motorcycle. Here, (far right), members
of a Shriners chapter in Reading, Pennsylvania,
proudly sit astride their new Honda rides.
1960 – 1969 27
a problem becomes an opportunity
“Operation Electric Guitar” Addresses Major Sales Crisis
After seeing motorcycle sales double each year in the early 1960s,
American Honda suddenly experienced a decrease in 1966. Sales of
the C100 series were down by half.
T
C102 Cub with white
Rally conversion kit
mounted between the
seat and handle bars.
28 fif t y y ea r s
of
he dramatic drop in sales in
the late ’60s quickly became a crisis
both for American Honda and Honda
Motor. Half of the motorcycles Honda
Motor produced in Japan were built for
export, and about half of those were
intended for American Honda.
“I reported this situation to Japan,
and I asked them for a big reduction in
the shipment of bikes from Japan,” said
Hirobumi Nakamura, then director
of motorcycle sales and later general
manager of American Honda.
The news rattled Honda Motor.
In fact, Kihachiro Kawashima — then
vice president of American Honda,
who was based in Japan — immediately
flew to the U.S. to see the situation for
himself. “I thought something was
wrong and there was a problem. So I
called [Takeo] Fujisawa [Honda Motor
vice president and co-founder], who
happened to be in Bayreuth, Germany,”
recalled Kawashima. Fujisawa
frequently attended the annual Bayreuth
Festival of Wagner opera music. “I told
him: ‘The American market has changed
completely.
Inventory is
building up,
and there
are some
problems.
So, I will stay
here for a
while and
take care of
this.’ ” But
Hirobumi Nakamura, then
Fujisawa left director of Motorcycle Sales
Bayreuth immediately for the U.S.
As soon as he arrived in Los
Angeles, Fujisawa gathered the Japanese
staff and asked very detailed questions
about the market even before going
to the Beverly Hilton Hotel for the
night. The next morning, he offered an
observation. “I was looking down at the
city for a long time from the window of
my hotel room,” he said. “But the streets
seemed very active with a lot of people,
and nothing seemed to have changed
so much.”
The American Honda
staff explained that it
was the middle
of the Vietnam
War and the
military
draft was
taking away
many Honda
customers.
Further, dealers
were telling
Honda that the U.S. government’s
Soldiers Relief Act — which allowed
buyers who got drafted to have their
loans written off if they returned their
motorcycles — caused some loan
companies to turn down the applications
of draft-age men.
After listening to the explanation,
Fujisawa asked: “Isn’t the problem that
our products are losing their appeal? Do
we have the same kind of attractiveness
as the electric guitars the young people
of today love so much? The bikes of
Honda should have the same kind of
appeal to young people.”
“He took the leadership in dealing
with the situation,” said Kawashima.
“He assumed that customers had
grown tired of the Cub [C100], which
was offered in only one model and one
color and had no changes. So, he took a
direction to add something new.”
A
fter more discussions within
American Honda, a decision was
made to produce conversion kits to
give a more exciting look to the C100
series, because sales of that model were
especially weak. “We asked our designers
to make some parts to attach to the bike.
And because Mr. Fujisawa talked about
electric guitars, we named this ‘Operation
Electric Guitar,’ ” said Nakamura.
C100s were shipped to dealers
two to a crate, so when the bikes were
reassembled at the dealer, the dealer
also attached the conversion kit
designed by Honda R&D. Sales soon
improved enough to help reduce the
huge inventory.
“It was a very serious situation,
as exports to the U.S. were stopped,
and the U.S. side was struggling
with inventories.” However, the bikes
sold in the United States were not
specially designed for the American
market. Honda R&D began a major
effort to develop new products for
American customers. After two years
of all-out effort, including ongoing
discussion with a number of Honda’s
U.S. dealers, an unprecedented number
of new models were introduced at
American Honda’s first national dealer
convention in Las Vegas in January
1969. They included the Z50, the CT70,
the SL90, the SL350, and the legendary
CB750. They were appealing to a wide
range of customers. Within two years,
record sales had returned — thanks
to Operation Electric Guitar.
“In terms of company
management, it was the biggest
crisis,” said Kawashima.
Honda introduced several all-new motorcycles at its first national motorcycle dealer meeting in 1969,
along with the N600 automobile, which would debut the following year.
Reagan Visits Honda HQ American Honda’s General Manager Hirohisa “H.G.” Nakamura
(center), introduces Ronald Reagan, then a candidate for governor of California, to the company’s
outside attorney, Lynn Takagaki, who played an important role in the official establishment of
American Honda. The future governor and U.S. president visited American Honda’s Gardena
headquarters in 1966.
The Hondells On the California coast and then all across America, the name Honda became
synonymous with fun in the sun. In 1964, Honda’s place in American culture was immortalized in the
song “Little Honda,” written by Beach Boys founder Brian Wilson. It was released as a single by the
Hondells, perhaps the only time a pop music group took its name from a company. While the Beach
Boys included the song on their All Summer Long album released the same year, it was the Hondells’
version that made it to No. 9 on the pop charts in the fall of 1964. The Hondells’ music was actually
recorded with outstanding session musicians, including Glen Campbell, who later found fame as a
recording artist. In 1965, the Hondells followed up with an album featuring Honda-themed songs
throughout. Later, they released “You Meet the Nicest People on a Honda,” a single lifted directly
from the commercial jingle that played in Honda dealer showrooms around the country.
1960 – 1969 29
1960s Innovations
Superhawk and Dream Sport
The robust CB72 Dream Sport and the CB77 Superhawk
(pictured) helped establish Honda as a serious player in the U.S.
motorcycle business. One innovation was the use of the bike’s
engine as a stressed member of the frame. The CB77 also used
an unusual forward-arcing kick starter to avoid contact with the
right front footpeg.
“From any viewpoint,
the Honda CB77 is an
exceptional
motorcycle.”
Cycle World, 1963
CB750
In 1969, the CB750 became the first mainstream motorcycle with a front disc brake and a straight-four overhead cam engine.
It proved that high-performance bikes could also be super-reliable.
“The most sophisticated
production bike
”
ever.
Cycle, 1969
30 fif t y y ea r s
of
cc
motor size of
the fuel-efficient
Mini Trail 50
In 1959, the legendary Super Cub (the Honda 50 or C100) launched
Honda’s American success story and became its top-selling model.
The “nifty, thrifty Honda fifty” could cruise all day at 40 miles per
hour, delivering fuel economy up to 200 miles per gallon. The Super
Cub would become the world’s best-selling motorized vehicle of
all time, with sales of more than 60 million units worldwide over
50 years (1958-2008).
43,644
nifty,thrifty,
fifty
Number of Super Cubs
sold in 1961, making Honda the
top-selling
motorcycle company in America
CL72 Scrambler Makes Baja Run
The renowned Baja 1000 cross-desert race in Baja California, Mexico,
actually has its roots in an idea conceived in 1962 by Honda associates
Jack McCormack and Walt Fulton to promote the new CL72 Scrambler
with a 950-mile off-road run across the Mexican desert. Their efforts
inspired others, and evolved into the Baja 1000 race, which officially
began in 1967. Honda has earned more overall victories in the race
than any other manufacturer — 18 times through 2008.
Mini Trail 50
CB450 Super Sport
Introduced in 1968, Honda’s first bike for the youth market,
the Z50A Mini Trail 50, featured a fuel-efficient 50cc motor
and a semi-automatic transmission. Along with the CT70, the
Mini Trail brought the Honda brand into the garages of many
American families.
Honda made the jump to the big leagues in 1965 with the CB450
Super Sport. With a 45-horsepower dual overhead cam (DOHC)
engine and an electric starter, it was Honda’s first big, fast
production motorcycle.
1960s Innovations
50
Honda 50
1960 – 1969 31
5687
1990s
2
32 fif t y y ea r s
of
live type
H
onda entered the auto
industry at an inauspicious
time. The business climate
was as heart-pounding and
ear-splitting as the heavy
metal rock bands that marked
the decade’s music scene.
< Honda Civic CVCC
19 70 – 19 79 33
a positive force for change
Economy
“Stagflation” in U.S. causes
increased unemployment and
inflation while interest rates soar
Deregulation of airline,
trucking, and railroad industries
is initiated to quell inflation
OPEC oil embargo leads to
rapid increase in oil prices,
straining global economy
Politics
President Richard Nixon
opens doors to Communist
powers Russia and China
Deep Throat: Watergate
scandal brings down
Nixon administration
President Jimmy Carter’s
Camp David Accord leads to
peace between Israel and Egypt
C u lt u re
The Atari video game
and the VCR change
home entertainment
British rockers introduce
heavy metal music, but
disco caps off the decade
T
he 1970s were a difficult decade for
business. “Stagflation” entered America’s business
lexicon to describe an economy marked by rampant
inflation, rising interest rates and unemployment,
and price controls that stopped business momentum.
An oil embargo by OPEC nations only added to
the difficulty.
Further, after 20 consecutive years of a
stable 360-yen-to-the-dollar exchange rate, the
U.S. dollar dropped. It fell to 254 yen from 1971
to 1973 and, ultimately, as low as 177 yen in 1978.
Jaws ushers in blockbuster era;
The Godfather: Makes audiences
an offer they “can’t refuse”
US90 ATC
3-wheeler
creates
all-new
product
category
“Steel Curtain” leads Steelers
to four Super Bowl wins, but ’72
Dolphins achieve “perfection”
70
34 fif t y y ea r s
of
Import-dependent American Honda was forced to
enact price increases so frequently that customers
often found identical products with different price
tags in dealer showrooms.
With the positive momentum gained from the
new motorcycles launched in 1969 and a $2 million
annual advertising budget — its largest to date —
Honda reasserted its dominant position in the
motorcycle market. This was followed in 1970 by the
innovative 3-wheeled ATC, a full-force entry into
the off-road racing market in 1973, and the original
S P O R TS
Billie Jean King dominates
women’s tennis and Bobby Riggs
in the “Battle of the Sexes”
Mark Spitz captures a record seven
gold medals, but the murder of Israeli
athletes haunts Munich Olympics
America extricated itself from the war in Vietnam in the 1970s. Détente thawed
icy relationships with Russia and China. But the business climate presented unique
challenges. With bold technologies and visionary business strategies, Honda’s
can-do spirit won the company a leading place in the American auto industry
and then led it in challenging new directions.
Parts
distribution
center opens
in Mt. Laurel,
New Jersey
(replaces
Pennsauken
facility)
Parts
distribution
center opens
in Dallas,
Texas
(replaces
Houston
facility)
71
Honda and
YMCA launch
National
Youth
Program
Using
Minibikes
(NYPUM) as
a national
program
Z600 Coupe
Parts
distribution
center opens
in Atlanta,
Georgia
72
Honda
International
Trading Corp.
established
4-stroke
CR250M
marine engine Elsinore,
(above)
CB350 Super
Sport (above),
Civic
and XR75
Hatchback
motorcycles
Honda
generators
introduced
73
Parts center
opens in
Rock Island,
Illinois, and a
new facility
in Portland,
Oregon
Honda Expo
’74 — first
single-brand
motorcycle
show held in
Southern
California
Power
Products
Division and
separate
Auto and
Motorcycle
Service
Divisions
established
74
75
GL1000 Gold Wing in 1975. But after reaching almost
720,000 units in 1973, sales fell to 450,000 units
the following year under the weight of the depressed
economy. It would be a decade before Honda would
again top the 700,000-unit mark.
The new automobile division began sales in
the continental U.S. in 1970, with 58 dealers and the
diminutive N600 and Z600 models. It was a slow start.
The Honda lineup was dwarfed by the offerings of
Detroit’s Big Four — GM, Ford, Chrysler and AMC. Honda
sales barely topped 20,000 units in 1972, and increased
only modestly with the 1973 launch of the Civic, even after
Road Test magazine named it the 1974 “Car of the Year.”
O
n the horizon were a series of events
that provided a pathway to the rapid expansion
of Honda’s automobile business. First, the 1970
Clean Air Act created challenging new tailpipe
emissions standards that every automaker would
have to meet by 1975.
First
Honda
cruiser
— GL1000
(Gold
Wing)
motorcycle
Civic CVCC
U.S. R&D
begins
as joint
American
Honda/
Honda R&D
project in
Torrance,
California
Parts
distribution
center opens
in Irving,
Texas
(replaces
Dallas
facility)
Emissions
test lab opens
in Ann Arbor,
Michigan
Parts
distribution
centers
open in
Moorestown,
New Jersey
(replaces
Mt. Laurel
facility)
76
Accord
Hatchback
On the heels of these tough new regulations came
the oil embargo, leading to the 1973 oil crisis. Higher
gasoline prices led to long lines at service stations and
a new focus on fuel economy on the part of American
consumers. That was a lucky break for Honda.
Honda R&D in Japan had proactively developed
new engine technology to comply with the new U.S.
Environmental Protection Agency (EPA) emissions
regulations. Announced in 1972 and introduced in the
Civic in fall 1974, the compound vortex combustion
controlled (CVCC) engine was the first and only
powerplant to meet the Clean Air Act requirements
using regular leaded gasoline, without the need for
a catalytic converter. The Civic CVCC was also rated
No. 1 in fuel economy by the EPA. Sales more than
doubled with its introduction.
Honda followed the Civic with the Accord CVCC
Hatchback in 1976 and the Prelude in 1979. Voiced by
the well-known actor Burgess Meredith, the “We Make
It Simple” advertising campaign elegantly captured
ME series
general
purpose
engines
77
FL 250
Odyssey
Parts
distribution
center and
regional sales
offices open
in Troy, Ohio,
and Atlanta,
Georgia
(replacing
existing
Atlanta
facility)
Civic tops the
U.S. EPA’S
first-ever fuel
economy
ratings
Honda
announces
plan to build
a motorcycle
plant in Ohio
what attracted customers to the Honda brand, and
described the company’s simple three-model lineup —
Civic, Accord and Prelude.
I
n 1975, a third sales division was established
to place increased emphasis on sales of power
equipment products. That same year, Honda took the
monumental first steps toward establishing research
and development operations in America. The first
R&D functions opened in Torrance, California,
n 1975, and were actually part of American Honda.
But it was an announcement of U.S. manufacturing
operations in 1977 that led to the establishment
of a new company in Ohio that foretold Honda’s
future in America. After the first motorcycle came
off the assembly line in Marysville, Ohio, in 1979,
a fax message from Japan was received at the plant.
It read: “Proceed with automobile production.”
California
Honda Air
Conditioning
(CALHAC)
established
Prelude
78
79
Parts
distribution
center opens
in Portland,
Oregon
First Honda
lawn mower,
the HR-21
Accord Sedan
Marysville
Motorcycle
Plant begins
production
with CR250R
CBX
motorcycle
19 70 – 19 79 35
a conversation with
Hirobumi Nakamura
Reflections
“
I was very impressed
by many things in the
United States . . . the
competition is very
tough, and the business
practices in the U.S.
were very challenging,
but very fair.”
Hirobumi Nakamura, the fourth general manager of American
Honda Motor Co., Inc., served in the position from 1971 to 1977.
It was his second tour of duty with American Honda. Previously,
from 1963 to 1969, he had served as the director of motorcycle sales.
This interview was conducted in January 2009.
You first worked for American Honda as
director of motorcycle sales in the 1960s.
What was your impression of the U.S. business
environment after your return?
I was very impressed by many things in the United
States, but especially the rules of society and rules of
doing business. The competition is very tough, and the
business practices in the U.S. were very challenging,
but very fair. There was no discrimination. I recall that
we had a hard time with an antitrust case, but I like
this fairness and justice thing. When I was in the court,
when those guys in the jury, black or white, housewives
and students, etc., said we were wrong, then we are
wrong. I accepted it. It was a good system, I thought.
But we learned from this kind of antitrust
situation: Every dealer bulletin should be screened
by the attorneys. In Japan, I don’t think this would
happen. I had to get every business practice [in the
U.S.] approved by attorneys. I thought the attorney is
36 fif t y y ea r s
of
like the president of the company [laughter]. But it was
very fair. It was a good learning experience.
In the 1970s, Honda was transitioning
from just motorcycle sales to automobile sales
as well. Was it a challenge to change the
image of the Honda brand?
Honda was widely known and had a great reputation as
a motorcycle company in the United States, and we spent
a large amount of money each year for advertising.
After we began automobile sales in 1971, we
announced the development of the CVCC system. Then
in 1973 we introduced Civic, and in 1974, became the
first to comply with the Muskie Law [the U.S. Clean Air
Act]. This was big news for the industry. In November
of that year sales began, and Civic was named No. 1
for EPA fuel economy, and there was the gasoline crisis,
and gasoline was very expensive. These things
happened in four consecutive years. The news about
these things came out in newspapers from time to time,
so Honda was pretty famous in the car industry. So I
don’t think there was a need to change the image from
a motorcycle company to an automobile company.
Also, we decided to use a different advertising agency
for automobiles from motorcycles. So, as general
manager, other than these things, I didn’t need to make
any special effort to change our image from motorcycles
to cars. But our sales team worked very hard.
You overcame a major sales challenge, introducing
several new models at the first national motorcycle
dealer meeting in 1969. How did you feel about it?
After such a long struggle with the kind of difficult
times we experienced, I was waiting with a “finally
it came” feeling. I was very confident that those
new products would be accepted. These bikes were
especially designed and developed for the U.S. market.
I was waiting for that time, and the dealers were very
enthused with those products. So, I was very excited
and very satisfied.
In the past, we would introduce maybe two
or three new bikes at a time. When we introduced
five new bikes in a single year, dealers very well
accepted those new models. These bikes became
big hits, every single bike. The shipments from Japan
had been drastically reduced from 1966 to 1968, so
after three years of hardship, by the year 1969 the
shipments came back to a normal level. Dealers
became very prosperous, and American Honda had
very profitable years. In 1968, we imported 155,000
units [motorcycles]. By 1969, it was up to 360,000
units and in 1971, 892,000 units!
I remember reporting to the export department in
Japan: “Thanks to R&D in Japan, these products were
very well accepted in the meeting, and we have no
doubt of big success.” Then, I was transferred back
to Japan. I left the U.S. for my new assignment in
Japan in March 1969, after seeing that convention.
The CB750 was very well accepted. That bike
made more money than we did from our auto sales.
Our automobile business, which started in 1970,
did not make any profit for about four years. But
we were not worried at all, because we had such
a strong motorcycle business after coming out
of the Operation Electric situation.
Do you remember the
“Holiday In Japan” program
for dealers?
American Honda dealers very much liked that trip.
Sometimes we had a number of winners, up to
50 dealers. We would charter one plane with Japan
Airlines. We went to the factories, sightseeing.
And throughout the trip there were two or three
professional cameramen taking many snapshots
and then they would make an individual album for
the dealers with all of the photos.
There was a geisha party in Kyoto and then
a “sayonara party” in Tokyo. Mr. Honda was very
good at those things. He was very gay and social.
Mr. [Takeo] Fujisawa [Honda Motor Co., Ltd.,
managing director and co-founder] wasn’t that kind
of personality, but Mr. Honda was very active in those
parties and the dealers enjoyed it.
Honda established its first R&D
operation in the U.S. in 1975. What was
the background of that effort?
It was February 1975 when we opened the California
Research Division. The office was on Lomita Avenue,
I think. We had six Japanese staff who transferred from
the Asaka Center. I remember about half of them were
design specialists, and the others were for testing and
so on. To do a good business in the U.S. market, we
had to have good research on the market. From time
to time, we had R&D personnel to come from Japan
and stay one week or 10 days. But the United States
is so big, to know it all is pretty difficult to do on just
a business-trip basis. There was a need for R&D to
breathe local air. So, I think it was a natural step for
Honda and very important for a manufacturer. At
the very beginning, this was part of American Honda
and Mr. Mori, who was in charge, was also American
Honda staff even though he was from R&D. But to do
R&D activities as a side business is very difficult. You
need 100 percent concentrated staff, so eventually it
became an independent R&D operation.
19 70 – 19 79 37
getting started on four wheels
A Small Car Takes a Big Step
The N600 was
initially at the
1968 Los Angeles
Auto Show.
American Honda had been warming up its motorcycle dealers
in the late 1960s with first looks at the N600 and S600 models.
They finally went on sale in the Western United States in 1970.
Most of the first 32 Honda
automobile dealers came from
the ranks of the motorcycle dealer
network — and many consumers
thought the diminutive Honda
N600 was about the size of two
motorcycles strapped together.
Before the launch of the Civic,
sales barely topped 20,000 units
in 1972, Honda’s third year in the
market. Until the 1973 oil crisis,
the idea of small, fuel-efficient
automobiles was more curiosity
than necessity.
38 fif t y y ea r s
of
A
future president of Honda
Motor Co., Ltd. (1998 to 2003)
Hiroyuki Yoshino became the first
engineer from Honda R&D to be assigned
to the U.S. in 1969. And for one year, he
was an American Honda associate.
In addition to his primary role
working with engineers from the U.S.
automakers to establish methodology
for measuring exhaust gas — part
of Honda’s CVCC engine project —
Yoshino took on another interesting
duty. In January 1970, American
Honda presented the new N600 at the
Hiroyuki Yoshino visiting Disneyland in 1969
Los Angeles Auto Show. For $50 per
day, Yoshino was asked if he would
work at the show to explain the car to
consumers. “I had trouble because my
English wasn’t so good,” he recalls. “The
suggested price was somewhere around
$1,375. Thirteen is a very difficult word
for Japanese to convey. Whenever I said
‘Thirteen,’ people would say ‘Seventeen?’
Finally, I found some way of pronouncing
‘tur-teen,’ and people understood me.”
Yoshino also had Chet Hale,
now executive vice president of the
Product Regulatory Office, as his
unofficial translator. “Chet had a good
understanding for what I wanted to say,
even though he couldn’t understand
what I was saying,” said Yoshino. In
December 1968, Hale spent about a
month in Japan at R&D, with assistance
from Yoshino, to learn about Honda’s
auto emissions performance.
“When I arrived in L.A. in
January 1969, he was supposed to meet
me at the airport, but he was not there,”
said Yoshino. “It turns out that his
daughter was born that morning.
That’s why to this day I still remember
his daughter’s birthday.”
can-do spirit on display
Honda’s Battle for ‘Blue Skies’ Advances Clean Air
The introduction of the CVCC engine was more than an engineering feat. It was an example of how Honda’s
can-do approach to challenges influenced the automotive industry and American public policy.
I
n 1968, engineers at Honda R&D
had already started to discuss the
conditions of what was known in Japan
as “the Muskie Act” — a proposal
from U.S. Senator Edmund Muskie to
amend the U.S. Clean Air Act with more
stringent air emissions standards.
Hiroyuki Yoshino, who would later
become the third president of Honda
of America Mfg., Inc., in 1987, and the
fifth president of Honda Motor Co., Ltd.,
in 1998, was one of 30 members of a
newly established Air Pollution Control
Research Lab at Honda R&D. “We could
already foresee that exhaust pollutants
would need to be reduced by 90 percent
and we needed to meet that requirement,
or Honda could not sell vehicles in the
U.S.,” said Yoshino. “But nobody within
Honda knew how to reduce emissions by
90 percent.”
Soichiro Honda, the founder,
president, and head of research and
development, decided that Honda would
leave Formula One racing to focus on
the race for cleaner emissions. He told
his engineers that meeting the Clean Air
Act was a great way to compete against
established companies, because it put
all automakers equal at the starting line.
However, Honda engineers did not view
the challenge as simply a competition
against other companies. They said their
goal must be to develop
technology to improve
the quality of the air
for future generations.
Their battle cry became
“blue skies for our
children.”
Honda announced
in October 1972 that its
CVCC engine technology
Honda officials testified at a U.S. EPA hearing on March 19, 1973.
had met the Clean Air
Act requirements. So
The EPA administrator explained that
Honda engineers were called to testify in
March 1973, when the U.S. Environmental Honda had developed a 4-cylinder car
engine that met the standard. The GM
Protection Agency (EPA) held hearings
executive argued that this could not
that lasted for more than two weeks. The
apply to the V8 engines. “To them,
hearings were contentious and, at times,
Honda was nothing in 1969 and still
openly hostile, as EPA officials blamed
nothing in 1973,” said Yoshino.
U.S. automakers for claiming that the
Clean Air Act emissions standards were
too difficult to meet.
alled on to testify a second
Executives from other automakers
time, the Honda team had
were asked whether their companies
anticipated a question about application
could meet the standards. “It was while
of CVCC technology to a V8 engine. So
watching this hearing that I learned the
they were prepared to present data on an
sentence ‘Do you swear to tell the truth,
experimental application of CVCC to a V8
the whole truth and nothing but the
engine. GM was called again the following
truth?’ ” said Yoshino.
day. “The EPA official was very strong
“When a GM executive was asked
to GM,” said Yoshino. “He said, ‘If your
about Honda’s ability to meet the
guys can’t develop the technology, why
standard, he responded, ‘Who is Honda?
don’t you buy it from Honda?’ But the GM
Are they a motorcycle manufacturer?
executive explained that the company
How can they do it?’ ” recalls Yoshino.
had already met with Honda. He said,
C
‘Two Nakagawas and two Kawashimas
came to our office, but they wouldn’t
explain how their technology worked.’ ”
After various automakers had
approached Honda about licensing CVCC
technology, top Honda executives had
visited GM, including Kiyoshi Kawashima
and Kihachiro Kawashima [who were
then president and executive vice
president of Honda Motor, respectively]
and Kazuo Nakagawa [then head of
engine development at Honda R&D Co.,
Ltd., and later the first president of Honda
of America Mfg., Inc.]. Ken Nakagawa
of Honda R&D served as interpreter.
Apparently, GM hadn’t realized that “two
Nakagawas and two Kawashimas” meant
they were meeting with Honda’s top
executives. Ultimately, Toyota, Ford, and
Chrysler spent millions to license Honda
technology, although none brought it
to market.
“We had a sense of mission and
Mr. Honda’s strong dream to enter the
auto industry driving us, but we were
very lucky that in 1973, the first oil crisis
took place,” said Yoshino. “We were also
very lucky that we didn’t have a fleet of
automobiles. We only had to make two
or three vehicles conform to the new
standard. It would have been different
if we were an established automaker.”
Still, the creation and quick
application of CVCC technology in the
Civic and Accord models in the U.S.
helped spur the entire U.S. auto industry
to meet the Clean Air Act.
19 70 – 19 79 39
oil crisis sets stage for success
The Civic and CVCC – A Dynamic Duo
Timing was important for the success of the Honda Civic —
and for Honda’s entry into the U.S. automotive industry.
T
As highlighted in
this classic “We
Make It Simple” print
advertisement, one of
the advantages of CVCC
technology was that it
could use regular leaded
or unleaded gasoline —
helping customers avoid
long gas lines.
40 fif t y y ea r s
of
he 1973 oil crisis increased the
demand for fuel-efficient compact
cars — even those made by a newcomer
to the industry like Honda. But Honda
had more than a fuel-efficient fourcylinder engine. Honda brought new
value to the market with the industry’s
first transverse-mounted engine and
front-wheel drive — which created cabin
space unusual for a small car. Honda’s
hatchback design also provided a level
of utility and convenience unusual in
the industry.
In its first year on the market, 1974,
Honda sold 43,000 Civics. With the
launch of CVCC technology that fall,
buoyed by the ongoing impact of the gas
crisis on American consumers and the
enforcement of the U.S. Clean Air Act,
Civic sales more than doubled, to 103,000
units in 1975. A number of Honda’s early
auto dealers recall the impact of the Civic
on their business and the industry.
“Customers were very curious
about them,” said Forrest McConnell III,
now president of McConnell Honda in
Montgomery, Alabama. “The Japanese
quality was a question at that time, but
the gas crisis had hit. So, people really
initially started buying them for gas
mileage. And then they were so pleased
because the quality was so much better,
and popularity just boomed. It was
almost like a cult car back then.”
Bob Eagle, who founded Eagle Honda
in Dallas, Texas, in 1971, had a more
pointed memory. “When I took on the
[Honda] franchise, a lot of my car dealer
friends laughed at me,” he said. “A year
and a half later when the energy crisis hit,
and they came out with that CVCC engine,
that Civic didn’t have to use a catalytic
converter and got great gas mileage.
I was laughing. I laughed all the way to
the bank. Because those big cars weren’t
selling, and we had a long waiting list.”
“One of the first cars that we took in
trade on a Honda Civic in 1973 was a new
Lincoln four-door sedan that was less
than two months old,” said Ron Tonkin,
founder of Tonkin Honda in Portland,
Oregon. “The owner just simply got
scared that he would never be able to
get the gasoline mileage from his Lincoln
to serve his automotive needs. And so
the answer to his problems at the time
was a new Honda Civic. That was the
mindset when we experienced our first
oil shortage in the ’70s.”
focusing dealers on customer satisfaction
The Legendary CS Project
Honda had been rapidly expanding its young automobile sales network,
from the original 32 retailers in 1970, mostly former motorcycle dealers,
to more than 630 dealers in 1976. Honda was intent on making certain that
the customers of each dealer received the highest levels of satisfaction.
D
ealers who had handled other
automobile brands, largely Big
Four, were equipped to handle customer
after-sale service needs. However, they
were not providing customers with a
unique “customer-focused” experience
consistent with Honda philosophy.
“I still remember one dealer’s face
very well,” said Yoshihide Munekuni,
then director of Automobile Sales,
recalling a visit to a dealer in the
Los Angeles area. “He told me, ‘I am a
third-generation GM dealer. I don’t
have to listen to the opinions of Honda.
I was born in the U.S. and graduated
from a college in the U.S. I don’t have to
ask you questions about how to handle
the customer.’ ”
Munekuni knew this kind of
attitude would not serve Honda well,
but he also recognized that American
Honda could not force dealers to change.
However, if the request came from their
customers, he reasoned, dealers might
be more inclined to listen.
It was then that Munekuni met
David Power, who had a fledgling market
research company named J.D. Power
and Associates. Power had worked
with a few automakers surveying dealers
about customer issues, but the research
findings. “Then this dealer, who was the
third-generation in this business and
who believed that what he was doing
was right, began to understand that the
expectations of customers get higher
and higher each year,” said Munekuni.
“It really opened
his eyes.”
A pilot study
was conducted
with 20 dealers
nationwide in
1975, and the
results were
consistent with
how Honda sales
and service
reps viewed the
selected dealers.
This gave
Cliff Schmillen and Yoshihide Munekuni, assistant director and director of
Automobile Sales, respectively, (center and right) receive the “Best Sedan”
American Honda
award for the Honda Accord from Road and Track editor Tony Hogg.
the confidence to
take a step that no other automaker had
was limited because dealers were
been willing to take. “Moon [Munekuni]
charged for the surveys and did not
decided that the best way to overcome
always want to participate. Working
any resistance to the survey was to fund
together, Munekuni and Power initiated
it entirely by American Honda and not
a telephone survey of customers
charge the dealers,” said Power. “In 1977,
who bought a product from that one
we surveyed 100 percent of Honda dealers.
Honda dealer in Los Angeles. Though
This was the first study of its kind ever
only focused on one dealer, it was the
conducted by any automaker.”
beginning of what Munekuni calls the
But the data were provided not only
“CS Project,” because it focused Honda
to Honda dealers. Customer opinions also
and its dealers on the goal of leading the
went to Honda R&D and the production
industry in customer satisfaction.
facilities in Japan. “There were issues
After summarizing the customer
related to the concept, and there were
opinions, Munekuni visited the Los
issues related to quality. We organized
Angeles dealer again to present the
them all and communicated them clearly,”
said Munekuni. “This became the base
for Honda to improve its development
and production technologies year by year.
I told them, ‘This is the situation the car
you made is in. If it is not changed, there
is no next time.’ ”
The information was a powerful tool
with dealers. “Customer expectations
can change dramatically and get higher
while dealers and the company don’t even
notice,” said Munekuni. “So, we set such
measures for customer satisfaction and
through these surveys, dealers started
to make themselves into exclusive
Honda dealers.”
“I give Moon credit,” said Power.
“People don’t like to hear the bad things.
But he had an open mind and wanted
to correct problems.” In 1981, Power
turned the survey into an industry
staple — surveying virtually every
automaker and producing an annual
index of the results — the Customer
Satisfaction Index. Today, J.D. Power
and Associates produces multiple studies
about the auto industry — including
the Sales Satisfaction Index, Customer
Service Index, and Initial Quality Study.
And the CSI survey is now produced for
a multitude of other industries, ranging
from travel to health care.
“But I never used the word CSI — it
is CS, period,” said Munekuni. “The word
‘index’ was added by David because they
are a survey company. But I have been
completely denying this ‘index.’ ”
19 70 – 19 79 41
a conversation with
Koichiro Yoshizawa
Reflections
“
. . . my wish was not
to separate jobs for
Japanese and jobs for
Americans . . . but
rather just assign
the right person for
the right job.”
Koichiro Yoshizawa, the fifth top executive of American Honda
Motor Co., Inc., served as president & general manager from
1977 to 1981. Yoshizawa was the first top executive to have the
title of president while serving in the United States.
The Honda Accord has become one of the most
dominant automobiles in the history of the industry.
What was the original idea for Accord and what
role did you see for it in the U.S.?
There was no other car but Accord that Honda could
introduce after Civic. The model R&D was developing
after Civic was an inline 6-cylinder FF 2L [front engine,
front-wheel drive, 2-liter engine] vehicle . . . and
development work was almost completed. But in 1974,
I believe, [Kiyoshi] Kawashima-san, who just became
the president, and [Kihachiro] Kawashima-san, who
was vice president, decided to cancel the launch of this
vehicle whose development was almost completed.
It was right after the oil crisis occurred, and in
addition, Honda was a newcomer in the auto business.
The choice to build a totally new car, though the
engineers wanted to do it, was not acceptable by the
company management. So, the only choice for Honda
back then was to build a car which had basically the
42 fif t y y ea r s
of
same kind of layout as Civic and larger than Civic.
The decision to cancel the [vehicle] development
that was virtually finished and with production tooling
partially started, was made in consideration of
the situation Honda was in at that time. I was still
a bucho [general manager in Japan], but I happened
to be at the meeting where the decision was made.
I remember this vividly, because the decision made
a big impression on me.
So, the basic thinking was to expand our customer
range, not only in Japan but also overseas, with a
model which uses the same layout as Civic, but bigger
than Civic. The development of the CVCC engine was
positioned with the U.S. as the most important market
for both Civic and Accord. However, they were not
developed focusing only on U.S. market. The first
model developed based on proposals from American
Honda’s thinking about the American market was CRX.
Honda’s strategy to build products in America was
first discussed as early as 1975 — even before the
launch of Accord. There was a lot of discussion about
whether this was the right strategy. What do you
remember about this discussion and the final decision?
I think that one of the reasons we were able to
establish a production plant in Ohio was we had a
shortage of production plants in Japan. If we are going
to build a production line in Japan, we might as well
build one in the U.S.
Yes, the very first project for U.S. production
started in 1972 or ’73, before Kiyoshi Kawashima
became president of Honda Motor. The production
that was being discussed was motorcycles, and the
project was suspended.
The U.S production project that paved the way
for Ohio started in about 1976, before I went to the
States, and this led the way to the announcement
of motorcycle production in October 1977. I don’t
think there is anything written down in the official
history of Honda, but everyone had in mind that we
would produce automobiles. But we would start with
motorcycles and have a learning curve. The Ohio
state government also had this in mind when they
gave us their offer.
Some have said Honda’s outstanding
reputation with the customer is the result of how
American Honda handled various problems such
as the rust issue in the late 1970s and early 1980s.
What do you remember about this?
Of course, the rust issue was a big technical
challenge. But aside from the rust issue, as we were
a young auto company, we had many other technical
problems as well. I remember very well that at a
dealer meeting one of the very powerful dealers said
to me: “Yes, it is true Honda has created a number of
technical problems, but this is true not only of Honda.
Other manufacturers have caused problems. But what
astonishes me about Honda is that when you take
notice of these issues, and recognize how serious
they are, you take charge, solve the problem, and
make it part of the past. This is the most outstanding
characteristic of Honda.” Regarding the rust issue, we
must give credit to the engineers and service people.
Due to their efforts to make sure these problems
were solved, we have earned a great reputation for
our products. Unlike the engineers who develop cars,
people working behind the scenes, these people
are rarely seen as heroes, but I do feel they played
a major role.
In 1977, you made a major change at American
Honda, creating new divisions and departments,
and establishing vice presidents for each division.
What was the goal of this change?
When I went to the U.S., I got the impression
that American Honda was an extremely efficient
organization. Very slim, with no fat, and only equipped
with the core functions. But this was a time when
auto sales were entering into full swing. In hindsight,
it was time to see a change in the chemistry of
the organization.
I think in spring 1977, for auto sales there were
Munekuni-san [Yoshihide Munekuni], Cliff Schmillen,
Jack Bilmeyer, Tom Elliott . . . there were less than
10 people at the Gardena office, including secretaries.
But then, of course, business was expanding, and we
needed to expand support in various areas, including
service, legal, administration. Therefore, I think it was
time we had to change the organization.
At local subsidiaries, the issue of Japanese
staff and American is inevitable. However, my wish
was not to separate jobs for Japanese and jobs for
Americans, but rather just assign the right person
for the right job. What I thought the worst thing to
do and definitely wanted to avoid was this clear
separation: that Japanese staff should do jobs involving
the head office in Japan and American staff should do
jobs involving dealers.
So, I thought it was desirable when it comes to
R&D that both Japanese and Americans should be
able to come together and discuss issues together.
And that’s the reason why Japanese staff had to go
into the U.S. market to understand the customer.
And Americans, for example, as Tom Elliott did, had
to understand R&D centers in Japan much more than
some Japanese staff.
In 1979, you were changing the communication
among associates at American Honda. This included
the “We Care” campaign. What was your goal?
I don’t remember all of the details, but the biggest
problem was that as the number of people working
in the organization increased to a very large number,
people started creating silos within the organization
and there was little exchange between people working
in the auto sales and motorcycles sales divisions.
The dealers partially overlapped, and customers
were buying both products. But at American Honda,
both sides did not find interest in talking together.
This was just one example. So, we tried several things
to improve cross-sectional communications. But we
realized that this improvement would be possible
only when the communications among all associates
was improved.
19 70 – 19 79 43
a conversation with koichiro yoshizawa
Yen appreciation created challenges in ’78,
with five separate price increases. Dealers might
have the same car on their lot with different prices.
How challenging was this to manage?
The exchange rate in spring 1977, when I came to
America, was about 280 yen per dollar. And one and
a half years later, in September 1978, it went up to
170 or 180. We were forced to increase prices several
times — it felt like almost every month. I do recall
that it was a monthly event more or less, when
Munekuni-san would come to my office with a stack
of papers he hand-written with a pencil, and I knew
it meant another price increase.
I guess because Honda products were so well
received by our customers in the U.S. and also because
the production capacity of Honda in Japan was fully
used and American Honda was not getting all the
vehicles we wanted, the price increases did not cause
a major damage to our sales.
But I was very worried how long it was going to
last, and I remember feeling fear, thinking, “This time,
finally, the sales may stop all of a sudden.” In October
1978, President [Jimmy] Carter announced his plan to
“defend the dollar,” and the dollar got stronger and yen
depreciated to about 240 yen per dollar. I remember
that very well.
At that time, I strongly thought, “It is a big
problem that we are selling in dollars but the costs
are in yen. It is not good that all products are being
built in yen. We need some products which are built
in dollars.”
44 fif t y y ea r s
of
There was a major growth and expansion of parts
distribution and dealer training centers during your
time at American Honda. Was this a specific strategy
based on something you saw at AHM?
On the one hand, it was the growth of American
Honda sales that led to the need to grow our parts
supply network. But this was an area we worked on
very hard. In terms of customer satisfaction, if there
is a need for service or repair, it is important that
the customer gets the repair the first time. If it takes
more than one visit, we lose the customer’s trust.
We don’t want to be short of parts and unable to fix
the customer’s car. So, we wanted to invest in parts
and be very proactive about the ability to repair the
customer’s car.
This is just a byproduct of our efforts, but this also
helped us prove our commitment to the U.S. market
and helped us gain the trust of our dealers. Unlike on
the West Coast, we didn’t have great trust from our
dealers on the East Coast. We were the first among
Japanese manufacturers to start production in the
U.S., and this was a big difference for dealers. But in
this earlier stage, the investment in parts centers told
dealers that we were serious about doing business in
the U.S. Auto sales also used this in a good way. In 1978
or 1979, they did a dealer meeting near the new parts
depot in New Jersey and the dealers came to visit
the center, and they could see how serious we were
about the automobile business in the U.S. I think we
were quite persuasive when we said that Honda was
making this kind of investment, and they should make
investment, including exclusive showrooms.
You had many challenges in your
career with Honda. What is your dream
for American Honda’s future?
Now is a very difficult time to talk about our dreams.
If we look back over the past 50 years of American
Honda, we did not always experience smooth growth.
But we had to overcome numerous difficulties. There
are two principal types of difficulties we have faced —
those caused by external factors and those by internal
factors. As for the former type, we sometimes turned
them into opportunities to change in a positive
direction. As for the latter type, we received hard
lessons from them and leveraged what we learned
thereafter. In reality, these two types are intertwined
together. We cannot travel back in time, as individuals
or as a company. However it is important to learn from
the history and experiences.
I understand that Honda management has already
taken a new direction to put an ever more thorough
focus on environmental issues. But the key is how
quickly and how clearly this decision will be realized
in the areas of development, production and sales.
What I think most important for a company — for an
automaker — is to always consciously maintain the
most efficient, muscular, and lean company body
structure that is the most appropriate for the times.
I believe that American Honda, as an organization
which is closest to the largest group of customers
in the world among the global Honda group, will
be in the forefront of that challenge.
gold wing debut
GL1000 – the Naked Truth
Rapid Expansion of Parts Centers
“Care” was the theme and “safety” was the subtitle at the 1975 National
Motorcycle Dealer convention. But the arrival of the much anticipated
Honda GL1000 stole the show. It was unveiled to Honda dealers and
associates on September 18 at the Las Vegas MGM Grand Hotel.
W
ith a flat opposed 999cc
four-cylinder water-cooled
engine, shaft drive, and triple disc
brakes, the GL1000 was like nothing
else in production. Unlike later versions
of the now-legendary cruiser, the early
GL1000 was a naked bike, without the
front fairing, the saddle bags, or the
multitude of long-distance touring
features that would come later.
Honda’s early marketing efforts
focused more on the GL’s straight-line
performance than its long-distance
touring capabilities. However, the
company sold more than 13,000
GL1000s in 1975, and Honda Gold Wing
riders took to the open road in droves,
helping to inspire an industrywide shift
toward long-distance motorcycling.
Reflecting the tremendous growth of the Motorcycle and
Automobile Divisions, American Honda opened 11 new parts
centers in the 1970s; several replaced existing centers. Dallas
Parts Center Manager Derek Lee (at top, far right with shovel),
Parts Division Vice President Yo Masuda (third from right),
and Texas Parts Rep John Haigler (far left) participate in the
1975 groundbreaking of the new center in the Las Colinas
subdivision of Irving, Texas. American Honda President
Koichiro Yoshizawa (bottom photo, center) shakes hands
with a Honda associate at the grand opening of the new parts
•
19 70 – 19 79 45
learning important lessons
Rust Problem Didn’t Tarnish Honda Reputation
Honda’s swift response to problems in the real world
earned it a reputation for customer satisfaction.
Honda vehicles imported
from Japan in the 1970s
began to encounter rust
problems in the northern
Midwest. Here Auto
Distribution Manager
Penn Lenson (left) and
Senior Port Rep Dave
Haney receive Honda
cars at the Port of Long
Beach in 1979 from the
Global Wing, one of
Honda’s specially fitted
car carriers. Honda was
importing about 30,000
vehicles per month.
A
commitment to customer
satisfaction begins with
developing products that exceed
customer expectations. But pushing
the envelope of new technology and
introducing products into new market
conditions can result in less than
satisfactory performance. How these
problems were handled in the real
world often determined whether Honda
achieved customer satisfaction.
This happened on a number of
occasions in the 1970s as Honda entered
the automotive business, including such
issues as a problem with CVCC head
gaskets and difficulty with early-model
Civics starting in cold climates.
46 fif t y y ea r s
of
One such problem Honda faced
in the late 1970s and early 1980s was
severe rust damage to Honda cars sold
in the northern Midwest, where rock salt
is used to address icy road conditions.
The problem bordered on epidemic.
“I saw many of those [rusted] cars with
my own eyes, and I thought if I were
the customer I would never buy Honda
again,” said Yoshihide Munekuni, then
director of Automobile Sales and later
president of American Honda. “If we
could not address this problem, it meant
that the answer was for American Honda
to quit the business, because customers
would not buy from us again.”
Honda R&D had no experience with
vehicles driving on surfaces with rock
salt. The engineers were quite surprised.
“When the R&D Center later looked
at the rock salt with a microscope, it
“You can’t hide a problem, because
had a sharper point than a needle,”
it won’t go away. And you can’t make
said Munekuni. “When it pierced and
the customer pick up the bill unless
damaged the painted surface, the salt
you want to sacrifice that relationship
was able to reach to
and your reputation,”
the metal sheet and
said Chet Hale, then
make it rust.”
vice president and now
While Honda
executive vice president
R&D addressed the
of American Honda’s
problem for future
Product Regulatory Office.
vehicles, American
“Over the years, we have
Honda undertook an
experienced many things
Chet Hale at the launch of the 1976 Accord
aggressive campaign
that we took care of
to take care of customers. “We decided
properly and tried to minimize
to buy back all of those rusted cars, even
any inconvenience to the customer,
if we had to invest all of the profit we had
even if it meant a large investment to
earned,” said Munekuni.
address the mistake.”
An American Honda Service Division
team led by Silvio Carrera undertook the
massive effort to assess each customer’s
car, replacing fenders and, where
appropriate, completely replacing the
customer’s car with a new vehicle. Dave
Heath, then a sales training instructor
and now assistant vice president of
sales communication, recalls going to
a warehouse in Cleveland, Ohio, filled
with Honda vehicles that had been taken
back from customers. “Of course, I was
disappointed in how our products had
performed,” recalled Heath. “But I have
to say I was so incredibly proud to work
for a company that would take care of the
customer like that.”
While customers were also
disappointed by the rust, Honda’s
response had a tremendous effect on
the brand’s reputation. “The amount
of good will we created was amazing,”
said Tom Elliott, then an assistant vice
president. “I think that much of Honda’s
reputation for customer satisfaction and
standing behind the product was the
result of how we handled this problem.”
It was also an important lesson
for Honda dealers. “We thought that
was the only way American Honda could
survive and continue growing, and I think
this way of thinking was communicated to
our dealers, and it was what led to the next
stage of growth,” said Munekuni. “Honda
dealers were confident with what we were
doing and worked hard providing aftersales services to the customers.”
motorcycle production paves the way
Building Products Close to the Customer
The decision to build * products in America was a bold and visionary step,
driven by the idea and commitment first expressed by company founders
Soichiro Honda and Takeo Fujisawa to “build products close to the customer.”
T
hrough the long lens of
history, it is easy to attach too
much significance to the philosophical
aspects of what was a very practical
business decision. According to the
Honda executives involved, Honda
became the first Japanese automaker
to build products in America in 1979
for a very simple reason. As a lean
company, without enough capacity to
meet growing U.S. demand, rather than
construct a new plant in Japan, Honda
made a practical decision to build the
products close to the customers who
would buy them.
After several years of planning
and discussion, on October 11, 1977,
Honda Motor Co., Ltd., Executive Vice
President Kihachiro Kawashima (above)
joined Ohio Governor James Rhodes
(left, holding paper), in Ohio’s state
capitol building to announce Honda’s
plan to build a motorcycle plant in
Ohio. Kawashima also told the Ohio
media: “It is our present intention to
start manufacturing of automobiles by
expanding the plant site.”
The first president of Honda of
America Mfg., Inc., Kazuo Nakagawa
(upper photo at right), rides the first
CR250M Elsinore out of the dyno booth
at the Marysville Motorcycle Plant in
Ohio on Sept. 10, 1979. The efforts of the
first associates (lower photo at right)
to build quality products and respond
positively to Honda’s culture were key
to Honda’s quick decision to move ahead
with auto production.
* using domestic and globally sourced parts
19 70 – 19 79 47
1970s Innovations
of
595
Elsinore CR250M
In 1970, Honda created a whole new category of motorcycling fun
with the 3-wheeled ATC90 all-terrain vehicle.
$
retail cost of
the original
all-terrain cycle
Honda’s first U.S.-made motorcycle, the CR250M Elsinore,
debuted in 1973. It was a revolutionary 2-stroke motocross bike
that dominated the dirt-track circuit from its first year.
70
TITLES
48 fif t y y ea r s
ATC90
won by CR250M Elsinore in
Motocross and Supercross racing
CB750A Hondamatic
The 1976 CB750A Hondamatic introduced the motorcycling world
to modern automatic transmission technology.
1
№
rank in fuel efficiency
in the EPA’s first-ever list of
the Top 10 fuel-efficient cars
1975 Civic CVCC
The 1975 Civic, with the Honda CVCC engine, set a new standard
for low-emission, high-fuel-efficiency engine technology using
regular or unleaded gasoline.
Gyro, Odyssey, Kick ’N Go
Honda broke new ground in alternative product concepts in 1972
with the 3-wheeled Gyro scooter, the one-man Odyssey dune buggy
(pictured), and the human-powered Kick ’N Go scooter.
XR75
In the 1970s, most automobiles required at least two keys — one
for the door and trunk and another for the ignition. Honda introduced
a customer-friendly car key that not only worked in the hatch,
gas cap, door and ignition — it could be inserted with either side
up, which made it easy for the driver to put the key in the ignition.
The “one key” approach is now an industry standard.
When it was introduced in 1973, the first true factory-built
off-road motorcycle, the XR75, proved that off-road bikes
were more than just modified road machines.
HR-21 Lawn Mower
Road Racing
The blade brake and clutch safety mechanism that debuted on the
HR-21 lawn mower in 1978 quickly stopped rotation of the blade
when the mowing lever is released and stopped the drive when the
drive lever is released. Called the “Roto-Stop,” the technology also
demonstrated the feasibility of regulations then under consideration
by the U.S. government that required installation of a blade brake on
all lawn mowers manufactured and sold in America.
By the time Honda entered the U.S. motorcycle racing world in
1970, the company was already a major competitive force on
the international Grand Prix road-racing circuit. Honda’s first
U.S. road racing victory came in 1970, when Dick Mann took the
checkered flag on his Honda CB750 at the Daytona 200.
1
st
lawn mower to
employ a blade brake for
enhanced user
1970s Innovations
The Key to Simplicity
safety
19 70 – 19 79 49
5687
1990s
2
50 fif t y y ea r s
of
live type
R
iding a roller coaster of
political and economic
challenges, Honda used visionary
strategies to build products in
the United States and to establish
a luxury automobile brand that
made it a true industry leader.
< Honda Accord
1980 – 1989 51
breaking new ground in america
Economy
“Reaganomics” begins
reducing government spending
and taxes to stimulate economy
Canada and the U.S. sign
a comprehensive free trade
agreement (FTA)
Interest rates hit record 21.5% and
lead to sharp inflation, turning voters
against President Jimmy Carter
Politics
America boycotts the 1980
Moscow Olympics in protest of
Russian invasion of Afghanistan
“Tear down this wall” . . . President
Reagan’s call to Gorbachev
helps bring down Berlin Wall
Violence in the Middle East
escalates with Iran-Iraq War, and the
attacks on U.S. Marines in Lebanon
Even in the face of rising political protectionism and a financial crisis that delayed
construction of American Honda’s new corporate headquarters, the company
deepened its roots in America. The result was the transformation of Honda from
an import distribution company to the producer of America’s most popular
automobile, and a leading developer and exporter of products from America.
I
n january 1980, just months after starting
motorcycle production in Marysville, Ohio, Honda
announced plans for the Marysville Auto Plant. As
automobile production began in November 1982,
American Honda dispatched its sales force to convince
dealers that the U.S.-made* Accord Sedans could
achieve the same quality level as those built in Japan.
As American automakers struggled to recover
from the oil crisis — and Chrysler declared bankruptcy
in 1981 — protectionist rhetoric in the U.S. led to a
Voluntary Restraint Agreement in 1981, restricting
the number of vehicles Japanese automakers could
import for much of the decade. Thus, Honda’s early
vision to manufacture cars locally provided a strategic
advantage. Honda passed Toyota to become America’s
top-selling Japanese nameplate in 1986.
In 1984, Honda began power equipment
production, assembling lawn mowers in North Carolina.
Manufacturing vehicles in Ohio led to local production
of engines and transmissions, and increased parts
purchases from American suppliers.
Local production also helped make the Accord the
C u lt u re
Space Shuttle Challenger
breaks up 73 seconds into launch,
killing all seven crew members
Microsoft launches Windows
operating system and a suite of
MS Office applications
“Material Girl” Madonna symbolizes
the Me generation; Michael
Jackson sets sales records
S P O R TS
Jack Nicklaus wins 1986
Masters at age 46, the last of
his record 18 major golf titles
Joe Montana leads 49ers to three
of their four Super Bowl victories;
Wayne Gretzky dominates NHL
American
Honda
Finance Corp.
established
F210 tiller
Bjorn Borg, John McEnroe,
Chris Evert, and Martina Navratilova
dominate professional tennis
80
52 fif t y y ea r s
of
Parts
distribution
center opens
in French
Camp,
California
New
Davenport,
Iowa,
warehouse
replaces Rock
Island facility
Ground
breaking
for Marysville
Auto Plant
ATC250R
3-wheeler
Gold Wing
motorcycle
production
and exports
begin in Ohio
81
Marysville
Auto Plant
begins
production
with 1983
Accord
82
World’s first
turbocharged
production
motorcycle,
CX500
GX Series
engines
Parts
distribution
center opens
in Windsor
Locks,
Connecticut
83
XR500
(above),
VF750
Interceptor,
V65 Magna,
and VT750
Shadow
motorcycles
CRX
EconomySport
Hatchback
and Civic S
Civic
Wagovan
American
Honda
Foundation
established
(during
company’s
25th
anniversary)
84
First Honda
lawn tractor,
HT3810
Lawn mower
assembly
begins in
Swepsonville,
North
Carolina
benchmark passenger car in the U.S. auto industry.
As the Accord design was refined to appeal to American
tastes, the increased production volume in Ohio helped
meet growing demand. In 1989, the Accord became the
best-selling car in America.
In March 1986, the Acura Division introduced the
first luxury brands from a Japanese automaker. Sixty
dealers in the top 30 markets sold the Legend and
Integra models. Overcoming skeptics, Acura earned
the top spot in the J.D. Power & Associates Customer
Satisfaction Index in its first year and was the topselling luxury import nameplate after its second year.
T
he 1985 Plaza Accord agreement among
five Western nations initiated a precipitous change
in the yen-dollar exchange rate. From 1985 to 1987,
the dollar’s value declined more than 50 percent, from
262 to 126 yen. In 1987, for the first time, more than
50 percent of Honda and Acura cars sold in America
were made in North America. But for imported
American
Honda
Honda
Research
of America, announces
plans for
Inc.,
established “Channel II”
in Torrance, luxury auto
brand
California
CRX Si
Anna Engine
Plant begins
production
of first
U.S.-made
Honda
engines
85
Honda R&D
Americas
opens Ohio
Center
Parts
distribution
centers opens
in Alpharetta,
Georgia, and
Torrance,
California
Honda
Research
of America
opens
Los Angeles
Center,
becomes
Honda R&D
North
America
86
Acura division
begins sales
with Legend
Sedan and
Integra
models
products, frequent price increases were again a factor
in the customer’s decision about when to purchase a
new Honda or Acura vehicle.
American Honda had to adapt to the weak dollar,
most notably by delaying the construction of its new
headquarters in Torrance, California. A few buildings on
the new corporate campus were completed on schedule,
but sales operations wouldn’t move from the old Gardena
facility to the new headquarters until 1990.
Motorcycle sales jumped by more than 40 percent
from 1980 to 1984, to a record of more than 825,000
units. But the battle between Honda and Yamaha that
spurred the increase ultimately contributed to a decline.
To support Harley-Davidson, the International Trade
Commission imposed a 49.4 percent tariff on Japanese
imports of larger motorcycles. Public concerns over the
safety of 3-wheeled ATCs also culminated, in 1988, in an
industrywide consent decree with the U.S. government,
ending sales of the vehicles. With higher prices due to
the exchange rate, motorcycle sales bottomed out at
Civic CRX-HF,
first car to
exceed 50
mpg EPA
fuel-economy
rating
Exports
of U.Sassembled
lawn mowers
begin
Acura Legend
Coupe
(first
American
Honda
product
equipped with
airbag)
87
Honda begins
exports of
automobiles
from the U.S.
(to Taiwan)
Honda’s
first U.S.assembled
steel-decked
lawn mower,
HRA214
CBR600
Hurricane
motorcycle
133,393 units in 1989, a more than 80 percent decline
from just five years earlier.
I
n September 1987, Honda announced a “FivePart Strategy” to accelerate the localization of Honda
production and R&D operations. Fulfillment of the
strategy began almost immediately, with the export of the
Ohio-made Accord Coupe to Japan in March 1988. Honda’s
second U.S. auto plant also opened in Ohio in 1989.
In 1984, American Honda celebrated its 25th
anniversary in the U.S. In recognition of the milestone,
the American Honda Foundation was created to
broaden Honda’s community outreach.
As the decade ended, another part of this effort
to establish deeper roots was under way. American
Honda associates Tom Dean and Makato “Mak” Itabashi
were traveling the country studying how Honda might
contribute to American youth. Their efforts culminated
in the establishment in 1993 of the Eagle Rock School
and Professional Development Center.
“Five-Part
Strategy”
announced
to expand
Honda North
production
America, Inc.,
and R&D in
established
North
as
America
coordinating
company
First
U.S.assembled
lawn mower
engine and
the first
electric lawn
mower, HR17E
88
Accord Coupe
First export
of U.S.-made
products
to Japan
(Accord
Coupe and
Gold Wing)
First
motorcycle
Rider
Education
Center opens
in Colton,
California
GL1500
Gold Wing
FL400 Pilot
4-wheeler
Honda
Engineering
North
America, Inc.,
established
(develops
production
tooling)
Soichiro
Honda
inducted into
the U.S.
Automotive
Hall of Fame
89
Accord
becomes
top-selling
car in the U.S.
Second U.S.
auto plant
begins
production in
East Liberty,
Ohio, with
the Civic
1980 – 1989 53
a conversation with
Tetsuo Chino
Reflections
“
I used to say that if you
have a big tree, the
beautiful part of the
tree is very important.
But the invisible part
of the tree is more
important. The invisible
portion is the roots.”
Tetsuo Chino, the sixth top executive of American Honda Motor Co.,
Inc., served as president & general manager from 1981 to 1987. He joined
American Honda in 1981 as executive vice president. Chino also served
as the first chairman of Honda North America, Inc., from 1987 to 1989.
In the 1980s, Honda was transitioning from
a company relying on imported products to one
building its own vehicles in the market. How did
you see Honda when you came to the U.S.?
Mr. Honda said so many times that we produce
products close to the customer. So we just followed
his philosophy.
We started to plan to make automobiles in the
U.S. in 1976. I was one of the project members. But all
of the factors we had collected were negative. Two key
negative issues then were the perception of the quality
of labor and an insufficient number of component
suppliers. At that time, for auto production in the U.S.,
the Big Three made many of their own components
themselves. Ford Motor even made the windshield for
themselves. So the good, small components suppliers
were missing, or they were subsidiary companies of the
Big Three. And the exchange rate didn’t support local
production. But as I mentioned, we had to find the
54 fif t y y ea r s
of
way to make production economical in the States.
I just remember that Mr. [Kiyoshi] Kawashima
[Honda Motor Co., Ltd., president & CEO] made the final
decision. But if you input all of the information and data
into a computer, it just says yes or no. And all of the
answers would have been no. But Mr. Kawashima must
have had some genius way of thinking. A binary system
just says yes or no. But Mr. Kawashima said we must use
a couple of binary systems. In addition to yes or no, we
have two more — yes, but no; and no, but yes. All of the
computers say no, but we have to make it yes.
Then we started production. But we needed so
much investment to make automobiles, so we started
with motorcycles to test American labor. Now, we
can see that the image of American labor was very
misleading. You cannot talk about just the quality
of labor, you must also talk about the quality of
management. That was the traditional superstition of
Japanese management was that American labor was
bad, but we found it was not so. Finally, we found that
American labor quality was not bad. It was as good
as Japanese labor, if management communicates
well with the people and they establish a good
understanding with each other.
How was the U.S.-made Accord
received by dealers?
Having two production sources from different
countries like this was a first in the auto industry.
We had a very unique system to provide automobiles
to dealers and customers. At that point, there were
import restrictions and supply was limited, and
demand for Japanese fuel-efficient cars was very big.
Dealers wanted more cars. So we decided to provide
the Honda Accord sedan from the plant in Japan to
dealers, as well as the Ohio Accord. So if you went to a
dealer showroom, you might see both Japanese-made
and American-made Accords. Naturally, consumers
wanted to recognize which was which, because at that
time they wanted to buy Japanese cars. Dealers also
had some resistance against U.S.-made cars, but finally
they realized there was no difference between U.S.and Japan-made. That was the beginning of the
success of the Ohio operation.
Your goal was to grow stronger roots
in America that could withstand a
difficult storm. How did you set out
to grow these deeper roots?
I used to say that if you have a big tree, like a sequoia
in California, the beautiful part of the tree is very
important. But the invisible part of the tree is more
important. The invisible portion is the root. We have
to put ourselves deeper into American soil.
Still, there was some friction in the U.S. from
both the UAW [United Auto Workers union] and
some politicians. So, I tried to suggest that Honda
should naturalize to American soil. When we started
production or supply from Ohio, I made the big
campaign for Honda to become more American.
At that time, there was some anti-import
movement, like a Buy American campaign. I think
the Wall Street Journal reported that the car’s brand
name was not so important, that traditional American
cars were not American cars, but imported cars. The
Buy American movement was difficult, because you
couldn’t always say which was which. But perception
was very important, so they tried to tell consumers
that Honda was not part of America.
I tried to put Honda deeper in American soil.
That was my emphasis after we established Ohio
production. Honda must naturalize to American soil.
Sometimes they say “transplant” to describe our
U.S. plants, as a means to segregate them from the
indigenous plants. I think Honda is a kind of transplant.
But do you know the medical word transplant — like a
heart transplant? We are that kind of transplant. With
a heart transplant, you have a period of rejection. But
if we get over that, the heart is indispensable to the
body. So we wanted to become indispensable to the
United States.
How did it feel when the International Trade
Commission (ITC) imposed restrictions on
Honda to help Harley-Davidson?
When Ohio started production of motorcycles,
Harley-Davidson asked us if they could come in to
study the Ohio motorcycle production site. And I said
OK. Because if Harley goes bankrupt and disappears,
Honda will have destroyed the domestic industry.
Of course, Indian motorcycles were gone by then.
I asked Nakagawa-san [Kazuo Nakagawa, first
president of Honda of America Mfg., Inc.] to help them.
And Harley sent about 10 engineers to our Ohio plant
to study quality control and cost cutting in production,
as the two major areas. And they learned a lot at
the Honda plant.
I think we learned a lesson from our experience in
the United Kingdom. We contributed to the destruction
of the motorcycle industry there. When we started
business in England and the United Kingdom, there
were more than 10 motorcycle manufacturers there.
However, since Honda started exporting motorcycles
to the U.K., they just went out of business. We were not
alone, but that is a bad image that continues to Honda.
We want competition, but not so aggressive that it will
destroy the local industry.
Of course, in the U.S., local manufacturers needed
some help and Harley-Davidson was provided that. The
ITC imposed a tariff for five years. But after four years,
they said to the ITC, we don’t need you anymore. That
type of help is important.
You established the American Honda
Foundation in 1984. What was your thinking
behind this first formal philanthropic effort?
When I was first stationed in the States, I didn’t
realize that America wasn’t just about the corporation,
but individuals who are thinking about making
contributions to the community. This is something
we lacked among the Japanese, to some degree.
Now we have that. But at that time, the mindset of
making donations was a little lacking. I learned that we
donated motorcycles to a youth program called NYPUM
[National Youth Project Using Minibikes] that we put
1980 – 1989 55
a conversation with tetsuo chino
together with the YMCA. They so much appreciated
Honda’s donation of the bikes. So I was impressed
that if we become American citizens, we must do the
same things that the American general public and
companies are doing. So, we established the charitable
organization, American Honda Foundation. When I
announced the Foundation, I was so astonished that
there were so many requests from all over the States.
For example, from the South Coast of California,
someone had discovered mammoth tusks, and wanted
to dig them up, and they wanted some money from
American Honda. We needed to concentrate the focus
of our benevolence, or we would need hundreds of
millions. So, we considered in what area we could
contribute to society. Finally, I established youth and
science education. That is the foundation of American
Honda Foundation.
This is also one of the single reasons for Eagle
Rock School, which was opened in my successor’s
time. American Honda has the education programs.
When I make the clearly targeted areas for the
Foundation, we can select some good programs.
I hope they are still doing the same thing.
In addition to helping the youth in science
education, we needed some charitable activities to
local people in the community, like the soup kitchen
or charity golf tournament. I think those kinds of
activities we must do as a corporate citizen.
I also remember that when they had that big
earthquake in the San Francisco area back in 1989,
many Japanese companies donated to help the
victims of the earthquake. But American Honda
did it a different way: If associates donate, AHM will
donate the same amount as a matching program.
I think that is a good way for community-based
charitable activities. If the company donates first,
56 fif t y y ea r s
of
associates are not involved. With the approach
used by American Honda, associates are involved
in the activities.
In 1982, you established the
Corporate Productivity Committee (CPC)
to improve productivity at all levels.
What was behind the creation of this program?
Our expansion of the organization and the numbers
of staff increased so quickly, so rapidly, that we had
quite new members at American Honda. Therefore, we
needed to make sure that all team members go in the
same direction. In order to make the same direction
based on the Honda way, we had to have a committee
to discuss what is our direction. That is the reason I
made this committee. Quite a variety of new members
had voices expressing different ways, so we needed
to make one voice and we must have goals. That is the
reason I established this committee. We needed to
have everyone on the same vector.
The ATC (all-terrain cycle) issue was
difficult, what went into your decision
to end ATC sales?
That was a big invention. Even “007” used this ATC.
I don’t remember which movie, but I think James
Bond, 007, appears on an ATC in the desert. But the
ATC was one of my big headaches at that time. We
know the machine was not at fault, but we had misuse.
We tried to educate the users. We sold the machines
with warnings, but the kids didn’t seem to care about
warnings. Many accidents happened and so many
people sued Honda. So much of my time was taken
to settle this.
When I finally made the decision to withdraw
from the ATC business of course, Mr. [Takeo] Fujisawa
[Honda Motor co-founder] was retired by that time.
But I was asked to visit his summer house up north
in Akita Prefecture in Japan. And I visited there
with [Tadashi] Kume-san, who was president of the
company [Honda Motor Co., Ltd.] at that time.
I remember that Mr. Fujisawa said that anything related
to the customer is very important, so you must make a
quick decision with how to deal with this ATC issue. He
was informed by someone that American Honda had
this very big ATC issue. So, he was concerned. He was
a thinker. He thinks always from several directions. He
thinks very deeply. He told me that money is not the
important issue. People are more important. So I made
the final decision after hearing his words.
You had many challenges in your
career with Honda. What is your
dream for American Honda’s future?
Some of the American people, or a majority of the
American people, immigrated from all over the world.
And, now, they are all Americans. So, I think that Honda
should become an American company, perceptually,
become 100 percent American. That is my dream.
That is what I mean by naturalized — 100 percent
naturalized to the United States: American. Mr. Honda
always said that nationality is not important. But if you
work in America, all the Honda operations must be
done by Americans keeping Honda philosophy. That is
my dream.
local production expands auto sales
Building a Honda in America, Not an “American Honda”
Honda entered the decade of the 1980s with less than three months of U.S.-based production* experience
at one U.S. plant. But that was enough to convince management to take a second monumental step.
No. 1 position among
import car distributors.”
Even as the first
U.S.-made Accord — now
a permanent fixture at
the Henry Ford Museum
in Dearborn, Michigan
— rolled off the assembly
line in 1982, Honda’s
decision to build cars in
America was still being
met with more than a small
dose of skepticism from
dealers and customers.
Volkswagen was struggling
with its Westmoreland,
Pennsylvania, auto plant
and would ultimately
abandon it in 1988. Could
Honda officials helping to celebrate the first Accord “001” produced at the Marysville Auto Plant in Ohio, include, from left,
Honda’s U.S. plant deliver
Honda of America Mfg., Inc., associate Bob Muth, Plant Manager Bob Watson, Honda Motor Co., Ltd., President Kiyoshi Kawashima,
American Honda Motor Co., Inc., Vice President Cliff Schmillen, and Honda of America Mfg. President Kazuo Nakagawa.
the same quality as Honda
plants in Japan?
“There is some
States, beginning in 1981. The initial
n January 1980, company officials
reluctance to buying a car made in Ohio,”
1.68 million unit quota for all Japanese
joined Ohio Governor James Rhodes
said one Cleveland dealer sales manager
manufacturers meant that Honda had
in announcing plans to build a new
at the time. “People are concerned about
no real opportunity to grow without
$200 million automobile adjacent to the
quality control at the Marysville plant.”
the success of production in Ohio. In a
motorcycle plant in Marysville, Ohio.
To address these early concerns about
memo announcing U.S. auto production
In the late 1970s, fearful of severe
quality, American Honda invited every
to all associates, then American Honda
sanctions from the U.S. government,
dealer to visit the new plant to witness the
President Tetsuo Chino said, “With
Japanese automakers agreed to a
associate training and pilot production
the Ohio plant in full operation and
Voluntary Restraint Agreement that
and to get more comfortable with the
its production added to our imports,
constrained the number of vehicles
notion of a Honda made in America.
American Honda should achieve the
they could import into the United
I
“The key was in how we approached
U.S. production,” recalls Tom Elliott,
then assistant vice president with
responsibility for sales in the Western
United States. “We were determined
to build a Honda in America, not an
American Honda.”
Recalls Elliott, “We had dealers
who would put two versions of the
Accord on the showroom floor, one
made in Ohio and the other in Japan,
and they would tell the customer
‘Pick whichever one you want.’
Generally, the only differences to be
found were in the type of battery and
the vehicle identification number.”
O
ver time, not only did
customers accept Accords made
in Ohio, but the other automakers
began to request tours of the Ohio
factory to study how Honda was able
to achieve such high quality and
efficiency in America.
During the next 10 years, Honda
steadily expanded its auto manufacturing
presence to include an engine plant in
Anna, Ohio, an auto plant in Alliston,
Ontario in Canada, and a second U.S.
auto plant in East Liberty, Ohio. Honda
concluded the decade having produced
more than 1.6 million Honda automobiles
in the United States.
1980 – 1989 57
enhancing occupant protection
Original Research in the U.S. Leads to New Airbag Technology
Honda’s industry leadership in airbag technologies
was forged by a small team of engineers who challenged
to develop original Honda technologies.
W
Honda openly shared
its approach at safety
conferences and others
began adopting similar
systems. “Ultimately,
we never even patented
this approach to the
passenger-side airbag,”
said Knight. “You could
call it a gift to the world.”
The Center for Auto
Safety called Honda’s
design “a blueprint on
how to design better
airbag systems.”
58 fif t y y ea r s
of
ith a long history of
facility, and then become an executive at
advancing airbag technology,
Honda R&D Americas (HRA).
Honda’s efforts have been marked by
“Naturally, most engineers
the development and industry-leading
wanted to develop sporty cars or racing
application of original technologies to the engines,” he said. “So my job developing
Honda and Acura product lineups.
Honda’s first airbag system
But the critical first steps
was not envied by anyone.
took place in Japan in the late
Fortunately, within Honda,
1970s, in a new department in
we have a strong passion for
Honda R&D Co., Ltd., nicknamed
research and, importantly,
nekomatagi — which translates
we invest in it.”
roughly to “a fish so smelly that
While the core
Tomiji Sugimoto
even a cat won’t eat it.”
technology development of
“When I was first assigned to work
Honda’s first airbag was done in Japan,
on airbag development, safety was
a significant amount of the work was
not considered an exciting challenge,”
conducted in the United States. This was
said Tomiji Sugimoto, who would later
led by Saburo Kobayashi, now retired,
guide construction of the world’s first
who also served in several influential
indoor multidirectional crash test safety positions within Honda’s U.S. R&D
operations.
Ben Knight, now
a vice president
at HRA, and
Chet Hale, then
American Honda
Motor Co., Inc.,
senior vice
president [now
executive vice
president],
also worked
on the project.
Better known
today as one of the auto
industry’s leading experts
on environmental issues,
Knight actually spent part
of his career focused on
safety. “I visited quite a
few technology suppliers
with Mr. Kobayashi,”
recalls Knight. “One of
the unique elements of our
The powder-actuated inflator obtained through a relationship
ultimate approach was to
with a U.S. aviation-based supplier gave Honda a significant boost
toward a production-ready system.
advance and apply solidpropellant technology and
the Fault Tree Analysis (FTA) method
more reliable sensors that we obtained
of defining a goal, identifying all of
from suppliers in America.”
the factors that could prevent its
Honda reached outside
achievement, and then calculating
the automobile industry to
the probability of failure for each
obtain and develop these
potential problem, as well as total
technologies, working with
system failure. Working with the
companies such as Talley
McDonnell Douglas Aerospace
Industries, Inc., in the
Center helped the Honda team
aviation industry, which
achieve its reliability target of
Saburo Kobayashi
developed the explosive
“five 9s,” or 99.999 percent.
devices for fighter jet ejection seats.
However, in November 1983,
the Honda team learned that even
this standard wasn’t high enough.
here were challenges both
“Reliability is the critical factor in
in the exhaustive trial-and-error
an airbag system’s success,” the team
process of developing new technology,
was told by Tadashi Kume, then a
and also in the need to convince
executives that the new devices would be Honda R&D executive, but soon to
become president of Honda Motor Co.,
safe for Honda and Acura customers.
Ltd. “Raise the reliability target
The critical factor was increasing
another digit.” Achieving this level,
reliability. The Honda team turned to
“six 9s” reliability, meant reducing
NASA to study the techniques used to
failure probability to one in every
achieve reliability in America’s space
million deployments.
program. Honda engineers learned
T
Over the course of the next three
years, the team worked to achieve it.
Then the team approached American
Honda about placing the new airbag in
a Honda or Acura vehicle.
Consumer studies showed concerns
about airbag reliability. “But if reliability
and effectiveness were established,
we felt the airbag could earn a positive
reception from customers over time,”
said Knight. Before introducing the new
technology to customers, American
Honda executives wanted to be
convinced of its performance. This led
to the testing of a fleet of more than 50
Acura Legends. The test showed that
the airbag achieved the desired level of
reliability. In September 1987, the Acura
Legend Coupe became the first vehicle
from American Honda to offer an airbag.
Honda’s effort to develop its own
original airbags rather than simply
installing supplier-designed systems
enabled the company to continue to
advance and apply new and enhanced
technologies. In 1990, Honda engineers
developed the world’s first upwarddeploying passenger airbag conceived
around the idea of avoiding possible
injury to a small-stature adult or
child seated out of position.
Other companies were adopting
passenger airbags mounted lower on
the instrument panel, which deployed
directly into passengers and were
more likely to result in serious injuries
or deaths. In 1990, American Honda
became the first automaker to announce
a commitment to equip all of the
company’s U.S. vehicles with driver
and front passenger airbags.
I
n the ensuing years, Honda
R&D continued to advance airbag
technologies, including front-side
airbags with an Occupant Position
Detection System to prevent deployment
when a small-stature adult or child is
not seated in the proper position. Honda
also developed side curtain airbags and
advanced airbag systems, or i-SRS, that
employed dual output inflators to help
tailor the force of the front passenger
airbag to the crash severity requirement
(maximium deployment speed in a
high-speed crash, and a less forceful
deployment in a low-speed collision).
Finally, Honda also introduced the
world’s first production motorcycle
with an airbag, the 2007 Gold Wing
motorcycle.
“Airbag technology is a great
example of where the development
of original technologies has created
expertise that is an advantage for
Honda and a benefit for our customers,”
said Knight.
Honda’s investment
in original airbag
technologies has
enabled the company
to enhance safety
for every vehicle,
regardless of size or
price, including the
Honda Fit (left).
25th Anniversary Celebration
As part of the 1984 celebration of American
Honda’s 25th anniversary, 260 American
Honda associates traveled to Ohio to gain
insights into the startup of manufacturing
at Honda of America Mfg. They also did a bit
of bonding among associates from the two
companies. In addition to the plant tours and
several meetings about Honda philosophy,
the group enjoyed two parties. Paying homage
to the 1959 startup of American Honda, a
1950s-themed event found associate Susan
Saavedra (right) comfortable in a poodle
skirt, at the jukebox with fellow associate
Valerie Hahlbeck.
1980 – 1989 59
“50m” project
CRX Becomes the First Honda Automobile Conceived in America
The two-seat CRX is not thought of as a car developed in America. But
Honda’s U.S. sales and R&D associates were the key to its development.
The design sketches of
the 50M car by HRA
led directly to the
ultimate design of the
1984 Honda CRX.
I
n the early 1980s, with oil prices
again on the rise, then American
Honda Motor Co., Inc., Executive Vice
President Yoshihide Munekuni began
thinking about a marketing opportunity.
“I was living in L.A. at that time,
around Riverside, and there were many
condos being built with many young
couples living there. They needed to
commute a long way, and they needed
to pay a house note and buy gasoline
to commute. It was almost impossible
with high gas prices. So, I thought they
needed some impactful car to live their
dreams of owning a house and a car.”
The “50M” project was launched with
the goal of developing a car that could
achieve 50 miles per gallon (mpg) fuel
economy. But Honda R&D in Japan said it
wasn’t possible, so Munekuni involved U.S.
60 fif t y y ea r s
of
focus should be when designer Doug
Halbert came up with the term ‘Civic
Renaissance.’ We all liked this idea,” said
Ikeda. “That is how it became CRX, for
‘Civic Renaissance Experimental.’ ”
HRA’s now legendary “long-roof”
Civic design influenced the direction for
the 50M project, and the overall styling
direction for the third-generation Civic.
“HRA helped put Honda styling on the
map,” insists Halbert, now retired,
who was an early member of the design
team and later head of the Honda
design studio.
Then the
idea of developing
a sporty version
associates in
of the car was
the project.
presented. “I
“American
pushed hard for a
Honda was so
high-performance
clear about
model,” recalled
our concept
Chet Hale, then
for the U.S.
vice president
Clay model of the 50M car at HRA styling studio
market that we in the early 1980s.
of the Technical
removed the rear seats,” said Munekuni.
Division. “I thought it would make an
The initial design work was done by Honda exciting product and something I would
Research America in Torrance.
like to have myself. There was no genius
“We wanted to achieve 50 miles
involved, but we had to bring a lot of
per gallon fuel economy, which meant
people involved to our way of thinking.
aerodynamics was important,” said
Ultimately, R&D proved very supportive,
Tony Ikeda, a designer in the original
because they enjoy developing cars that
HRA design studio. Styling for the
are fun to drive.”
CRX actually came from work HRA was
The 1.3-liter CRX-HF [for high fuel
conducting for the third-generation
economy] smashed Munekuni’s goal,
Civic, which would debut in 1984.
achieving an amazing 51 mpg city and
“The team was thinking of what their
67 mpg highway EPA rating. Tom Elliott,
then vice president of auto operations,
recalled a late-night prototype test.
“In late ’82, we were testing
prototypes, driving up Crenshaw at
about 11 o’clock at night,” said Elliott.
“The CRX-HF prototype was geared so
tall that I could not maintain speed up
Crenshaw hill to the top of PV [Palos
Verdes]. I got pulled over by a sheriff.
Munekuni’s next to me in the passenger
seat and conveniently forgot his English.
The guy looks at the car, and it had a
distributor plate and the registration
was fine. So he gave me a ticket because
it didn’t have a VIN number. He said I
had to show up with the car in 10 days
and have it examined to make sure it had
been taken care of. I waited until the car
was back in Japan, and then I went down
to the sheriff’s office and explained that
we no longer had the car, and they tore
up the ticket.”
Meanwhile, the performanceoriented CRX, with a 1.5-liter engine,
became known as a “pocket rocket.”
It fueled the import tuner movement
among young automobile enthusiasts.
“Through these efforts, you could
clearly see the mission, I felt, in the
American Honda marketing division,
to create what the market wanted,”
says Munekuni. “American Honda told
HRA that what we wanted was not an
American car but an original Honda
car for America.” CRX earned the 1984
Import Car of the Year award from
Motor Trend magazine.
a moving target
“A Million Little Things” Help Accord Set Industry Standard
The thirdgeneration Accord
earned Honda the title
of America’s bestselling passenger car
in 1989, making official
pop-up headlights and a racing-inspired
what had already been
double-wishbone suspension — a first
understood throughout
for a front-wheel-drive automobile.
the industry: Accord
That raised the bar for sporty handling
was the target that
in a mainstream sedan. “A lot of people
other automakers
wouldn’t know why rack-and-pinion
aimed to match.
steering was important,” said Berkman.
“You had a whole
“But once they got in the car, they could
genre of vehicles that
feel the responsiveness. The steering
were developed attempting to replicate
was tight and nimble. Suddenly, Accord
what Accord represented,” said John
went from being the customer’s second
Mendel, executive vice president of
car to being the first car.”
American Honda’s Auto Sales Division,
American Honda’s approach
but who worked at Ford Motor Co. in the
of packaging features in “trim” levels
1980s. “It was interesting to see how
also was an important
the industry responded, especially
customer-friendly
Taurus and Camry, and the race for
strategy. “Back then,
sales leadership. Accord became
every feature coming out
the gold standard, the car to beat.”
of Detroit [automakers]
Accord served as a benchmark
was a freestanding
in other ways. In the fall of 1985,
option,” said Berkman.
with the launch of the all-new 1986
“We made everything
The Accord earned
“Ten
Best”
honors
Accord, Honda of America Mfg.
standard in a package.
from Car and Driver
set a new standard for production
“We offered a rear
in 1983, the first of
an unprecedented
efficiency in North America with
window defogger in the
23 “Ten Best” awards
for Accord during the
the first ever “rolling” full-model
mid-1980s as standard
next 26 years.
change. The plant switched
equipment when it was an
production from the secondoption for the domestic
generation to third-generation models
brands. And we put a timer on it to help
without shutting down the line or the
save your battery,” said Berkman. “All
plant, which was the standard practice
of these little things were exceeding the
among Detroit automakers.
accepted practices at that time.”
The Honda Accord set the standard for passenger cars in America in the
1980s. It raised the expectations of American customers and ultimately
became the target that other automakers aimed to match.
T
he launch of the secondgeneration Accord in 1982 was a
watershed moment in Honda’s U.S. sales
history. It wasn’t only the first Japanese
car manufactured in America. Accord
heralded a new era for Honda as the
maker of automobiles that could go
head-to-head with established products
from America, Japan and Europe.
Erik Berkman, who is now vice
president of Product Planning and
Logistics for American Honda and
president of Honda Performance
Development, had a unique vantage
point for Accord’s success. He began his
career at the Marysville Auto Plant of
Honda of America Mfg., Inc., and then
moved to Honda R&D Americas, Inc.,
where he helped create the 1994 Accord
Wagon and led development of the
1998 Accord Coupe.
“It’s a million little things,” said
Berkman, attempting to define the
reasons behind Accord’s success. “In
each new development and each new
model launch at the factory, it is a matter
of staying true to our values. But over the
years, we invested in the car in places
where people are going to feel it and
understand it.”
In 1986, Honda introduced the
all-new third-generation Accord with
Reflective of its critical
role in shaping the U.S.
auto industry, for the
past 20 years the first
Honda Accord produced
at the Marysville Auto
Plant on November 1, 1982,
has rested in an honored
place (front left) in the
Henry Ford Museum in
Dearborn, Michigan, as
the lead car in a display
called “Automobile in
American Life.”
American Honda soon began
exporting Ohio-built Accords. In the
fall of 1987, the first Accord sedans
were shipped to Taiwan. The following
spring, American Honda began
exporting a new model built exclusively
in Ohio — the Accord Coupe — to Japan.
The fact that the Marysville plant built
both right-hand-drive and left-handdrive models on the same assembly
line further advanced Accord as a
benchmark vehicle.
“We developed our product
attributes that make Accord ‘Accord,’ ”
said Berkman, “things like great
dependability, quality and reliability,
and interior ergonomics where
everything is in the right place. And
we try to put some soul into it, some
personality, that gives it unique
character. As a result, it has consistently
exceeded customer expectations.
That’s what keeps it going strong today.”
1980 – 1989 61
a conversation with
Yoshihide Munekuni
Reflections
“
As with customer
satisfaction, the
(quality) standard
changes all the time.
If our competitors
get better, we have
to go above them. So,
we must constantly
follow . . . the voice
of the customer.”
Yoshihide Munekuni, the seventh top executive of American Honda
Motor Co., Inc., served as president & CEO from 1987 to 1989.
He was the company’s first top executive to have the CEO title.
Munekuni also served at American Honda in the 1970s, starting as
automotive sales director in 1974, then as vice president in 1977,
and as senior vice president in 1982. Munekuni became chairman
of Honda North America, Inc., in 1989.
You arrived at AHM in the position
of auto sales director as the Civic CVCC
was being launched. What is your
memory of this time?
In 1973, the first oil crisis occurred. Then in 1975,
we began sales of Civic CVCC at the price of $2,799.
The world was surprised by the fact we introduced
this clean CVCC technology, which complied with the
Muskie Act [the U.S. Clean Air Act], something that
other automakers could not achieve at this price.
However, for me and American Honda, it was not a
model we welcomed so much [laughter]. Well, the
development cost of this product was too high, and
thus we could not make much profit.
62 fif t y y ea r s
of
It is natural that the cost was higher, because
it was very innovative technology. To me, this was a
product which was filled with Honda’s spirit — the
unprecedented technology Honda engineers achieved
with their challenging spirit. So it was not about price.
It was Honda’s commitment to the world. The Muskie
Act came from a concern for people’s health and the
environment; as it addressed the problem of pollution.
It was not an option not to sell this product. Those who
developed this product had a technology-oriented spirit
and we, the marketing side, also took on the challenge
with this product full of Honda’s spirit. We were very
encouraged to sell this product — and then we were
sued by the U.S. government for dumping.
This was a product we achieved with our
challenging spirit and our dreams, and at the same
time we fought for this product against a dumping
case, which we ultimately overcame. But I would say
this is what challenging was all about. Whatever barrier
was in front of us, we had to clear it, because it was
for the earth and for human beings. So our motivation
to take on any challenge was much stronger.
You were involved in the effort
to start the first CSI study in
partnership with J.D. Power. What
provided the idea for such a survey?
First of all, I needed to understand: Why am I at
American Honda? I am in America to embody the
Honda Company Principle. That is my job — to achieve
the joy of Honda customers around the world. In reality
it [the Company Principle] is a much longer sentence,
but the point is to bring joy to our customers around
the world. And I am in America to embody this.
What customers want is two things: good
products along with good dealers who can continue
taking care of them for the long term. We make the
products on our own, products that meet the needs
of customers. However, when it comes to dealers, each
dealer has a different owner who thinks differently.
There are many other differences depending on the
region and climate. Honda does not have power to
change things about them. However, if it was a request
from their customers, dealers must work toward
fulfilling them.
To embody the Honda Company Principle, the
joy of customers, it was important how deeply we
could delve into the voices of our customers — voices
about our products, their dealer, and Honda’s total
image. Without this process, we could not embody
the Company Principle. So I bet on David Power
[of J.D. Power and Associates], and I bet on his survey.
We exchanged a lot of ideas, and the discussions with
David continued deeply, year after year. Once the
survey was done for the year, we started talking for
the following year. We couldn’t embody Honda
philosophy without this.
Now all kinds of businesses around the world are
using the CSI. But I never used the word CSI. There is
a popular song [in Japan] which is about being “only
one.” So, the product for you, the dealer for you, just
one customer and one dealer, this is what we pursued
with the CS project.
How did American Honda prepare
for the start of auto production in Ohio?
It was a rather bold project. Even as they prepared to
start building motorcycles in 1979, already in 1977, the
project was started to establish the auto plant in the
U.S. At that time, the auto sales volume in the U.S. was
only 150,000 units per year. Still, we already thought
about building a plant with another 100,000 units.
From the perspective of the salespeople at
American Honda, we were being asked to continuously
double sales volume from the time that factory started
operation, or else the capacity utilization would not
be high enough. Of course, we knew there were ups
and downs in the market, and we weren’t confident we
could continue to sell double volume after starting the
factory. And we knew once the utilization of the factory
went down, that would be a dead end for us.
It took such a long time for us to think about the
most appropriate approach to the market. After long,
deep contemplation, the solution was to divide the
American market into two regions, with the Mississippi
River in the middle and the Eastern part and the
Western part. We decided the Western region should
import cars from Sayama, and the Eastern part should
receive Ohio-made cars. So, for the Eastern half of the
market, we needed to distribute four times more cars
than we had originally considered. And that is how we
started to develop the dealer network in the Eastern
half of the U.S.
In order to establish a good dealer network,
we needed to select high-quality dealers, and in
order to build their facilities, they had to meet local
requirements for water and land, etc. The timing was
very important, because HAM [Honda of America Mfg.,
Inc.] could only start production from November 1982.
So if we started relations with dealers too early, all
the dealers would not receive cars. And if we were too
late creating agreements with dealers, we wouldn’t be
able to handle the cars from HAM. With each milestone
achievement of the Ohio factory construction, such
as groundbreaking and laying down scaffolding and
installing the assembly line, we brought dealers to
Ohio to observe what was going on. And this timing
was reflected to their store construction. Through all
of these steps, we started building cars in Ohio in 1982.
You were known for your sangen shugi
approach: going to the plant and the port
to inspect incoming cars.
The very first cars produced in Ohio, I personally
went there myself to see if they were acceptable
or not. Checking each car, unit by unit, I refused
to accept almost half of what they produced.
1980 – 1989 63
a conversation with yoshihide munekuni
Because the American Honda distribution center
was right next to the factory, and all of these cars
had been inspected by the people working as final
inspection in Ohio. But even in the cold weather
in Ohio, we inspected outdoors and found that
almost half were not acceptable. And that is how we
demonstrated to them the criteria that American
Honda has for quality. That kind of action helped HAM
to understand what was acceptable for production of
quality for our customers.
I went to all of the ports, as soon as a vessel
arrived. There were port representatives there. So,
I checked with them, and they learned the criteria I
was using to check those vehicles. I could not check
every car myself, but I did it for one day, then port reps
spent several days checking. Then they put only good
ones on the trains and trucks for our customers. We
had a space for repair work at the port. Depending on
the number of vehicles, we had to have engineers from
Japan. This is how the port repair operation began.
We took photos of the spots I pointed out. Port
reps kept one copy [of the photos] as their decision
making standards. At the same time, we sent those
photos to the factory, saying these issues were not
acceptable for specific reasons. There was no e-mail
back then, so we had to use postal mail. It took time,
but we kept sending those photos. As a result, the
factory side learned and changed their criteria. It
was that kind of time period.
To give you one example, initially we did not
accept a 2-millimeter gap [misalignment] and sent
photos to the factory. Then, eventually, I started
not accepting a 1-millimeter gap. The factory was
surprised and said, “It was getting better than before.”
The reason why I did not accept the 2-millimeter
gap anymore was because the quality of Toyota
64 fif t y y ea r s
of
cars improved significantly during that time. As with
customer satisfaction, the standard changes all the
time. If our competitors get better, we have to go above
them. So, we must constantly follow — qualitatively
and quantitatively — the voice of the customer.
Back then products came only from Japan. Earlier
I mentioned how we did not accept products from
HAM. In the same way, we checked all of the cars that
arrived from Japan. We did not accept cars which
did not meet our standards. The factory in Japan
was troubled, so they sent many associates to the
ports in the U.S. for repair work. This should not have
happened. But American Honda firmly maintained its
standards for products which should not be delivered
to our customers. I remember when a vessel arrived on
a cold winter day, our engineers who came from Japan
repaired the cars one by one in a biting wind. I felt bad.
I ordered bentõ boxes from a Japanese restaurant and
took them to the port. But there were some things we
could never give up in order to offer good products to
our customers.
You had many different challenges in
your career with Honda. But what is your
As I said before, when I came to American Honda,
I asked myself, Why am I in the U.S.? What am I here
for? If each salesperson at American Honda today can
think, Why am I here at American Honda?, If they can
take the first step forward this way, I think the dreams
will follow as a result.
Today, the means of communications have gotten
too complicated. There are too many ways, starting
from postal mail, e-mail, Internet, etc. That is OK.
I don’t deny them. However, we should still meet
people face to face and talk while looking the person
in the eye. Obviously, it takes more time and effort,
but I think communications which do not take time
and effort do not create anything.
People use the words “customer satisfaction,” but
they are not digging down deeply. They are just talking.
I don’t know what will happen to American Honda in
the future, but still they should go meet customers
face to face and listen to them while looking them in
the eye: Go meet dealers face to face and listen to their
opinions. Then dig down even further, solidify your
thinking, and offer it to those people who build
the products.
So, now is the best timing to rethink what
American Honda is . . . that is the 50th anniversary. It
is time to look at the next 50 years to come. If they can
do this, American Honda will still be growing 50 years
from now.
major expansion of manufacturing and r&d
Bold “Five-Part Strategy”Addresses Business Challenges
The popularity of Honda products continued to grow.
But the company became capacity-strapped, both for production
volume and product development resources.
Honda brand products and the parts
used to build them in America became
a critical business strategy.
Thus, on September 17, 1987,
Honda took another bold step in the
expansion of its North American
sales, manufacturing, and R&D
operations with the announcement
of a comprehensive Five-Part Strategy
for its U.S. operations. With the stated
goal to establish a “self-reliant U.S.
car company,” Honda’s Five-Part
Strategy included:
• construction of a second U.S. auto
plant in Ohio with capacity of 150,000
units annually
• expansion of U.S. R&D operations,
including a new product
development center in Ohio
• major increase in local content
to 75 percent of the vehicle by 1991
(up from 60 percent)
American Honda Motor Co., Inc., President Tetsuo Chino and U.S. Senator Robert Packwood celebrated Honda’s
bold move to export U.S.-made Accord Coupes back to Japan on March 7, 1988. This led to the establishment
of the American Honda Export Sales Division. It prompted Honda of America Mfg., Inc., to focus more on quality
in order to meet the demanding expectations of customers in Japan. It also helped teach Honda plants in North
America flexibility in producing multiple models with different specifications on one assembly line. American
Honda exported more than 900,000 cars and light trucks to more than 100 countries from 1987 to 2009.
T
he 1986 launch of the Acura
brand created several challenges
for American Honda. First, as all Acura
models were built in Japan, Acura had
to be factored into the fixed number of
vehicles American Honda was allowed to
import from Japan under the Voluntary
Restraint Agreement that had limited
Japanese automakers since 1981. The
company’s second auto brand also
placed increased demand on Honda R&D
in Japan for new model development.
Further, after the 1985 Plaza Accord
agreement, the yen appreciated by more
than 50 percent against the U.S. dollar
by 1987. Increasing both the supply of
• export of 70,000 U.S.-built Honda
automobiles per year, including exports
to Japan in 1988
• expansion of Honda’s production
engineering operations in North
America to create the production
tooling and systems required to
manufacture products
“It is not enough that our U.S.
operations are competitive only
in the U.S.,” said Tetsuo Chino,
then president of Honda North America,
Inc. “Our goal is that our United States
operations attain capabilities
that compare to our operations
in Japan.”
Fulfillment of the Five-Part
Strategy would have a profound
impact on Honda’s fortunes in the
coming decade.
U.S. Automotive
Hall of Fame Soichiro
Honda was honored as the
first Japanese automaker
inducted into the U.S.
Automotive Hall of Fame
in 1989. A number of
American Honda associates
and dealers attended the
event to honor Mr. Honda
and — as in old times —
were later entertained by
him in a suite at the hotel
after the event.
1980 – 1989 65
new american automotive brand
Channel 2 – EX Project Spawns Acura Brand
Over the course of Honda’s first decade of auto sales, the brand
rose from a little more than 4,000 units in 1970 to more than 375,000
in 1980. Honda sold just three models — Civic, Accord, and Prelude —
all slotted in the family car segment. That was about to change.
C
oncerned that its auto dealers
might be reaching their sales
capacity, American Honda management
began to explore a new direction. “The
average dealer was selling about 600
units a year, and that was about the
highest in the industry,” said Tom Elliott,
then assistant vice president of auto sales.
“Our feeling at that time was that they
were getting maxed out.” Adding more
Honda dealers was problematic, because
in some states they couldn’t locate within
American Honda Senior
Vice President Cliff
Schmillen (left) was the
primary spokesman for the
Acura launch, seen here
with then Public Relations
Manager Kurt Antonius
(center). Schmillen also
appeared on the NBC
Today Show, with popular
host Jane Pauley along
with Volvo’s U.S. sales
leader Bjorn Ahlstrom,
who contended that Acura
would fail in its effort to
enter the luxury segment.
After the brand’s second
year, the good-natured
Schmillen spied Ahlstrom
across the room at a
Family Circle magazine
awards luncheon. “I took
out a business card and
on the back I wrote: ‘One
year later, Acura 109,470,
Volvo 106,539,’” recalled
Schmillen years ago.
“It was all in fun, but
I made my point.”
66 fif t y y ea r s
of
10 miles of an existing Honda dealer due
to franchise laws.
Looking at the competitive
marketplace, American Honda also
spied opportunity. The U.S. luxury
market was increasingly turning toward
performance-oriented products, most
of them European brands. As core
baby boomer customers looked to go
upscale, they would begin turning to
such vehicles. Honda needed to intercept
them before they left for a premium
brand. But expensive vehicles didn’t fit
the Honda brand image.
Further, while demand for
Honda products exceeded supply, the
fluctuating exchange rates created
challenges. “Volkswagen sales started
falling drastically from the early 1970s,
when they were selling 500,000 units
of the Beetle,” said Yoshihide Munekuni,
then vice president of auto sales.
“A key reason was the appreciation of
the German mark after the floating
exchange rate system was put in place.
If the Beetle suffered that much,
I thought the Civic could too. I began
thinking that we should create a sporty
hi-tech division to prepare ourselves for
the strong yen.”
Elliott, who worked on
that study of Volkswagen’s sales
decline, recalled the impact of
the exchange rate on Honda: “In
1982, we had five separate price
increases, so we’d have cars on
a dealer’s lot — the same car —
with three different prices.”
The combination of these
various factors led to the
establishment in 1982 of the “EX
Project” — EX for “exciting.”
Elliott and Tom Umeno were
assigned to look at the business
case for such a move. “We looked
at state-by-state registrations
for domestics vs. imports, by
price class, and then by total
registrations to determine within
the luxury market what percent we could
shoot for, how many dealers would we
need, and what kind of volume could we
achieve,” he said.
But American Honda’s outside
legal counsel strongly opposed the
plan, concerned that existing Honda
dealers would view the establishment of
a new brand as a violation of American
Honda’s dealer franchise agreement.
Munekuni thought the company was on
solid ground, as GM had five different
sales divisions. “But the attorneys
told me: ‘You don’t know anything.
Those divisions were made as a result
of the consolidation of different
companies. They never divided one
company into two.’ ”
“We could not give up,” said
Munekuni. “So, the first thing we did
was ask R&D to develop cars that were
not like Honda. Without this, we couldn’t
establish this second channel.” The
concept of creating a second sales
channel also spawned a code name —
Channel 2 — that was used to identify
the project until a brand name was created.
A
n initial review of prototype
vehicles by auto enthusiast writers
and other experts found the new cars too
closely styled to Honda models. A second
round of design work was completed.
Munekuni and Elliott returned to Japan
to review the new vehicles with Senior
Vice President Cliff Schmillen, an outside
attorney, David Power of J.D. Power and
Developing a Brand Identification
Associates, and Ted Connelly, an Ohio
dealer and then Honda dealer council
chairman. “We asked them to check
the vehicles. Then we all came to an
agreement that ‘This is not a Honda,’ ”
said Munekuni.
It was also then that a new policy
was established to put “Honda Motor Co.
Ltd.” on the engine, glass, seat belts and
other components, rather than simply
the name “Honda.”
Elliott recalls that the ultimate
hurdle was gaining approval from
retired company founder Soichiro Honda
for a line of products that did not bear
the Honda company name. “Everyone
was very concerned about the Acura plan
and reporting to him,” said Elliott. “But
Mr. Munekuni showed the plans, and
he [Mr. Honda] said he thought it was a
good idea. He apparently said one of the
biggest mistakes he made was putting
his name on the car.”
The new division was officially
born on April 1, 1984, with the public
announcement that Honda would
market luxury vehicles. American
Honda then commissioned the NameLab
company of San Francisco to develop
a unique brand name that could embody
the concepts of precision and quality.
They arrived at “Acura.”
Sales officially began on
March 27, 1986, with the Acura brand
selling 52, 869 vehicles in the first year.
The brand became America’s bestselling import luxury nameplate in 1987,
and led the J.D. Power and Associates
Customer Satisfaction Index (CSI) for
four consecutive years.
The Acura NSX drew huge crowds to its debut in February 1989 at the Chicago Auto Show.
Tom Elliott was a key player
in the development of the Acura
Division, including the naming
of the brand. Here are Elliott’s
notes from one of the meetings
where brand names were
discussed with NameLab, Inc.,
the San Francisco-based company
hired to come up with a name for
the new luxury car brand.
Launched in 1986, Acura vehicles would not feature a brand logo until the introduction of the NSX
in 1989. A stylized engineer’s caliper was created (above, center). The new logo had gone into
production and was already being placed on the first 1990 model year NSX, Legend and Integra
models coming off the assembly line. Not so fast. Putting anything other than the traditional
Honda “H” mark on a vehicle needed to pass muster with retired company founder Soichiro
Honda. After a careful examination, Mr. Honda accepted the idea of a new marquee, but he wanted
it to look more like part of the Honda family. So he added a horizontal bar to the original caliper
design of the Acura mark, to make it look more like the “H” mark on Honda vehicles. It also would
look more like the letter “A,” to represent Acura. Urgently re-minted, the new version (above,
right) has served as the Acura brand marquee ever since.
1980 – 1989 67
1980s Innovations
CX500 Turbo
Spree
Introduced in 1982, the world’s first turbocharged
production motorcycle.
Riding a wave of demand for Honda scooters, the 1984 Spree
scooter became the best-selling scooter of all time.
1
№
Prelude was the
first production car
to feature 4-wheel
steering
ATC250R
Four-Wheel Steering
In 1981, Honda’s first 2-stroke ATC transformed a utilitarian vehicle
into a high-performance machine.
The debut of the 1987 Honda Prelude in October 1986 heralded
the arrival of the world’s first 4-wheel steering (4WS) system.
By steering both the front and rear wheels, Honda 4WS provided
both improved high-speed handling response and low-speed
maneuvering capabilities.
Acura Legend
In 1986, the first luxury automobile from a Japanese automaker,
the 151-horsepower, 2.5-liter V6-powered Acura Legend Sedan,
took on long-established European and American luxury brands
such as BMW, Mercedes, Lincoln and Cadillac. In 1987, Acura added
the Legend Coupe (left) with a shorter wheelbase, a trailing arm
rear suspension (in place of the sedan's rear struts), and a more
powerful 161-horsepower, 2.7-liter V6 engine. The Legend Coupe
also debuted American Honda’s first driver’s airbag. In 1990,
the Legend Coupe came equipped with the industry's first-ever
upwardly deploying front passenger side airbag.
“God, this car is
68 fif t y y ea r s
of
good.”
Car and Driver, 1987
GL1100 Interstate, Gold Wing Aspencade, and GL1500
One of the“ 10
greatest bikes
of all time.”
“Green Paint”
Honda was the first automaker in America to use low-emission
waterborne basecoat in its automobile plant paint booths.
The East Liberty, Ohio, plant was Honda’s first manufacturing
facility to implement the new technology in 1989. Every one of
Honda’s U.S. auto plants now uses waterborne paint processes.
Interceptor, Shadow 750, and V65 Magna
1983 was a banner year for new Honda motorcycle technology:
the Interceptor (pictured), with its perfectly balanced V-4 engine,
was a giant leap for performance and technology in a production
motorcycle. The Shadow 750, Honda’s first “traditional” V-Twin
custom motorcycle, combined modern features such as liquid
cooling and a shaft drive with a classic look and style. The
V65 Magna brought a unique blend of quality, refinement and
performance to the U.S. custom-bike market.
Cycle World, 1988
“...it redefines what
handling should be for
a sports coupe.”
Road and Track, 1983
CBR600
Honda Prelude
With the introduction of the CBR600 Hurricane in 1987, Honda
began an 11-year domination of the 600 Supersport class, with five
championships and dozens of enthusiast-press best-bike awards.
The second-generation 1983 Prelude featured the industry’s first
pop-up headlights, a design heavily influenced by American Honda.
Road and Track magazine concluded: “. . . it redefines what handling
should be for a sports coupe.”
5
consecutive
AMA Superbike
Championships
1980s Innovations
Gold Wing innovation: the GL1100 Interstate was the first production
bike to come standard with touring accessories, including a trunk,
saddlebags, and front fairing. The 1982 Aspencade (pictured)
added standard fuel injection, an auto-leveling rear suspension,
an intercom system, cruise control, and a Dolby stereo system.
The 1989 GL1500 with its flat-6 engine, reverse gear, and full body
cladding was so far ahead of the game that competitors, including
the Suzuki Cavalcade and Yamaha Venture, soon exited the market.
1980 – 1989 69
2
70 fif t y y ea r s
of
E
stablishing deep roots was a
guiding theme for the growth
of Honda in the 1990s. The size
of the tree was important, but
deep roots would ensure that
Honda’s expansive growth was
anchored safely in American soil.
< Acura NSX
1990 – 1999 71
from challenge comes opportunity
Economy
Service sector jobs
begin to outnumber
manufacturing jobs
North American Free Trade
Agreement (NAFTA) unites U.S.,
Mexico, and Canada in commerce
Booming stock market described
as “irrational exuberance” by
Fed Chairman Alan Greenspan
Politics
President Clinton attempts
Middle East peace negotiation, but
legacy threatened by impeachment
Iraqi invasion of Kuwait
triggers the first
Persian Gulf War
Yugoslavia dissolves as four new
countries declare independence,
leading to war and U.S. involvement
C u lt u re
Dot.com! World Wide Web and
HTML are created; mobile phones
become must-have technology
Titanic becomes the
highest grossing film
of all time
M
oving into a new headquarters in
Torrance, California, American Honda faced a
recession triggered by the Persian Gulf War and the
bursting of Japan’s “bubble economy.” This ended the
company’s string of eight straight years of auto sales
growth. It was new territory for Honda. But the company
chose to maintain production in North America despite
declining sales. Cars that formerly sailed off showroom
floors were now stored as excess inventory.
Despite these challenges, Honda continued
to invest in the future of the company and the
community. In 1993, the Eagle Rock School and
Hip-hop goes mainstream;
Nirvana leads the popular
grunge rock movement
Tiger Woods begins to
rewrite golfing records with
1997 Masters victory
Acura NSX
Power
Equipment
Division
moves
headquarters
to Duluth,
Georgia
90
72 fif t y y ea r s
of
Professional Development Center opened in Estes Park,
Colorado, demonstrating Honda’s commitment to
youth and education.
In a further effort to become part of the fabric
of the community, American Honda entered openwheel racing when it became an engine supplier to
the Championship Auto Racing Teams (CART) series.
Embarrassed by its failure to qualify for the 1994
Indy 500 in the first year, cars powered by Honda
engines would go on to dominate the CART series.
In 1993, a scandal surfaced, a bribery scheme in
which rogue Honda sales executives were alleged to
S P O R TS
New York Yankees win four
World Series titles; Dallas Cowboys
win three Super Bowls
Michael Jordan leads
Chicago Bulls to six NBA titles;
becomes global sports icon
The power of Honda’s challenging spirit was on full display in the 1990s. The
company continued to invest in the future, even in a period of significant challenge
and substantial change. With increased responsibility for decisionmaking anchored
in America, Honda accelerated the growth of R&D and manufacturing, entered the
light truck market, and increased its corporate citizenship activities.
Honda
introduces
world’s first
vertically
deploying
front
passenger
airbag
VTEC engine
technology
introduced
Honda R&D
Americas,
Inc., opens
Honda
Proving Center
California in
Mojave Desert
American
Honda moves
headquarters
to Torrance,
California
VF750R/RC30
motorcycle
(above)
BF35/45
marine
outboard
engines
Honda
commits to
driver and
front
passenger
airbags in all
automobiles
by 1994
Accord
Wagon,
first Honda
automobile
designed,
developed,
and built in
the U.S.
Construction
begins on first
Honda
Service
Center by
local dealer
in Madison,
Wisconsin
Honda del Sol
(above)
91
92
Acura Vigor
Sports Sedan
Honda
International
Trading
becomes
Honda
Trading
America
Corp.
Honda R&D
Americas
expands
Honda
Ohio Center
Performance
and opens
Development
North
established to
Carolina
support U.S.
Center for
open-wheel
power
auto racing
equipment
programs
CBR900RR
motorcycle
93
have extracted payments from dealers in exchange for
vehicle allocations and dealership points. Although
there was no impact on customers, the scandal
undermined Honda’s relationship with dealers,
shaking the foundation of the company and leading
to the departure of numerous executives. Ultimately,
the crisis was handled in a manner that strengthened
American Honda’s commitment to business ethics and
forged new, trusting relationships with dealers.
The need to rebuild the auto sales organization also
created an opportunity. After almost two decades of
customers coming to the Honda brand, American Honda
needed to adopt more aggressive marketing strategies.
A
ccord’s three-year reign as the best-selling
car in America ended in 1992, due to the recession
and to competitors’ heavy use of fleet sales. Acura jumpstarted the decade with the exciting NSX super sports
car. Challenged by competition from Lexus, Infiniti, and
European brands, Acura sales peaked at 142,000 units
in 1991, and would not reach that level again for a decade.
American
Honda
Education
Corp. opens
Eagle Rock
School
Honda
begins
aviation
research
in U.S.
Honda’s first “Automobile
minivan, 1995 Strategy for
Odyssey
the Americas”
(above)
to expand
production
Acura TL
and R&D
Honda enters (replaces
Harmony
IndyCar open- Vigor)
lawn mower
wheel racing
series (later
CART)
Parts
distribution
center opens
in Knoxville,
Tennessee
94
First
V6-powered
Honda
automobile,
1995 Accord
Honda Riders
Club of
America
holds first
“Honda Hoot”
rally
Acura SLX
95
With a new sales team, American Honda began a
leasing program, a regional marketing campaign, and
other strategies that boosted sales while protecting
product resale values. Starting in 1994, American
Honda enjoyed 14 straight years of sales increases —
exceeding a million units for the first time in 1998,
with annual Accord sales of more than 400,000 units.
In 1995, the Civic became the first gasolinepowered car to meet California’s Low-Emissions Vehicle
(LEV) standard. In the ensuing years, Honda met even
more stringent and demanding standards — all ahead
of government requirements. In 1999, the Insight
became America’s first gas-electric hybrid car, adding
to the Honda brand’s leading environmental image.
Motorcycle sales struggled in the 1990s, before
closing the decade on a positive trend. The launch
of the Gold Wing-based GL1500 Valkyrie custom
bike, a new ATV plant in South Carolina, and the
VFR800 Interceptor (Motorcyclist magazine’s 1998
“Motorcycle of the Year”), helped boost sales in 1999
to the highest level in 12 years.
Honda
captures top
IndyCar
World Series
awards:
Manufacturer,
Rookie, and
Driver
96
Acura RL
(above)
replaces
Legend
First U.S.designed,
developed,
and
manufactured
Acura, 1997
CL Coupe
Production of Second
“Strategy for
automatic
transmissions the Americas”
further
begin at
expands
new plant
production
in Ohio
and R&D
1996 Civic is
first vehicle
certified as
LEV (LowEmission
Vehicle)
CR-V, Honda’s
first crossover
vehicle
(above)
First gasoline
vehicle to
meet ULEV
standard, the
1998 Accord
97
W
ith the expansion of Honda R&D America’s
product development center in Ohio, more
U.S.-developed models began coming to market,
including the 1991 Accord Wagon, the 1993 Civic
Coupe, the 1996 Acura CL, and the 1998 Accord Coupe.
In 1995, the dollar hit an all-time low of 79 yen.
Honda responded with two “Strategy for the Americas”
plans in 1994 and 1996 that would move Honda to
the next phase of its growth in North America. The
strategy included new auto plants in Canada and
Mexico, V6 engine production in Ohio, a major increase
in local parts sourcing, and the doubling of new model
development capacity.
As sales of light trucks moved toward 50 percent
of the overall market, Honda was a latecomer, entering
the segment in the middle of the decade with the
first-generation Odyssey minivan and the CR-V. But
it was the launch of the 1999 Odyssey, the largest
vehicle in company history, that served as the
platform for a series of light trucks that would debut
in the coming years.
Acura
introduces
first in-dash
satellitelinked
navigation
system
Sales of
LEV Civic
expanded to
all 50 states
EV Plus
electric
vehicle
(above)
GC series
engines, Mini
4-stroke, and
HRS216 lawn
mower
CR250R and
Valkyrie
motorcycles
Outboard
motors meet
2006 EPA
emissions
standards
eight years
ahead of
regulation
98
Civic GX
natural gas
vehicle
ATV plant
begins
production in
Timmonsville,
South
Carolina
EU1000i
generator,
first in class
with inverter
technology
S2000
Roadster
First SULEV
vehicle sold
in California,
2000 Accord
99
America’s
first hybrid
car, the
2000 Insight
Power
Equipment
Division
moves
headquarters
to Alpharetta,
Georgia
1990 – 1999 73
a conversation with
Koichi Amemiya
Reflections
“
American Honda
started in California,
but over 50 years
working with our parts
centers and zone
offices and with
manufacturing, we
learned and involved
many different
cultures in the U.S.
This is America!”
Koichi Amemiya, the eighth top executive of American Honda Motor Co.,
Inc., served as president & CEO from 1989 to 2003. The longest-serving
CEO in the company’s history, Amemiya also served as the COO of
the North American Region from 1994 to 2003, and was president of
Honda North America from 1990 to 2006.
The early ’90s were marked by recession,
related to the bubble economy bursting in Japan,
the first Persian Gulf War, and the record
high yen. How did these challenges influence
your decision making and your strategies?
What was important in the 1990s was to achieve
what Honda had committed to in the 1980s — to put
into action what we had committed to do. We finally
started to see production in Ohio in full swing, and
strengthened R&D and we’re thinking all is going well
and everything is in place when suddenly this shock
came. There were several aspects to it because we had
to think about short-term challenges related to the
inventory situation, with something like 220,000- to
240,000 units of inventory. We thought the company
might collapse if this continued. Yoshino-san [Hiroyuki
Yoshino, then president of Honda of America Mfg., Inc.]
would call every day saying that it would be difficult to
74 fif t y y ea r s
of
stop production. He said that we needed to find a place
to keep the cars as they came off the line. This sounds
stupid now, but since we were starting to transport
cars via rail from Ohio, we were thinking of using space
at the railhead at the destination stations to store
the cars. Just put them on the train, get them to the
destination and keep them there. The other option
was to rent storage space from Chrysler. They did have
space, and we rented space from them and kept cars
there. Then Automotive News scooped this — they
took a photograph — and published it, saying there
are Honda cars in a storage space!
To resolve this challenge, we also needed to
provide dealers with support. American Honda had been
working to sell cars, but what we had been doing was
not what we could describe as a push, but more of a
pull. Because of the buildup of inventory, we had to push
sales. We introduced leasing programs and incentives
to dealers. Up to that time, we had done little to none of
this. We still had to implement what we had committed
ourselves to do — to develop and produce products
close to the market. This was going to be unchanged.
So, for the long term, we had to commit ourselves to
what we had promised. But for the short term, we tried
to use sales incentives and dealer support.
Accord gradually became an American car.
Talk about the role AHM played in changing
this product to meet the needs of the American
customers who loved it.
What American people preferred naturally was
understood by HRA [Honda R&D Americas, Inc.], and
obviously by American Honda who sold the product,
and the people in Ohio who built the product. We had
the lead-country system in our product development
at that time, where the lead country among the regions
around the world became responsible for working
together with R&D to develop a product. For Accord,
America, including Canada, was overwhelmingly the
lead country. When we had an evaluation meeting for
the Accord model which later became the best-seller,
Mr. [Tadashi] Kume [then Honda Motor president] came
then. At the courtyard of HRA, where the meeting was
held, Mr. Kume was looking at the car for a long time
with his arms crossed over his chest, without saying a
single word. Finally, he said, “I am worried about this
car. I am worried. I am worried.”
Back then, Kume-san’s words carried a lot of
weight, but I said, “No, everything is going to be
perfectly fine. I am absolutely confident.” It was not
just me, but Americans at HRA, Japanese engineers
at HRA, people in Ohio, and Tom Elliott, who was
responsible for product planning back then, who
felt the same way. From Japan’s point of view, this
car worried people. But from Americans’ point of view,
we were absolutely sure that this would be a car
American people would love. In short, it was a product
developed based on the voice of the genba [at the
spot]. After all, it worked out. With this product,
Accord became No. 1, and our automobile business
in the U.S. experienced major growth.
You have said that from bad, sometimes
good things can happen. Was this true for
the bribery scandal with dealers?
For myself as an individual and for American Honda,
this bribery scandal was really a sad thing that happened.
It was attributed to just a few people at American Honda
and a few dealers. It was something that should never
have occurred, but something that did occur.
But it can also be said that it was a learning
experience. We had clearly communicated Honda
philosophy, including to those working with our
dealers. But somehow they misunderstood our
philosophy. Those responsible left the company, and
it was the right judgment that we had them leave.
But at the same time, when they were gone, we lost
something. We lost trust and credibility for Honda.
This scandal was an opportunity for us as well.
We had to think about the negatives, and we had to
ensure that this kind of behavior never happened again.
We had to work on educating our people. We thought
all of the people at American Honda understood the
philosophy. We knew that we had to train our people,
and the people in Human Resources focused more on
teaching our people to understand the basics of Honda.
That is one thing that resulted from the scandal.
But we still had this mentality of being a
distributor. I think the fact that people were just
thinking of themselves as a distributor instead of
a sales and marketing company could have contributed
to a problem like the scandal. So, we had to think of
ourselves as a sales and marketing company that was
selling products and services to customers. Taking this
scandal as a lesson, we recognized again how we must
work while focusing more on our customers. Good
things emerged.
We were fortunate to have new people like
Dick Colliver come to us, people who had different
experience and were from different walks of life.
They helped us, but we wanted them to become fullfledged Honda associates, so we educated them as
well. Thanks to these people, we were able to convert
ourselves from just a distributor mindset to a sales and
marketing company. Dick played a pivotal role amongst
all of these people.
Honda made a major commitment to
environmental technologies in the 1990s.
Why was Honda so proactive in these areas,
beyond just meeting regulations?
One reason was that Honda engineers had always
been developing advanced technologies. That was
the basis. The second reason was American Honda
was established in 1959 and introduced Super Cub,
customers bought our motorcycle products, and then
we introduced Civic and Accord. In this process, the
corporate image of Honda was established in the U.S.
and gained the approval of the American people. This
was the accumulation of Honda products and Honda’s
business activities meeting the needs of customers
and society.
In my opinion, it is still true today. Issues such
as emissions and gas mileage. Everybody talks about
“eco” today, with a concern for global warming, but the
major changes that society requires always come from
1990 – 1999 75
a conversation with koichi amemiya
the general public. As the saying goes, revolutions
don’t start with the bourgeoisie class. If rich people
want clean air, they can pay money and go places
where they can enjoy clean air. But the general public
cannot do such a thing. Therefore, the general public
has always been the basic force when society seeks
a change. Honda always valued the needs of society.
Honda engineers have always been understanding that
and developing the technologies to address that. Then
we deliver such technologies to customers in products
and gain acceptance. This is the history of Honda. So,
merely meeting the regulations is not enough. What
Honda always thinks about — and the basic value
and target of Honda engineers — is to fulfill needs of
the society in a timely manner and to deliver what is
beyond the expectation of society. The basis of Honda’s
brand image is that we deliver such technologies to the
market in the form of products.
I always thought, and it is still true, but Honda is
a manufacturing company. Basically, American Honda
is also a part of a manufacturer. All Honda associates,
no matter whether they are in the U.S. or Japan,
understand very well that technology is the basis of
Honda. The Three Joys is stated in our Fundamental
Beliefs, along with Respect for Individual. But we are
a company which experiences joy when we feel the joy
of people and the joy of society. For that, maybe I have
sometimes said it with sarcasm, but I had no hesitation
to invest if R&D is developing technologies for things the
society will want in the future.
How long had AHM been thinking about
open-wheel racing in the U.S. before entering in 1994?
What were your goals for participation?
Putting aside American Honda, I came to the U.S.
for the first time in 1984, under Munekuni-san [then
American Honda President Yoshihide Munekuni], for
76 fif t y y ea r s
of
auto business. One thing that surprised me at that
time was that the corporate image survey findings
of the time showed that we ranked low in terms of
motorsports and a sporty image, compared to Toyota
and Nissan. I asked myself why that had been. Before
I came to work in the U.S., I had returned to Japan
from England, where I had experienced the TT race on
the Isle of Man, MotoGP, and Formula One racing. So,
I wondered why Honda did not have a sporty image in
the U.S. This was one thing that really surprised me.
That was the starting point for me. But my
thinking was how to get Honda recognized in U.S.
society, which leads to corporate citizenship. To
acquire corporate citizenship, we need to do all kinds
of things: manufacturing, product development, etc.
In 1992, Kawamoto-san [then Honda Motor President
Nobuhiko Kawamoto] decided we would withdraw
from F1 racing. This was the second time for Honda to
do so. Prior to that, I had been discussing with Tom
Elliott and others about how to build up our image as
a motorsports company and sporty image. F1 racing
isn’t so recognized in the U.S., so it didn’t have so much
value in terms of building up our image. The timing was
bad after just announcing that we were withdrawing
from F1, so I consulted with Kawamoto-san and I
acknowledged that it was bad timing, but explained
that in the U.S. to build a motorsports image, we
wanted to participate in Indy racing. Kawamoto-san
responded that American Honda would have to take
all responsibility, without full support from R&D in
Japan. So, I said I understand. I accept responsibility.
And I decided to establish HPD [Honda Performance
Development]. There was no other option. So we had
to establish HPD. This was an opportunity to be
recognized in society as a good corporate citizen and
establish the Honda brand as a motorsports company.
Why did you stick with racing after the
relationship with CART [Championship
Auto Racing Teams] fell apart?
I had some regret at that time. When we started,
we wanted to enter into Indy as one of the means to
be accepted into the American community or society.
However, when Toyota came in, what we did was not
to enjoy being a member of the society, but we went
to the point where we dominated the race, because
we always care about winning and losing in racing. As
a result, Chevrolet withdrew, Ford withdrew, then by
the time we noticed, there was only Toyota and us.
Then Toyota had the problem. There were many people
who said we should quit. I like racing and I don’t like
losing, so we raced for winning or losing. As a result,
Mr. Kawamoto said to me, “Ame-san, you went too far.
This is a result of you going too far.”
In 1989, when Mr. Soichiro Honda came to the U.S.
to be inducted into the Automotive Hall of Fame, Tom
Elliott and I were invited. Tom asked Mr. Honda why did
we race F1, why not Indy? Soichiro-san said, “I don’t
know if you guys know, but I have seen Indy 500 twice.
I thought it is a great race. But what I thought was we
would not be welcomed if we get involved in racing
in the U.S., because it is a game American people are
enjoying together. For us, racing is to establish our
technology and to prove our technological superiority.
Therefore, we will win and make competitors approve
us. At that time, Honda was still in the process of
establishing our technologies. In Europe, when we
can establish overwhelming technological superiority,
they approve Honda. That is a society which respects
technologies. Indy is different. We were not yet a part
of American society back then. If we raced back then,
we would have been told to get out.” When I was told
by Mr. Kawamoto that I went too far, I remember this
comment of Mr. Honda and regrettably thought that
when we started, our goal was to become a good
corporate citizen, and we recognized it as important
entertainment in the U.S. But we went after win/
lose results. So, we should go back to the basics and
continue to race even if we become a one-make race.
This is what was behind my decision to stay in racing.
You talked about how you valued people
who would challenge for what they believed in.
How important is this to Honda culture?
We were very keen to become a good corporate
citizen in the United States. We wanted to blend in.
Sometimes we wanted to blend in so much that we
went too far, trying to become too American. People
like Tom [Elliott], Chet [Hale] and Cliff [Schmillen]
have this great enthusiasm for Honda. Sometimes it
is greater than ours. Chino-san [Tetsuo Chino] made a
number of projects [starting] from 1984 and the 25th
anniversary. And one part of that is that we said we
should try to become more like an American company.
I remember these guys said that if Honda was to
become more like an American company, they wouldn’t
want to work here anymore. These people were the
true assets of Honda. They really kept us in check.
During the 1990s, you expanded the
company into new areas in the South and
Southeast. What was your strategy?
We started our business in California and we had to
learn about the U.S. The West Coast is not everything,
and sometimes we made a mistake to think that
California is America. I learned this when I was working
in the power equipment area before coming to the U.S.
I proposed to build the North Carolina lawn mower
factory [opened in 1984]. And Kawashima-san
[then Honda Motor President Kiyoshi Kawashima] said,
“Why do you say North Carolina?” I told him that the
majority of the market is there. He said, “That’s right,
but you could build an engine factory in one state and
then build a different factory for each product in all
48 [continental] states. How many different types of
lawns do they have? Maybe five or six — maybe you
need assembly operations in other states.” My gosh,
what a big thinker. I thought, That is why sangen shugi
[going to the spot] is so important.
Then, I learned about Ohio and Midwestern
people. If we did not establish our Ohio operations,
we would be missing something big in the U.S. But we
were missing a big area in the South. The entire power
equipment market is in the Southeast, so I asked them
to move the entire sales division to Atlanta. Then,
we established a plant in South Carolina. But after
expanding our auto production operations in Ohio,
I thought we needed Southern culture, so we built
the plant in Alabama, where we could again learn a
different culture and where there is more diversity.
Basically, I did a copy of what Honda did in Japan.
If you look at Toyota, everything is in the area of
Nagoya. But Honda started factories in Hamamatsu,
then Suzuka, Saitama, Kumamoto and so on.
Fujisawa-san [Takeo Fujisawa, Honda Motor co-founder]
thought we should use different cultures, and then
we could gain the strength of working together. I tried
to apply that same strategy in the U.S.
American Honda started in California, but over
50 years working with our parts centers and zone offices
and with manufacturing, we learned and involved many
different cultures in the U.S. This is America!
What is your dream for
American Honda’s future?
company, I want the people working for Honda to
feel proud to be working for Honda. I want dealers
to be proud to be working with Honda. And I want
customers proud to own our products. So all of these
people in association with Honda will be saying in their
community that they are proud to be with Honda. This
is consistent with wanting to be a company that society
wants to exist. When they go back to their home, I want
everyone to proud to be with Honda. This is not just a
dream, but something that I want to see happen. This
is precisely what is meant by the Three Joys.
I think the U.S. is one of the few countries that
is still in the making. Different people from different
parts of the world are still going to the U.S., and
they have very fair conditions to receive people from
Asia and Europe. We are corporate immigrants. We
have migrated to the U.S., but we have our corporate
headquarters in Japan. To think that we can be
recognized as a good corporate citizen in America
in just 50 years is a mistake. We are still struggling.
We need to work together to create a corporate
identity for Honda. Fifty years is not long enough to
do that. We have done quite well with where we
started. But there will be many more challenges.
American Honda is facing the biggest challenge
in its history. But precisely because American Honda
is facing hard times, this is the time to consider the
future. Some people might think it is a ridiculous
time to think about a vision. But I don’t think so.
In that respect, this 50th anniversary is coming at
a very good time.
1990 – 1999 77
I don’t know if this will happen in 10, 20 or 30 years,
but forgetting whether it is an American or Japanese
1990 – 1999 7 7
new campus finally completed
Home Sweet (New) Home . . . in Torrance
Honda started the decade by completing its move onto the new Torrance campus.
The company was finally reunited in one location after more than a decade.
Right:
An overhead view
of Honda’s Torrance,
California campus.
Left:
Honda Motor Co., Ltd.,
founder Soichiro Honda
surprised everyone by
hoisting a fragile gift from
American Honda associates
over his head at the grand
opening ceremony for the
new Torrance headquarters.
(Left to right) Hiroshi
Kobayashi, then head of the
Export Sales Division,
longtime American Honda
associate Take Hotema, and
Kurt Antonius, then manager
of Public Relations. Antonius
said he feared Mr. Honda
was going to step off the
front of the stage.
C
onstruction of the new
Torrance campus began in 1984,
and was expected to be completed by
1987. But the project was delayed by
more than three years, in part because
of the calamitous impact of the rise of
the yen against the dollar from 1985 to
1987. In addition to the delay, design
modifications were made: A pond and
visitor’s center originally planned were
not part of the final design.
“I thought it was a huge place and
we can make the headquarters as a
campus,” recalled Tetsuo Chino, then
president of American Honda Motor Co.,
Inc., who picked the site and wanted to
create a college campus-like atmosphere.
78 fif t y y ea r s
of
“I selected the trees from various
places. The jacaranda was a very nice
tree I found in Los Angeles.” In later
years, a newly engineered “pink cloud”
cherry tree was planted in a project
led by then Executive Vice President
Atsuyoshi Hyogo.
Associates were thrilled to
occupy the new buildings after years of
patchwork changes at the old Gardena
headquarters. Construction was
completed in two phases. Phase 1 began
in 1984 and included the Torrance Parts
Center, Building 300, the original Honda
R&D Americas center, and the Recreation
Center. When parts center associates
moved into the new facility in April 1985,
it was the first time they had all been in
one location in more than five years.
Twenty-five more acres were added
to the original 76-acre site in 1985.
They were used for much of Phase 2,
which included the new Building 100
headquarters, Building 500 for Service/
Technical, and Building 110 for ISD.
Phase 2 was completed in the fall of 1990.
Initially, only four floors of the five-story
headquarters building were occupied.
Plans for the campus involved
extensive participation from associates.
A Work Environment Advisory Group
helped design the office layouts and
assess equipment needs. A recreation
team determined recreational needs.
Phase 2 of the project was delayed
several years due to the exchange rate
issues. “Then we discovered some issues
related to the property, but it was too
late to turn back. So we just completed
the project,” said Tony Piazza, now vice
president of Administration, one of the
leaders of the project.
Harmony with local surroundings
was key to the overall design. “There
are no fences around most of the facility,”
said Piazza. “We use trees and landscaping
as a buffer.” And no reflective glass is used
on the campus. “Mr. Honda feared that
birds would see themselves and fly into
the glass, so we use nonreflective glass
in all buildings,” said Piazza.
leading the industry in a positive direction
“A Gift to the World” – A New Race for Clean Air
Facing a difficult economy, Honda’s decision to depart Formula One auto racing in 1991 to focus on meeting
new clean air standards once again signaled that the company’s engineers had entered a new kind of race.
S
uccessfully completing the
1991 Formula One racing season,
Honda had earned its sixth consecutive
Constructor’s Championship and the
Driver’s Championship. Yet, in the face
of challenging business conditions,
then president & CEO of Honda Motor
Co., Ltd., Nobuhiko Kawamoto, said
the company would leave the F1 circuit
after the 1992 season to devote its racing
spirit to a new challenge: ensuring
cleaner air for future generations.
“Our management recognized
air quality as a serious societal issue,”
recalled Ben Knight, vice president of
Honda R&D Americas, Inc. “The
interesting thing about Honda is
that we don’t see a disconnect or a
wall between customer concerns
and social issues. If we can create
new value for society, we will enrich
the lives of our customers. This is a
fundamental Honda viewpoint and
the driving force behind what we
achieved in reducing automobile
exhaust emissions.”
Honda set its sights on
meeting the recently enacted
California Air Resources Board
(CARB) Low-Emissions Vehicle
(LEV) and Zero-Emissions Vehicle
(ZEV) regulations. The company
viewed the new emission standards
as a good challenge. Honda immediately
intensified its research into basic
principles of engine combustion and
emissions control. The project involved
both American and Japanese Honda
engineers from many disciplines, such
as materials, chemical, and computer
engineering. Together, they focused on
developing practical new methods of
reducing automobile exhaust emissions.
The introduction of the 1996 Civic
made Honda the first automaker to meet
CARB’s LEV standard. It was an
important achievement, but what came
next represented an even more significant
and far-reaching commitment from
Honda: introducing the technology
beyond the scope of the regulations. At a
World Bank meeting, several automakers
asserted that no auto company would
ever go beyond government regulations,
and several studies in Europe suggested
that California’s proposed ULEV
(Ultra-Low Emissions Vehicle) exhaust
standards could not be achieved before
2015. But by 1997, despite the lack of
low-sulfur gasoline in all markets, every
Accord and Civic sold in all 50 states met
the LEV standard, even though this was
not a requirement.
During the next four years, Honda
led the industry with the first retail sales
of an Ultra-Low Emissions Vehicle, the
1998 Accord; the first 50-state ULEV
vehicle, the 2001 Civic; and the first
Super Ultra-Low Emissions Vehicle,
the 2000 Accord.
“Of course, we are proud to have
been the first with many of these
technologies,” said Knight. “But Honda’s
strategy for reducing exhaust emissions
was something of a gift to the world.
We provided the automotive industry,
both manufacturers and suppliers, with
a practical and economical pathway for
reducing automobile exhaust emissions
on a broad scale that no one thought
was possible.”
Far left: A Honda print
advertisement announcing
the voluntary application
of Low-Emission Vehicle
technology nationwide.
In 2000, Honda joined
forces with several leading
environmental organizations
to study and advance ultraclean vehicles in a program
housed at the College of
Engineering-Center for
Environmental Research
and Technology (CE-CERT),
University of California,
Riverside. Ben Knight, now
vice president of Honda
R&D Americas, helped make
the announcement.
1990 – 1999 79
new investments in face of economic challenges
Regional Strategies Lead to Growth in America
American Honda
faced rising auto
inventories for the first
time because of the
economic recession in
the early 1990s, brought
on by the bursting of the
bubble economy in Japan
and the First Persian
Gulf War.
In the 1990s, Honda accelerated its investment in production and research and
development activities in North America to create greater exchange rate toughness.
• expanding U.S. automatic transmission
F
• doubling the employment and capacity
rom its earliest days, Honda
followed an evolutionary path
in America. It first established
local sales operations, then production
options, then research and development
capabilities.
But Honda’s global growth,
combined with challenging economic
conditions, led to a new business
strategy with far-reaching implications
for Honda in North America.
Honda continued to expand
globally, and the needs of each market
continued to grow and diversify. But the
economic recession of the early 1990s
and appreciation of the Japanese yen
(to a record 79 yen to the dollar in
1995), created a situation that required
more investment and decision making
autonomy in each region.
The new global strategy crystallized
in the June 1994 establishment of a
four-region organization, based in the
Americas, Europe, Asia/Oceania, and
Japan. Ultimately, six regions were
established: The Americas were split into
North and South American operations
and China was added as a region.
Based on this global Honda
strategy, the company adopted an
“Automobile Strategy for the Americas”
in 1994, and then a revised Strategy for
the Americas in 1996, which greatly
expanded Honda’s sales, production,
and R&D operations in North America.
“Honda in North America will
expand its capabilities to become
a self-reliant, globally integrated
company, dedicated to adding value to
our products and society,” said Koichi
Amemiya, then president & CEO of
American Honda Motor Co.,
Inc., who later added the title
of chief operating officer of
the new regional operation.
Key elements of
Honda’s two Strategy for the
Americas plans were aimed
at insulating Honda from
the impact of exchange
rates and led to production
and sales growth for years
to come:
production, including the establishment
of a separate company
for new-model development at
Honda’s U.S. R&D operations and
increasing efforts with suppliers on
local parts sourcing
• increasing the local parts content of
cars and light trucks manufactured in
North America to at least 90 percent
• expanding U.S.
and Canadian auto
production* from
610,000 to 840,000
units, including a second
plant in Canada to make light trucks
• beginning auto assembly in Mexico
• expanding engine production in
Ohio from 500,000 to 900,000
units, including V6 engines and
advanced Ultra-Low Emission
Vehicle (ULEV) Engines
• increasing exports from the United
States to Latin American nations,
with the American Honda Export
Sales Division helping to expand those
markets; and beginning to export
component parts to other regions,
in addition to finished vehicles
80 fif t y y ea r s
of
new directions
Honda Goes Indy — Entering Open-Wheel Racing in the U.S.
Honda Creates Rider Education Centers
Then American Honda Senior Vice President Tom Elliott
announces Honda’s plan to start a U.S. open-wheel racing
program in January 1993.
Honda and local officials celebrate the opening of the Rider Education Center in Alpharetta, Georgia.
Left to right: former American Honda associate Pete terHorst, Kit Carson of the Motorcycle Safety Foundation,
Alpharetta Mayor Chuck Martin, then President & CEO Koichi Amemiya and then Vice President John Petas.
T
o deepen Honda’s U.S. roots and to
strengthen its sporting image with
American consumers, the company decided
to rev up its U.S. racing activities. American
Honda Senior Vice President Tom Elliott
announced in January 1993, at the North
American International Auto Show, in
Detroit, the company’s plans to enter the
highly competitive Championship Auto
Racing Teams (CART) open-wheel racing
series as an engine manufacturer for the
1994 season.
“It was a very well-kept secret,” said
Kurt Antonius, then senior manager and now
assistant vice president of public relations.
“Tom hosted that press conference, and the
media knew him as head of our marketing
efforts. So to unveil a CART car with the
intention to enter the most competitive
open-wheel racing series in the U.S. just sent
shock waves through the automotive and
motorsports press corps. The fact
that Honda, a global racing superpower,
was starting a U.S.-based open-wheel
racing effort — not a Japan program, but
a U.S. effort — was huge news.”
Elliott would become the first president
of Honda Performance Development, the
American Honda subsidiary responsible
for maintaining and building the engines
that powered Honda’s CART race cars. He
recalled Honda’s humble beginnings. “I think
a lot of people expected Honda would be
very successful right at the start,” he said.
“But we had a lot of engine problems. For
Honda, it was a way of learning about this
particular series. There were a lot of failures
in 1994 [the team’s first year]. Those failures
led to a new engine in 1995, which became
the forerunner of all of the success we had
in the CART series.” Honda earned its first
CART FedEx Championship in 1996.
I
n the late 1980s and early ’90s, Honda made
a commitment to motorcycle and ATV safety
with the construction of four Rider Education
Centers — in four regions of the country.
“Honda always considered safety in
combination with our motorcycle business,”
said Koichi Amemiya, president & CEO of
American Honda when three of the centers
were established. “Once you try to increase the
competitiveness of your products, it is bound
to lead to concerns about safety. This led us to
focus even more on safety education. This has
always been the thinking at Honda.”
In addition to addressing safety concerns,
building the centers sent a message to dealers
that safety was important to the future of the
motorcycle industry. “There were already places
in the community that offered motorcycle safety
training,” said Amemiya. “We wanted to take
up this very challenging issue independently,
because unless we did it by ourselves we
couldn’t sincerely communicate the importance
of safety to our motorcycle dealers.”
The first center opened in Colton,
California, in 1988, followed by one in Irving,
Texas, in 1989, and the Alpharetta, Georgia, and
Troy, Ohio, centers in 1990. Each center provides
motorcycles and safety equipment, and includes
paved training roads, an off-road range with a
hill for ATV rider training and classrooms with
instructional support equipment.
From the beginning, courses were offered
for beginner, intermediate and advanced riders.
The instructors were certified and licensed by
the Motorcycle Safety Foundation (MSF) and ATV
Safety Institute (ASI). In 2008, in anticipation
of its 50th anniversary and to underscore the
need for proper rider training for all motorcycles
and ATV brands, operation of the Honda Rider
Education Centers was turned over to the MSF,
spreading Honda’s philosophy on proper usage
throughout the rider education community.
1990 – 1999 81
a new game: light trucks
Heartland Project Guides Honda’s Entry into New Market
The light truck segment was growing by leaps and bounds in the 1990s.
But Honda and Acura didn’t have a significant piece of the market.
To grow its automobile business, American Honda would require
new products and a new factory.
Honda’s first entry
into the light truck
segment, the 1999
Odyssey minivan.
and an all-new product, so if the
time to build a new factory — with the
product was a failure, it would mean
U.S. and Japan coming out of economic
recession. Balancing the need to address the failure of the entire factory,” said
Sekiguchi. “We looked at Honda’s brand
market needs with limited resources,
acceptance in middle America very
Honda announced plans in July 1994 to
carefully and studied the sales potential
construct a 120,000-unit second plant
for a minivan.” The conclusion was
in Alliston, Ontario, Canada. Honoring
somewhat negative from the standpoint
its Canadian location, the initiative was
of volume. “I think the actual sales
dubbed the Maple Project.
projection was only about 50,000 units
The simultaneous investment
a year, which is too small to support a
in a new product and a new factory
new factory and a new product,” said
increased the stakes for American
Sekiguchi. Ultimately, the initial sales
Honda. “If we could not enter that
target for the North American Odyssey
market, we thought our future growth
was set at 70,000 units.
potential would be limited, so we
decided to develop a true minivan,”
said Takashi Sekiguchi, then working
he investment in a new product
as a strategy planning group leader
and new factory placed additional
in the North American Sales Division
pressure on American Honda. “You
in Japan, and now executive vice
guys can achieve profitability from the
president of American Honda
first year of production, right?”
Motor Co., Inc. “But we were
said Yoshihide Munekuni, then
concerned about whether we
executive vice president of Honda
could gain acceptance for our
Motor Co., Ltd. “It seemed almost
light truck products in the
impossible,” said Sekiguchi,
American heartland. We also
who came to American Honda
were worried about entering
for the first time in 1996 in
Takashi Sekiguchi
the light truck market because it was
Product Planning.
dominated by the Big Three and might
The challenge also set in motion
create some competitive friction.”
plans to develop SUV models on the same
The concerns led to a market
unibody light truck platform. With the
research study named the “Heartland
engine room basically common to the V6
Project” led by former American Honda Accord, each subsequent light truck was
associate Matt Lewis as project leader,
able to achieve car-like ride comfort and
and Hitoshi Itsubo, both working in
driving stability. These vehicles would
Product Planning. “We were going to
not only meet the changing needs of
build a new factory, with new associates Honda and Acura customers, but ensure
T
E
ntering the light truck
market modestly, American
Honda offered two re-badged Isuzumade vehicles — the 1994 Passport
and the 1996 Acura SLX (Isuzu Rodeo
and Trooper, respectively). Honda’s
first homegrown light truck, the
first-generation Odyssey minivan,
was introduced in 1994. The Odyssey
delivered new value to the marketplace
with a car-like ride and a flat-folding
third-row “magic” seat. But the Odyssey
was too small to match either the
competition or the expectations of most
American minivan customers.
82 fif t y y ea r s
of
Driven by cheap fuel prices and the
lifestyles of the baby boom generation,
U.S. sales of minivans, sport-utility
vehicles, and pickup trucks grew at a
feverish pace throughout the 1990s.
American Honda was determined to
break into the light truck segment, but
it had some serious catching up to do.
As Honda R&D worked to develop a
full-size, V6-powered minivan to be built
on a new unibody light truck platform,
Honda also had to establish a place to
build it. There was no Honda plant in
the world with the ability to produce a
vehicle of this size. It also was a difficult
Expanding ATV Production in South Carolina
construction. “When we
kicked off the MDX prestudy
in 1996, the new Canada plant
only had a foundation,” said
Paluch, now vice president of
Honda R&D Americas, Inc.
“To know the size limitations
[for the product] we had to
work from the Maple Project
drawings.”
In the fall of 1998,
the first “North American”
Odyssey rolled off the
assembly line in Canada.
Retaining its “magic”
third-row seat, but with
Koichi
KoichiAmemiya,
Amemiya,then
thenpresident
president&&CEO
CEOofofAmerican
AmericanHonda,
Honda,speaks
speaks
sliding doors and larger
at
atthe
the1996
1996groundbreaking
groundbreakingofofthe
thesecond
secondauto
autoplant
plantininCanada.
Canada.
capacity, the new Odyssey
would be a resounding
full capacity utilization of the new plant
success. It was widely regarded as the
in Canada.
new benchmark for quality, interior
“The initial idea was to develop
packaging, and driving dynamics.
both the Honda model and Acura model
Honda had succeeded in creating
at the same time,” said Sekiguchi.
its first segment-leading product in
“But Dick Colliver [then executive vice
the light truck category. In the early
president of sales] suggested to Mr.
part of the following decade, the SUVs
Amemiya [then president of American
that were developed in part to ensure
Honda] that the Honda brand was so
the success of the factory would be a
strong that if we launched a similar
resounding success with Honda and
model for both Honda and Acura at
Acura customers and critics alike.
the same time, it would kill the Acura
“We were initially concerned
version.” So, Honda R&D changed its
about whether we could gain acceptance
plan and focused first on development
for our light truck products in the
of the Acura MDX.
American heartland,” said Sekiguchi.
Frank Paluch, who was assistant
“But the success of this effort became
large project leader for the MDX, recalls
a real trigger for a growth phase in
the challenge of trying to engineer a
American Honda.”
vehicle for a factory that was still under
American Honda ramped up sales of all-terrain vehicles (ATVs) in the late 1990s and early
2000s after Honda of South Carolina Mfg., Inc. (HSC), began producing them in Timmonsville
in 1998. Fueled by the new plant, American Honda Motorcycle Division sales more than
doubled from 1998 to 2003, when sales exceeded 500,000 units for the first time in 17 years.
1990 – 1999 83
of
“best
sports
car
ever
built”
The Odyssey’s third-row fold-flat magic seat was heralded
as a major innovation in minivan packaging in 1994, providing
a new level of people- and cargo-hauling flexibility. The second
generation 1999 model is pictured above.
Motor Trend
NSX
With titanium connecting rods and the world’s first all-aluminum
body, the Acura NSX was a game-changer. It married supercar
performance and styling to Acura quality, durability, and reliability.
Motor Trend called it “the best sports car ever built.”
The Acura NSX was introduced to the world February 9, 1989, in a
small ballroom at the Drake Hotel in Chicago. Honda Motor CEO
Tadashi Kume entered the room to look things over. Kurt Antonius,
now assistant vice president of American Honda Public Relations,
remembers: “Kume wanted to inspect the car, so he took off the
cover . . . and checked the paint quality, and looked at the fit and
finish of the vehicle.
8,000
RPM
1990s Innovations
84 fif t y y ea r s
Odyssey Interior
“Then he hopped inside and before we knew it, he started
the engine. Keep in mind, right next door there was a Ford
press conference going on. And we ran over to him. ‘Stop! Stop!
Please stop!’ And he’s going ‘Vrooom! Vrooom! Vroooom!’
These weren’t polite revs. He pegged the throttle. By the time
we had our press conference, word had spread that we had
a super sports car and the room was packed, wall to wall.
I remember photographers who didn’t even have seats on
the floor in front, crawling on their elbows, trying to scooch up
closer to get ready for the photo op. It was pandemonium.”
the ultra-high-revving
NSX’s redline
Honda EU Series Generator
IndyCar Racing
Introduced in 1998, the Honda EU series generators employed
ultra-quiet inverter technology to achieve substantially higher
fuel economy and lower emissions than conventional generators.
With driver Andre Ribeiro taking the checkered flag (above) Honda
won its first IndyCar open-wheel race in New Hampshire in 1995, just
a year after joining the series. In 1996, Honda’s third year in Indy/
CART racing, Honda power won 11 of 16 races, earning racing’s triple
crown: the Manufacturers Championship, PPG Championship title for
driver Jimmy Vasser, and the Rookie of the Year title for Alex Zanardi.
MILES
120
CR250R
String Trimmer
Honda brought the world’s first twin-spar aluminum
frame technology to motocross racing with the radical
1997 CR250R motorcycle.
Honda introduced the world’s first 360-degree inclinable
mini 4-stroke engine for handheld power equipment.
“Come ride with us.”
EV Plus
Passenger Airbags
In 2007, the first four-passenger electric vehicle to use
advanced nickel-metal hydride batteries, the EV Plus, was built
from the ground up as a battery electric vehicle — the earliest
example of Honda’s push toward electrically driven powertrains.
In 1990, Honda was the first automaker to introduce a
front passenger airbag that deploys upward toward the
windshield rather than directly at the passenger, reducing
the potential for injury from the airbag’s deployment.
YEARS
8
Honda’s jump on
U.S. EPA mandated
standards
Clean Marine Engines
VTEC
Honda Insight
Honda’s 1998 outboard marine engine lineup used 4-stroke
engine technology to become the first in the industry to meet
the U.S. EPA’s more stringent 2006 emissions standards.
Honda did it eight years ahead of schedule.
In 1990, Honda became the first manufacturer to employ
electronically controlled variable valve timing engine technology
that varies both lift and duration for increased fuel efficiency
and performance. This VTEC technology was ultimately
introduced to all new Honda and Acura models.
The 1999 Insight Hybrid became America’s first hybrid car,
achieving 70 miles per gallon EPA-highway fuel economy. It used
a lightweight aluminum body, aerodynamic shape, and Honda’s
Integrated Motor AssistTM hybrid technology.
1990s Innovations
range of the EV Plus
on one charge
MPG
70 fuel economy
1990 – 1999 85
86 fif t y y ea r s
of
T
he best of times turned to
the worst of times suddenly,
and with great force. But the
challenge of creating new value
for the customer continued to
light the path forward.
< Honda FCX Clarity
2000 – 2009 87
a tale of two decades
Economy
Dow Jones tops 12,000 for first
time; then plummets following
subprime lending crisis
Rising nations China and
India become contending
economic powers
Executive abuses at Enron
and WorldCom symbolize
corporate governance scandals
Politics
9/11 terrorist attacks
and war in Iraq define
George W. Bush’s presidency
Barack Obama becomes
the first African-American
elected President
Global warming evolves
into a major environmental,
economic and political issue
C u lt u re
Fantasy movies rule! Lord of the
Rings, Harry Potter, and Pirates
of the Caribbean film series
Survivor and American
Idol usher in the
era of “Reality TV”
I
t will take years to assess and fully comprehend
the perfect storm of economic calamity that hit the
American economy in 2008 and then quickly cascaded
around the world. The toxic cocktail of the subprime
mortgage crisis, tightening business and consumer
credit, and the dramatic fluctuation in fuel prices dealt
a devastating blow to the automotive industry and
created a harsh reality for every aspect of American
Honda’s business.
The severity of economic conditions quickly
turned a record 14 straight years of steady growth in
American Honda’s U.S. automobile sales into a distant
Google and Yahoo enter
mainstream; Internet used
for all forms of business
New England Patriots win
three Super Bowls, but are
denied the perfect season
America’s
first 50-state
ULEV, the
2001 Civic
(above)
Acura MDX
00
88 fif t y y ea r s
of
memory. American Honda had emerged in the early
2000s as a genuine leader in the U.S. auto industry,
not only in sales, but in the advancement of new
environmental and safety technology, and in the
power of its flexible production system.
Even as Honda strengthened its bread-andbutter Civic and Accord lineups, the brand added
new products: the Pilot, the Ridgeline, the Element
and the Fit. Acura launched the MDX. These models
earned industry accolades and presented new sales
opportunities. Honda’s significant investment in its
landmark “Safety for Everyone” initiative enhanced
S P O R TS
Professional baseball faces
controversy and Congressional scrutiny
due to players’ use of steroids
Tiger Woods wins “Tiger Slam,”
in his chase of Jack Nicklaus’
record of 18 major golf titles
History must be written from a vantage point of cool reflection. But as a
decade of record sales dissolved into the depths of recession in less than a year,
it was clear that the first decade of the 21st century would conclude with
the most extreme change of events in American Honda history.
Honda R&D
establishes
HondaJet
research
activity in
Greensboro,
North
Carolina
Odyssey and
V6 engine
production
begins in
Lincoln,
Alabama
First use of
VTEC in
a marine
engine, the
BF200 and
the BF225
Acura RSX
First
motorcycle to
meet 2008
CARB emissions
standards,
the Gold Wing
01
Civic Si
BF175
outboard
motor meets
2008 CARB
requirements
02
AquaTrax
F-12X
personal
watercraft
Civic Hybrid
Side-curtain
airbag
technology
introduced
Pilot SUV
(above)
CRF450R and
VTX1800
motorcycles
FCX is
world’s first
EPA-certified
fuel cell
vehicle
Element SUV
Personal
watercraft
production
begins in
South
Carolina
General
purpose
engine
production
begins in
North
Carolina
MCHP
co-generation Parts
device
distribution
center opens
in Chino,
California
03
the safety performance of Honda products and helped
lead the industry toward greater investments in safety
technology. Further, Honda led the industry toward the
future by introducing the first government-certified
fuel cell electric vehicles to customers.
O
n the manufacturing front, Honda
continued to invest in its substantial auto
production base in North America by constructing
four new plants — in Alabama, Indiana, Georgia
and Canada — for the production of automobiles,
transmissions and engines. The focus was not
only on adding capacity, but on creating a flexible
manufacturing network in North America capable
of reacting quickly and efficiently to rapid change.
This strategy proved critical in Honda’s ability to
react to dramatic swings in fuel prices and the
economic crisis late in the decade.
Honda R&D Americas continued the expansion of its
capabilities with a new automotive safety research facility
Honda R&D
Americas
opens new
Automotive
Safety
Research
Facility in
Ohio
Honda
announces
“Safety for
Everyone”
commitment
Acura TSX
Sports Sedan
Rune
motorcycle
Alabama
plant opens
second
assembly line
04
Honda wins
its first
Indianapolis
500 after
rejoining
IndyCar
Series
HRX lawn
mower
Honda Aero,
Inc.,
established
for jet engine
business
Phill™ natural
gas home
refueling
appliance
leasing begins
FCX leased to
world’s first
individual
customer for a
fuel cell vehicle
05
and two new California-based design studios. But more
than the investment in facilities, it was the growth and
maturity of Honda engineers that led to the development
of key new models for the Honda and Acura brands.
Before recessionary pressures began to hit
the market in the latter part of the decade, Honda’s
motorcycle and power equipment divisions also enjoyed
great success. The Motorcycle Division leveraged the
popularity of its ATVs and its entry into new product
segments, including personal watercraft, to increase
sales almost 50 percent, to more than 540,000 units
in 2004 from fewer than 300,000 units in 1999.
The expansion of general purpose engine
production capacity in North Carolina to almost
2 million units provided the foundation for tremendous
sales growth. Honda sold engines to more than 200
manufacturers of various products, including pressure
washers, pumps and construction equipment. Honda
also expanded its sales of lawn mowers to Home Depot
stores. But sales of lawn-and-garden products cooled
HondaJet
makes public
debut at EAA
AirVenture in
Oshkosh,
Wisconsin
Honda marine
engines first
to achieve
CARB 3-star
emissions
rating
Civic and
Ridgeline
(above)
named North
American
Car and Truck
of the Year
06
Automatic
transmission
production
begins in
Tallapoosa,
Georgia
Honda R&D’s
Ohio Center
building
receives
USGBC
LEED-Gold
green
building
certification
Acura RDX
Honda R&D
Americas
opens Acura
Design Studio
in Torrance,
California,
and Advanced
Design Studio
in Pasadena,
California
substantially in the struggling economy at the
end of the decade.
A
s the decade drew toward its close, Honda
renewed its focus on environmental technology,
introducing the second-generation Insight hybrid car.
Honda was named the “Greenest Automaker” by the
Union of Concerned Scientists, and it won numerous
other awards from organizations such as the Sierra
Club. But in the marketplace, the success of the
Toyota Prius hybrid car created a serious challenge
to Honda’s longstanding image as the industry’s
environmental leader.
As American Honda began its second 50 years,
the company was renewing its focus on innovation
throughout the company by introducing a new
generation of hybrid vehicles, exploring the continued
potential of fuel cell power, and pursuing other new
ideas aimed at creating new value for customers
and society.
Union of
Concerned
Scientists
names Honda
“Greenest
Automaker”
for 4th
consecutive
time
07
Acura enters
the American
Le Mans
Racing Series
Gold Wing
becomes
world’s first
production
motorcycle
with an
available
rider airbag
Aquatrax
F-15X
Civic Sedan
production
begins in
Greensburg,
Indiana
08
FCX Clarity
leased to
customers in
Southern
California
Major expansion of parts
distribution
center in Troy,
Ohio
New data
facility opens
in Longmont,
Colorado
Honda R&D
Americas,
Inc. opens
Marine Engine
Research
facility in
Valkaria,
Florida
Gresham,
Oregon, parts
distribution
center earns
LEEDPlatinum
Green
Building
certification
Fury, the first
factory-made
Honda chopper
(above)
DN-01
motorcycle
Secondgeneration
Insight Hybrid
09
2000 – 2009 89
a conversation with
Koichi Kondo
Reflections
“
. . . people started
feeling that the
company would get
better just by talking
about the philosophy
and started losing
the viewpoint that
they should participate
and take action.
This is what I wanted
to change.”
Koichi Kondo, the ninth top executive of American Honda Motor Co.,
Inc., served as president & CEO from 2003 to 2007. It was his second tour
of duty with American Honda. Previously, from 1982 to 1987,
he was coordinator of motorcycle sales and planning. Kondo became
COO of the North American Region in 2006.
Your time at AHM was separated by
about 15 years. How did you see AHM
differently in the 1980s and the 2000s?
When I went back to the States in 2003, while
our auto business had expanded a lot, I was a bit
disappointed that Honda’s presence in the motorcycle
industry had weakened quite a lot. But I appreciated
a lot the efforts expended by people in the U.S. to
make motorcycle business a profitable one. Even
though the market share for Honda had dropped
significantly, at least they were not losing money.
They were generating a profit. When I went back in
2003, I thought the presence of our motorcycles in
the market had diminished, while Harley-Davidson
had grown and the Canadian ATV company Bombardier
had grown. So I thought the motorcycle division
needed to be strengthened in the market.
90 fif t y y ea r s
of
Motorcycle business is the origin of Honda’s
business. Honda motorcycle business is No. 1 in the
world and we have a certain level of sales volume
and name recognition, so we are proud of the status
as world’s top brand. In Honda’s business structure,
motorcycle is also the frontrunner. Diminishing the
presence of Honda motorcycles may suggest that
the same thing will happen to automobile business
in the future, because the same company is doing
it. So, motorcycle has to maintain its top brand status,
and it has a role and responsibility to lead the world.
Otherwise, we cannot be optimistic about the
growth of our automobile business. So, no matter
how hard it is, the motorcycle division has to continue
leading the market as the top maker.
As CEO, you tried to emphasize the
importance of associates’ taking initiative
and responsibility. What kind of progress
do you think was made?
We undertook an initiative that was originally
conceived as the “New Honda Plan.” HR rephrased
it as “Reimagine Honda.”
The concept or background behind the Reimagine
Honda project is that the size of the company became
very large, and something different from what we had
been seeking. Since the 1990s, American Honda had
been expanding business consecutively for more than
a decade. Even though we had become a big company,
we needed to be able to respond to the market in an
agile and responsive manner.
When I came back to the States in 2003, there
was a very clear organizational chart. However, the
sensitivity of the organization vs. the market was quite
dull. And sangen shugi [Three Realities Principle, or
“go to the spot”], listening to the voices of people in
the plant and on the floor, needed to be reflected to
management. This is the ideal philosophy of Honda,
but it was not implemented well. The hierarchy to the
organization of people meant there was too much
distance from the spot. Ideally, we wanted to be close
to the spot to make decisions close to the people.
However, when I returned I felt that the
motorcycle division’s sense of the market was not
sharp enough, for instance, when a competitor
launched a new model to market. Due to the HondaYamaha war, we were so quick to give this kind
of information back to R&D, including features,
specification, etc. So we could get a quick response
from R&D. When I went back in 2003, such sensitivity
was not observed anymore. The sense of the market
from the people at the spot to management was quite
slow. So, there was a big discrepancy between what we
wanted to realize and the sangen shugi concept. That
was the time we decided to remind people, not just the
motorcycle division, but auto division people as well,
that we need to be sensitive to what is happening in
the market so that management can take action that
is proper.
For the Reimagine Honda project, we talked to
people at the spot to find root causes of problems, so
we could realize the ideal structure of Honda again.
We let people at the spot discuss among themselves
to learn what needed to be done to strengthen the
sangen shugi principle.
There is one good example of how sensitive we
were to competitors in the 1980s. All competitors
held conventions, and Yamaha held their convention
and we had a dealer in attendance who provided
us information from the meeting. That night we
talked to R&D about plans and models, sales points,
features, strengths and so on, so that we could take
countermeasures. I am not proud of this kind of action,
but it is a good example of how we were sensitive to
our competition and acted with a real sense of urgency.
Because of the very good success of American
Honda, with more than a decade of continuing
expansion, somehow the organization responded
very slowly to market changes, and what was going
on with Toyota, GM, VW and Nissan. These things
were not clearly or quickly sent to R&D. It is good
to have the organization grow, but there is a risk to
the philosophy of sangen shugi: that it will be more
difficult to communicate and slower. So there was a big
discrepancy between the 1980s and 2000s and beyond
about the American Honda organization. This gave me
a sense of fear and concern. That is why we believe it
was a good time to remind people about the sangen
shugi principle and how this is an ideal organization.
Without this kind of action and reminding people
through Reimagine Honda, this kind of big-company
disease could happen to Honda. We tried to identify
parts of the company that needed to change so we
could realign the organization.
You also placed a big focus on customer
and quality improvements, suggesting
that it was the responsibility of everyone — not
just manufacturing and R&D. How do you move
an entire company in this direction?
On the occasion of the 50th anniversary of Honda
Motor, there were many activities about Honda
philosophy, including documents, booklets and
education. This resulted in good things and bad
things. The good thing from all of these activities
and education was that the understanding of Honda
philosophy was expanded and deepened. But there
was also some negative impact from that. The
philosophy was just taken as a stand-alone philosophy,
without any implementation or actions along to realize
it. The philosophy has such a universal value that no
one could argue against it. People just repeated it, as
if just by saying it everything would be better and the
company would be better. But people did not follow up
with action or realize it.
In 1998, when Yoshino-san became president [of
Honda Motor], we decided to realize the new level of
outstanding quality. That was very much repeated
by all associates, but we couldn’t realize it for a long
time. Within the organization, the tendency to find bad
things and blame them as the reason became more
obvious, rather than people trying to understand how
they were supposed to be involved in achieving the
goal and directly involved to make things better.
2000 – 2009 91
a conversation with koichi kondo
So, I reminded that it is all of us, including the sales
side, who achieve the new level of outstanding quality.
It was the same way for the philosophy: People
started feeling that the company would get better just
by talking about the philosophy and started losing the
viewpoint that they should participate and take action.
That is what I wanted to change. Everyone in the
organization needs to be involved, and such a mindset
needs to be shared.
If top management just tells subordinates
what to do, it is not really deeply rooted at the spot
because these phrases are repeated so many times.
What we did through Reimagine Honda was to
select a representative from each division and asked
these representatives to get together and share the
challenges they faced and the ideal organization they
need and the action plan we needed to realize these
targets. I believe it was once a month or so we had
a discussion. And I attended these meetings, and
this process was part of an action from Reimagine
Honda. As part of this discussion, it was informed
and announced to the organization.
Establishing the “Safety for Everyone”
strategy was a major financial commitment,
but one that has been good for customers
and helped distinguish Honda in the market.
What was your thinking about moving
ahead with this approach?
After the turn to the 21st century, there were two
very big themes: the environment and safety. No
one would object to this understanding that these
were the two big inevitable themes for our business.
What would differentiate one company from another
would be whether you would implement those things
or not. With regard to the environment, whether you
92 fif t y y ea r s
of
could implement something or not was related to the
level of maturity of technologies. Unfortunately, we
were a little behind the Prius, and our environmental
technology in this area was not mature enough. But in
safety, we did have mature technologies. Some other
companies might have had them as well, but the point
was whether or not you were ready to offer all of these
technologies in your products. When you were willing
to equip all of your vehicles with these technologies
there is some risk, because the cost of the vehicle goes
up with all of this safety equipment as standard. The
market wouldn’t accept it if we passed along all of this
to the customer. Even when they know it is safer, they
couldn’t accept the price, so Honda had to take some
of the cost margin in the effort to differentiate our
products from others.
So, Safety for Everyone was the theme we
embraced. We sacrificed the [profit] margin to some
extent. We wanted to be the leader in offering safety
equipment as standard for the customer. It took
several years, but we applied the equipment to all
models, large and small alike.
We are currently going through a very tough
time due to the economy. But you experienced the
endaka [high-yen recession] of 1985-1987, when the
yen appreciated from 250 to 120 per dollar in a short
time. Did your management of this challenge in the
1980s or at any other time in your career, help you
prepare for the current economic crisis?
The difficulty in the 1980s [dramatic yen appreciation]
and the difficulty of today [economic recession and yen
appreciation] have different characteristics. Recession
is an economic wave, and thus is difficult to address.
However, how we strengthen our toughness against
currency fluctuations — in other words, how we
pursue localization of sales, production, and R&D —
is an important part of our efforts to strengthen our
overseas operations, and it always has been and will
be one of the key management agendas. The history
of our efforts to strengthen our overseas operations
is the history of our localization. Our experience in
strengthening local operations, especially in the 1980s,
and 1990s, has been valuable and useful.
You have had many challenges in your
career with Honda. What is your
What I expect for American Honda is to be a real,
genuine American company. What I mean by that is, for
example, Honda’s philosophy says we strive to become
“a company society wants to exist.” So first, because
it is conducting business in the U.S., American Honda
should be the company American people want to
exist. What I mean by becoming an American company
is I want American Honda to be a company which is
autonomous within America — from R&D to production
and sales. We are still in the process of getting there,
though our local production ratio is about 70-some
percent, and higher than our competitors. I want
American Honda to be the kind of company that
American people will say: “I am glad this company is
here.” To achieve this we need to further pursue the
localization, so that local people can do everything
from development to sales.
advanced technology regardless of size or price
“Safety for Everyone” Pathway Looked Beyond Requirements
Honda’s industry-leading Safety for Everyone campaign had
its roots in the company’s global vision to enhance safety for Honda
customers, while also making an active commitment to enhance
safety for pedestrians, motorcyclists, and other vehicles.
A
s with its early efforts
with low-emissions vehicles,
Honda looked beyond government
regulations with its safety efforts.
The program also reflected a
strategic effort by American Honda to
differentiate the Honda and Acura
brands from the competition. “In
the early 2000s, many automakers
were turning to the heavy use of
incentives as a way to deal with
factory overcapacity,”
recalls Dan Bonawitz,
recently retired vice
president of American
Honda Motor Co.,
Inc. “We had many
discussions to decide
how we would counter
this trend and not drag
down Honda’s and
Acura’s brand image or
product resale value in
the process.”
A group of Honda
executives, product
planners, and safety
experts from R&D came
together. After much
discussion, research, and
debate, they came up with a strategy
to advance Honda’s safety image as a
means to differentiate Honda from the
competition while adding real new value
for Honda customers. The resulting
Safety for Everyone program, launched
in October 2003, promised to
deliver a core suite of advanced
safety features as standard
equipment on all vehicles,
regardless of the vehicle’s
size or price. This
included expanding
the application
of pedestrian
safety features
and the use of
Honda’s innovative
Advanced
Compatibility
Engineering™
(ACE™) body
structure on
all new vehicle
platforms.
“It was a
difficult decision,
and there was
a lot of angst, but
ultimately it was a very,
very smart approach,” adds Bonawitz.
“We immediately started getting calls
from our dealers saying, ‘This is great.
All we have to do is show them all the
features on our car, and
the customer goes down the street
and discovers what they had to pay
to get the same equipment on
competitors’ products.’ ”
“This was a great example of salesside leadership,” said Robert Bienenfeld,
then senior manager of product planning
and now senior manager of Environment
and Energy Strategy. “R&D had all this
great technology. But we were able to
create a vision for how Honda could
take the lead in safety. It really showed
us what an important role the sales side
can play in creating new value for our
customers, while advancing Honda’s
image with those customers.”
Honda completed the centerpiece
of its commitment in 2007, with the
installation of antilock brakes and
side-curtain airbags on all model year
2008 vehicles, along with Vehicle
Stability Assist™ and rollover sensors
for side-curtain airbag deployment in
all light trucks. By 2009, the ACE body
had been applied to all but two models,
and the company had placed more than
8 million Honda and Acura vehicles
The Acura MDX was a safety
leader from its introduction
in 2001, earning a “Best
Pick” in a frontal crash
test from the privately
run Insurance Institute for
Highway Safety (IIHS). Left,
the 2002 MDX earned a
5-star rating in both NCAP
frontal and side impact
tests from the U.S. National
Highway Traffic Safety
Administration (NHTSA).
For model year 2009,
Honda and Acura had 10
vehicles — more than any
other automaker — that
earned top safety ratings
from both NHTSA and IIHS.
The NHTSA and IIHS tests
are very different in nature,
making the achievement
of top ratings in both test
programs a significant
triumph. Honda’s industryleading performance
reflects both its early and
continuous investment in
advanced safety technology
and its commitment to
deliver a higher level of
occupant safety in a wide
variety of crash conditions.
2000 – 2009 93
late to the party . . . but well-dressed
Honda and Acura Expand Light Truck Business
To help meet the rapidly
growing demand for
light truck products,
Honda built a new plant
in Lincoln, Alabama.
Production of the Odyssey
began in 2001. A second
line was added in 2004 for
the production of the Pilot.
Ultimately, all production
of both models was shifted
from Honda of Canada
Mfg., Inc., where they were
launched, to exclusive
production in Alabama.
Honda Manufacturing
of Alabama, LLC, added
Ridgeline production in
2009. The Lincoln Plant
is now the sole global
production source for all
three models.
Honda rode the growing wave of U.S. customer demand for SUVs,
pickups and minivans in the early 2000s with a series of U.S.-designed
and -engineered light trucks: the Acura MDX, and the Honda Pilot,
the Element and the Ridgeline.
A
s part of the heartland
project, (see page 82), American
Honda had forged a new direction for
the Honda and Acura brands in the
light truck segment. Though late to the
market compared to most of its major
94 fif t y y ea r s
of
competitors, the new Acura MDX and
Honda Pilot would establish an entirely
new trend in the market — “crossover”
vehicles based on a unibody platform.
“By this time, we had a much
stronger market research capability
on the sales side, along with maturing
U.S. R&D capabilities, and significant
truck-building experience in our Canada
plant,” recalls Dan Bonawitz, recently
retired vice president of American
Honda Motor Co., Inc.
“We could see clearly that people
were getting tired of the traditional
truck tradeoffs and thought, How can we
give customers what they want and stay
true to our core values?”
Using the highly successful
unibody light truck platform as the
base, the MDX and Pilot sport utes set
new benchmarks for interior space,
flexibility, fuel efficiency, and driving
performance in their respective
segments. The 2001 MDX captured
Motor Trend magazine’s SUV of the Year
award and played a major role in the
revitalization of the Acura brand. Two
years later, Honda’s eight-passenger
“ultimate family adventure vehicle,”
the 2003 Pilot, earned the first of five
“For 10 years our dealers had been
screaming for a full-size, V8-powered
truck,” said Bonawitz. “Certainly, we
could have done one. It’s not rocket
science. But we kept saying, ‘What
unique value would we add?’ We watched
the market closely and saw that the truck
market was beginning to morph and
our research found that something like
80 percent of truck users [who towed]
were towing less than 3,500 pounds, and
around 30 percent never towed at all.”
Working closely with its U.S. R&D
counterparts, the team created its image
for a next-generation truck designed
around the needs of the casual truck
user, for camping, weekend hauling, and
trips to Home Depot. “We had to make
sure we could deliver on the truck part
of the equation using a unibody platform
and V6 engine,” said Bonawitz.
Honda R&D Americas designed a
truck with true
half-ton truck
towing, hauling,
and off-road
capabilities,
but with vastly
superior driving
dynamics, a
more spacious
and flexible
interior, and an
innovative In-Bed
Trunk™ storage
The U.S.-designed and developed 2001 Acura MDX was named
compartment.
North American International Truck of the Year for 2001, by a panel
of select auto writers in the U.S. and Canada.
The Ridgeline
consecutive appearances on Car and
Driver magazine’s “5 Best Trucks” list.
That same year, the company
introduced the radically new Element
SUV. The Element was conceived in its
entirety by a team of young American
market researchers and designers as a
“dorm room on wheels” for Gen-Yers
with active lifestyles. And, because
it was based on Honda’s crossover
platform, it could be built* efficiently
alongside the Civic in Honda’s East
Liberty, Ohio, auto plant.
Honda’s evolution from small car
manufacturer to a full-line automaker
culminated with the introduction of its
first U.S. pickup truck, the Ridgeline,
in 2004. Once again, it was an exclusive
U.S.-developed effort to anticipate the
evolving tastes of U.S. truck buyers and
to bring a uniquely Honda approach to
the market.
Executive Vice President John Mendel helps introduce the second generation 2009 Honda Pilot to Honda dealers
in the spring of 2008. The new Pilot added more SUV-rugged styling to a vehicle that had helped advance the
crossover segment by introducing a combination of smooth ride comfort, accommodating interior packaging,
and overall efficiency that was lacking in traditional SUVs.
was heralded as the first significant
innovation in the truck market in many
years. It captured both the Motor Trend
and the North American Truck of the
Year honors in 2006.
The expansion of Honda’s light
truck lineup leveraged the benefits of
the rapidly growing U.S. R&D, sales, and
manufacturing organization, allowing
Honda to capitalize on the shift in
consumer demand from traditional
trucks to more flexible, fun, and
fuel-efficient crossover vehicles in the
late 1990s and 2000s. The company’s
aggressive new-product program more
than quadrupled American Honda’s
light truck sales — from fewer than
150,000 units in 1999 to almost 670,000
in 2007 — a span of just seven years,
or less than two generations of newmodel development.
In 2008, the third-generation
Honda CR-V, one of the first crossover
vehicles when first introduced in
1997, unseated the Ford Escape as
the best-selling SUV in America.
Meanwhile, Acura added a second
SUV, the turbo-charged RDX fivepassenger crossover, to its lineup of
performance luxury vehicles.
Despite a decade of success and
innovation in the U.S. light truck
market, dramatic fluctuations in fuel
prices and a U.S. economic recession
beginning in 2008 soon put a damper
on the demand for trucks. The new
conditions challenged the flexibility
of Honda’s North American auto
plants and called into question whether
the once-burgeoning segment could
sustain the pace of its U.S. light truck
sales in years to come.
2000 – 2009 95
manufacturing milestones
Local Production Powers Sales Growth
As Honda reached and passed the 25-year mark in the history of local production in America, the achievement of
key production milestones fueled the ability to meet critical customer needs. Demonstrating incredible flexibility,
Honda manufacturing facilities added production of light trucks, personal watercraft, general purpose engines,
and other new products to help American Honda take advantage of new marketplace opportunities.
Engine Sales Strategy To support American
Honda’s strategy to sell engines that power other
manufacturers’ products, such as water pumps,
pressure washers, and generators, Honda Power
Equipment Mfg., Inc., in Swepsonville, North
Carolina, added a third assembly line in 2003
(far left). The production capacity of GC and GCV
engines rose to 2 million units per year.
Civic Pride Honda Manufacturing of Indiana,
LLC associates celebrate production of their first
natural gas-powered Honda Civic GX, the only
dedicated natural gas vehicle produced by a major
automaker in America. The vehicle had previously
been produced at Honda’s East Liberty, Ohio
auto plant. The Greensburg, Indiana plant began
production in fall 2008 and was Honda’s fourth U.S.
auto plant and seventh in North America.
Major Milestones In November 2003,
Honda associates, including Dave Cron (far
left) at the Marysville Auto Plant, produced the
10-millionth automobile in the U.S. Like the first
car produced in November 1982, the milestone
vehicle was an Accord. Less than six years
later — in January 2009 — Honda produced its
20-millionth automobile in North America.
25th Anniversary The first president
of Honda of America Mfg., Inc., Kazuo Nakagawa
(on motorcycle), returned to Ohio to mark
the 25th anniversary celebration of U.S.
motorcycle assembly. Many of the original
64 associates from the plant attended.
96 fif t y y ea r s
of
a conversation with
Tetsuo Iwamura
Perspectives
“
The difference from the
past to the future is
timing. The ability to
take action is supposed
to be much shorter
because the world is
becoming much, much
faster than before.”
Tetsuo Iwamura, the 10th top executive of American Honda
Motor Co., Inc., assumed the role of president & CEO in 2007.
He also serves as the COO of the North American Region.
This interview was conducted in February 2009.
What makes you so confident about
the future of American Honda?
I have absolute confidence in the future of
American Honda for two primary reasons. First, the
world is facing big changes. Some people say we are
in a once-in-a-hundred-years economic crisis, and
under this kind of turmoil, politically, socially, as
well as technologically, major changes are happening.
In the automotive industry, more and more, our
products must meet social requirements, such as
vehicles with low emissions and low fuel consumption
to address global climate change. For the future,
alternative fuel technology is required to address
concerns about the depletion of global oil reserves —
as well as efforts to enhance safety performance.
To meet these challenges, technological innovation
is a fundamental expectation.
Second, the U.S. is a huge and expansive
country. Public transportation is not well established,
apart from a few major metropolitan areas. Even
with the difficult business conditions we now face,
the market is still more than 10 million in size —
people need automobiles in this country, and the
population is increasing. So, the demand for cars as
basic transportation for people will continue for the
foreseeable future.
In the face of these two factors, Honda has
advanced technologies, especially in the area of the
environment. Honda has always been a forerunner
for environmental issues, and this provides us with
an advantage over our competition. And we have a
strong brand image that has been established by
our predecessors that puts Honda cars at the top of
the shopping list and will continue as a source of our
strength in the future. Based on all of these factors,
I have absolute confidence about American Honda
in the future.
2000 – 2009 97
a conversation with tetsuo iwamura
What role must American Honda
focus on for the next 50 years?
First of all, as a leading subsidiary of the Honda
group, the role of American Honda is supposed to be
a driving force for Honda globally. This means not only
increasing revenue or profit, but also exercising Honda
philosophy through our daily activities. By doing this,
we can demonstrate the good example for an overseas
subsidiary of Honda Motor. As the oldest overseas
subsidiary in the world, we must be a good role model.
Second, in order to ensure Honda’s success in the
largest automotive market in the world, we understand
that American Honda needs to constantly learn more
about the customer’s point of view. We must gather
the customer’s needs and market characteristics
and provide this information to our product planning
and new model development and also feed this point
of view back to our approach with dealers and our
marketing efforts. Circumstances change all of the
time. We must stay very sensitive to changes in society
and government regulations and adjust our actions to
that. In this way, we will make sure that Honda does
not make a mistake in our largest market and thus
in our global strategy.
What role do you see the motorcycle division
playing in the future of American Honda?
Powersports products have several roles — for some
customers they serve as personal transportation,
while for other customers they are valued for utility
or recreational purposes. Our first motorcycles, like
the Cub, were used for transportation purposes. Now,
some of our large Powersports products are purely
recreational, such as personal watercraft.
Our products have been accepted by the U.S.
market up to now. But we need to create the next
98 fif t y y ea r s
of
epoch-making products for both purposes — basic
transportation and for recreational and utility purposes.
By developing such new products, I want to make our
motorcycle business strong and viable again. As a result,
once again, our customers will appreciate Honda, the
factory will be active, our dealer network will be active,
and our associates will be even more motivated. I want
the motorcycle division to contribute once again to the
growth of American Honda in the future.
To achieve this, we have a much higher challenge:
to find out the customer’s point of view and social
needs for the product. We must remember our role.
American Honda created the motorcycle market in
the United States with inexpensive and easy-to-ride
transportation and very good marketing. At the next
stage, we introduced sports bikes with excellent
handling and off-road bikes that created new value.
Then we created the ATC/ATV, and the Gold Wing
helped create the big cruiser class. Since then, we
have been mostly a follower. We must lead in the
area of creation. That is our role as the market leader.
Once we stop creating the market we have no chance.
There must be some new direction we still can
go. I know some people think we face a high wall and
have done everything we can do. But we must use
our creativity more and more, especially under these
circumstances. People try to blame everything on
economic turmoil, the subprime loan issue, or politics.
But do we really have innovative products? There are
many examples of companies that have come back
based on creating new value to create a stronger brand
in the marketplace. So, we must accomplish this again.
What do you see ahead for Acura as a brand?
Do you view it as more of a long race or as a sprint?
It’s a long race, with a long winding road still in front
of us. The objective of the Acura brand will not be
achieved overnight. Acura is not looking to join the
so-called Tier One group. Just to copy what Tier One
has now doesn’t make sense. Acura is to offer new value,
which is different from the established values of that
class. Yet, at the same time, we want to be recognized
as a premium brand. This definitely needs to be based
on our concept of being “ahead.” The key is to find what
represents being advanced and ahead of customer needs
and requirements and offer that to them. We must be
able to respond to the driver’s will in any circumstances,
whether through responsive handling or a comfortable,
relaxing drive. That is the direction of Acura.
I am confident that we will be able to achieve
these objectives. But Acura’s success will not be easy
or necessarily achieved so soon. Acura will struggle
to create our unique identity, but through these
struggles, we will create a new premium value for the
customer that reflects the social needs of being ahead.
Importantly, this challenge will make Acura even
stronger. We have to concentrate and challenge to find
this new value. This is an important process that will
enable people to discover Acura and bring us to the
point we are looking for.
But I also want to emphasize that the starting
point is the daily business of Acura today. We can’t
just sit in a meeting and draw a picture for the future
and take Acura into the stars.
Budget constraints, tough competition, models
that are not so successful — this is all the nature of
business. Every step along the way, we make our best
effort, and the customer will understand. No one
purchases a car today looking at the future direction
of Acura. It is fine to talk about the future direction,
but even if we have a clear direction, we have to show
the market that we are maximizing our value now.
So today is an important day as well. We must focus
on today’s customers, today’s dealer, today’s Acura,
and the message we send to the market today.
And this will take Acura into the future.
How do you view the role of racing
within Honda in America?
Honda’s purpose in racing in the U.S. is not just
the spirit of competition. Of course, since it’s a race,
it is important to win. But more than that, racing is
one approach to make Honda rooted more deeply
in U.S. society.
When I go to the Indy 500, I’m very proud
being there to see Honda-powered cars race in the
Indy 500 on Memorial Day weekend, when the U.S.
people express a deep appreciation for the veterans
who dedicated their lives to the country. It is very
interesting to see the Indy 500 race in person. I really
felt happiness and pride to be working for American
Honda to see that event. That’s how I see the dream
of becoming more grassroots has taken hold — the
effort to participate in society and be a good corporate
citizen. That is a feeling I can’t express well. The
Indy 500 is a very good example of how people accept
H-O-N-D-A as it is. Nobody talks about “Honda,
Honda, Honda.” Nobody talks about a Japanese
company. Nobody says “Who is that who powered
those racing cars?” It’s just natural. We are just
accepted as is. The appreciation for the veterans
with trumpet, introduction of the racing teams and
the F-22 flyover — then over 300,000 Americans
are excited to see the race. Everything is a part of
that atmosphere, well-coordinated, well-blended.
Everything is natural. Nothing feels artificial. Nobody
questions about Honda — and I think this is due to
the efforts of our predecessors.
How important is it to grow the next generation
of leadership for American Honda?
Basically, I want the next generation of leaders for
American Honda to come from the people who are
growing up in American Honda. This doesn’t mean
that I want to make American Honda a closed society
without taking in new people and ideas. But I want to
ask our next generation of leaders to become even
more familiar with the Honda philosophy and our
corporate culture and I want these associates to take
leadership in the future.
Toward that purpose, I would like to create much
more opportunity in our organization by accelerating
job rotation and promote or move associates to those
new positions. To accomplish this, I want to apply
the 40 percent rule that I learned from one of my
sempai [more senior company official]. When I say the
40 percent rule, I mean that to consider someone for
a promotion or job rotation, you only need 40 percent
confidence in their capability.
It is natural for senior people to always look at
junior people based on what they don’t have. When
people work for you, you see the result as based on
your guidance. So, we perceive more of a gap between
senior and junior than the reality. I feel the same things
sometimes — “Can they do the job?” But I overcome
it by applying the 40 percent rule and giving them
the opportunity.
If managers must have more than a 50 percent
confidence in a candidate for promotion or job
rotation, generally it becomes very hard to make that
decision with confidence. It is very easy to say, “Not
yet, he needs to improve a bit more.” It becomes a
black-and-white choice. There is a bit of psychology in
it, but if we set the bar at 40 percent, people start to
watch and look for the good part of people.
When I became the president of Honda Germany
years ago, my sempai told me that I was qualified
according to that 40 percent rule. I learned a lot from
that position. It was like a dojo, or a good training
ground for me. I think most people probably have a
similar experience somewhere in their career. So, I
thought “Why not other people?” The 40 percent rule
will send more people to the training ground. Since
then, I have applied it many times and in most cases,
people have met my expectations.
Looking into the future, what is your
vision for American Honda?
I wish to make American Honda a unique, global,
company which people can be proud to have in America.
I don’t say American Honda is supposed to be an
American company. It should be a unique global company
with the American people proud to have it in America.
That is my vision. This is somewhat similar to the Honda
Motor vision to be a company that society wants to exist.
To achieve these visions, American Honda must
pursue Honda’s core philosophy, which is to respect
human beings and pursue The Three Joys. In other
words, we should not simply chase the scale of
business, but rather chase the fulfillment of The Three
Joys. The phrase is not new for Honda people, but The
Three Joys is very well refined and well thought out.
Importantly, by pursuing The Three Joys as a principle,
we can be a unique global company that American
people can be proud of — including Honda customers,
dealers, suppliers, and associates. This uniqueness can
become a kind of power to separate us from common
companies. To be recognized as a unique global
company is the fundamental need for American Honda.
2000 – 2009 99
providing industry leadership
Honda Applies Real-World Lessons To Advance Environmental Vision
Honda’s history of environmental leadership has been fueled
by lessons learned as the company invests in original technologies
and then rapidly brings them to market.
The first-generation
Insight provided important
experience with technology
even as it earned Honda
acclaim. In 2000, the
Sierra Club honored Honda
with its first-ever award
to an automaker — the
Award for Excellence in
Environmental Engineering
— to the Insight. Ben
Knight, vice president of
Honda R&D Americas (left)
and Richard Szamborski,
assistant vice president of
American Honda (right),
accept the award from Carl
Pope, executive director
of Sierra Club.
T
he first-generation insight,
launched in 1999, was a pioneer for
gasoline-electric hybrid cars in America.
The all-aluminum body, including
extruded-aluminum body frame parts,
helped it achieve an industry-leading
70 miles per gallon on the highway
and gained Honda recognition from
the Sierra Club and others for its fuel
economy leadership. Annual sales
peaked at 4,726 units in 2001 and
Insight was discontinued in 2007.
The experience Honda gained
from the Insight, including application
of the compact IMATM (Integrated
Motor Assist TM) hybrid system, was the
foundation for subsequent challenges
100 fif t y y ea r s
of
that took hybrid technology into a new
era of practicality and affordability.
This included two generations of the
Civic Hybrid and the second-generation
Insight, which debuted in March 2009.
“We didn’t think the original
Insight would be a big seller like 5,000
units a year,” said Robert Bienenfeld,
the first manager of the Alternative
Fuels Marketing Department and now
senior manager of Environment and
Energy Strategy. “We knew from the
experience with the Honda CRX that a
2-seater had limited potential, but we
thought it would generate excitement
for hybrids, put a stake in the ground
for what hybrids could achieve, and
learned that we needed to get the whole
provide us with experience we would
organization supporting the effort,”
build upon with future technologies.”
said Bienenfeld. “We had advertising,
This ability to learn from real-world
sales training, and our dealer group to
experience has been a consistent theme
help us select dealers. Even a project
in Honda’s leadership in introducing
like that, with a small number of units,
hybrid, natural gas, and fuel cell vehicle
requires a huge team effort.” In turn,
technologies throughout the 2000s.
the experience with electric vehicle
“By understanding both the
and hybrid technologies led directly to
technology and the customer using it,
Honda’s fuel cell vehicle development.
we are able to continue to advance and
evolve each technology as the foundation In 2002, the Honda FCX became the
first U.S. government-certified fuel cell
for future transportation options,” said
vehicle, which enabled Honda to get the
Ben Knight, vice president of Honda
vehicles in the hands of real customers.
R&D Americas, Inc. “We believe it is
This has been a key part of Honda’s fuel
important to introduce technologies
cell technology strategy. John and Sandy
to the marketplace as soon as they
Spallino of California, took delivery of
are ready in order to gain real-world
the first generation FCX in 2005. In 2008,
experience. This is effective to advance
Honda began delivering the sleek and
the customer acceptance of these
futuristic FCX Clarity fuel cell sedan to
advanced technology vehicles.”
U.S. customers.
Honda’s introduction of the battery
Honda’s introduction of the
electric vehicle, EV PLUS, in 1996
natural-gas-powered Civic GX in 1998,
provided important know-how and
experience that has shaped
subsequent technology
advancements benefiting
customers. “Combining the
technology of our efficient
gasoline vehicles with our
electric component knowhow from EV PLUS enabled
us to more quickly launch our
super-clean, super-efficient
hybrid vehicles,” said Knight.
Honda gained experience
in marketing alternativeThe Spallino family took delivery of their 2005 Honda FCX hydrogenfuel vehicles as well. “We
powered fuel cell vehicle, in June 2005 in Los Angeles.
honda takes flight
HondaJet Homegrown in America
Although only a handful of Honda’s U.S. associates were aware of it, Honda’s first careful steps into the
creation of a flying Honda began in the 1980s, when it started to build and test prototype aircraft on U.S. soil.
The 2010 Honda Insight hybrid vehicle sets a new
benchmark for the affordability of an advanced
technology vehicle.
and the introduction of the Phill™
home refueling device in 2005, helped
promote know-how with gaseous fuel
that has been critical to Honda’s ability
to develop methods for on-board
hydrogen storage and refueling for
fuel cell vehicles. This has included the
experimental Home Energy Station on
the campus of Honda R&D Americas in
Torrance, California.
As the decade approached its close,
fuel prices fluctuated wildly, providing
little clear direction to manufacturers
regarding the product best suited for the
market. Yet society’s growing concerns
about global warming sparked increased
interest in advancing fuel efficiency as a
means to reduce greenhouse gas emissions.
“Fuel efficiency is fundamental to
our culture,” said Knight. “It also speaks
to Honda’s thinking for the customer.
Even when fuel economy has not been
such a high priority in the marketplace,
we like to keep ourselves on the cutting
edge of fuel efficiency technology and to
share that dream with our customers.”
HondaJet made its public debut at the 2005 Air Venture Aviation Show in Oshkosh, Wisconsin. In a return to the show a year later, the company announced plans
to create a premium sales and service network for the HondaJet. Sales commenced on October 17, 2006, at the National Business Aviation Association convention
in Orlando, Florida. Honda collected orders for more than 100 of the $3.65 million planes in just two days.
T
he engineer who would go on
to create HondaJet was a part of a
groundbreaking team in 1986.
“I learned a lot about American
culture in those days,” recalls
Michimasa Fujino, who spent his first
year in America sanding the composite
wings for prototype planes. He would
eventually become the first president
of Honda Aircraft Company, Inc.
“American people have a passion for
aviation, and I saw many people building
planes in their own backyards. But I
also felt that the American people were
very accepting of new ideas. This gave
me great confidence for our effort to
create the HondaJet.”
Fujino’s experience in America
led him to convince a skeptical Honda
board of directors that the company
could improve human mobility in the
skies by creating a Honda business jet.
In 2000, Honda R&D established
aircraft research operations at the
Piedmont Triad International Airport
(PTIA) in Greensboro, North Carolina,
that in 2006 would become Honda
Aircraft Company, Inc. With the unique
over-the-wing-engine design created
by Fujino, on December 3, 2003 —
nearly two decades after aircraft
research began in Japan and within
days of the 100-year anniversary of
the Wright Brothers’ historic Kitty
Hawk flight — the HondaJet made its
inaugural flight, lifting off from PTIA.
“For me, it was like watching your
baby being born,” recalls Fujino.
Honda Aircraft Company opened
its new headquarters and research
and development operations at PTIA
in 2009. Its production facility was
to open in 2011. Honda Aero, Inc.,
which will produce the GE-Honda
engine that will power HondaJet,
established its headquarters and
production facility in nearby
Burlington, North Carolina.
2000 – 2009 101
Thanks for 50 Years
of American Dreams
June 11, 2009
Associates from across the country participated in
activities to mark American Honda’s 50th anniversary.
In Torrance, California, associates gathered in front
of Building 100 (opposite page) for a formal ceremony
on June 11, 2009.
Other events included, clockwise from upper left:
The planting of five trees on the Torrance campus
commemorated each of the first five decades of
company history. From left, Honda associate David
Castellanos, retired former executive vice president
Tom Elliott, American Honda President Tetsuo Iwamura,
Honda customer Giovanni Barone and Michelle Higa,
representing one of Honda’s community partners,
Ride for Kids and the Pediatric Brain Tumor Foundation.
In Torrance, associates tour the American Honda
Collection, a private collection of historic and milestone
products and race machines from the past 50 years.
of
In Alpharetta, Georgia, associates Maxine Gibson
and Herb Hopkins look at a 1968 vintage Honda CL175
Scrambler motorcycle in a product display outside the
Power Equipment Division headquarters.
In Charlotte, North Carolina, associates in the
American Honda Finance Corp. regional office mark
the occasion with cupcakes.
In the Mt. Laurel, New Jersey, parts center, parts
administrator Virginia Speeney carries an anniversary
cake to an associate event.
In Torrance, associate David Castellanos speaks on
behalf of Honda associates at the formal ceremony.
In Davenport, Iowa, parts warehouse supervisor
Bill Crawford takes the measure of a Honda Z600
that was on display.
“
Fifty years ago, Honda took a very unique approach in establishing a U.S. sales operation. The founders of Honda said that
we should always carry our own torch with our own hands. As a result, American Honda was created. And that is why, today,
we can celebrate 50 years of developing relationships with our customers in America. Our future is bright. I can see the light
out there. It is the torch that was lit by our predecessors who built this brand and that has been carried forward over the past
five decades by many Honda associates and dealers — including all of you. Now, with a clear focus on the customer to guide
our decisions we must pick up this torch and light the way to our next 50 years of success and beyond.” Tetsuo Iwamura, June 11, 2009
2000 – 2009 103
2000s Innovations
of
1,880
A Honda engine with
pounds
of thrust!
ASIMO
Motorcycle Airbag
The world’s most advanced humanoid robot, ASIMO, made its
U.S. debut on February 14, 2002, at the New York Stock Exchange
(NYSE), in celebration of the 25th anniversary of Honda’s NYSE
listing. In 2007, ASIMO began making daily demonstrations at a
special Disneyland “Innoventions” attraction.
The 2006 Gold Wing became the world’s first production
motorcycle with an available fully integrated rider airbag system.
Turbofan Jet Engine
Fuel Cell Vehicles
Honda partnered with General Electric to develop the HF120,
the higher-thrust successor to Honda’s original HF118. The
advanced design of the Honda GE HF120 turbofan engine delivers
a 5% increase in fuel efficiency over other engines in its thrust
class. It boasted a 5,000-hour interval for major mechanical
inspections, twice that of conventional engines in its class.
The world’s first production fuel cell vehicle, the Honda FCX,
was first to earn both U.S. EPA and California Air Resources Board
certifications for regular commercial use, the first to be leased to a
fleet customer, the first to start in subfreezing temperatures, and the
first to be placed in the hands of an individual customer. The Hondadesigned V-Flow FC stack enabled Honda to create a fuel cell sedan,
the 2008 FCX Clarity. The first customers included actress and author
Jamie Lee Curtis and her husband, filmmaker Christopher Guest.
now
“The FCX Clarity is ready ”
.
New York Times
December 9, 2007
Super-Handling All-Wheel Drive
Telematics
Acura’s Super-Handling All-Wheel Drive™ (SH-AWD ) system,
introduced on the 2005 RL sedan, was the first all-wheel-drive
platform to distribute the optimum amount of torque both
between the front and rear wheels and between the left and right
rear wheels, resulting in superior cornering performance and
outstanding vehicle stability.
®
Acura debuted industry-leading applications of new telematics
technologies, including the first use of Bluetooth wireless phone
interface as standard equipment, DVD-Audio 5.1 surround sound,
the first in-dash navigation system with real-time traffic information
in the 2005 Acura RL, and first use of real-time Doppler-style
weather information in the 2009 TSX.
Variable Cylinder Management™
so good
Phill™ Home Refueling Device
In 2000, American Honda invested in Fuelmaker Corp, a Canadian
Corporation that created the world’s first natural gas home refueling
device to provide convenient home refueling of natural gas vehicles.
The unit, named Phill,™ was offered to retail customers, including those
purchasing the Civic GX, America’s only factory-built natural gaspowered passenger car available for purchase by retail customers.
3|4|6
“This technology is
,
you don’t even know it’s
Number of cylinders in which
there except when filling up at
second-generation VCM engine
the gas pumps.”
technology can operate
Canadian Driver, October 2004
Collision Mitigation Braking System
The Collision Mitigation Braking System (CMBS) debuted as an
option on the 2006 Acura RL sedan. CMBS uses millimeter wave
radar to detect potential frontal collisions and can alert the
driver, apply braking and begin to prepare the restraint system
before a crash occurs.
ACE™ Body Structure
With the introduction of its Advanced Compatibility EngineeringTM
(ACE™) body structure, Honda became the first automaker to
address comprehensively the issue of compatibility between
small cars and larger vehicles in a frontal collision. The ACE body
distributes crash energy in frontal crashes through interconnected
front frame members, away from the cabin of the vehicle.
“We want to provide all our customers with
top-level
safety for all passenger vehicles.” Koichi Kondo, 2003
Home Energy Station
Honda developed the experimental Home Energy Station, which has
operated in Torrance, California, since 2003. The unit not only uses
natural gas to provide hydrogen for a fuel cell vehicle; it also provides
heat and electricity for a home. The fourth generation of this unit is
even more efficient: CO2 emissions for a household using the Home
Energy Station would be 30% lower than for an average household
using a gasoline-engine car and commercial electricity and heat.
2000s Innovations
Honda’s fuel-saving Variable Cylinder Management™ (VCM®)
technology debuted in the 2004 Odyssey minivan. The world’s
first cylinder deactivation system for V6 engines, it switched
between 3- and 6-cylinder operation. The second-generation of
VCM, introduced on the 2008 Odyssey, expanded the operating
range of VCM technology to 3-, 4- and 6-cylinder modes.
2000 – 2009 105
The Challen
As a young man, Soichiro Honda established
a national speed record in Japan before suffering
an accident that ended his days as a race driver
and almost took his life. But the racing spirit inside
the man could not be extinguished, nor his will
to challenge. The two are inextricably linked in
the life of the company he founded.
of
nging Spirit
the ch a l l enging spir it 107
Honda race team celebrates
victory in 1961 Isle of Man Tourist
Trophy races.
T hrough the years, Honda’s “racing
spirit” took on broader meaning —
reminding all Honda associates to be
ready on time, to focus on teamwork, and
to embrace competition as a dynamic
catalyst for innovation. But the very root
of Honda’s involvement in racing and its
proactive use of challenges to drive the
company forward stems from the same
audacious pronouncement. Two teams, composed primarily of Honda associates, drove
Honda Civic Si race cars to first and second place in the 2005
“25 Hours of Thunderhill” endurance race in Willows, California.
of
In 1954, five years before the
establishment of American Honda, Soichiro
customers in one nation required setting
customer satisfaction in a competitive and
the goal of being No. 1 in the world.
ever-changing business environment. Honda challenged his young company to
Fifty years ago, this same challenging
enter and win the prestigious Isle of Man
spirit led Honda to America in the effort to
is one of continuous challenges that propel
Tourist Trophy races in the United Kingdom. find a new market for its products. More
the company forward by stirring the
From the beginning, he had his sights
than 30 years ago, it led to establishment of
passions of Honda associates who design
set on more than just a racing victory. This
research & development and manufacturing
and develop original technologies and
extraordinary challenge was intended to
operations in the U.S.
products, manufacture those products to
motivate and inspire everyone to work
The story of Honda in America
Thus, the will to challenge that led
ever-increasing levels of quality, efficiency
together to seek the highest levels of
Soichiro Honda to establish a new company
and flexibility, and deliver those products
quality — to hone the skills of his engineers
and take it onto the global stage is not
to market with outstanding sales and
to create the most advanced technology,
something that happened only once. It is an
service. In this way, Honda creates new
and to recognize that becoming No. 1 with
ongoing effort to meet the highest levels of
value for its customers and society.
the challenging spirit
Serving Customers
in America
reating a market for its products in America
C
was not a singular event. Time and again,
Honda has challenged to establish new products
and services that bring joy to the customer.
All lined up with places to
go: Early American Honda
sales efforts involved selling
motorcycles to dealers on
consignment from the backs
of these trucks.
of
Serving Customers in America | motorcycle Division
Riding
the Cycles
When he arrived to establish American Honda’s motorcycle business in 1959, Kihachiro Kawashima
described the United States as the “land of the automobile.” History has proved him right.
But by 1965, Honda’s success in creating a new market for motorcycles in America had won the
company a market share of almost 72 percent. After three years, sales of Super Cub-based models
began to struggle, and Honda’s market share dipped by half (see page 28). By introducing a series
of new bikes in 1969, Honda again advanced its market leadership in the 1970s.
Competition is always a driving force for innovation
and determination. Yet, left unchecked, a focus on competition
can become a distraction from more essential goals. In the
1980s, after Yamaha challenged Honda’s historical supremacy
as the world’s leading motorcycle manufacturer, Honda
responded with a technological furor that resulted in a dizzying
number of new model introductions. But the motorcycle
sales battle that has since become known in business schools
and boardrooms as the “Honda-Yamaha war” soon became
a distraction for Honda. At a 1983 Honda dealer meeting,
American Honda introduced more than 27 new models.
These included not just full model changes, but entire new
product categories, such as an inexpensive scooter and
Honda’s first custom bike, the Shadow.
The world watched as Honda and Yamaha duked it out,
trying to outdo each other with new models. Both moved into
the sports bike category and offered luxury touring cruisers.
But it was the companies’ move into the custom category with
V-twin engines — Harley-Davidson territory — that touched off
a trade controversy. Claiming that the direct competition and
ensuing price war was ultimately damaging the cruiser market,
Harley-Davidson successfully petitioned for International Trade
Commission (ITC) 201 tariff relief. Granted on April 1, 1983, the
tariff affected all imported Japanese motorcycles 700cc or
larger. The tariff of 4.4 percent went to 49.4 percent the first
year of the five-year plan.
There were other contributing factors to
declining sales, including the demise of Honda’s
3-wheeled all-terrain cycle (ATC) business.
As public concerns about safety
heated up, the Consumer Product
Safety Commission held hearings on
all-terrain vehicle (ATV) safety issues.
Lawsuits against Honda and other
manufacturers filed by those injured while
riding the vehicles received wide news coverage. The crisis
culminated in a 1988 industrywide consent decree with the
U.S. government ending sales of the
This Honda dealer
3-wheeled vehicles.
in El Paso, Texas,
Further, the dramatic appreciation of
took American
Honda’s advice
the Japanese yen hurt the sales of imported
and established
bikes. The combination of these factors
a riding course
in front of the
drove a stake in the company’s sales.
dealership to
“I would say now that 1985 was a big
attract and train
contrast year for the motorcycle division,”
new riders.
said Koichi Kondo, who worked in the
American Honda Motorcycle Division at the time (he later
became the company’s president & CEO). “Before 1985 and
after 1985 it was quite a different business.”
Honda had captured more than 60 percent of the market
again during the Honda-Yamaha war, and its sales network
peaked at 1,800 dealers. But by the end of the decade, its
market share had fallen to a little more than 30 percent.
flourished with performance bikes, cruisers, and
American Honda sales declined through the
the Gold Wing. Rural dealers became focused more
remainder of the decade, to 700,000 (1985),
We needed
on off-road bikes and ATVs. “The sophistication of
500,000 (1986), 450,000 (1987), 229,000 (1988),
to put into
many dealers at the time was still like a ‘cigar box
and 133,000 units (1989). Even though Harleyplace systems
business,’” said Blank. “If there was money in the
Davidson petitioned the ITC for termination of
and methods
box at the end of the day, they felt they must have
the tariff in 1987, one year early, by then Honda
to help our
been OK. It was still the days of the good old dirtsuffered from huge inventories. “We had three
dealers
floor motorcycle shop. We needed to put into place
model years of inventory, but at the sales rate, it
cope with a
systems and methods to help our dealers cope with a
was like we had four to five years of inventory,” said
much more
much more sophisticated product line than before.”
Ray Blank, who would later become vice president
sophisticated
Honda developed a facility planning guide and
of the Motorcycle Division.
product line
a standardized accounting system for dealers, so
The steady and precipitous decline in sales
than before.
they could do financial reporting in a consistent way
required that American Honda restructure the
ray blank
nationwide. This enabled American Honda to track
Motorcycle Division in 1987. “I don’t remember how
sales and service better and to help dealers improve
many people were there, but we needed to reduce
their business.
that number by half,” said Kondo. “Even now, I can
Blank was part of the dealer development group
feel how painful it was.”
at
that
time. “We developed interior merchandising
With the business changing, Honda had to
devices that allowed dealers to make a custom and local
make adjustments to its sales network. “As the transportation
look, but at the same time have some standardization,” he
market started to taper off and the sport-recreationexplained. “We introduced a whole new dealer development
performance market started to pick up in the ’80s, those
plan and program in 1985 to try to sophisticate the business
dealers who did not build dedicated facilities really couldn’t
consistent with the product’s sophistication
deal with the product anymore,” said Blank.
and to make it more appealing to a
Honda originally looked to small businesses such as
much broader customer base than
hardware stores as dealerships. But as the product became
we had before.”
more sophisticated and service needs warranted
more highly trained technicians, that sales
environment didn’t work anymore.
“Honda went from selling
Cub-based bikes to CB750s
and Interceptors with
exotic technologies. You
simply couldn’t go to an Ace
Hardware store and expect
it to be able to service a
Gold Wing,” said Blank.
The business also started to
segment by geography. The larger
dealers in the metropolitan areas
Shadow
of
Coming out of the tailspin of the late 1980s, Honda’s
dealer network declined to about 1,200 dealers. Sales fell
to the lowest level in more than 20 years. In addition, safety
became a major issue due to the consent decree that forced
an end to the 3-wheel ATC business. “In the 1990s, we began
assisting dealers to be better businessmen. We also had to
get smarter about the business. We had to turn the negative
publicity into positive publicity,” said Blank.
As baby boomers who were now empty nesters began
returning to the motorcycle market, the Motorcycle Industry
Council established an organization called Discover Today’s
Motorcycling. The goal was to turn around the negative image
that plagued the business in the late 1980s, and to present
motorcycling as a clean and healthy sport to be enjoyed by
people of all ages. Honda was also investing in the business,
despite the economic downturn, by establishing four Rider
Education Centers (see page 81) in the early part of the decade.
In 1998, Honda opened a new ATV factory in South Carolina
to support the growing popularity of 4-wheel ATVs. “It took
10 years, but from 1989 to 1999, it was almost a 180-degree
turn,” said Blank.
Sales were booming again, soon topping the 500,000
unit mark for the first time in almost 20 years. The
Motorcycle Division used the momentum to get more
dealers to build dedicated Honda facilities. The
concept, called “Honda Powerhouse,” debuted in
2001. The program showed its value in the face of
the economic challenges that began to hit
the powersports business in 2007,
when the strongest dealers
were Honda Powerhouse
facilities. The Honda
Powerhouse concept
serves as an extension
of the Honda brand,
showcasing the full range
of Honda powersports
products in a contemporary
and Honda-exclusive environment. Honda Powerhouse
dealers also benefit from more efficient processes, such as
automatic inventory replenishment, in which a sold vehicle is
automatically replaced with a new unit.
“It’s all about enhancing the buying experience and
giving the dealer the freedom to focus on the customer,”
said Jack Gray, senior manager of Motorcycle Sales in
charge of the Honda Powerhouse program. “Products
aren’t stacked handlebar to handlebar. More efficient and
customer-focused operations translate into a better customer
experience, more unit sales per outlet, and a stronger dealer.
An increasing percentage of our sales are coming from our
Powerhouse dealers.”
The economic recession that began in 2007 was the fourth
major economic downturn experienced by the motorcycle
industry since the early 1970s. “This 50th anniversary year
is going to be the darkest year for us. It is very painful,” said
Blank. “But it can also be a huge opportunity for us to start a
very strong renaissance. Every time we go through this —
and there are some people here who have been through
four of them — we come back and raise the bar higher. We
get more powerful, we get more creative, and we become
more inspired.”
One idea was the 2008 “Unconvention” concept.
Rather than hosting a traditional national dealer meeting to
showcase new products and discuss business, the Motorcycle
Division hosted the event online. The Unconvention gave
the division more time to share information with dealers.
Honda had annually conducted an hour-and-a-half business
presentation at a convention. “It’s not just less expensive,
it’s better compared to a convention, and it’s worked out
very well. We’ve now done product introductions using this
approach, too. With Unconvention, we’re out there every
couple of months or so with another convention, if you will,”
said Blank.
To compensate for the loss of face-to-face discussions
with dealers, the division undertook a major riding tour to
visit dealers. “We sent all of the managers to the spot, to
meet the dealers face to face in their stores and really spend
quality time with them,” explained Blank.
Honda Powerhouse
“It’s really important for Honda to
dealers make a
continue
to develop a difference within
commitment to
the Honda brand
the market, even though it’s more difficult
that results in
as time goes on to create something
a greater selection
of products and
different,” said Blank. “The real benefit that
accessories and
we will have in motorcycling in the future is
better service for
clearly technology. Being a technological
the customer.
leader in powertrain applications and so
many other areas is going to put us at the forefront.”
Blank believes that the market is ready for a new
paradigm. “We’re probably right on the cusp of it now. You
hear more and more people talking about either electric or
hybrid or alternative fuels in motorcycling,” said Blank. “It’s
particularly strong amongst Generations X and Y. Growing up
in a green culture, young people look in the future to green
products. And who’s better suited to combine technology
and motorcycling than Honda?”
Serving Customers in America | power equipment Division
American Honda established the Power Equipment Division in 1975.
The original team, shown here, was based in Gardena, California.
Powered
by Honda
starting in America in 1962 as EGF (Engine, Generators
and Farm), Honda’s power equipment business began with one
product to sell, the small F190 tiller. By 1965, the group was
operating as a part of the Motorcycle Division, and had added
its first generators, the portable E40 and E300, and its first
general purpose engine, the GB30. Sold through existing Honda
motorcycle dealers and some hardware stores, sales of Honda
power products totaled less than 1,000 units in 1965.
The first four EGF associates reflected Honda’s growing
international footprint and the cultural diversity of Southern
California. Willie Tokishi, a member of the group who would go
on to a diverse career in marketing, sales, distribution, racing,
and community relations, recalls: “Masami Suzuki had come
of
from Honda France and wanted to develop
a power products division in the U.S., but
he spoke almost no English. He brought
along an engineer who spoke Japanese and
French. And we had Chin Chi Hsu, who was
from Taiwan and spoke Chinese. The kanji
alphabet is a bit different between Japanese
and Chinese, but our communications
went from French to kanji, and then Chin
Chi Hsu translated the kanji to English. It
was a challenge sometimes for us just to
communicate, but we made it work.”
The four associates took to the road in
the late 1960s to study the market for future
product opportunities. They came back
with the idea for a tiller with a snowblower
attachment, a dual-purpose machine that
was unique in the industry. By 1968, the EGF
group had 13 products. Annual sales were
approaching the 9,000-unit mark.
In 1971, Honda expanded into the world
of power equipment with the Honda F28 rototiller,
with available snow-removal attachments. It also
launched the company’s first outboard marine
engines, the F35 and the F75. The entry into the
marine market with cleaner 4-stroke technology
followed an extensive study headed by associate
Howard Matsumoto. Prototype engines had been
given to Honda’s 60 power equipment dealers along
with an extensive 80-question survey designed to
determine the product’s market potential. “The
response was very positive,” recalls Matsumoto.
“There seemed to be a great deal of interest in our
marine engines.”
By 1975, Honda saw the need to separate
power equipment sales from the Motorcycle Division.
Terumasa Kanazawa arrived as the general manager
of the newly minted Power Products Division. The first five
field sales reps focused on generator sales, while the general
purpose engine business remained centered in California,
with five associates working in a small, windowless office
adjacent to the cafeteria in Gardena. “It was a converted
telephone switching room, as I recall,” says Steve Bailey,
one of the first Power Product reps and now vice president
of the Power Equipment Division. “My territory was the entire
United States!”
Early customers for Honda general purpose engines
included Snapper, which used Honda engines in its lawn
mowers until the arrival of the HR-21, Honda’s first U.S. lawn
mower in 1979. The HR-21 featured numerous innovations,
including the world’s first blade clutch that could stop the
blade in less than three seconds. Power Equipment Field
Service Representative Richard Veronese recalled: “We
were five years ahead of the competition with the HR-21.”
Even after Snapper switched to a competitor’s engine,
some Snapper dealers
The E300
generator was
one of Honda’s
early power
equipment
products.
Serving Customers in America | power equipment Division
LEE, for “less expensive
“I think of it a little like that three-dimensional
continued to seek Honda engines. “Our distributors began
engine.”
The
LEE
project
chess game on Star Trek,” says Bailey, referring to the
selling engines directly to the Snapper dealers, who would
would lead to the launch
science fiction television program. “You move one piece
swap them out in their stores,” recalls Bailey. “That was
of Honda’s GC and GCV series
up top, and it impacts pieces on all three levels. It’s a
more or less the beginning of our re-power business,
engines in the late 1990s. The GC
fascinating business.”
which was directed mainly at commercial
series
boasted
the
superior
performance
In 1994, the company began pursuing a dual strategy
customers and equipment rental
of a 4-stroke overhead-cam design, along
of selling general purpose engines and other Honda Power
companies that had come to
with lightweight construction and about
Equipment products, such as generators and pumps, to
appreciate our engines’ quality,
30 percent fewer parts than the GX series.
rental companies and other commercial users. “Before,
durability and reliability.”
And
its
uniblock
design
allowed
the
production
we were on separate roads. Now, we’re traveling on the
Honda Power
of one engine block for both horizontal (GC) and
same highway in adjacent lanes,” said Rock Reed, assistant
Products began signing
vertical (GCV) driveshaft applications, further reducing
vice president of Power Equipment. “The basic goal is to
up engine distributors,
both cost and manufacturing complexity.
make sure our customers have a good tool to make their
and business expanded.
HR-21 lawn mower 1978
With
a
new,
less-costly
engine
in
its
arsenal,
Honda’s
life more enjoyable.”
Honda’s U.S. engine sales
sales were once again on the rise. In 1996, Honda Power
experienced their first growth spurt in 1977
Equipment Mfg., Inc. — which began lawn mower assembly
with the G series engines, called internally the ME, or
Honda Finds a New Home (Depot)
in 1984 — kicked off production of GC and GCV engines
“million engine” series to reflect the company’s goal of a
Until 1998, sales of Honda Power Equipment products,
at
its
Swepsonville,
North
Carolina,
plant.
By
2006,
annual
million engine sales worldwide. The GV35 engine provided
including lawn mowers, trimmers, generators and pumps, were
production of GC engines in America hit the
the company with a platform to take its first big step into
conducted exclusively through Honda’s 2,200 U.S.
the national distribution of OEM (original equipment
power equipment dealers. That year, the company
2 million mark.
We knew the
manufacturer) engines.
partnered with a still-growing Home Depot, initially
In the 1990s, the Power Equipment Division
value that the
Honda Power Equipment — called Honda Power Products
selling only lawn mowers there and then expanding
launched the “Powered by Honda” marketing
Honda name
under the Motorcycle Division until its establishment as a
to other products, including Honda snowblowers and
strategy to manage the use of its name across all
represented to
separate division in 1985 — began signing up distributors.
minitillers. “Our team looked at a number of options,
OEM products. The Powered by Honda logo popped
our customers.
The Honda engine business grew. The G series was followed
and with Home Depot we expanded into the DIY
up in stores across the country, including Sam’s
steve bailey
in 1983 by the GX series. “The GX series was a major step in
[do-it-yourself] channel,” said Bailey.
Club, Costco, and major hardware chains. It was
our growth,” said Bailey. “It was years ahead of the competition tagged on to a variety of products, including
The move was initially unpopular with some
in meeting California’s emissions standards.” With the
of Honda’s existing dealers. So the company adopted
pressure washers, pumps, and other small homearrival of the GX, engine sales more than doubled by 1986.
special measures to ensure that its Home Depot
use products. “We knew the value that the Honda
They continued a steep climb as Honda became the bestcustomers received outstanding customer care in the
name represented to our customers,” said Bailey.
selling engine in the rental and construction industries.
dealers’ service shops. Honda Power Equipment’s independent
“The ‘Powered by Honda’ strategy allowed us to leverage that
“Our commercial engine sales had a very strong following,
dealers were paid for an extra half hour of flat-rate labor for
brand equity.”
but in order to reach more residential consumers, we realized
any service on those products.
With a product line and customer focus that cut across
we would need to offer a new line of engines,” said Bailey.
Ultimately, the Home Depot strategy proved to be a
a broad swath of the market — from lawn-and-garden
Under the leadership of Shoichi Tanaka, the Power
smart decision. It doubled Honda’s U.S. lawn mower sales
equipment to outboard marine engines to general purpose
Equipment Division conducted a series of market studies
and increased sales both at Home Depot outlets and through
engines — the Power Equipment Division now works with
focusing on the premium residential market as the most
Honda Power Equipment’s independent sales and service
a vast network of dealers, engine distributors, and original
promising next step for its U.S. engine business. The team
dealer network. “It raised awareness and purchase intentions
equipment manufacturers (OEMs) — a sales network totaling
came up with an ideal image for a new engine internally called
across the board,” said Bailey.
more than 25,000 companies.
Serving Customers in America | Automobile Division
Dawn of
a New Era
Chevrolet also had small cars to sell at that time. Inevitably,
that led Honda to particular dealer candidates that might be
interested in selling small cars.
“We called them ‘BOP’ dealers, for BuickOlds-Pontiac,” said Elliott. “But more than a
Most of the original 32 dealers who helped American
brand, what we really wanted were dealers who
Honda start sales of its diminutive N600 Sedan and Z600
could offer financing, who had good service and
Coupe models in several Western states came from the ranks
parts departments, and who could take care of
of Honda’s motorcycle dealer network. However, the company
the customer.”
quickly determined that relying on the motorcycle dealers
Before the end of the first year, American
probably wasn’t the best way to build auto sales.
Honda had more than 700 associates, but only
“Most of these dealers weren’t willing to stock more than
10 automobile sales reps, each covering one or
two cars,” said Tom Elliott, who joined Honda in August 1970
two of the so-called “smile states” that stretched
as the new department’s fourth salesman. “They didn’t take
trades, and they had no customer financing. They were good at from California to the Gulf Coast. “We brought
motorcycles, but simply not equipped to sell and service cars.” them in from all over the country, for four to six
weeks of training, staying at the Cockatoo Inn on Hawthorne
In the end, it was the need to serve the customer that
Boulevard,” Elliott recalled.
drove Honda’s strategy in setting up the dealer network.
Market studies were conducted to determine consumer
Honda reps trained their sights on the best dealers in their
receptivity to import brands and to establish accurate sales
markets, but also on the ones who would be most interested
targets. But so far, American Honda didn’t even have a
in what Honda had to sell — small fuel-efficient cars. Ford and
distribution system. Dealers
had to arrange to pick up their
Honda cars at the port.
Things began to change
in December 1972, with the
launch of the Civic at the
inaugural National Auto Dealer
Meeting in Los Angeles. More
than 350 Honda dealers and
prospective dealers filled the
International Ballroom at the
Beverly Hilton for a full course
of information on Honda’s
new Civic, a series of dealer
and media test drives (held in
a heavy Southern California
rainstorm). They also received
Honda founder and President Soichiro Honda was a guest of honor at Honda’s first
information about some justnational automobile dealer meeting in Los Angeles — along with the debut of the Civic.
announced technology that
of
would be introduced in the Civic in 1974 — the CVCC engine.
It was also at this time that Yoshihide Munekuni and Cliff
Schmillen teamed up as the new director and
assistant director of automobile sales. An effective
team, the focused Munekuni and congenial
Schmillen set out to build a dealer network able
to meet the brand’s growing needs.
“We drove around to see the town, and the
candidate with the most beautiful and outstanding
store was the place we would visit first,” said
Munekuni. “To judge the quality level of each store,
we wanted to see two things: first, was the quality
of the signage, then the cleanliness of the windows.
It should be clean and transparent glass. Then
we would go into the showroom. From experience,
we could judge immediately whether it was a good candidate.”
American Honda sales executives continued to visit
dealers to establish good relationships. “We’re dealeroriented. It was quite unusual for them to have a guy like
Mr. Munekuni and me to come and visit,” said Schmillen, who
had served for a decade in a variety of positions with Honda’s
motorcycle business. “They [manufacturers] just don’t
normally do that in the automobile business. But we did,
and the dealers really loved it. They were really happy to see
someone who had some authority.”
But American Honda had little influence over how Honda
cars were sold. “At most dealers, Civics would be mingled with
used cars outside the store,” said Munekuni. “Customers would
be walking around looking at used cars and, all of a sudden, a
new compact car was sitting there. They were surprised that
a new car price was lower than the used car. Plus, the new car
had a warranty. The only selling point we had at that time was
that, at $2,150, Civic was the lowest-priced new car in America.”
American Honda’s next challenge was to establish
exclusive Honda dealerships — rather than sharing
multifranchise locations with other brands. “Once they were
in the market for a car, customers could see both kinds of
dealers,” said Munekuni. In 1973, Honda did not have a single
exclusive dealer. By the end of 1974, it had 19.
Meeting Customer
Demand
with more customers for the Civic than
Civics to sell, Honda ended 1973 with sales
momentum. Further, the 1974 Honda Civic was
named Road Test magazine’s Import Car of the
Year and earned the U.S. EPA ranking as the
most fuel-efficient car in America — attracting
even more positive attention from customers.
Cliff Schmillen, who passed away in 2008,
recalled a turning point in the effort to increase
the supply of cars for American customers:
“In 1974, we were on target to sell
43,000. And everybody [dealers] wanted
more cars than they could get, so it was a
challenge. But we had gotten notice that we
were going to get 53,000 the next year, and
this was into ’75. Well, I had visited a lot of
dealers, all over the country, East Coast,
West Coast, and in between, and I just knew
that 53,000 cars was not right. So, when I
came back and talked to Mr. Munekuni, and
he was with me on some of the trips. I told
him that we needed at least 150,000 cars.
He thought we should go to Japan and talk
about it. And so we did. We had a lunch
meeting with every previous president of
American Honda.
We talked kind of
Cliff Schmillen
worked for eight
socially for a while,
years in the
Motorcycle Division and then they asked
before becoming
Mr. Munekuni how many
assistant director
cars we were talking
of Auto Sales in
1973. Much loved by about. And Mr. Munekuni
dealers, he retired
looked at me and he said,
as a senior vice
‘Cliff, you tell them.’ So
president in 1990.
I told them, ‘I want 150,000
automobiles.’ And all jaws dropped. It was
a shocker to them. But it was such a shock
that I thought, I’d better ask each one how
they felt about it. I asked Mr. Kawashima,
the first president of American Honda,
who founded the company. And he said,
‘I don’t know, Cliff.’ And I went right around
the table and I got the same response from
everybody. I got to H.G. [Hirohisa] Nakamura,
who is, I think our third president, and I
said, ‘H.G., what do you think about it?’
and he said, ‘Ya, ya, ya.’ That kind of relaxed
everybody. Everyone agreed that they’d
give us as many cars as they could. They
wound up giving us 103,000, and we sold
every darn one of them. We could have
sold more. I think that was kind of a turning
point in their thinking about Mr. Munekuni
and I, and about what our needs really
were in America.”
Local Production
Opens New Doors
With the start of local automobile
production, Honda’s U.S. auto sales network
entered a new phase in November 1982. The
increased inventory from the Ohio factory
would help overcome the limitation imposed
by the Voluntary Restraint Agreement, which
had limited Honda to a little more than
300,000 imports per year. Just as important
was what Honda produced.
The launch of U.S. production followed
on the heels of the second-generation Accord
Sedan. It had rapidly become the vehicle
the entire industry benchmarked in terms of
quality and reliability, a car that was fun to
drive and elegantly packaged.
From American Honda’s perspective,
it was essential to increase sales, both to
maintain stable production and to justify
the huge investment in local manufacturing.
The sales organization had been divided
into Eastern and Western regions, with the
Mississippi River in the middle. Initially,
Tom Elliott managed the Western region;
Jack Bilmeyer was in charge of the East.
“Tom and Jack would disagree on almost
every issue,” recalled former President Koichi
Amemiya. “At some point in the meeting, Jack
would always say, ‘OK, the discussion is over.
Mr. Amemiya, make a decision.’ And I would
decide — sometimes based on Jack’s and
sometimes based on Tom’s point of view. In
either case, Jack would always follow. But
Tom would always push for what he thought
was best for Honda. And that helped the
company a lot.”
While the Marysville Auto Plant was
ramping up to full production, the Western
region relied on imported cars — the Accord
from the Sayama factory and the Civic from
Suzuka factory. The Eastern region was to sell
all of the Accords made in Ohio. “We needed
to distribute four times more cars than we had
originally considered,” said Munekuni.
“The national dealer meeting was held
in Ohio in 1982,” said Elliott. “Basically, every
dealer went to the factory. I think there were
concerns about quality, but we saw the
training and the pilot production and they
began to feel better about it. By the time
production began, dealers were ready.”
Tom Elliott, then assistant vice president of auto sales
in the Western region and Edd Baker, a sales assistant.
Honda expanded production with
a second auto plant in Canada in 1986,
ultimately focusing on Civics. The launch of
the 1986 Accord, the third-generation model,
took Honda to a new level. With supply
increasing from Ohio and the popularity of
the Accord soaring, sales were booming.
By the end of the decade, Honda and its
dealers had made Accord the best-selling
car in America — a first for a Japanese
nameplate vehicle.
Even with the increasing number of
locally produced Accords and Civics, as the
decade drew to a close waiting lists at dealers
were common.
Former Executive Vice President of Automobile Sales Dick Colliver (above) led American Honda in the
direction of becoming more of a marketing company according to former President & CEO Koichi Amemiya.
Becoming a
“Good Marketer”
When Dick Colliver joined American Honda in
January 1993, the company faced two of the most serious
challenges in its history. An economic recession, coupled
with competitor sales tactics, cost the Accord its title as
the best-selling car in America. After almost two decades
of ever-increasing sales, the familiar customer waiting lists
of
were gone. Inventories were rising dramatically, with Honda
Accords ignominiously stockpiled on third-party storage lots
in Ohio. Further, there was an unfolding bribery scandal: A
group of rogue sales executives had victimized both American
Honda and its dealers. The trouble would eventually result in
prison sentences for some of Colliver’s predecessors and the
departure of most of Honda’s zone sales managers.
To stabilize the sales networks, prior to Colliver’s arrival,
Senior Vice President Tom Elliott had returned to sales on an
interim basis, in addition to his duties as head of Automobile
Operations, and Jim Roach had moved from Parts to the Sales
Division as head of the Western Region. After Colliver arrived,
he hired new sales personnel — including Dick Szamborski,
Steve Center, and Frank Beniche — he identified the first
challenge as establishing a trusting relationship between
Honda and its dealers. “It was important that they [dealers]
trusted that American Honda would do the right thing, so I
traveled around the country meeting with all the zones and
meeting with dealers,” he said. Colliver also communicated
directly to the dealer body every six weeks through a series
of video messages on business issues and with motivational
messages. “Even though all the litigation had started, they
were encouraged that we were moving in the right direction.”
American Honda had to get the metal moving again.
Center recalls attending a meeting on customer satisfaction
shortly after joining Colliver’s team in September 1993. “At
the end of the meeting, Mr. Amemiya was asked to make a
comment. He kept it very simple,” recalls Center. “He said,
‘We have always been a good distributor. Now we need to
become a good marketer.’ ”
Becoming a marketing company — going from pushmarketing to a pull-marketing strategy — first required better
knowledge of the customer. However, American Honda had
no centralized customer database. In fact, the company
was paying R.L. Polk millions annually to rent a list of Honda
customer information. “We had to pay for information about
our own customers, and it was just a list,” said Center.
Establishing a proprietary customer database was a
game-changer. “We wanted a larger percentage of the share
of mind of the dealers,” said Colliver. “Now, we owned the
data. By analyzing the data, we have a better understanding of
when a person is going to buy a new car, whether or not they’re
loyal to us, and if they’re not going back into the dealer’s
service department. Everything was designed to grow the
dealer’s business.”
Built for a fraction of the fees once paid to R.L. Polk, the
database provided invaluable information about Honda and
Acura customers. That served as the neural backbone for
product launch activities. “We really started learning about
concurrent ownership of our products, repeat ownership,
all kinds of information,” said Center.
A new leasing program then set in place a chain of
programs that strengthened the dealer network and stoked
the fire of Honda sales in the mid-1990s. “Having been in the
leasing business, I saw a real competitive advantage with
Honda products because of their high resale values,” said
Colliver. “The used-car values were stronger than any brand
in the industry.”
Up until that time, American Honda’s financing arm was
used primarily to support the motorcycle dealer network. It
provided floor financing and lines of credit to dealers who were
struggling in the poor economy. Working with American Honda
Finance Corporation, the Sales Division developed an auto
leasing program. “Leasing helps build solid trading cycles, and
our strong resale values set a lower payment for the customer
than what the competition can offer,” said Center. “But in 1993,
Honda Finance had maybe 17,000 leases in its portfolio. Not
for a month, that was the whole portfolio! We had to convince
them [dealers] that this was a good idea, because it was key
to our strategy.”
With Honda able to set low lease rates for some of
America’s most popular products, such as the Accord and the
Civic, leasing was an instant success. It soon created another
opportunity. “As we saw that portfolio growing, and we could
collaboration with the Sales Division team, who worked
visualize the cars coming off lease down the road, we thought,
with Mike Nitz of Service Engineering, Mike Burke of Service
How do we control those used cars and keep them in the
Operations, Dan Spafford in Honda Finance, and budget analyst
Honda dealerships? So we developed the Certified Used Car
Joe Placencia, among other associates. Honda-Certified
program,” said Colliver.
Used Cars has been named a “best in class” program in every
Even the name of the program — Hondayear since its inception.
Certified Used Cars — was intended to reflect
The next step was a real test of the team’s growing
We did studies
transparency with the customer. “We did studies
relationship with Honda dealers. “Honda was very,
on what to
on what to call it, and the agency had all of these
very conservative in the ’70s, when they established
call it. But
fancy names,” recalled Center. “But we decided
the dealer organization, in terms of what they requested
we decided
Honda had the best name in the business, the
with [dealer] facilities,” said Colliver. “Initially, most
Honda had the
cars were certified because we stood behind
of them would start with another brand. Then when
best name in
them, and they were used cars — we didn’t want
they did separate, they built real small inexpensive
the business.
any of that ‘pre-owned’ euphemistic language.”
buildings — like the old Butler Steel buildings that you
steve center
could put up for almost nothing. As the business had
grown, they couldn’t take care of the customers they
Dealers were hesitant about the program
had. We knew from our research that service customers
because the certification added to the price. But
weren’t coming back to Honda dealers. They weren’t
Honda’s confidence was bolstered by research
going to wait two to three weeks to get an appointment.
into customers’ concerns. “They worried about
And we knew we were about to grow sales even higher.”
the car breaking, so we offered a warranty,” said Center. “And
At the 1996 dealer meeting, the Honda Sales Division
they worried about the dealer’s extended warranty, so we said,
launched
its “image program” — a comprehensive remake of
‘Fine, it has our warranty.’ We just removed all objections.”
the look, design and capacity of Honda stores. The idea was
“Honda Service had already developed an extended
to establish a stronger presence for the brand in each local
service contract that they could sell to the dealers, but we
market by standardizing the look of the dealerships. Anyone
weren’t doing anything with it,” said Colliver.
driving through any town in America should immediately
“It was designed as an extension of the warranty.
recognize a Honda dealership. “They thought I was crazy when
But I got them to place it at the finance company
I introduced that image program,” said Colliver. “But today
because it was going to be sold in the dealership.
probably 80 to 85 percent of our dealers have completed it.
It became a profit center for us and the dealers.
After three years of growth from 1993 to 1995, they could see
So when we did the certified program, all we
our vision of where we were going and the fact that to meet
did was go back to that same
Honda dealers
the demands of consumers, they had to expand their facilities.
program and just expand it for
ultimately
embraced the
So it was part image, and the other part was getting them to
used cars. We didn’t have to
“image program.”
expand their facilities so they could take care of the customer.”
put a whole new department
The goal was not
only a new look,
Through these and other initiatives, including the
together or add a bunch of
but increased
Regional
Marketing Program and e-business efforts, starting
new
people.
This
kept
our
service capacity
to accommodate
in 1994 the Honda Sales Division was on its way to achieving
cost down.”
the needs of the
14 consecutive years of annual sales increases — including
Importantly, the program
growing number of
12 straight years of record sales.
represented an enormous
Honda customers.
After Strong Start, Acura
Takes Wandering Road
With 60 dealers in the top 30 U.S. markets, each with a
new stand-alone facility, Acura began sales on March 27, 1986,
becoming the first Japanese automaker to enter the hallowed
ground of luxury automobiles. (See related story on page 66.)
“We had an aggressive schedule to sign up dealers and
get so many of them open by a set time,” said Ed Taylor, then
vice president of the Acura Division and its very first associate.
“We didn’t have a large team, but they really invested their heart
and soul in starting up this division.” Key associates included
Paul Pugh, the first manager of Acura Service, Dan Crowe, then
manager of Market Representation, and Ron Chufo, then manager
of Acura Parts. “We formed a very tight-knit team,” said Taylor.
The first challenge was to sell dealers on the premise
for Acura. “We had to get them to spend millions of dollars
up front to build or acquire new buildings,” said Taylor. “We
tried to make it easier for them. They didn’t even need to hire
an architect to construct a new facility because we had a
consultant write a book about how to build a new building
that was very customer-focused. It included a waiting room,
American Honda President Tetsuo Chino (center, with red tie) and Vice
President Koji Kadowaki (left) listen to an explanation of construction
plans at the groundbreaking for one of Acura’s first dealers.
of
Acura sales operations in Torrance to cope with
the recession and slowing Acura sales. “From the
We worked
standpoint of organizational efficiency, we get a ‘10,’”
very hard to
said Steve Center, a former vice president for the
focus [Acura]
division, who is now vice president of Advertising and
dealers on
Public Relations. “But doing Honda and Acura from
serving the
one area of responsibility doesn’t get you there in
customer.
terms of differentiating the brands.”
ed taylor
With the strong support of former Executive
Vice President Atsuyoshi Hyogo, Acura experienced
a renaissance from the late 1990s into the 2000s,
driven primarily by successful products developed
and built in North America. The first U.S.-developed
TL quickly became Acura’s top seller in 1999. It would
continue in that role until it was eclipsed eight years later by
The goal of being recognized as part of the Acura
the U.S.-developed Acura MDX.
Precision Team — an annual honor for the brand’s top
“In the early 2000s, we went through a complete
dealers — contributed to Acura’s earning the No. 1 spot in
revitalization
of dealer facilities. I had dealers tell me, ‘You
the J.D. Power and Associates Customer Satisfaction Index
know what paid for this building? The new MDX and the new
for its first four years in business. In fact, Acura achieved what
TL,’ ” said Jeff Conrad, now vice president of the Acura Division.
were then the highest scores in the history of the survey.
Though the creation of Acura was an act of bold leadership, “These were superb products that put a lot of gross profit on
the bottom line for dealers. We had some facility assistance
sustaining it proved a difficult challenge. The Japanese luxury
funding that was the icing on the cake. But the products
makes Lexus and Infiniti entered the field, and European brands
ringing the cash register enabled us to get dealers to invest.”
were startled into action by the success of Acura.
“The response of the dealers was the largest and quickest
Acura had ambitious plans, including a goal to achieve
support
of an automotive nameplate’s facility image and
annual sales of 250,000 units through a 600-dealer network
signage program ever in the industry,” said Dennis Manns,
by 1990. But the sales network never rose much above the
then assistant vice president for National Sales for the Acura
300-dealer mark. Sales topped out at 143,000 units in 1991;
brand. “We had so many dealerships being built that the
they would not reach the 200,000-unit threshold until 2005.
suppliers for the spec materials were actually running out
Acura was viewed as an intercept brand by some and
of those materials. It was a testament to the confidence the
as a luxury, sporty brand by others. “The [Acura] Integra was a
dealers had in the product and the brand.” More than 90
great car, but it was not a luxury car,” said Taylor. “I think this
percent of Acura dealers adopted the facility guidelines.
is one of the reasons Acura got the reputation as a near-luxury
After achieving record sales of almost 210,000 units in
brand. We never did introduce all of the products that we had
2005, the brand again could not sustain its momentum. The
initially talked about with dealers. A great number of dealers
Acura RL was underperforming as the marquee model, and
struggled early on as a result.”
Acura exited the low-end of the market by terminating the RSX.
Further, Acura had begun life as a separate sales
Additional new model launches were ill-timed, with long gaps
organization, so associates could focus on one brand.
between introductions or overlapping launches in a single year.
In the 1990s, the company consolidated the Honda and
which was new at the time, and an area to make the
service write-up smoother and easier.”
Acura met its first-year sales goal with almost
53,000 units and became the top-selling luxury
import brand after two years on the market. It also
set a new industry benchmark for customer service.
“We worked very hard to focus dealers on
serving the customer,” said Taylor. “Up until then,
when we named our top dealers, the criteria were
weighted toward sales. Paul Pugh and I came up
with the Acura Precision Team concept to give more
priority to the service side of the business and to
encourage dealers to improve customer relations.”
Creating a New Acura
Customer Experience
Embarking on its ultimate destination Acura is
being positioned as a luxury marque with its own unique brand
values — with the products, marketing and client experience
consistent with that standing. Conrad knows it won’t be easy.
“Taking a franchise that was positioned in the market for
22 years as an intercept brand and was accepted by customers
who vote with their wallet, and then elevate that brand into
luxury positioning is a big proposition,” said Conrad.
Conrad and Center led a more than year-long effort to
establish the brand’s direction. It was not the brand’s first
makeover. But this time, the steering committee guiding the
effort included associates from sales, service and parts,
advertising and public relations, product planning, logistics,
Acura Client Services, and Acura Financial Services. “It has
been a long, tough struggle with lots of passionate arguments
and discussions,” said Conrad. “Now, we fully understand
that in embracing the goals we have of becoming a premium
positioned brand, that the brand is articulated both through
the styling design and performance of the products together
with a client experience that showcases that positioning.”
A key to the new direction is a unique, branded level of
personalized client care to be called the “Acura Concierge
Experience.” It will be formally introduced to dealers in 2009.
The program will encourage Acura dealers to make their
facilities more upscale, inside and out. But the physical layout
is secondary to the actions of the people who work there. The
program’s goal is to make the sales and service experience
less like a transaction and more like concierge service at a
five-star hotel.
“We need to brand our experience, just as we brand
our cars,” said Conrad. “The concierge approach is not one
person behind a welcome desk in the showroom or the service
department. It is that the whole team understands they all
must serve in the role of concierge, truly listening to the
customer and then meeting those needs.”
“People don’t always realize the importance of having
The concierge strategy was born in an Acura Institute
a network of talented and dedicated dealers who believe in
meeting in the summer of 2007, when members of the sales,
your vision and follow it. Fortunately, we have a lot of those
parts and service field organization were asked to contribute
people,” said Conrad. “It never ceases to amaze me to go
ideas for research that would clarify the Acura customer
out in these tough times and find car dealers with $6 million
experience. “All of these field people started offering up ideas
in inventory on their lots. They’re betting that the economy
that were merged with other concepts and formed the basis
will turn around, and they’re betting on their ability and the
of lively discussions for the steering committee we established
abilities of their people.”
to set Acura’s future direction,” said Conrad.
With the new direction, there are many in the Sales
In December 2008, the plan was pitched to the Acura
Division hoping for a return to completely separate Honda
National Dealer Advisory Board, in a private meeting held
and Acura Divisions, including Colliver, now an advisor to the
before the executive session. Dick Colliver, former executive
company. “The biggest challenge and biggest opportunity
vice president of Auto Sales, Conrad and Center were joined
for growth is to separate the Acura and Honda brands,” he
by John Mendel, now executive vice president of Auto Sales,
said. “We need to establish a separate identity not only with
and Chuck Kendig, senior manager of Acura Parts and Service.
consumers, but internally, in the mindset of associates,
“After we made the presentation, one dealer looked at us and
that the Acura brand is different.”
said, ‘The ship is sinking, and you’re out mowing the grass,’ ”
said Conrad. His point
was that the world had
been turned upside
down with gas prices
and the economic
crisis and he was
more concerned
about the short-term
lease programs and
promotional programs.
“We responded
that our responsibility
is to keep the foot on the
gas pedal for both shortand long-term needs.
Then another dealer
spoke up and said,
‘I like the ideas they
are talking about, and
I applaud them for doing
both. Keep going.’”
Jeff Conrad, vice president of the Acura Division, was tasked with leading a select
The meeting kept the
steering committee that helped develop the idea for “Acura Concierge Experience.”
momentum going.
Keeping it
“Simple”
many long-term relationships exist between
American Honda and many of its dealers and with a number of
community organizations. But its 35-year relationship with the
same advertising team is unique in the auto industry.
Gerry Rubin and Larry Postaer faced a big challenge to their
relationship with the company in 1986. After they spent a dozen
years creating Honda’s automobile advertising at the Los Angeles
office of Needham, Harper & Steers, the big agency became part
of a larger holding company with client conflicts. So Rubin and
Postaer approached American Honda management with the
concept of continuing as an independent agency. After a brief
discussion, then Executive Vice President Koichi Amemiya asked
one question: “Do the people stay the same?” With the answer
affirmative, Rubin Postaer & Associates (RPA) was born.
RPA writers and art directors coped with former American
Honda Executive Vice President Tom Elliott’s legendary red
pen for several decades. “Outwardly, he may cast off the
appearance of a blackjack dealer protecting his hand,” said
Just as “You Meet the Nicest People on a Honda” helped distinguish Honda motorcycles in the 1960s,
the “We Make It Simple” campaign was more than just an advertising slogan. It helped introduce and
articulate the Honda brand values to car buyers in the 1970s.
of
Rubin of Elliott, who had automobile advertising, among his
many responsibilities. “Inwardly, the man knew instinctively
the mood, the tone, the messaging that was consistent for
the Honda brand. Tom’s intimate knowledge of the product,
combined with his sense for what values such product features
brought to the customer, often plussed-out the original idea.”
Rubin valued the role Honda executives played in shaping
the company’s advertising. “We had an ad campaign called
‘We Make It Simple.’ But all of the Honda executives were
simplicity themselves,” said Rubin. “They never exaggerated.
In fact, they downplayed the truth to where it was frustrating
The advertisement above reflects a change made by
Vice President of Automobile Sales Yoshihide Munekuni
to avoid potential customer disappointment.
for us.” Rubin
recalled a print ad
that provided an
insightful lesson
from the director
of automobile
sales, Yoshihide
Munekuni, about
being honest with
the customer.
“The new Accord
Gerry Rubin (left)
hatchback was rated as having
and Tetsuo Chino
(right) honor actor
25 percent more horsepower, and
Burgess Meredith for
we created an ad that said so. But
his 10 years as the
announcer of Honda
Moon [Munekuni] said that when he
automobile television
personally drove the car, it didn’t
commercials.
Meredith’s wry and
feel like it had that 25 percent
craggy voice was the
more power. We could legally have
perfect match for the
“We Make It Simple”
run the ad — and it was just a
campaign.
simple print ad. But Moon felt that
the Honda customer would be disappointed. So at his
request, we modified the headline to say ‘a new more
powerful engine.’” (See advertisement at left.) Concluded
Rubin: “We Make It Simple was not a line, not a selling
proposition, but a philosophy.”
According to Rubin, the key to the agency’s growth
with Honda were lessons learned in the duo’s earliest days
working with the company. “We had created a commercial
called ‘Gas Pump’ for the Civic CVCC 5-speed laying claim
to achieving the highest miles per gallon of any automaker,”
recalls Rubin. “It was the highest-mileage car in America.
But after presenting the finished commercial to Mr. Munekuni,
he looked down at his notebook and said, ‘I don’t think so.’
“We thought we had made a big error! But by his
estimate of unit sales and inventory, Honda would not be
able to meet demand. Moon simply did not want to run the
spot for fear of disappointing the customer. So, we scrapped
the commercial and learned a valuable lesson about the
Honda way: We are not going to mislead our customers.”
More Efficient
Product Distribution
Since entering the auto industry, Honda had made
great leaps in its distribution methods. It had transitioned
from the humble days in the 1970s when dealers arranged their
own transportation of vehicles from Honda’s port operations
to an elaborate network of alliances with rail and trucking
companies taking vehicles from the ports or Honda’s North
American plants directly to dealers. In 2008, this evolution
would lead Honda to own its own fleet of rail cars.
Key to the evolving distribution strategy was a focus on
efficiency. The goal was to minimize the distance and time
required to get products from the assembly line and port to the
dealer showroom. In 1997, as American Honda entered the light
truck market, Dick Frick, former manager of American Honda’s
automobile distribution department, sketched out an idea for a
new trilevel railcar that would be able to carry up to 21 cars or
light trucks. Traditional trilevel rail cars had capacities of 15 to
18 passenger cars per load.
Despite dramatic changes in the size and variety of
cars and trucks sold in America, rail transportation had not
changed significantly in more than 50 years. In the late 1990s,
the U.S. market shifted dramatically toward SUVs, minivans,
and pickups. Trilevel rail cars could transport passenger cars,
but bilevel railcars were required to carry larger light trucks.
This significantly increased the cost of transportation and
resulted in more damage when Honda and Acura light trucks
were shoehorned into narrow railcars.
The new design, called Auto-Max, could not only handle
more vehicles and a mix of cars and trucks. It also offered
ample space for loading and unloading, a lightweight and
more fuel-efficient design, improved suspension system, an
articulated center, and improved running gear. It could travel
at speeds of up to 80 miles per hour, versus 50 miles per
hour for conventional trains. Not only could the trains carry
more cars at faster speeds, the Auto-Max railcars could be
linked together in a continuous line of 30 to 50 railcars, a
Each multi-level Auto-Max® railcar holds up to 22 vehicles and can
transport both light trucks and cars to maximize the use of space,
resulting in less fuel consumption per vehicle shipped.
configuration referred to in the rail industry as a ‘unit train,’
which receives priority treatment in the rail traffic system.
The fleet of conventional railcars is controlled by
a company that allocates automotive railcars based on
forecasts supplied by automakers. “Some of our competitors
would perpetually over-forecast their allotments leaving us
scrambling for railcars,” recalls Dan Bonawitz, former vice
president of American Honda Auto Operations. “We got tired
of being held hostage to this system and came up with a
better solution.”
Honda worked with Oregon-based Greenbrier Company
to turn its design into the first Auto-Max railcar. American
Honda convinced its primary carrier, BNSF, to purchase 400
of the new Auto-Max railcars and to put them exclusively in
Honda service. Later, American Honda bought 400 railcars of
its own. But Honda wasn’t the only company to benefit from
the innovative design. In 2008, other railroads began ordering
Auto-Max railcars. Soon, more than 1,360 were expected to be
in operation.
“We lowered our average travel time from 13 days to nine
days, at a lower cost per unit,” said Bonawitz. “The innovation
by our team resulted in a significant savings to Honda and a
major opportunity for the industry as a whole.”
In fiscal year 2008, American Honda saved more than
half a million gallons of diesel fuel, and reduced its CO2
emissions by more than 5,000 metric tons through the use
of Auto-Max railcars.
A Stronger Bond
With Dealers
A critical event in Honda’s commitment to maintain a
strong and open dialogue with its dealers occurred with the
establishment of the National Dealer Advisory Board (NDAB),
the successor to the National Dealer Council, which had
started in the early 1980s. “The change was more than just the
name,” said Dave Conant, president of Norm Reeves Honda in
Southern California and a former NDAB chairman. “We had
to respect the fact that Honda didn’t need us to tell them how
to do their job. The National Dealer Council gave good input,
but usually at the back end, when it sounded like criticism.
We were trying to change the position at which dealers came
into the process. We wanted to demonstrate that we could
respectfully give input that could be valued enough that they
would bring us in earlier and, when appropriate, refine the
direction of their decisions.”
Today’s NDAB is made up of dealer representatives from
each of Honda and Acura’s sales zones.
The representatives are elected by their
With a focus
dealer body to represent their interests
on advising
and concerns to American Honda.
each other
“When I joined the company, we
instead of just
had a very adversarial relationship with
demanding
the Dealer Council,” recalls Dick Colliver,
things, it
former executive vice president of Auto
became a very
Sales. “We were kind of talking at one
good working
another, not listening to each other’s
relationship, a
point of view. We changed it to the Dealer
real education
Advisory Board, with a focus on advising
process for
each other instead of just demanding
both sides.
things. It became a very good working
dick colliver
relationship, a real education process
for both sides.”
Colliver recalls inviting American
Honda President & CEO Koichi Amemiya
to a meeting of the Council in Cape Cod,
of
Massachusetts, in
1995. “I think
Mr. Amemiya had
become a little tired
of the old process.
It had become such
a negative thing. He
sat and listened for
the entire meeting
but didn’t say a word.
As we were getting
close to the end of the
meeting, I asked him
if he wanted to say
anything and he said,
‘No.’ Then, as we were
wrapping up, I asked
Members of the Dealer Product Advisory Council gather with Honda associates outside Honda R&D Co., Ltd. Tochigi Center
in Japan in 1997. From left, back row: dealers Craig Scott , Forrest McConnell III, Bob Goodwin and Dave Mungenast, Sr.,
him again if he wanted
former Honda R&D Executive Chief Engineer Shigeru Uehara and former American Honda associate Art Garner. Front row:
to talk and he said,
Kazuhiko Morizumi, general manager of the Tochigi Center, American Honda associates Elmer Hardy and Peter Rech,
‘No.’ But then he said,
Adam Barish (dealer), former American Honda Executive Vice President Dick Colliver, dealers Dave Conant and Ron Theis,
former American Honda Vice President Dan Bonawitz and former Honda R&D Executive Chief Engineer Kunimichi Odagaki.
‘But’ and he ended up
talking to the group for
30 minutes. I think he realized that we were now partners.”
Increasing Dealer Input into
At the initiative of Conant, the council was expanded to
New-product Development
include subcommittees for parts, service, e-business, and
The company took an unique step in the mid-1990s. After
other areas of special interest. “It was the chairman’s job to cull
years of requests by dealers, American Honda brought
through the recommendations that came in from dealers around representatives of the automobile dealer body deeper into the
the country,” said Conant. “The year I was chairman, I had
new-product development process with the establishment of
106 pages of typewritten input from dealers that I had to make
the Dealer Product Advisory Committee (DPAC). “Establishing
some sense of for Honda. I couldn’t expect top Honda executives the group was a struggle at first,” recalls Dan Bonawitz, who
to listen to 100 pages of dialogue, but we also had a lot of good
retired in 2009 as American Honda vice president in charge of
ideas that I didn’t want to waste. The committee concept was to
product planning and corporate logistics.
take the valuable inputs and insights that might not be among
“Mr. Amemiya said, ‘If we need the dealers to tell us about
the top two or three ideas to discuss in the executive sessions
future products, then we’re not close enough to the customer.’
and make sure they were considered and discussed by the
But as the process improved, he could see the value of their
appropriate division and department within Honda.”
input,” said Colliver.
“Through the subcommittees, we could iron out issues
The initial committee was formed of six members of the
ahead of time and not wait to talk about everything when we
dealer body with diverse backgrounds and perspectives on
met every six months,” added Colliver.
the market. It included Dave Conant (Norm Reeves Honda in
Southern California), Ron Theis (University Honda in Corvallis,
Oregon), Dave Mungenast, Sr. (St. Louis Honda in Missouri),
Bob Goodwin (Hyannis Honda in Massachusetts), Adam Barish
(Route 23 Honda in Pompton Plains, New Jersey), and Forrest
McConnell III (McConnell Honda in Montgomery, Alabama).
“We’ve always tried to get a good cross-section of
dealers in terms of age, geographic location, single-point and
multipoint dealers,” said Bonawitz. The initial idea was for
the committee to be six members serving two-year terms.
However, the committee members needed more time to learn
how to evaluate products in the early stages of development.
Committee members now serve from six to 10 years.
“I wish that every dealer could learn what DPAC
representatives can learn,” said Conant. “When you consider
some of the insane things we ask for as dealers, once you
become knowledgeable about the process, you can see why
they [Honda] can’t do it. It’s like explaining to someone without
a child what it’s like to raise a child.”
“One time, we took the group to Japan and showed them
an Odyssey, the current model, and the car was painted flat
black. The dealers were absolutely sick and said the car was
an absolute failure,” recalls Bonawitz. “We brought the same
model back to them a little later with silver paint and they
absolutely loved it. We understood that it would take more time
and some coaching for dealers to develop the skills they needed
to serve effectively on the team.”
“They took a lot of time to explain to us how they design
a car, how all of the processes fit together,” said McConnell,
a second-generation Honda dealer. “They taught us Honda’s
method of developing a car, they showed us prototypes in
clay, and showed us many projects in advance. We’re smart
enough to know we don’t make decisions; we just give input
when asked. But they would always ask us, ‘Tell me what the
customer is thinking. What do they think about this product?
What features would they want?’ They would wear us out
asking questions, and it was all about the customer. I don’t
think any other manufacturer had this kind of program.”
“The dealers have become an integral part of our process,”
said Bonawitz. “It’s proved to be a very valuable relationship.”
Enhancing
Dealer Diversity
dealership opportunities when, in 2003, NAMAD formally
called on all automakers to set a goal of 15 percent minority
dealer representation.
Honda’s Dealer Investment Program is a long-term
strategy that allows candidates with 15 percent of the total
In the late 1990s, Honda began to take proactive steps
capital required to purchase and operate a dealership to
to increase the diversity of its automobile dealer networks.
receive Honda-backed financing and investment. Dealers
This included reaching out to the National Association of
are then given the chance to buy out Honda’s interest in the
Minority Automobile Dealers (NAMAD) and, in 1999, the hiring
dealership over time.
of Marc Burt as the company’s first manager of Minority
“In general, four to seven years is the time frame in
Business Development.
which participants in the program should be able to take
Charged by then Executive Vice President Dick Colliver
complete ownership,” explained Burt, now senior manager
with helping increase both the number and percentage of
of the American Honda Office of Inclusion & Diversity (OID).
minority-owned Honda and Acura automobile dealerships,
“Our objective is to have the best dealer network in the
Burt helped establish the American Honda Dealer Investment
industry, and it has become crystal clear that the best dealer
Program in 2001.
network will be, by necessity, a diverse dealer network.”
The program provides minority candidates with the
As a result of the program and other efforts, by 2009
opportunity, training and resources needed to own and
American
Honda had more than doubled the number of
operate a Honda or Acura dealership. Burt was actively
ethnic-minority-owned U.S. Honda and Acura dealerships
involved in the recruitment, evaluation and selection of
from 2000 levels. Sixty-six ethnic-minority dealers accounted
qualified minority candidates interested in Honda and Acura
for about 5.1 percent of the
company’s U.S. Honda and
Acura dealer network.
In 2007, Burt helped
establish the OID for American
Honda, which provides
leadership to Honda’s diversity
initiatives throughout the
United States. It coordinates
efforts by American Honda
and other Honda companies
in North America in dealer
representation, purchasing,
financial services, employment,
advertising and philanthropy.
American Honda recruits and sponsors the keynote speaker at the annual luncheon of the National
Association of Minority Automobile Dealers convention. In 2000, former U.S. Congressman, United
The OID is working to accelerate
Nations Ambassador and Civil Rights leader the Rev. Andrew Young (front row, third from left) served
the quality and speed of
as the speaker. The Rev. Young was joined at the event by (front row, from left) Marc Burt, former
associate Marshalia Snoddy, associate Barbara Ponce, and former associates John Petas, Lyn King,
progress in all areas
(back row, from left), associates Jeffrey Smith, Jeff Conrad, and Frank Beniche.
of inclusion and diversity.
Serving Customers in America | american honda finance corporation
Creating an “iN”
with Honda Dealers
As the Internet became an increasingly important
and powerful tool for new car buyers, the Auto Sales Division
turned to the Information Systems Division (ISD) as it began
exploring new means of advancing the technology that
connected the company and its dealers.
Honda needed a communication system that would
be able to do more than the limited scope of business
transactions handled by the company’s existing
Dealer Communications System (DCS). “We saw an
increasing disconnect between the customer and
the dealer,” recalls Dave Heath, manager of Honda
sales training. “The dealer was backing the customer
into the process as if they knew nothing about the
product. I thought we needed to change the way we addressed
the customer with the implementation of the Internet.”
Honda introduced the
iN system nationally in 2002.
of
Heath and Steve Center, then senior manager of
Market Support for Automobile Sales, approached ISD with
their idea for an Internet-based communications system. “The
commercialization of the Internet was leading to a great deal
of disintermediation in the channel between the customer and
the dealer,” recalls Center. “I remember when we brought our
ideas to Dick Colliver [then executive vice president]. He said to
me, ‘If we do a good job with this and make it very useful to the
dealers, it will increase their bond with us.’ ”
Their initial proposal for a Web-based system faced some
challenges based on the state of the Internet in 1998.
“At that time, Internet connectivity was not generally
available at the dealer level, and the reliability of
the Internet was not yet ready to run our automobile
business,” recalls Dave Mateer, manager of dealer
applications in American Honda’s Information
Systems Division.
In 2000, the company introduced the dealer Interactive
Network — or iN — as a private network to augment the
existing DCS system with new
capabilities. It provided dealers
with product information to assist
in the sales process and with sales
training. Around the same time,
ISD rolled out a new DCS for
American Honda’s power equipment
dealers using a dial-up Internet
connection. “In the case of the
power equipment dealers, there
were literally thousands of small
dealers and the volume of activity
was not as high, so we felt an
Internet-based solution was the
best approach,” recalls Mateer.
In 2001, a next-generation
system for automobile dealers
was introduced. “This built on what
had been done for Power Equipment
and brought it to the next level so it
could support a wide variety of business
needs for the auto dealers,” recalls
Basically,
Mateer. But this system still used the
we married
private network introduced for the
the dealership
original Interactive Network.
experience
By the fall of 2002, the maturity
with the
and availability of the Internet had
Internet
grown to the point where it could
experience.
support the automobile business. The
dave heath
new Web-based system offered greatly
expanded availability to the dealers
at a substantially lower cost. In 2002,
American Honda ran a pilot program with
about 50 U.S. dealers. “We monitored
them every day,” recalls Heath. When
the program was rolled out nationally later that same year,
the company continued to operate the existing iN system in
parallel with its new Web-based system. “We wanted to make
sure there were no hiccups and no downtime,” said Heath.
Honda’s Interactive Network has continued to grow.
In 2009, it supported American Honda’s automobile,
motorcycle and power equipment business lines with a
full range of applications for sales,
parts and service.
This brought
“Basically, we married the dealership
it to the next
experience
with the Internet experience,”
level so it
explains Heath. “The old system was
could support
very transactional. With iN we moved to
the wide
more of a two-way communication. I’m
variety of
really proud of what we accomplished as
business
a team. Together, we created a business
needs for
plan, wrote the software, piloted the
the auto
program, and rolled it out nationally.
dealers.
We were among the very first in the
dave mateer
auto industry to move to a Web-based
system. I think it has really improved
the effectiveness of our engagement
with our dealers and, ultimately, our
service to our customers.”
Serving Customers in America | american honda finance corporation
“The Best Captive
Finance Company”
Chino recognized the growing need for new tools in Honda’s
marketing arsenal.
“He said, ‘Honda may not always build the perfect vehicle
in its class, and financial support may be needed to help with
sales,’” remembers Steve Smith, vice president of Honda
Before the creation of American Honda Finance
Financial Services. HFS made its first foray into the automobile
Corporation, now doing business as Honda Financial Services
financing business, offering floor-plan and retail financing to its
(HFS), in 1980, Honda motorcycle and car dealers dealt
Acura dealers and customers.
exclusively with independent financial institutions for their
In 1991, the First Gulf War and a slowing U.S. economy
floor-plan financing and customer financing needs. HFS
led
to
contraction in U.S. auto sales. Honda saw its first down
started small, with floor-plan financing for motorcycle dealers.
year in almost a decade. “In the 1990s, all of the companies
It added Power Equipment dealers two years later.
were stripped of their money for financing,” said Amemiya.
“Honda was very prudent about establishing American
Honda Finance,” said former president & CEO Koichi Amemiya.
“The Big Three [finance companies] were less willing to provide
“We needed to train our people to be capable in this area.
financing, except GMAC was more generous and did not act
Rather than providing financing to our customers, the first step negatively toward Honda dealers. That’s when we began to
was to provide floor financing to our motorcycle dealers.
switch strategies from pull- to push-style sales, that Dick
On the automobile side, there wasn’t so much demand from
Colliver later came to emphasize to a great extent. Because of
dealers for our financing. Back in those days, rather than
this process, the role of American Honda Finance increased.
using Honda Finance, dealers used GMAC, Ford Finance,
Thanks to American Honda Finance, we could do our leasing
or Chrysler Finance.”
business for Accord, rather than providing discounts.”
In early 1986, Honda Finance partnered with the
At the request of the Auto Sales Division, HFS
Motorcycle Division to offer the first low interest
introduced its first special lease program — $199
HFS is an
rates on motorcycles to stimulate sales of the Gold
a month for a new Accord — taking advantage of
extension of
Wing. Within three months, HFS became licensed in
Accord’s high resale value. HFS increased its menu
the Honda
all 50 states, created customer contracts, registered
of products over time. It included special financing
experience.
all motorcycle dealers, offered an 8.9 percent
packages and retail financing of Honda and Acura
We can offer
financing program to help sell Gold Wings, and then
certified used vehicles, always mindful of the need
a better
revised it to 5.9 percent to meet customer needs.
to protect Honda’s brand image and the value of
product and
“If you’re dealing with an outside institution,
its products. “HFS is an extension of the Honda
ownership
they’re going to give you the product they have,” said
experience,” said Smith. “We can offer a better
experience
Ray Blank, senior vice president of American Honda’s
product and ownership experience with superior
with superior
Motorcycle Division. “But, American Honda Finance
customer service and business practices.”
customer
could basically do what we wanted to do. We’ve got
Dealers appreciate how HFS has grown. “They
service.
the best financing, best programs, and best support
may have started timidly, but American Honda
steve smith
in the business.”
Finance is the best captive finance company in
In the late 1980s, vehicle inventories were
the industry, period,” said Forrest McConnell III,
on the rise, so the captive finance arms of GM,
president of McConnell Honda in Mobile, Alabama.
Ford, and Chrysler began offering incentives to car
HFS still strongly focuses on understanding
buyers. Then American Honda President Tetsuo
the needs of customers, especially during major
disasters. In 2004, in the wake of Hurricane Katrina, HFS took
the initiative to reach out to customers who were without
homes or employment yet still had car payments to make.
“We received many letters from people thanking us for our
help,” said Smith. “They were extremely pleased to see Honda
stepping up, saying, ‘That’s what I expected from Honda.’ ”
In 2009, the company launched Acura Financial Services,
a new division of the company designed exclusively for
Acura dealers and customers. Jeff Conrad, vice president of
the Acura Division, appreciates the efforts put into the new
direction. Led by Senior Manager Chuck Aiesi, HFS identified
more than 1,200 points where the financial services area
interfaces with the customer. “Some people would think this
is as simple as changing the stationery and the phones,”
said Conrad. “But Chuck Aiesi and his team went through
excruciating detail, analyzing every element of their operation
that has a customer-facing view.”
With its nine regional offices and
national service center, HFS has financed
or leased more than 50 percent of the
Honda and Acura automobiles sold since
2003. HFS also provides floor-plan financing to 90 percent
of Honda motorcycle dealers and 24 percent of auto dealers.
Managing more than 3 million customer relationships, HFS
consistently scores in the top three on National Automobile
Dealers Association surveys. It has won two J.D. Power and
Associates awards for outstanding customer satisfaction.
A call center
operation within
the national service
center of Honda
Financial Services.
Serving Customers in America | parts and service Divisions
Earning Satisfaction
After the Sale
Similar multistage growth was
seen in parts centers in Georgia, Illinois,
Ohio, Oregon, and Texas. Most of the
major centers also housed a variety of
zone offices, including sales and service
functions for the Auto, Motorcycle and
Power Products Divisions, as well as
American Honda Finance.
By the early 1970s, the demands
of Honda’s expanding and new product
lines required a higher level of attention
to parts and service support. In 1975,
the company appointed Makoto (“Mak”)
Itabashi to the newly created position
of executive vice president for the Parts
and Service Divisions. “Service and
parts are a logical and necessary unit to the sales activity,”
he said. “It is difficult to isolate parts from service, simply
because without parts one could not perform service and,
likewise, without the backing of service information, one could
not effectively sell parts. American Honda is not a simple
distributor of the product. We are a business, and as such
we must provide total customer service.”
After the separation
of the Service Division
into separate Auto
and Motorcycle Service
Divisions, the auto
team went out to meet
its dealers. Left to
right: Customer Service
Manager John Donovan,
Service Field Rep
John Petas, Eastern
Auto Field Service
Coordinator Dave
Fender, and Auto
Service Director
Teruhisa Ohki were
kindly welcomed to
Marshall Honda in
Reading, Pennsylvania,
with a sign that
misspelled Ohki’s
first name.
The company began life as a distributor of small
motorcycles. But as American Honda’s product lines grew
and sales took off, the company found itself challenged by the
rapidly expanding customer base and the attendant growth in
the need for expert service and parts support. By 1965, Honda
had dealers in every state; it claimed more than 65 percent
of the American motorcycle market. Further, the increasing
technological sophistication of Honda products required
greater training for dealer service personnel.
American Honda was growing beyond the role of product
distributor into a full-service operation, with responsibility
not only for the sales of Honda products, but for the care
of its customers after the sale.
Honda’s parts group was preparing for a wave of rapid growth
American Honda’s headquarters on Pico Boulevard doubled
to keep up with booming sales. The first parts warehouse
as the company’s first parts warehouse. Matt Matsuoka was hired
outside of Los Angeles opened in Racine, Wisconsin, in 1962
to manage parts operations in 1962. “When I came in for my first
and was intended to handle all dealer needs east of the
day, Mr. [Kihachiro] Kawashima [first general manager of American Mississippi. That same year, American Honda announced a
major expansion. New parts facilities opened in
Honda] told me, ‘I want you to take over the parts
Portland, Oregon, and Pennsauken, New Jersey,
department.’ I said, ‘I’ve never ridden a motorcycle.
American
in 1964, and in Houston, Texas, in 1966.
I don’t know the first thing about motorcycles, and
Honda is
In a 10-year period, from 1963 to 1973,
I don’t really know anything about managing a parts
not a simple
American Honda’s parts and service facilities
warehouse.’ He said that was all right.”
distributor of
underwent an incredibly rapid expansion,
According to Honda dealers, in the early days
the product.
building new warehouses and moving into
it was not unusual to have to wait for parts because
We are a
existing facilities at an astounding rate. For
business, and
100 percent of the supply was coming from Japan.
example, the first parts center in New Jersey
as such we
“We had a hard time getting parts for the motorcycles,
opened in 1964 in Pennsauken, just outside
must provide
because Honda was just getting started in the States
Camden. It moved to a leased-land facility in
total customer
and they didn’t have very many parts,” said Helen
Mount Laurel in 1970. Honda then constructed
service.
Musselman, a pioneer dealer in Tucson, Arizona.
the giant Moorestown Parts Center in New
During a trip to Japan, “All the dealers were very
mak itabashi
Jersey, in 1976. It was the largest Honda facility
impressed with the factory,” she said. “Except one
in America and it employed Honda’s first
of the jokes the dealers would say was, ‘Let’s fill our
high-rise automated retrieval system, picking
pockets with parts. We can’t get them in the States.’”
Rapid sales growth required Honda to expand into new parts centers
in New Jersey three times in a six-year period, including this grand opening
parts with narrow aisle forklifts to make more
The Pico parts warehouse moved to a new
for the Pennsauken facility in 1964.
efficient use of space.
facility on Jefferson Boulevard in 1961, and American
of
This image of American Honda as a company responsible
for all aspects of the customer experience gave the company’s
parts and service operations an increasingly critical role to play in
advancing Honda’s reputation as a customer-focused company.
As the company invested in new buildings, its systems
for the administration of parts and service activity and dealer
support were increasingly found to be out of date. “American
Honda was the key link in the chain between our customers
and Honda R&D in Japan, which could address our technical
problems,” recalls retired American Honda Executive Vice
President Rich Thomas. He at one time headed both the
Parts and Service Divisions, before leaving to head the Acura
Division. “The only system we had for tracking problems in the
field was our warranty reports. We had a six-month backlog on
those, which meant we weren’t giving very timely or accurate
feedback to R&D.”
American Honda’s Service group revamped Honda’s
entire system for processing warranty claims and gathering
accurate information from the field by introducing computerized
record keeping and initiating American Honda’s first warranty
claims audit. Dealer service manuals were redesigned to
provide technicians with easier-to-follow illustrations and
instructions. Customer relations was strengthened with
specialists installed in each of Honda’s U.S. regional sales
and service offices. The team also introduced a new system
of field technical reports. “It was important to have all three
inputs — warranty, customer relations, and technical
reports — to give R&D a clear picture of what was happening
in the field,” said Thomas.
American Honda Service also sought to address
weaknesses in dealers’ service processes, introducing a
Management Action Program (MAPS) taught by a former vice
president of Volkswagen’s service group. “VW had the best
service process in the industry, hands down,” said Thomas.
“So we hired the best to come in and teach our dealers best
practices.” The MAPS program involved class instruction on
how to conduct a proper and profitable service business, the
role and responsibilities of staff, and the processes necessary
to achieve superior customer service.
Parts Takes to the Field
In 1986, the Parts Division also established its first
field parts staff. In each of 10 zone offices, a zone
manager supervised four to seven district parts
representatives. The parts zone staff were charged
with enhancing customer satisfaction, strengthening
dealer support, and promoting the sales and use
of Genuine Honda Parts and accessories. Dealers
were being courted by increasingly aggressive
aftermarket parts suppliers which were eager to
supplant Honda. “There are literally hundreds of
aftermarket vendors knocking on the dealership
doors to sell them parts and accessories, and
there is no guarantee that these products are
This was a
major changing
point. The
majority of
parts now are
purchased
from U.S.
suppliers.
yo masuda
manufactured to the same high standards as
Honda products,” said Yo Masuda, who was vice
president of parts planning and support at the
time of the announcement. Parts reps in the field
were tasked with promoting the use of Genuine
Honda parts as a key step in achieving customer
service satisfaction.
In 1988, the Parts Division entered a new era.
The opening of a new parts center in Troy, Ohio,
was part of a major strategy to obtain service
parts from the same suppliers who provided
mass production parts to Honda of America
Mfg. Inc., (HAM) in Ohio. “Until then, virtually all
manufactured parts were imported,” said Masuda.
Jim Roach has spent 30 years with American Honda, primarily in Parts and Service.
Today, he is senior vice president of the Parts and Service Divisions.
Serving Customers in America | PARTS AND SERVICE Divisions
“As HAM increased its local parts-sourcing
efforts, we wanted to mirror that in our service
parts. This was a major changing point.
The majority of parts now are purchased
from U.S. suppliers.”
Revolutionizing Service Training
Honda products were growing ever more
sophisticated, particularly in engine
technologies. So American Honda’s Service
Division also took on the challenge of training
dealer service technicians to conduct repairs
on Honda vehicles. The program was headed
by associates Tom Dean and John Ball.
Dean, with a background in education,
had the idea for a new approach.
“The old way was to put a group of
technicians in a classroom and talk to them
about a process. Then the instructor would
show them the skill in the service bay.
One guy would get to try the actual skill and
everyone else would just be looking over
his shoulder,” recalled Dean. “We changed
the whole approach. We went from group
instruction to an individual, self-directed,
learn-at-your-own-pace process. Every single
person did every single skill, and their work
would be checked periodically by the
instructor. It was a big change for Honda,
and there was a significant investment
in reconfiguring the training centers to
accommodate this new process.”
“It really did revolutionize service
training,” said Jim Roach, senior vice president
of the Parts and Service Division. “We won
a ton of awards, but more importantly we
saw a big impact to the customer in terms of
product downtime, return visits, and fix-itright-the-first-time.”
of
expense to get them to come in to the dealer.”
everyone in the company
The Service Marketing group conducted
understood the value of
research that showed that the average
service in the customer’s
customer purchases seven new vehicles in
decision to buy a vehicle.
their lifetime. “He [Takemura] wanted to make
He would walk around the
sure that for every one of those opportunities
division and ask, ‘Why are
the customer would buy Honda,” said Morales.
we here?’ and everyone
The team’s research led to the
would answer, ‘Customer
development of a “Circle of Life” concept,
satisfaction.’ He would say,
which represents different phases in new‘That’s true, but we are here
vehicle ownership. The “impression” stage
to sell vehicles and it is
covers the purchase experience and the first
customer satisfaction that
90 days of ownership. The “validation” phase
achieves that.’ ”
covers the first three years of new vehicle
The Customer
ownership, and is an opportunity to confirm
Satisfaction Index (CSI)
the buyer’s purchase decision over the longand Initial Quality Study
The Lifetime Owner Loyalty project was led by
American Honda’s Service Marketing group in the mid-1990s,
term performance and service experience
(IQS) research used by the
including the members of the team pictured above.
with the vehicle. The “consideration” stage
entire industry represented
is generally the fourth year of ownership,
a “snapshot” of customer
in which a customer is expected to begin
satisfaction at a given time. But Takemura
considering the purchase of a new vehicle.
wanted to better understand customer
Takemura emphasized the core teaching
satisfaction over the lifetime of vehicle
of Honda founder Soichiro Honda, who had
ownership. He launched an initiative that
explained that one problem out
added a new phrase to the lexicon
of Honda and, ultimately, the entire
In the summer of 1995, planning
How well we
of 100 products might seem like
industry — Lifetime Owner Loyalty
was already under way in the Service Division
handle the
an acceptable level of quality; but
(LOL). “Take [Takemura] was a
for the 6th Mid-Term (three-year) business
[service]
for the customer who experienced
visionary who wasn’t afraid to dream
plan that would begin in April 1996. Hideo
situation
that problem, Honda would be
Takemura, then executive vice president of the big. He always thought important
determines
perceived as 100 percent defective.
things
could
be
done,
and
he
didn’t
American Honda Parts and Service Division,
how the
Customer care was an
hesitate to rally people to do them,”
was looking for a new approach to focus his
customer
important part of the LOL project.
said Jim Roach, then an assistant
team on what he saw as the ultimate mission
judges
“When a customer experiences a
vice president in Service Operations
of his division — the owner’s decision to
Honda.
problem with his or her vehicle,
and
now
senior
vice
president
of
purchase another vehicle from Honda.
bringing it in for service can be
hideo takemura
the Parts and Service Division. “We
“We had very good customer
a major inconvenience,” said
wanted the quality of the product
satisfaction,” said Matthew Morales, then a
Takemura. “Since the service
and service to be the catalyst to
service marketing manager and now senior
process starts under these
make
customers
want
to
buy
another
manager of Technical Training Operations.
unfavorable circumstances, how
car, rather than incur the marketing
“But he [Takemura] wanted to make sure
well we handle the situation
Lifetime
Owner Loyalty
determines how the customer judges Honda, the dealer, and
the service experience.”
Takemura spoke frequently about providing customers
with “heartfelt service,” which led to another program
aimed at improving customer care at Honda dealers in 1995,
Heartfelt Customer Care. The program recognized dealers
that demonstrated exceptional customer service by resolving
complaints at the dealership level.
The impact of the LOL initiative has been quite positive.
Repurchase decisions have been on a steady rise every year
for both the Honda and Acura brands.
“Mr. Takemura was very effective in not only focusing us
on the broad voice of the customer and being No. 1 based on
a survey score,” said Morales. “Rather his focus was on building
a relationship with individual customers and understanding
the voice of the customer. That is what he taught as the true
measure of success.”
Honda Service Express
By the late 1990s, with Honda and Acura sales continuously on
the rise, automobile dealers for both brands were struggling to
keep up with the rapid growth in demand for service support.
Some customers were being required to leave their cars in
the dealership for an entire day or longer just for routine
maintenance checks.
In 2001, Honda rolled out its Service Express program to
Vice President of the Parts Division Bruce T. Smith (at left in upper left photo) and Senior Manager Tony Gomes (right) explain the role of Honda’s
$89 million Midwestern Consolidation Center to Troy, Ohio, Mayor Michael L. Beamish. The hub takes parts from Honda’s U.S. plants and suppliers
and repacks and distributes them to smaller Honda facilities. To reduce customer waiting times for product service, American Honda launched the
Daily Stock Order program (lower left photo). If a dealer orders a service part by 4 p.m. a Honda parts truck will deliver it by 9 the next morning.
Honda’s 12 parts centers (photo at right) meet the service parts needs for an increasing number of Honda and Acura products.
improve the customer service experience. “We showed dealers
that we could do any of the regular service procedures in less
than 30 minutes,” recalls John Petas, retired vice president
of American Honda. “The big selling point for dealers was
that they could reduce the time spent on basic maintenance
activity and use more of their service capacity for customerpay service. It meant a greater return on their investment and
a better experience for the customer.” By 2008, more than
400 Honda dealers in the top 60 metro markets had enrolled
in American Honda’s Service Express program. The Acura
Division began introducing its own version, Acura Accelerated
Service, in 2008.
Rapid Response to Customer Needs
The growth in the number and variety of Honda and Acura
products on the road was also beginning to strain Honda’s
parts warehousing capacity and its ability to provide service
parts more quickly. In 1998, American Honda was managing
parts supply for roughly 10 million vehicles on America’s
roads. By 2007, that number exceeded 16 million units,
and projections were for more than 20 million by 2010.
At the same time, a major move was under way to
modernize Honda parts centers throughout the country.
A series of systems were introduced: global forecasting,
automated order projection, and the first-ever bar code
system. Each component of the plan aimed at increasing the
speed, flexibility and efficiency of the parts center network.
“We had to make these systems work through the entire
supply chain. It was a major undertaking,” said Roach.
To leverage its investments in a more flexible and
responsive parts production and warehousing system, in
2006 the company introduced one of the industry’s most
ambitious parts supply programs. To help dealers quickly meet
the needs of Honda and Acura customers, Honda created the
revolutionary Daily Stock Order (DSO) system. Through DSO, a
dealer can order a service part from Honda as late as 4 p.m.
and receive it from a Honda parts center by 9 the next morning.
Honda has come a long way from the days when dealers
had to wait weeks on end for a service part from Japan.
Serving Customers worldwide | exports
Quality for the
World from the U.S.A.
The strategy was more than simply a matter of putting
products onto ships leaving American shores. An Export Sales
Division was established within American Honda by Hiroshi
Kobayashi, now a director of Honda Motor Co., Ltd., and Larry
Ikemura, now manager of Export Sales.
Addressing dealers at the 1978 motorcycle dealer
“We had the right products at the right time in the Accord
convention, Koichi Yoshizawa, then president of American
Coupe and Accord Wagon and Kobayashi had the idea of
Honda, announced a plan that revealed a lot about Honda’s
marketing them in Japan as ‘made in the U.S.A.,’ ” explained
commitment to America and its focus on worldwide customer
Yo Masuda, former vice president of Export Sales. “At the peak
satisfaction. “When we start production in mid-1979, we will
of our exports, more than 50 percent of those Accords went to
become a key American enterprise in exporting AmericanJapan. It was a good product and good marketing. Everything
made products to many countries in the world as well as
came together very nicely.”
distributing to the U.S. market,” he said.
With American Honda taking a bigger regional
Yoshizawa’s bold declaration was quickly
role
due
to the Automobile Strategy for the Americas
fulfilled, with the first exports of Ohio-made
(see page 80), the zenith of automobile exports came
motorcycles in 1980. It was only the beginning.
in 1994, when Honda exported 105,511 units. This made
Following Honda’s Five-Part Strategy in 1987
Accord the No. 1 export model from America. Almost
(see page 65), just five years after auto production*
half
of
the
cars went to Japan. Exports of finished vehicles
began in Ohio, automobile exports began to Taiwan. Months
gradually declined thereafter as Honda rapidly expanded auto
later, in March 1988, came the export of Accord Coupes and
production in markets around the world.
Gold Wings to Japan. Power equipment exports, based on
The Export Sales Division, together with the Parts and
lawn mower and engine production in North Carolina,
Service
Division, took on additional responsibilities to support
would begin in the late 1980s.
Honda distributors in the Latin
America and Caribbean markets.
“We were able to provide
a single business window for
Honda distributors in Latin
America and the Caribbean,”
said Masuda. “There was only
one Honda in terms of everything
we did, even though products
were coming from Japan as
well as North America. But we
were able to focus on them,
develop an understanding of their
business needs and capabilities,
and establish relationships that
In December 1987, Honda of America Mfg. began production of an all-new 2-door Accord Coupe,
the first exclusive version of Accord built in Ohio. Exports to Japan of the Accord Coupe,
helped them meet the needs of
bearing a special emblem (above), began in March 1988 from Portland, Oregon.
their customers.”
*using domestic and globally sourced parts
of
Honda began building
The auto export program ultimately
right-hand drive
contributed to Honda’s success in
vehicles in America for
America in a number of ways. Challenged export markets in 1991.
to meet the demanding expectations of
customers in Japan, Honda of America Mfg. (HAM)
heightened its attention to quality. Further, with products
exported to more than 100 countries with different
regulatory requirements and customer needs, Honda plants
in North America were asked to build multiple variations
of Accord and other models on the same assembly line.
This elevated the ability of Honda associates to cope with
flexible production, which would become so important
in the 1990s and 2000s.
In the late 1990s, the Export Sales Division began
managing a challenging new area — the export of so-called
“knockdown” units, shipments of major components needed
to build a car, to 13 Honda factories in Asia, China, Brazil and
Japan. As a result, American Honda’s export sales business
has strengthened Honda’s ability to build products close to
its customers in other regions.
In the late 2000s, American Honda was exporting
more than 750,000 components annually. The exportation
of cars and light trucks was approaching a million units.
Power equipment exports reached nearly 2 million units,
with more than half headed for Europe. Exports of motorcycles
and ATVs approached 500,000 units — a long way from
the vision first expressed in 1978 by Yoshizawa, even before
production began.
Serving Customers worldwide | exports
Turnabout Is
Fair Play
it began as a typical aspect of Honda’s focus on efficiency.
In 1972, Honda wanted to take advantage of empty cargo space
on its Pacific fleet of ships — the Pacific Wing, the World Wing,
and the Universal Wing — which were returning empty to Japan
after transporting Honda automobiles, motorcycles, power
equipment, and parts from Japan to America’s Western ports.
Honda International Trading Corp. (HIT) was established
as the international trading arm of American Honda as the
company saw an opportunity to use Honda’s ships to supply
Japanese consumers and businesses with U.S.-made products.
The initial cargo on the ships returning to Japan included
livestock, such as cattle and hogs.
In 1993, HIT became a subsidiary of Honda Trading Japan.
It was renamed Honda Trading America (HTA), although
American Honda retains a 15 percent stake in the company.
Today, trade with Japan has become a $3.5 billion a year
business for Honda Trading America. In total, HTA managed
more than 3,100 import and 1,200 export shipments each year.
HTA exports soybeans grown by independent
farmers in Ohio and other states to Japan.
In addition to livestock, the company’s early transports
included products such as U.S.-made golf clubs, toys, coffee
makers, and refrigerators, which would be marketed to
Japanese consumers through Honda’s Japan dealer network.
Sales the first year were a modest $15,000.
HTA vastly broadened its focus to include a diverse array
of products, including auto parts, Honda-branded motorcycle
accessories, and agricultural products, such as hay cubes.
Through a subsidiary, Harmony Agricultural Products, HTA now
maintains a brisk trade in the processing and sale of high-quality
soybeans, which are grown on Honda-owned farms in Ohio and
purchased from independent farmers in surrounding states.
“Like all of Honda, our focus is on finding new value for our
customers and making sure the products we deliver offer the
highest possible quality and value,” said HTA Vice President
Greg Norval.
As Honda’s U.S. manufacturing presence continued to
grow, HTA’s focus shifted to supporting Honda’s U.S. and global
manufacturing operations by proving a critical link between
Honda factories, its materials suppliers, and other trading
partners. HTA is also a vital part of Honda’s Raw Materials
Supply System, a partnership between HTA and Honda of
America Mfg.’s North American Purchasing
Division to provide quality materials for Honda
production facilities and and its suppliers.
HTA leverages the volume of its supply network
and expertise to procure materials, such as
steel, aluminum, plastics, and raw materials
such as silicon and magnesium for Honda
manufacturing facilities worldwide.
HTA now has five U.S. offices. HTA
associates work on-site at virtually every
Honda facility around the country. HTA and its
suppliers in North America procure 100 percent
of the aluminum that is used in Honda’s North
American production facilities. Of the steel HTA
procures, 70 percent is used by Honda suppliers
to make parts used in Honda products; the
other 30 percent goes directly to Honda plants.
Besides the
procurement of
raw materials
for Honda’s U.S.
factories and
suppliers, HTA
now procures
and recycles
precious metals
used in catalytic
converters
and other
components.
It also
coordinates
supply chain
logistics. Honda
uses precise
quantities of
HTA began business
platinum, palladium, and rhodium to
in 1972 by exporting
American products
reduce emissions in its automotive and
on car carrier ships
motorcycle exhaust systems. HTA is
returning to Japan.
responsible for securing and managing
most of these materials used by Honda worldwide.
Through centralized purchasing, inventory management,
and global experience, HTA works to mitigate the upward
price pressure inherent in the volatile precious metals
market and to ensure that Honda factories have a stable
long-term supply.
The recycled materials collected by HTA that are not
used internally for Honda parts and materials are sold on the
open market. As new processes and opportunities evolve,
HTA continues to seek new innovations to gain efficiencies in
recycling for Honda, its suppliers, the automotive industry,
and the world.
“We like to think of ourselves as the people who fill the
gaps in the supply chain. Wherever there’s been an unmet
need, we’ve tried to fill it utilizing our international trade and
procurement expertise,” said Norval.
Building Products
in America
onda was the first international automaker to establish
H
successful production operations in America
and has continued to advance its original commitment
to “build products close to the customer.”
Honda founder Soichiro Honda
(kneeling in foreground) reviews
plans for the new Marysville
Motorcycle Plant in Ohio with,
from left, Kiyoshi Ikemi, Honda
Motor Co., Kazuo Nakagawa,
first president of Honda of
America Mfg. (behind Mr.
Honda), Koichiro Yoshizawa,
president of American Honda,
Kiyoshi Kawashima, president of
Honda Motor Co., Shige Yoshida,
vice president of Honda of
America Mfg., Mrs. Sachi Honda,
and Ken Nakagawa of Honda
R&D Co.
of
building products in america
Building
the Foundation
Vice President Kihachiro Kawashima said the company also
planned to build automobiles in Ohio. Many of Honda’s U.S.
dealers opposed the idea. The announcement was not wellreceived. Nakagawa recalls, “Japan-made products were
cheaper and better. That was the feeling of Honda dealers
The first president of Honda of America Mfg., Inc., Kazuo Nakagawa, remembers the advice he received
in
the U.S.”
from Honda Motor Co., Ltd., President Kiyoshi Kawashima after accepting the assignment to run Honda’s
The Marysville Motorcycle Plant startup began with a
first production* facility in America.
focus on building quality products for Honda customers. None
“Do not forget that they are letting us work in their country,” said Kawashima. “Let’s not fall from
of the first 53 American associates hired had ever assembled
grace.” The advice gave Nakagawa pause. “That is a little different than being told to ‘Make sure to be
a motorcycle. Most had never worked in a factory. So teamwork
loved’ as we work in a foreign country,” said Nakagawa. “I think ‘not to fall from grace’ has more meaning.
was as important as technical skills. The white uniforms worn
by all associates served several purposes. “The white work
For example, if we were told to be loved, we might try to do things beyond our capability. Then we might
clothes were designed with hidden buttons to keep them from
one day lose our footing. However, we should be able to not fall from grace if we sincerely do things while
scratching the product. And white clothes would call attention
listening, hearing and learning what is appropriate from the local culture. And if we continue that, we will
to stains caused by bad work processes,” said Iwamoto. But
ultimately keep our feet on the ground and may be loved. If you think in this way, these are quite profound
the white uniforms also signified the “One Team” concept.
words — as the key words to serve as the basis of our actions.”
The original 64 associates, including 11 engineers from Japan,
all were considered part of the
same team.
company],” said Nakagawa. “In
Nakagawa also received advice from Masami Suzuki,
“Sometimes the communication
America, working people were often
then a senior managing director of Honda Motor who led the
between the Americans and Japanese
differentiated by how they were called
planning for the new American factory. Suzuki said, “Make it
was a struggle,” said Wayne Hamilton,
— like employer and employees.
a plant with a good work environment” and “Be friendly with
one of the original 64 associates. “A
However, there were some companies
the American people.” So every detail of the factory layout
lot of times they would use drawings
that used the word “associates.”
created was focused on achieving a good work environment.
to explain different operations.
So, we studied it and decided to go
This included the layout of the production processes, the
Sometimes the frustration would get
with
“associates.”
We
are
team
location of locker rooms, the absence of executive parking or
“Original 64” associate Steve Yoder
to the point where a piece of paper
members, not management and
offices, and everyone being called an “associate.”
would ultimately come out and the
workers. Obviously, there is a president
According to Nakagawa, the title “associate” is consistent
drawings would start. When we were building the plants,
and there are board members, but we are the same. From the
with Honda’s philosophy toward employment in Japan. But
a lot of plans were drawn in the dirt.”
beginning, Honda was such a company. So this did not change
the specific idea came from research of American companies
The focus of most training centered on quality for the
when we came to the U.S.”
led by Shige Yoshida and Kunio Iwamoto. Iwamoto led the
customer. “For the first month I was at Honda, we would build
Something that did need to change was the perception
initial hiring process for the Marysville Motorcycle Plant.
bikes and then tear them down,” said Steve Powell, another
of American workers. “In the 1970s, some cars made by the
Yoshida had worked at American Honda and was involved in
of the original 64 associates. He later became assistant plant
Big
Three
were
called
a
‘Monday
car’
or
‘Friday
car,’
which
the site selection process for the new plant before becoming
manager. “There was zero tolerance for quality issues.”
meant the cars they made on Friday or Monday had too many
a vice president of Honda of America Mfg.
Finally, on September 10, 1979, mass production began
defects,” said Nakagawa. “It was the time when the reputation
Nakagawa explained that the title “associate” aligned
at the Marysville Motorcycle Plant. The first Elsinore CR250R
[of American labor] was very bad.”
with Honda corporate culture. “Some Japanese companies
that came off the line was more than a motorcycle. It was the
In making the announcement in 1977 that Honda would
called a factory worker koin [member of the factory]. Honda
beginning of a new approach to manufacturing in America.
begin motorcycle production in Ohio, Honda Motor Executive
didn’t do that. At Honda everybody is jugyoin [member of the
* Honda production facilities in America use domestic and globally sourced parts.
Investing in People,
Not Just Facilities
Within months of the start of production at the
motorcycle plant, Honda officials gathered again with
Ohio Governor James Rhodes and local officials to break
ground for the $250 million Honda of America Mfg. (HAM)
Marysville Auto Plant.
All of the efforts that went into the establishment of
the motorcycle plant — the focus on quality, teamwork and
communication — would be repeated there, but on a much
larger scale. “The plants in Ohio represent the largest project
in the history of Honda outside of Japan,” Honda Motor Co.
President Kiyoshi Kawashima told associates in Ohio after
the announcement.
The pattern would be repeated over and over again
during the next three decades, as Honda’s manufacturing
operations expanded throughout North America. The focus
was not simply on building new facilities and equipping them
with advanced technologies to achieve higher efficiency,
of
manager of the North American
flexibility, and quality. The goal
Purchasing group that oversees
was to advance the skills of the
Honda’s parts sourcing.
Honda associates responsible for
In 1997, Jutte described
these characteristics.
an early lesson in empowering
“What Honda brought to the
associates at the spot. “For
industry was a different approach
10 years I had worked for an
with our associates, a different
electric contracting company
approach to manufacturing, and
in Ohio — in a system that was
a different approach to business
very structured. Employee
partnerships with our suppliers,”
This farmhouse was the first office for Honda of America Mfg.
suggestions not only weren’t
said Tom Shoupe, senior vice
engineers who were planning the Anna Engine Plant in Ohio.
sought, they were ignored when
president of Honda of America Mfg.,
offered. Management made all of the decisions,” he said. “So,
in the fall of 2007 at the launch of the 2008 Accord.
imagine my surprise in July of 1985, during my first month
“In some ways, you could say that Honda of America was
with Honda, when I observed a team of associates on the line
the trailblazer for the international auto industry. Today, there
tackling a very technical issue related to equipment design.
are some 10 international brands building vehicles in America.
As they thrashed through the problem-solving process, I
Both Honda of America and Accord blazed a trail. And I can
remember thinking, This is not an issue for associates, this
recall throughout the late ’80s and early ’90s that we opened
is an issue that engineers should decide. But, in reality, the
our doors to a number of competitors who wanted to see what
associates were there fighting the battle every day and knew
we were doing here.”
more about the equipment and the problem than engineers
Hundreds of Honda associates traveled to Japan for
like me. With the full support of management, they solved
brief periods to learn manufacturing skills at the Sayama Plant
the problem. Further, as a team, they had great ownership
that produced the Accord. And more than 300 Japanese
in the resolution, which also made for a smoother execution.
engineers came to Marysville for extended stays,
I quickly learned that there is a very strong
with the responsibility to teach the Honda way of
undercurrent of teamwork and flexibility at Honda.”
manufacturing, to refine the equipment and
I quickly
Over time, the first generation of production
processes that would be used to build Honda
learned that
associates in America became teachers themselves.
products, and to ensure that the Accords built there
there is a
The second generation of production associates
would be every bit as good as the Accords built in
very strong
in Alabama, Georgia, South Carolina, and Indiana
Japan. Initially, there was criticism that Honda had
undercurrent
learned through the leadership of those first
too many Japanese engineers. Ultimately, this
of teamwork
generation associates in Ohio and Canada. “I recall
transfer of knowledge was the springboard to Honda’s
and flexibility
that when we started up the new plant in Alabama,
organic growth in North America.
at Honda.
Ohio Governor
it was based on our strong foundation in North
Larry
Jutte,
a
former
senior
larry jutte
James Rhodes and
Honda Motor Co.
America. Hundreds of experienced associates from
vice president of HAM, served in
President Kiyoshi
Canada and Ohio went to Alabama as teachers,” said
several
roles
in
his
career,
including
Kawashima break
ground for the
Hiroyuki Yoshino, former president of Honda Motor
plant manager of both the Anna
Marysville
Co., Ltd., as well as president of Honda of America
Engine
Plant
and
the
East
Liberty
Motorcycle Plant
Mfg. from 1988 to 1992. “Our associates from
Auto Plant, as well as general
in 1978.
From the
standpoint
of creativity,
throwing
money at
things isn’t
always the
answer.
Ohio and Canada were teaching Honda
corporate culture. The energy and passion
to accelerate production for the customer
was created through the efforts of Honda
associates in North America. I was more
proud of this achievement than anything
else they accomplished.”
One of these associates was
Chuck Ernst, who in 1985 helped start up
chuck ernst
production at the Anna Engine Plant in
Ohio. “I thought I was joining a big global
company,” said Ernst. “Then I reported for
my first day of work. Our project office was
in an old farmhouse on the land Honda
had purchased to build the plant. Each room was devoted
to a different area of the plant. The facility engineers were in
the kitchen. Each bedroom housed a different department —
assembly, machining, casting, and so on.
“I recall that we built training engines in an off-line
build area in the basement and suspended them from the
hand-hewn wooden floor beams using chains purchased
from the local hardware store. I was asked to disassemble
those engines, but before I started was told we had no
budget for tools. So I brought my own Craftsman tools from
home. After hours and hours of use, I had to replace some
of my tools several times. Certainly, this is an extreme
example. But it was an invaluable lesson for me regarding
the importance of operating flexibly at the highest efficiency
and doing more with less. Because it wasn’t just a matter of
making sense financially. From the standpoint of creativity,
throwing money at things isn’t always the answer. I learned
a lot about Honda culture and how this relatively small
company with limited resources has been able to achieve
so much,” said Ernst.
Ernst felt that the experience in Ohio was key to the
successful startup of production at Honda Manufacturing of
Alabama, LLC, (HMA) where he serves as senior vice president.
“Like the Anna Engine Plant, we had to hire and train many
The flexibility of associates at the Honda of America Mfg. Engine Plant in Anna, Ohio, including
(left to right) Stephanie Brosher, Amanda Sutton, and Mary Wilson, is critical to Honda’s ability to produce
4-cylinder and V6 engines for eight different Honda and Acura models made in North America.
associates. In fact, more than 2,000 all-new associates
for HMA — most of whom had no experience in an auto
manufacturing environment. Finally, in addition to maturing
our people, we also had to mature the equipment — and then
interface the two,” he said.
Similar stories were repeated over and over again
throughout North America: American engineers who
learned the Honda way in Ohio leveraged their abilities to
become the leaders of new manufacturing operations on
American soil. Associates from the Marysville Motorcycle
Plant in Ohio helped turn Honda of South Carolina Mfg., Inc.,
into an efficient producer of high-quality all-terrain vehicles.
Associates from Honda Transmission Mfg. of America
in Russells Point, Ohio, led the establishment of Honda
Precision Parts of Georgia, LLC, in Tallapoosa, Georgia.
And in Indiana both the plant construction and
management were led by associates who began their
Honda careers in Ohio, and moved on to leadership
roles at HMA before joining the new team at Honda
Manufacturing of Indiana, LLC.
At an event marking the 25th anniversary of the
Marysville Auto Plant, Shoupe spoke about the growth
of Honda in America through the efforts of its associates.
“What’s important is not the anniversaries, but what they
represent, which is the vision to establish production
operations here and the commitment to associate involvement
and teamwork to achieve high quality in America,” said
Shoupe. “The reality is that the key to our success here
in Ohio is our people . . . and how over the past 25 years we
have worked to advance and utilize their skills and ideas.”
an interview with hiroyuki yoshino
Advancing Corporate
Culture in Ohio
Hiroyuki Yoshino was president of
Honda Motor Co., Ltd., from 1998
to 2002. Previously, he served as
president of Honda R&D Co., Ltd.,
from 1994 to 1998. Yoshino first
worked in the U.S. as an American
Honda associate in 1969.
From 1988 to 1992, Yoshino
served as president of Honda of
America Mfg., Inc., in Ohio, where
he initiated a program called the
North American Task Group (NATG) in
which a select number of associates
went to Japan for up to two years
at a time, along with their families.
The goal was for them to learn more
about Honda manufacturing systems
and requirements. In the days before
Honda R&D Americas became a
primary source of automobile product
development — these associates
served as a window to the new model
process between Honda R&D Co. in
Japan and associates preparing for
new model introductions in Ohio.
of
Honda of America Mfg. (HAM)
emphasized teaching Honda’s
corporate culture — almost as much
as how to build products. Is this
approach different from Japan?
When I was assigned to HAM [in 1988],
we had 5,000 people there. When I left
HAM four years later, due to expansion,
that number had doubled to 10,000
associates. This means that every year
we needed to hire more than 1,000
new people in addition to the existing
associates, who also didn’t have so
much experience with us. Therefore,
I thought it might not be Honda anymore
unless we made an intense effort to get
across things like Honda’s culture or
basic way of doing business. That is
why we put our effort in this.
The impact these new people
had on the organization in the U.S. was
more than in Japan. In Japan we also
hired the same number of associates or
more every year. But the organization
[Honda Motor] had 40,000 people,
so the newly added 1,000 was only 2
to 3 percent of the total. But with only
5,000 total associates, and with limited
experience, the new 1,000 or more was
20 to 30 percent of the organization. So
the impact was very large. We needed to
emphasize corporate culture, or Honda’s
way of doing business.
A very easy way of understanding
this was that in Japan one or two out of
100 were new. So, without any system or
approach, it was natural that these one or
two associates could fit into the culture.
But in the U.S. we needed an organized,
systematic approach to provide a good
understanding about Honda.
You initiated a program in the early
’90s known as NATG (North American
Task Group) to advance the growth
and maturity of U.S. manufacturing
associates by giving them up to
two years to work at a factory in
Japan and be involved in new-model
development. What gave you the
idea for this program?
I thought it was not enough [for those
associates] to come to Japan on a spotbasis only, when it became necessary
and absorb whatever they needed, and
go back. Because they only get to know
the last 1 percent [of the process] after
the 99 percent was already done. But
there were many things that happened in
the process before it came to that stage,
taking two or three years to get there.
Without knowing that process, the
know-how, in its true meaning, would
not be understood by those Americans.
What I thought to be especially
important was that to achieve the final
success of Honda, the teamwork on the
floor is very important, but something
like this teamwork on the floor was
difficult to convey because there were
only a few Japanese associates on the
floor in the U.S. I heard some associates
saying, “This is America here.” So, I
thought it was very important to have
American associates understand how
in reality the 99 percent part was done
in Japan.
What was the initial
reaction to NATG?
Actually, it cost virtually the same
whether 10 Japanese were sent to the
United States to stay or if 10 Americans
went to Japan to stay there. But when
we examine the effect, of course it was a
normal approach to send the Japanese
and we saw the benefit, but we also saw
the limit. To break through this limit, I
thought it was better to station American
associates in Japan for the same cost.
The other thing was that
Japanese associates who were
stationed in the U.S. experienced lots
of hardships, but Americans could not
understand that very well. But when
American associates were stationed
in Japan, they also experienced lots
of hardships, but then it resulted in
better mutual understanding.
The other factor was that by then
there was a large enough population
of those who returned to Japan after
being stationed in the U.S., and they
could take care of American associates
stationed in Japan in terms of
communications and so on.
You had the opportunity to work
in the U.S. at different points in
the 50-year history. What are
your own reflections on Honda’s
growth in the U.S.?
I think Honda’s corporate culture has
many similarities to American culture.
We are all very open, we love a
challenging spirit. And results are
very fairly judged.
I was in American Honda during its
10th year of operation in the U.S. And
I joined Honda in Japan at the time of
its 15th year in Japan. So when I went
to American Honda, I couldn’t feel that
it had only 10 years behind it; I thought
it could have had a longer history than
10 years. Further, it is also an interesting
coincidence that when I joined Honda
Motor in Japan, it was the year Honda
started doing 4-wheel business, and
when I came to the U.S. it was also the
year they started doing auto business.
So I was able to see the special vitality
in both organizations in starting a
new business.
In 1970, American Honda sold
about 3,000 units in America, while the
Volkswagen Beetle sold about 560,000
units. At that time, we discussed how
long it could take for Honda to sell
such a big volume in the U.S. But in less
than 40 years, we are selling more than
1.5 million, while Volkswagen is now
selling around 300,000 units.
What is your dream for
Honda in America?
The last sentence of the Company
Principle says: “for worldwide customer
satisfaction.” I know this has not been
100 percent realized yet, but sooner or
later we will be able to achieve it. What
is beyond that is the Three Joys, which
is written in our Fundamental Beliefs.
There still is a large gap between the
levels of Joy and Satisfaction. So,
whether Honda, not just American
Honda, can achieve the level of Joy in
concrete form . . . though I don’t have
good ideas yet myself . . . I think, after
all, that is what represents the true
value of Honda. So, with hope, I would
like to say that is my dream: Someday in
the future to achieve the Three Joys.
Partnering
with Suppliers
When the first Accord rolled off the assembly line
at the Marysville Auto Plant in November 1982, the new Ohio
factory was largely an assembly plant. Certainly, there was
a large stamping press that used steel sourced from U.S.
steelmakers. And all of the parts were welded, painted and
assembled under one roof. But most of the key components
were coming from Japan as “knockdown units” — Honda
parlance for a package of key components shipped from one
plant for assembly into a vehicle at another plant.
As Honda began increasing parts sourcing in North
America in the late 1980s and 1990s, many suppliers in
North America experienced difficulty in meeting the
company’s exacting QCD (quality, cost and delivery) standards.
Honda didn’t use these struggles as grounds for ending the
relationship. “We wanted to help them succeed and to see
that our relationship succeeds,” said Bill Easdale, who has
worked in the purchasing area at both the Marysville and East
Liberty Auto Plants and at Honda of Canada Mfg. In fact, Honda
experts were often dispatched to work in supplier facilities
for weeks or months at a time to help suppliers improve their
production characteristics.
In 2008, Honda had more than 600 suppliers in North
America — representing more than $19.5 billion in parts and
materials purchases. The efforts that went into achieving
these numbers evolved through the years. Among many other
initiatives, they now include a North American Technical
Group, where 100 Honda purchasing associates support
quality, efficiency and delivery within Honda’s network of
North American suppliers.
Many automakers in the U.S. have attempted to improve
their own cost competitiveness by forcing suppliers to reduce
prices regardless of the cost of making the components.
Honda has approached its relationship with suppliers as more
of a partnership. “By working with our suppliers, we achieve
low cost, we don’t buy low cost,” said Easdale.
This approach is tied explicitly
to Honda’s commitment to local
production. “We believe in
building products close to our
customers,” he said. “So we work
to strengthen our local supply
network, to make sure it can be
globally competitive.”
One noteworthy example is
Grand Haven Stamped Products,
which made the automatic
transmission lever assembly for 2005 Civic at its facility
in Hart, Michigan. After doing collaborative work with
Honda R&D and HAM associates in Ohio, Grand Haven
also began supplying this component to Honda plants
in Japan, Thailand, and the United Kingdom.
Honda not only sources
more than 90 percent
of its steel from
domestic suppliers.
It works closely with
U.S. steel companies
to ensure that
they can meet new
requirements for
high-strength steel to
achieve Honda targets
for weight reduction,
product safety, and
fuel efficiency.
In 2000, Honda began applying this collaborative spirit
to its work with toolmakers in Michigan, Ohio and Canada.
To make smaller tooling companies stronger and more
globally competitive, Honda promoted advanced
technology and lean management systems.
By working
This is still contributing to the overall
with our
competitiveness of the North American tooling
suppliers, we
industry, as these companies use the new skills to
achieve low
provide value to their other customers.
cost, we don’t
By working together and sharing knowledge
buy low cost.
for
mutual
benefit, Honda has shown that
bill easdale
suppliers and toolmakers can achieve world-class
manufacturing operations that match Honda’s
flexibility. In this way, they can remain competitive
locally within a global supply base.
Creating a Flexible
Manufacturing System
When Project Leader Randy Shiplett and his team at
the Marysville Auto Plant in Ohio began to introduce Honda’s
global flexible production system in 2000, they faced more
than the challenge of adding new equipment. The project
required that they install an entirely new weld department
and a significantly longer assembly line without stopping
production of the popular Honda Accord and Acura TL.
of
Further, they had to accomplish the change in the midst of the
mass production startup of an all-new 2003 Accord.
The new flexible production system was part of a sweeping
change at all of Honda’s major auto plants worldwide. Honda
introduced the flexible New Manufacturing System in North
America in the early 2000s. With the establishment of each
new factory — including plants in Alabama and Indiana in
the first decade of the 2000s — Honda applied the best
available technologies and lessons from its North American
and global manufacturing experience. But an important
element of Honda’s success in maintaining quality, efficiency
and flexibility is that the principle of innovation must apply to
existing operations as well as to new ones. Each production
facility undergoes regular and sometimes wrenching change as
the company continuously introduces new and more complex
products and processes.
The East Liberty Auto Plant in Ohio was first to complete
the change in 2001. But the change was most challenging at
the Marysville Auto Plant, which was approaching 20 years of
production at the time of the innovation. Shiplett and his team
adopted the slogan “BN20” — Better for the Next 20 Years —
to define the purpose of the project.
Tom Shoupe, now senior vice president of Honda of
America Mfg., previously served as plant manager at both the
East Liberty Plant and the Marysville Plant when the innovation
occurred. “In both plants, we tore out the old hydraulic welding
systems, where most of the fixtures were specific to single
models,” he explained. “We replaced them with electronic
welding robots that have the flexibility to accommodate the
introduction of new models with reprogramming and
minimal retooling.”
At the Marysville Plant, continuous expansion had taken up
most of the space in the plant. There was a self-imposed limit
on expanding the size of the facility. As a result, completing
the changeover required a little ingenuity. “We spent a year
obtaining associate input on the best way to innovate the
weld areas. Since we could not create space by expanding the
building, the BN20 team took a ‘build-and-scrap’ approach to
innovating the weld department,” explained
Honda has the
Shiplett. “First, we installed the new floorflexibility to
produce passenger component weld system for Line 1 in what
cars and light
had been a material service area. Then we
trucks at each
tore out the old Line 1 floor-component weld
one of its plants
in North America.
system and built the new Line 1 car body weld
Honda associate
system. This alternating build-and-scrap
Bryan Peterson
inspects a 2007
construction process continued throughout
Element light truck
the innovation process.”
following a 2007
Civic sedan down
Even the task of pouring cement for new
the assembly line
weld
systems required creativity with a focus
at the East Liberty
on maintaining production for the customer.
Auto Plant in Ohio.
In 2001, the Marysville
Auto Plant’s twin
assembly lines were
lengthened by 23
car lengths without
stopping production.
lengthening both of the plant’s assembly lines by 400 feet —
The schedule required that the cement
the length of 23 car bodies — in a plant already packed
be delivered during production. But
with processes.
the cement trucks didn’t fit in the aisles
Construction of the final 100-foot leg of the extended lines
and under conveyors. “We considered
was the most daunting challenge — and the biggest risk. To
various delivery methods before the team
have no impact on production, this construction phase was
settled on what we called the ‘bucket brigade,’ ” said Shiplett.
scheduled for a nine-day window of time during the
Carrying a half-yard of cement at a time, fork-lift
holiday shutdown in December 2001. “Gossip started
trucks equipped with buckets shuttled as much as
We spent a
circulating in the surrounding communities that the
450 yards of concrete a day — more than 6,000
year obtaining
Marysville Auto Plant might not resume production
yards in all. “This was unconventional, but the plant
associate
on January 2nd as scheduled,” said Shiplett. “Some
was able to maintain production of 1,800 cars each
input on the
area businesses were telling their customers that
day,” he said.
best way to
they were anticipating a few extra days of business
innovate the
from an extended shutdown.”
weld areas.
Another key aspect of Honda’s global flexible
However, working through the shutdown
production system, is a standard five-zone layout
randy shiplett
period, several hundred Honda associates and
for the main assembly lines. This strategy includes
contractors installed a new assembly conveyor that
quality gates at the end of each zone. The idea is
became functional at 4 p.m. on New Year’s Eve 2001.
to drive quality deeper into the production line to
When Honda associates returned to work Jan. 2,
prevent potential quality problems from making
production began as scheduled on the new longer
it to the end of assembly. This strategy required
assembly line, with no interruption of production.
The flexible manufacturing system now allows all Honda
plants to introduce new products into production more quickly,
and at lower cost. For instance, Honda product development
teams can now design new vehicles within the engineering
capabilities of a group of similar plants, rather than dealing with
the unique plant configurations.
In the difficult economic conditions that began in 2008, the
flexible system also allowed the company to move production
from one plant to another more efficiently, in order to make
better use of overall capacity. This included the transfer to
Honda Manufacturing of Alabama of some V6 Accord sedan
production from the Marysville Auto Plant and all Honda Pilot
and Ridgeline production from Honda of Canada Mfg.
Significantly, on the heels of this major innovation, the
Marysville Plant added a new paint shop and a new door
subassembly line, all without interruption of production.
“The one thing I learned at Honda was that the only constant
is change. We will consistently find the best way to do
something,” said Shoupe.
Now, the Marysville Auto Plant can introduce virtually
any Honda vehicle in the midsize and small vehicle categories
without significant new-model investment. In fact, in 2006,
the plant introduced its first light truck, the Acura RDX, after
25 years of building only passenger cars.
The general welder system used in the Marysville Auto plant and all other
major Honda auto plants is key to achieving the flexibility to switch quickly
from one model to another by reprogramming rather than retooling.
Associate Involvement
Spurs Improvement
“Hard innovation” such as that found in new weld
systems and equipment changes to assembly lines is important
to the flexibility and efficiency of Honda plants. But according
to Tom Shoupe, senior vice president at Honda of America Mfg.,
another critical focus was “soft innovation” achieved through
associate involvement.
“We were not simply moving equipment around,” he said.
“We were creating a new way of doing things. The leadership
of the Marysville Auto Plant wanted to create a new culture,
along with the new efficient and flexible manufacturing system,
based on the needs of the associates working in the plant.
We wanted to make sure that each associate understood
of
ergonomics is not about winning awards. With the
why we were making these incredible changes —
introduction of each new model to mass production,
and why each of their jobs is so important to our
We were not
Honda associates contribute hundreds of suggestions
overall operations.”
simply moving
for changes to the product and the processes used to
Associate suggestions were key to a number
equipment
build them. They participate in creating an ever-safer
of the innovation improvements. For example, the
around, we
work environment for associates and higher quality
original design of the global standard electric-servo
were creating
for the customer. Their innovations often include
welding gun had the coolant tube on the outside,
a new way of
modifying product design for easier installation of
making it vulnerable to damage. Developed by
doing things.
components and additional lift-assist devices for
Honda Engineering, Honda’s production engineering
tom shoupe
heavy components.
subsidiary, the new electric-servo weld guns were
These ergonomics advancements proved
more accurate. They could quickly apply the right
particularly important in plants that build larger
amount of pressure depending on the welding
vehicles with heavier components. A team of Honda
application. The guns also consumed less energy.
associates in Ohio and Alabama collaborated on
But engineers from the Weld Department at the
the development of a new “Superseat” now used in
Marysville Plant went to Japan to convince Honda
the Alabama plant. The robotic chair enables associates to
Engineering to modify the gun by placing the tube on the
maneuver more easily inside the Odyssey frame as it moves
inside. This modification was implemented and later adopted
along the assembly line. The continuous innovations to
by Honda’s Sayama Plant in Japan as well.
Honda’s American manufacturing plants demonstrate the
Such innovation and associate involvement did not
company’s commitment to delivering ever greater value to
end with the implementation of the flexible manufacturing
its customers and to fulfilling its vision of building products
system. For instance, Honda has been an industry leader
close to customers.
in enhancing the ergonomics of manufacturing processes
in all of its factories. Associates at the Anna Engine
Plant won the 2008 Ergo Cup, awarded by the
Ergonomics Center of North Carolina, for creating
a new system that reduces push-pull forces
required to move parts from
The ongoing
the material service department
challenge to improve
to the assembly line.
work process
“The team was not just
ergonomics led
Honda associates
engineers,” said Brent Rankin,
in Ohio and Alabama
engineering coordinator at the
to collaborate on
the “Superseat.”
Anna Plant. “We had a group of
It makes interior
associates on the line who took
assembly processes
less strenuous for
interest in and wanted to solve
associates, including
the problem. We got together
Chad Duncan (left),
working on the
as a group and came up with
A team of associates from the Anna Engine Plant celebrate their
Odyssey minivan at
first place finish in the 2008 Ergo Cup: from left, Kevin Tipton,
a
lot
of
different
ideas.
It
is
an
Honda Manufacturing
Brent Rankin (hoisting the trophy), Phil Ford, and Paula Felder.
ongoing process.” But improving
of Alabama.
Making “Greener”
Factories in America
Paint shops generally consume more energy than
any other area of an auto plant. They require consistent
temperature and humidity conditions, in addition to the
energy to operate the painting equipment. So, when Shubho
Bhattacharya, a staff engineer at the Marysville Auto plant,
wanted to make an improvement that would have the greatest
impact on plant operations, he zeroed in on the facility’s
paint department.
Honda had been conditioning the air in its paint booths
to a target temperature and humidity that was based on
prevailing outside weather conditions. Bhattacharya’s idea
created a system that achieves the target with as little
energy as possible. He wrote the system’s control algorithm
in cooperation with the mechanical engineering department
at Ohio State University, with which Honda maintains a close
relationship in a variety of areas. “I approached this in terms
of operations cost, but we were also able to have a positive
impact on the environment. In this sense, it was a win-win,”
said Bhattacharya.
In 2006, Honda of America Mfg. began rolling out this
new “intelligent paint booth” technology. It uses predictive
mechanisms to control air temperature and humidity, reducing
energy consumed in the auto body painting process by as
much as 25 percent. Following a pilot demonstration at the
Marysville Motorcycle Plant in 2006, intelligent paint booth
operations started at the Marysville Automobile Plant’s new
Line 2 paint shop in November 2007. A year later, the East
Liberty Auto Plant, Honda Manufacturing of Alabama’s Line 2,
and Honda of Canada Mfg. Plant 1 also implemented this new
energy-efficient technology. In 2009, the Marysville Auto
Plant’s Line 1 will also add the system.
Honda has actually been advancing paint technology
for two decades. In 1989, Honda of America Mfg.’s East
Liberty Auto Plant became the first U.S. automobile factory
to apply waterborne basecoat paint, significantly reducing
Left: Marysville Auto Plant associate Mark Hearn inspects an Accord Sedan in the $123 million paint facility that opened in 2006.
The paint shop was the largest single investment among a series of renovations and expansions that have kept the 27-year-old plant on the
cutting edge of technology. The new paint shop sharply reduced emissions and energy use, while enhancing quality — and enabled the
Marysville plant to begin light truck production. Top right: Karen Heyob is coordinator of Honda’s North American Green Factory efforts.
Bottom right: Shubho Bhattacharya conceived and developed a system that further reduced energy use and cost in the paint shop.
potentially harmful emissions associated with the automobile
painting process.
For decades, Honda plants have strived to lead in
the creation of more environmentally responsible means
of producing Honda automobiles, power equipment, and
motorcycle products in its U.S. factories. In 2002, Honda
Manufacturing of Alabama’s Lincoln plant became the first U.S.
auto plant to produce automobiles while generating no waste
to landfills. In 2006, Honda Power Equipment Mfg.’s plant
in Swepsonville, North Carolina, became Honda’s second
“zero-waste-to-landfill” plant in America. By 2009, Honda had
six plants in North America that were zero landfill.
“Green factory is more than a slogan for us, it’s
fundamentally a way of life at our operations throughout the
United States,” said Karen Heyob, North American Green
Factory Coordinator. “Conservation is taking place throughout
our operations. We’ve made significant progress because
associates are driving our efforts through their suggestions,
team activities, and our overall green factory culture.”
Creating Products
in America
y continuously advancing its ability to design
B
and develop new products and technologies in America,
Honda is fulfilling its research and development
mission — “making people’s dreams reality.”
Longtime HRA associate
Paul Hutchins (right) and
Hiroshi Kannan sculpt clay
for a 1/6th scale model of a
concept vehicle designed in
the Los Angeles Center.
of
creating products in america
Creating Dreams for America —
in America
When Honda Research California (HRC) — later to become Honda R&D Americas, Inc. (HRA) — was
established in 1975, Honda was experiencing tremendous growth in its U.S. motorcycle business. It also
was successfully establishing itself in the automotive industry, and researching the possibility of a U.S.
manufacturing presence. American Honda was Honda’s only U.S. corporate entity at that time. Because
R&D wanted to establish a long-term presence in America, HRC became a subsidiary of American Honda.
Its first office was on the third floor of Building II on the Gardena campus.
Within several months, the group moved to a stand-alone office on Oregon Court in Torrance,
California. “It was just three people,” recalls former HRA Chief Designer Tony Ikeda. “I was in charge
of automobile and Mr. Aoyama was in charge of motorcycle, and we both reported to [Norimoto] Otsuka.”
The team’s first big task was to setup their new studio. “We did not have anything, just an empty building.
We had to start from zero,” said Ikeda.
them the American-side opinion. It’s important, HRA’s Civic
Renaissance design
because in Japan everything is different, even
concept led directly
to the Honda CRX
the color of the sky.”
that debuted as a
HRA’s early efforts to define Acura styling
1984 model.
included design of the original Acura Integra
the Ohio Center, and Doug Halbert, now retired, who would
In 1976, one year after its first office opened within
and a major helping hand in the final concept and styling
become chief of the auto design studio, as well as Martin
American Honda, the design and engineering teams of
direction for Acura’s NSX supercar.
Manchester, executive designer, and Gary Sowers and Ken
HRA began conducting market research and identifying
The early days were marked by the team’s tight-knit
Miyako of the motorcycle design studio. Working closely with
new market opportunities for Honda in America. Under
relationships.
“We were kind of like family,” said Halbert.
American
Honda
on
the
“50M”
project
(see
page
60),
project leader Ben Knight, the team conceptualized a
“We joked around a lot, but we really trusted one another.
HRA then developed the design concept for the Honda CRX.
front-wheel-drive minivan. “This was six years before the
It was a very special time.”
It was based on Halbert’s Civic Renaissance design.
first Chrysler minivan,” said Knight. “We conceptualized a
Ikeda recalls: “There were not so many Japanese
This was followed by the designs of the “long-roof”
front-wheel-drive minivan concept and took it to Japan.
[The Overseas
at
HRA,
so we became very close to our American
Civic
Hatchback,
introduced
in
1984.
But,
in
1983,
“It was twice approved by Mr. Kume [Tadashi Kume,
Assignment
colleagues. I spent so much time with Doug, maybe
as the CRX moved into development, the
president of Honda R&D Co. and later president
Program]
I knew him better than his wife.” And, like family, the
styling arm of HRA opened a separate
of Honda Motor Co.],” recalls Knight. “This was in
remains a very
We’d fight
team members would sometimes disagree. “We’d
facility on Fujita Street in Torrance, gaining
1976-77, and there was no factory space due to
important
like cats
fight like cats and dogs. Tony would yell at me for
the
space
and
capacity
to
develop
full-size
demand for the Accord. So they looked at smaller
pathway to
and dogs.
everything,” said longtime associate Dave Marek, now
clay models and mockups.
versions and switched it to the H3 project — a
growth and
But it was
division director of the Advanced Design Studio. “But
“We had very small capability
small SUV that ultimately became the Civic Wagon
learning
OK. I really
it was OK. I really respected him, and he was always
and the Civic Shuttle models.”
within HRA.
respected him. compared to Wako,” said Ikeda, referring
trying to share his knowledge with me.”
to
Honda
R&D’s
styling
studio
in
Wako,
In 1978, HRC moved into new offices on
dave marek
charles allen
“Yes, we would fight. Sometimes you have to fight,
Japan. “But we had some good influence
237th Street in Torrance. Included among the 15
really fight, but that’s not very important,” said Ikeda,
based on our strong team. Even when
engineers, designers, and technicians are current
reflecting on 20 years leading HRA’s design group.
Japan has a good design, they always
HRA associates Ben Knight, now vice president
“We fought because we all wanted good design. We
look
to
the
U.S.
to
make
sure
the
design
based in the Los Angeles Center, Charles Allen,
all shared the same dream — to make Honda R&D the
is suitable for this market. We would give
now senior vice president and general manager of
HRA associates
best design studio in
celebrate the
the world.”
first vehicle
developed in
The styling design,
Ohio — the 1991
market research, and
Accord Wagon.
engineering development
arms of HRA were finally united in the new
Los Angeles Center in 1986, one of the first
occupied buildings on the Torrance campus.
Halfway across the country, another
significant development occurred. A satellite
HRA office was established in Ohio, for the
support of local manufacturing and, ultimately,
new-model engineering development.
In 1988, HRA established its Overseas
Assignment Program (OAP) to give its
designers and engineers the opportunity
to train with Honda R&D in Japan. The OAP
program accelerated learning opportunities
by enabling U.S. associates to experience
different elements of design and development
within a more mature R&D operation.
“Early on, we would take new associates
right out of university and ship them to Honda
R&D in Japan for two years,” explained Allen.
“That may sound a little rough, but many
of those same associates today are leading
many of our new technology and vehicle
development efforts in America.” Some of
the younger associates who experienced
of
the OAP program also ended up leaving HRA
prematurely. “Today, we focus on associates
with a little more experience inside HRA,
perhaps two or three years,” said Allen. “But it
remains a very important pathway to growth
and learning within HRA.”
HRA’s design responsibilities continued
to grow as it took on increasing responsibility
not just for product design, but also for
product development. In 1989, HRA did its
first U.S.-led production model development
with the special-edition Accord SEi. This was
followed by HRA’s first new body development,
a derivative model based on the Accord
platform — the 1991 Accord Wagon.
The first-generation Accord Wagon
featured a unique body style. It was also
the first Accord model with an airbag. The
vehicle was American Honda’s second export
model — but the first experience for HRA to
design and develop a vehicle to be sold in
other countries. “That’s when things got really
serious,” recalls Marek. “The whole mood of
the place changed.”
Another derivative model followed
in 1993: the Civic Coupe. HRA had already
begun work on its second Accord Wagon, the
1994 model. This was the first development
by HRA that occurred in parallel with the
development of the base Accord Sedan and
coupe in Japan. The project proved to be an
invaluable experience for Erik Berkman, who
served as the assistant large project leader,
after having transferred to HRA from Honda
of America Mfg. Berkman is now both vice
president of Product Planning and Logistics
at American Honda and president of Honda
Performance Development, American Honda’s
motorsports subsidiary.
Honda’s ability to create new products in America was a result of its decision to invest in the
new Ohio Center, which opened in 1993, where product development and fabrication take place.
New Facilities
Grow Capabilities
In 1990, HRA built a proving center from
scratch in the Mojave Desert in California.
It was equipped both with a 7.5-mile oval
track and with the assorted winding road
and off-road courses that have become an
essential part of Honda’s global automobile
and motorcycle development. The new
track provided HRA with year-round testing
capabilities. Another 7.5 mile banked oval
track and other test courses operated by the
Transportation Research Center located next
to the HRA Ohio Center have long been used
in its development.
In 1993, HRA unveiled a major
expansion of its U.S. R&D resources with
the opening of the $27 million first stage of
HRA’s new Ohio Center. An additional
$25 million expansion of the design and
fabrication areas began almost immediately.
Multiple labs were created for the testing
of products and technologies. Although
it would continue to expand in size and
capabilities during the next decade, the
new center was more than just a new facility.
The new Ohio Center provided greater
resources for product development and
Honda’s work with suppliers. It served
as the launching pad for Honda’s ability
to conduct “complete product creation”
in the United States.
Acura CL Marks
a Major Step
In 1995, HRA took a big step with its first auto show
concept car. The Acura CL-X Concept, by designer Ricky Hsu,
debuted at the North American International Auto Show in
Detroit. The CL-X was a low-slung sharp-edged machine that
served as the foundation for the production-model 1997 Acura
CL Coupe. “The CL-X is still a very important product for HRA,”
said Tony Ikeda, a former HRA chief designer. “Some designers
still look back to that car for inspiration.”
The 1997 Acura CL Coupe was HRA’s first new model with a
unique character. It was built on the experience HRA obtained
through the prior derivative products. It was also the first new
body development led by a U.S. engineer, with Charlie Baker
as large project leader. It signaled a major turning point in
the maturing of HRA’s U.S. engineering capabilities. Upscale
appointments — such as a new 8-way power walk-through
Then Large Project Leader Erik Berkman (left) introduces Takeo Fukui,
then president of Honda R&D Co., Ltd., to a prototype of the second
generation 2001 Acura CL. Fukui later became president of Honda
Motor Co., Ltd. Acura returned to its performance luxury roots with the
introduction of the U.S.-developed 1999 Acura TL. The product helped
boost sales in the United States and became Acura’s best-selling model.
The 2002 3.2TL Type-S, also developed by a team led by Berkman,
reflected HRA’s focus on burnishing the sporting image of Acura. It
featured a more powerful 260-horsepower engine, a firmer, sport-tuned
suspension, 17-inch high-performance wheels and tires, and a larger
rear stabilizer bar. “These were critical developments,” said Jon Ikeda,
chief designer of the Acura Design Studio. “They really helped us to
understand very deeply what our customers expected of Acura and to
realize our own core competencies in defining Acura design.”
seat that was a first for the Acura brand — took a great deal
of development time.
Working with the Accord Coupe platform, HRA created
a vehicle with a unique Acura
look and feel. The target for
driving feel was delivered in part
through a unique body structure
that connected the body side-sill
and C-pillar, yielding noticeable
gains in body rigidity and sportluxury ride feeling. “The ‘clean
and clear’ ride feeling, as we
called it, really defined the CL,”
recalls team member John Dirrig.
The CL also featured a unique 4-way stamped trunk lid,
with both longitudinal and lateral crease lines. This innovative
design created some challenges for the East Liberty Auto Plant
that built it — and led to relationships between HAM and HRA
that would be critical to future model developments. “The CL
project was a big steppingstone for us,” recalls Dave Marek
now director of HRA’s Advanced Design Studio.
The depth of HRA’s American engineering staff began
to show. The Ohio Center now
had the capability to develop
multiple vehicles simultaneously.
Parallel to the Acura CL project
HRA created the 1998 Honda
Accord Coupe. Large Project
Leader Erik Berkman says it
was the first Accord Coupe
with a completely unique body
style. “Only the headlights
Acura CL-X Concept
and door handles were common
with the sedan,” recalls Berkman. The new Accord Coupe
was based on the newly created “flexible platform.”
Honda could now offer the larger, so-called “American”
Accord as well as a smaller version with variations for
Japan and Europe.
Members of the first generation 1997 Acura CL development team pour
over a white body at a key review point in the model’s development.
Defining the
Luxury Crossover
Defining and executing a completely new vehicle
concept, the Acura MDX marked a significant turning point in
the capabilities of HRA from the standpoint of market research,
design styling, and development — complete product creation.
“It was perhaps the first time HRA was tasked with
defining the basic vehicle concept, its very essence, and
every aspect of its performance and packaging,” recalls Frank
Paluch, the assistant large project leader for MDX for much of
its development. “The standing joke at the time was that SUVs
didn’t offer any sport and not all that much utility. The idea of
a midsize crossover SUV didn’t exist back then.”
The team conducted extensive market studies, including
“home invasions” — visits to the homes of target customers
to understand their lifestyle needs and life-stage wants.
The team also made visits to popular off-road parks in
California and Michigan in competitors’ SUVs to determine
what would constitute acceptable off-road performance
for the new Acura SUV.
The resulting concept was an SUV with a third-row
seat — a first for a midsize SUV. MDX also had a refined
and sporty driving character, top-level safety, and what the
2001 Acura MDX team members (from left) Art St. Cyr, Charlie Baker, Frank
Paluch, and Tony Kmeid with the 2001 Motor Trend SUV of the Year Award.
of
HRA’s
“Ultimate Athlete”
after back-to-back successes with HRA-developed
models the Acura TL became the “bread and butter” of the
Acura brand. For the 2004 TL, HRA had styled an aggressive,
angular vehicle it dubbed the “Ultimate Athlete” at a time when
many competitors were moving toward softer, more rounded
designs. But this final styling direction for the 2004 TL would
not be determined until unusually late in the development
process, after a heated competition played out between U.S.
and Japanese design concepts. The passion and commitment
of both teams led to two full-scale mockups that were
ultimately evaluated by about 180 customers in a Santa Monica
Frank Paluch, large
team defined as “medium duty” off-road
styling clinic.
project leader of the
and
towing
capabilities
—
well-suited
The results from the clinic were inconclusive. Each team
2007 Acura MDX,
continued to view its own design as the best choice. Despite
sits behind the wheel of to the needs of target buyers. “This
that second-generation multidimensional concept put the ‘MD’
the strong feelings of the U.S. development team, led by
model. Paluch, who
in MDX,” explained Paluch.
Erik Berkman, Honda R&D management from Japan decided to
participated in HRA’s
Overseas Assignment
The team’s do-it-all concept
recommend the Japanese design. The final decision, however,
Program, was a
for
MDX
also
led
to
a
new
4-wheelwould be made by Koichi Amemiya, then president & CEO of
key member of both
MDX development
drive system, HRA’s first major
American Honda. It all came down to the S-E-D
teams.
new powertrain technology.
(sales, production engineering and R&D) evaluation.
Of course,
The team established high targets for its new
Amemiya seemed ready to endorse R&D’s
we wouldn’t
powertrain, including best overall vehicle dynamics
recommendation when Berkman rose unexpectedly
always get
in all road conditions, good all-weather traction and
from his chair and made an impassioned plea
our way,
performance, best-in-class fuel economy, and lowest
on behalf of the U.S. team. “In retrospect, it was
but we had
weight for any 4WD system in the class. The team
potentially career limiting, but it was the right
found our
searched high and low for a solution, repurposing
thing to do,” said Berkman. The styling decision
voice and the
a supplier’s technology to create a magnetic clutch
was postponed for three months. Then the U.S.
confidence
that would allow for the infinitely variable transfer
team was finally told to proceed. Their sharp-edged
to say what
of engine torque from front to rear while reducing
“Ultimate Athlete” had prevailed.
we felt.
the system’s size and weight. They called it Variable
“I think HRA was moving out of its adolescent
erik berkman
®
Torque Management™ 4WD, or VTM-4. The system
stage,” recalls Berkman. “We were like a teenager
talking back to our parents, saying, ‘Hey, I’m taking
was used on both the MDX and the Honda Pilot. It also
the keys to the car!’ Of course, we wouldn’t always
served as the foundation for later advancements in
get our way, but we had found our voice and the
powertrain technology, including two generations of
®
confidence to say what we felt.”
Acura’s Super-Handling All-Wheel Drive™ (SH-AWD ).
Model X for the
Next Generation
A unique new model was conceived by HRA in the late
1990s, with direction from then American Honda President &
CEO Koichi Amemiya, for a new vehicle for young people based
on the Civic platform.
“We didn’t have any trucks back then, except the CR-V,”
said Eric Schumaker, a senior member of the Element design
team. “There was no MDX, no Pilot. When I would tell people
I was working on a truck, they’d just laugh.”
A vehicle for the Japanese market provided the idea. “Little
minivans were really popular with young people in Japan,” said
Schumaker. “I remember bringing a Japan model home one day,
and the neighbor kids were all over it. Our generation grew up
wanting a sports car, but these kids wanted something that they
could hang out in with their friends. They loved that van. That
was a major shift in thinking for us.”
To evaluate their concept, the team conducted market
research at the X-Games, at the beach, and at college
fraternity houses. “The frat guys kind of became a pseudo
market research panel,” recalls Aziz Ucmakli, a member of
HRA’s advanced market research group.
“We still had a challenge to convince top management of
our idea,” said Ucmakli. “We took Mr. Tezuka [Masato Tezuka,
then HRA senior vice president of Design] and other team
members on a beach camping trip in San Onofre, California.
It was a critical opportunity for him to see how these young
guys used their vehicles. Once we had Tezuka-san on board,
things went a lot more smoothly.”
The team developed a striking concept car. “We wanted to
create a shape you could recognize in silhouette from a quarter
mile away,” recalls Schumaker. “That was the basic concept.”
Named Model X after its Gen-X target audience, the
concept car made its debut at the 2001 North American
International Auto Show. It later became the Element.
Achieving Element’s cost targets was critical — as was the
deadline established by Amemiya. “He said, ‘I’d like this to be
Association (NHTSA) crash-test rating in both frontal and side
my 2002 Christmas present,’” recalls Art
impacts. “We knew the customer might be skeptical about the
St. Cyr, Element’s assistant large project
design, so we thought we needed to set a high bar,” said Evert.
leader in charge of vehicle test. The team
The team’s first tests, with a modified CR-V, were
faced numerous engineering hurdles in
unconvincing. Then the team developed a full-on structural
the Element concept, including a flat
prototype featuring a number of innovative solutions, including
floor, washable interior materials, and
a patented hook and catcher door-latch mechanism and
composite plastic fender panels — all
strengthened structural elements such as a beefed-up door
firsts for the U.S. development team.
structure and body side-sill. “We had never done that kind of
Element’s “wide-opening” doors,
basic structural development before,” recalled St. Cyr.
made possible by the absence of the vehicle’s B-pillar, created
Perhaps the biggest challenge came with an
an enormous development challenge for HRA.
S-E-D management evaluation decision to increase the
Without it, the team had to explore other methods
We still had a
Element’s wheel and tire to a larger 16-inch size, which
of ensuring good crash safety performance.
challenge to
required a 30-millimeter widening of the entire vehicle
The Element team went first to engineers
convince top
body. This had profound consequences: All parts that
at Honda R&D in Japan, who had faced a similar
management
could have been common with the CR-V platform
problem with a sedan and found it to be a very
of our idea.
suddenly became exclusive. Virtually all of the body
difficult task. “That was important information,
aziz ucmakli
design work already completed had to be scrapped.
but we still felt strongly we could achieve it,”
But the decision was a good one. HRA’s innovative
recalls Gary Evert, then assistant large project
approach to body design earned several U.S. patents.
leader in charge of design. The Element team
The Element went on to earn a five-star rating from the
went further, setting a challenging target to earn
NHTSA for both frontal and side impact crash tests.
a five-star National Highway Transportation Safety
Two members of
the HRA team that
developed the Element
concept, Damon Schell
(right) and former
associate Clarissa
McPeck, review early
design sketches for
the wholly original
Element, which
debuted in 2003.
Taking the Lead
in Safety
HRA helped initiate a major step forward
in safety in 2001, as the Civic Coupe and the
Volvo S80 became the first two passenger cars
to earn a top five-star U.S. government safety
rating for both frontal and side impacts.
2001 Civic Coupe
Inheriting the basic body structure from
the Japan-developed sedan, the coupe team
had an idea to enhance the coupe model’s
performance in side impacts. The team
envisioned a new type of body structure that
would create an additional “load path” for
the absorption of crash energy. However,
the system failed in initial testing. The bolts
connecting the new frame member to the
body were all broken. The team went back to
the drawing board, designing a new system
with more and beefier bolts.
Critical to success was the use of new
computer-aided engineering techniques.
Honda R&D management was initially skeptical
of the team’s reliance upon new simulation
software. Ultimately, the team achieved results
beyond its initial target of a four-star crash
testing rating. “It was a very satisfying effort
for our team,” recalls HRA engineer Chuck
Thomas, now one of the industry’s leading
of
safety experts. “We achieved five stars and
maintained our weight targets, and we proved
the value of this new simulation technology.”
Honda R&D now employs newer versions
of that same simulation technology in the
United States and Japan.
Advanced Safety Research Center
In the late 1990s, with responsibilities for
new-vehicle development at the Ohio Center
growing at a rapid pace, Honda’s safety
research group proposed a major expansion
of its testing capabilities in Ohio. In 2003,
Honda R&D Americas opened a new Advanced
Safety Research Facility in Ohio, featuring
seven advanced safety labs and two of the
world’s most sophisticated safety testing
technologies.
One of them, a 100-ton four-sided crash
barrier block, incorporates a high-resolution
surface with 450 load cells, giving engineers
the capacity to measure the distribution of
crash energy in a collision more accurately.
Another innovation is a “pitching” crash
test sled with the ability to simulate the
forward pitching motion of a car in a frontal
collision. The pitching test sled has allowed
Honda engineers to gather data that more
closely reflects the real-world performance
of systems such as airbags and seat belts.
“The pitching test sled was a major
achievement,” recalls Craig Markusic, an
HRA engineer who helped spearhead its
development. “Other companies had tried
unsuccessfully to develop this kind of
technology, but ours was a world’s first.”
The HRA safety facility has been used
to support testing and development of each
HRA-developed vehicle since the facility
opened in 2003.
The creation of the pitch test sled involved nearly two years of research and development by HRA
and Honda R&D Japan, working with several of the world’s leading providers of safety test equipment.
Gary Evert
An American
in Tochigi
Gary Evert had previously worked
at Honda R&D Co. in Japan in the Overseas
Assignment Program (OAP), but he found
himself in Japan under far different
circumstances when a project that began at
HRA was shifted to Tochigi R&D Center. Instead
of learning from Japanese engineers, he was
leading them in developing the Acura RDX.
Encouraging open communication became
a key theme for Evert’s new team. “Even though
we were speaking two different languages, I
encouraged open communication at all levels,”
recalls Evert. This active discussion broke
down silos between function groups, and made
decisions more transparent, ultimately helping
the team achieve its performance targets.
“I think the experience made me a much
better engineer and leader,” reflects Evert.
“It taught me to think more deeply about issues
and to consider the outcomes three or four
moves ahead. Also, in Japan, I found they have
tremendous communication. Everyone on the
team knows what everyone else is doing. It takes
a lot of time and energy to communicate this
way, but it ensures that everyone is pulling in the
same direction all the time. That’s something I’ve
tried to bring back to my work here in Ohio.”
Creating a
“Halo” Car
In 2004, a team of young American engineers was tasked
with developing the coupe version of an all-new Civic, slated
for launch in the fall of 2005. As subsequent generations of
the Civic grew bigger and more sophisticated, its image as a
car of choice for young buyers had lost some of its sheen.
The average age of Civic buyers was rising. In March 2004,
a story in the Wall Street Journal made a challenging assertion:
“The Civic Loses Its Cool.”
The HRA team took up the challenge of restoring the
magic that the Civic had enjoyed in the 1990s as a car for young
buyers, particularly the young, performance-minded drivers
who made the Civic an icon of the “import tuner” movement.
Leading the charge was 33-year-old engineer Mark Pafumi,
an avowed Honda enthusiast, with 1984 and 1992 Civics in his
home garage. Mark and other performance-minded members
of the team proposed the return of the performance-oriented
Civic Si as the key to
restoring the car’s
youthful and sporty
image. With strong
support from then
American Honda
Executive Vice
President Tom Elliott,
2006 Civic Si Coupe
the team created
the specifications for the new Civic Si, including a 16-valve
DOHC VTEC engine, a limited-slip differential, a large-throated
exhaust, and fat 17-inch high-performance wheels and tires.
In May 2006, the Detroit News summarized the success
of the new Civic Si under the headline “How Civic Got Its
Groove Back.”
“This car had personal meaning for every member of
our team,” said Pafumi. “In some way, we were all building
a car for ourselves, and that passion made Si the halo of the
Civic lineup.”
The development teams for the Civic Coupe and Si (left) and Ridgeline (right) celebrate the unprecedented
capture of both the 2006 North American and the Motor Trend magazine Car and Truck of the Year awards.
“Hondarado”
Becomes Ridgeline
In the late 1990s, American Honda and HRA started
evaluating the pickup truck market to determine what
opportunities might exist there for Honda.
HRA‘s first test mule in 2001 was an extended version of an
Acura MDX with a competitor’s pickup truck bed integrated into
the rear structure. “We called it the Hondarado,” recalls Gary
Flint, large project leader for Ridgeline’s development. The team’s
vision for a Honda pickup based on a unibody frame began to
materialize. “The image was a truck with unprecedented ride
and handling characteristics, coupled with traditional truck
capabilities and segment-busting innovation,” said Flint.
The team developed rigorous standards for the Honda
truck, including half-ton cargo hauling, 5,000-pound towing,
and extreme bed toughness. Building on its experience with
development of the MDX and the Pilot, the team conducted
extensive studies of body construction. It came up with a
modified version of Honda’s Global Light Truck platform, with
two-and-a-half times the rigidity of comparable body-on-
frame designs. “We didn’t do it because it was cheaper;
we did it because it was better,” said Flint.
The Ridgeline development team, the first all-American
team in HRA’s history, undertook a number of challenging
development objectives, including a double-hinged tailgate,
an all-composite truck bed, and, of course, the In-Bed
Trunk.™ “We had conducted a ton of research with our target
customers, and the lack of secure storage space was a
huge weakness of existing products. We knew it would be
a huge innovation in the segment,” said Flint.
Ridgeline earned top honors in the J.D. Power and
Associates APEAL study for three straight years. “That’s what
I was most proud of. That’s what Honda is all about, delighting
our customers,” said Flint.
2006 Ridgeline
Creating
a Fury
HRA’s motorcycle design studio gained an appreciation
for customer needs in the U.S. motorcycle market, leading to
the design of the CB Custom series, introduced in 1980. Building
upon that design, HRA took a lead role in the creation of the
Nighthawk, Shadow and Magna series bikes. The very successful
Nighthawk series debuted in 1982, followed by the Shadow and
the Magna in 1983. This solidified HRA’s place as a key design
studio for motorcycles geared toward American riders.
HRA’s influence on Honda motorcycle design can be
seen in many of Honda’s most popular 2-wheeled machines,
particularly in the realm of custom bikes, dating back to the
late 1970s and early 1980s. Then, in the 1990s, came the naked
bike design of the HRA-styled Rune.
The challenge came when the HRA design team sought to
create something unique in the world of Honda motorcycles —
a mass-produced bike with the unmistakable style, sound,
and feel of a custom-built chopper.
No one was sure whether the team could develop
a chopper that would meet Honda’s criteria for
handling, functionality, reliability,
Shadow
and quality, and still remain true to the chopper design.
“Honda R&D loves to take on a difficult challenge if it believes
our customers and society will appreciate the results,” said
Bruno Conte, the lead designer of the Fury. “This was just that
kind of challenge.”
With engineering and testing under way at Honda R&D’s
motorcycle development center in Asaka, Japan, the
American design team had to turn a concept sketch into
a production design.
The team needed to maintain certain functional elements,
such as the handlebar clearance over the fuel tank and the
tank’s 3.4-gallon fuel capacity. “Since the basic proportions were
fundamentally dictated by the chopper concept, we focused on
the fenders and fuel tank as key design elements.”
The final design broke new ground for the
chopper category and
gave the Fury its long,
low custom look.
Another key challenge was the integration of the radiator
and its plumbing into the chopper design. “One of the key
visual elements of a chopper is the open space created by the
high headpipe and raked-out front forks,” said Conte. “We
created a strong headpipe design, but we minimized any visual
interference from the radiator to maintain the bike’s clean front
appearance.” The team’s breakthrough idea — to route the top
radiator hose through the engine’s front valve cover — created
a design feature that Honda has since patented.
“There were plenty of opportunities for the project to get
derailed or for the design to be compromised, but our team never
wavered from its vision. The result is something that we think is
really unique in the market,” said Conte. “Fundamentally, we set
out to create a bike that we would want to ride and own, and
I hope our customers will really enjoy it too.”
Bruno Conte (seated), lead designer of the 2010 Honda Fury, celebrates
the launch of the new factory chopper bike at the February 2009 press
introduction event in Carlsbad, California, with (left to right) Bill Savino
and Jon Seidel of the American Honda Motorcycle Division and Dan
Hallada of the HRA design team.
Stylists at Honda R&D Americas created the original
sketch for the Honda Rune custom bike (left).
of
Developing
Power Equipment
The first new product development undertaken by
Honda R&D in America wasn’t a Honda car or motorcycle, but a
lawn mower, according to Bill Bezilla, senior manager and chief
engineer in Honda R&D Americas’ Power Equipment Division.
“Our very first development was an electric lawn mower,
in 1988,” said Bezilla. “I joined R&D part of the way through the
project, in 1987, when we were still in Ohio.” Bezilla was one of
three members of the power equipment group in Ohio. There
was also a small development group along with styling design
In the late 1980s, Honda R&D Americas’ Power Equipment Styling Design
based in the HRA Los Angeles Center.
group, led by Shungo Akizuki, developed a riding mower concept called the
In 1993, the HRA power equipment group opened the
“Augusta” (above). “Most riding mowers at the time lacked aesthetics,”
said Aziz Ucmakli, then a member of the power equipment team and now
North Carolina Center, adjacent to Honda’s power equipment
senior manager of HRA’s Advanced Product Planning Department. “The
assembly plant in Swepsonville, and in the same region as the
Augusta was very sleek, with a focus on styling and convenience.” After
the recession of the early 1990s, the Augusta never reached production.
Alpharetta, Georgia, American Honda Power Equipment Division.
However, other HRA design efforts have come to market.
This has strengthened the group’s relationship with both Honda
companies. In addition to supporting development of the GC
and GCV general purpose engines assembled by Honda in North
keep the performance of the Masters series, which was at the
Carolina, the group has been heavily involved in increasing local
low end of the commercial market, but at the price point of the
parts sourcing. “The first year, it was mostly Japan-sourced
Harmony mower, which is a residential product. We had to look at
components. But now the GC and GCV engine are more than
every part and do a lot of negotiation with our suppliers to get the
price down while maintaining the quality and performance.”
70 percent locally sourced,” said Bezilla.
The team also came up with Honda’s innovative
Honda power equipment R&D also works
It’s easy for
Versamow® system, which increased flexibility between
closely with America Honda to resolve market
us to go to
issues and to help Honda’s original equipment
the factory, or
bagging and mulching grass clippings. Now, in addition
manufacturer customers select the right
to go see the
to new product developments and engine research,
general purpose engines for their products.
customer and
the North Carolina Center is supporting the sales of
“Being close to the factory and to PE sales is
understand
Honda’s innovative micro combined heat and power
critically important in terms of our ability to
their actual
cogeneration system, known as freewatt, in conjunction
react to the market and provide good customer
situation.
with technology partner Climate Energy. “That’s been an
service,” said Bezilla. “It’s easy for us to go
exciting project for us,” said Bezilla.
bill bezilla
to the factory, or to go see the customer and
HRA also conducts product testing, market support,
understand their actual situation.”
and customer research for marine engines in the U.S.
One of HRA’s most recent innovations came
Established in 2003, the Honda Marine R&D group moved
with the development of the HRX lawn mower.
into a new Honda-owned facility in Grant-Valkaria,
“It was a very challenging project. We wanted to
Florida, in December 2008.
New Design
Studios
In 2006, HRA established two new design
studios in California. The Acura Design Studio on the
main campus in Torrance is responsible for the styling
design of Acura brand automobiles and light trucks.
The Advanced Design Studio in Pasadena, California,
is responsible for creating future design concepts for
Honda and Acura products and working closely with
leading design schools.
“Acura design began as an extension of Honda
vehicles, as variants of the same philosophy,” said
Jon Ikeda, chief designer of the studio, explaining the
reason for the dedicated facility. “There continued
to be influence, even as we followed different brand
values, because the people developing Honda and
Acura vehicles worked and thought about cars in the
same location. In order to take Acura design to the
next level, we felt strongly that we needed to have a
clear separation of the two brands.”
Dave Marek, division director of advanced
design for Honda R&D Americas, explained the role
of the new studio. “At HRA, stylists aren’t responsible
just for making sketches and mockups. We follow the
product all the way through development, working
closely with the engineers in Ohio, at R&D, and in the
factory. It takes precedence over everything else.
We realized we needed some group that can just
think about future products.”
Associate Teamwork
in America
T he ability to offer products and services that create
new value is based on the concept of many components
of the company working together as one Honda team
to meet the needs of the customer.
Former associate Nancy
Yamamoto working in American
Honda’s original Pico Boulevard
headquarters in 1961.
of
associate teamwork in america
Right Car, Right Place,
Right Time
The creation of a state-of-the-art vehicle allocation system to serve Honda and Acura dealers required
an intense level of collaboration among several American Honda divisions and sister companies,
including the American Honda Information Systems Division (ISD), Honda North America, Inc. (HNA)
and American Honda Auto Operations.
This challenging effort not only created the successful MOVE (Market Oriented Vehicle Environment)
system in use today, but also established within the company critical working relationships that continue
to create new value for the customer.
In the early 1990s, then senior vice president of American Honda Auto Sales Takeo Okusa visited the
rail yard behind the Marysville Auto Plant in Ohio. A new color — “sea foam green” — had been added
for the 1990 Accord model lineup. Although initially well-received, the popularity quickly cooled and
dealers were soon turning down Accords in that color. The factory, however, had continued to produce it.
It seemed to Okusa that every car in the growing inventory was sea foam green.
“He said: ‘How could this have happened?’ ” remembers
Jim Burrell, manager of Sales and Production Planning during
the development of MOVE, and now assistant vice president
of the Export Sales Division. The reality was that Auto Sales
had anticipated demand for the color at about 15 percent of
total Accord sales, but the initial popularity led to a decision
to increase the production mix to 30 percent. With an order
lead time of four-to-five months, once dealers started refusing
delivery of sea foam green Accords, production could not be
adjusted quickly enough. It took Auto Sales about six months
to sell off the inventory of that one color.
Together with other deficiencies in the process of
allocating vehicles to dealers, this experience led to the May
1992 establishment of the Sales and Production Planning
Department within the Auto Sales Division. The first major
assignment for the new department was to establish a more
customer-focused vehicle allocation system that would lead
to the 1997 launch of the MOVE system. But the path to MOVE
would prove to be a long and often painful one, requiring
tremendous collaboration among Sales & Production Planning,
the Auto Sales and Auto Operations Divisions, the Information
Systems Division (ISD), and the Legal and Audit Departments
of Honda North America, Inc. (HNA).
With the old allocation system, every zone received
basically the same allotment of cars, with little reflection
of the unique needs or characteristics of individual markets.
For instance, dealers in the sun-drenched Southwest generally
wanted more white cars, while dealers in the Northeast
sought more dark colored vehicles. Dealers in trafficcongested metropolitan areas wanted fewer vehicles with
manual transmissions. “Each year the allocation system
was the single biggest complaint we had from the Dealer
Advisory Board,” said Burrell.
Within two years of the establishment of Sales and
Production Planning, a new zone ordering system was created
using sophisticated Excel spreadsheets that helped guide the
Zone office in ordering new vehicles by providing an image
of the entire supply chain — detailing which vehicles were
selling, which were in stock and which were in transit to its
dealers. Within an order of 600 Accords, the zone could
determine how many EX, LX and DX models it would receive.
This system was used as Honda worked on the development
of the new IT system that would become MOVE.
But as this new system was being mapped out, another
serious problem related to allocation entered the picture.
A bribery scheme surfaced in which a few American Honda
sales executives were alleged to have manipulated the vehicle
allocation system to extract payments from dealers. The rogue
executives departed the company, and many were convicted
for their actions. But Honda needed to change the allocation
system to make certain that such manipulation could not
occur again.
“The allocation system is particularly important when
you have too few cars,” explained Cathy McEvilly, then senior
staff attorney and now assistant general counsel of the HNA
Law Department, and a member of the working group that
created the MOVE system. “The key was to create a system
and process that allowed for a fair distribution of vehicles.”
The phrase “fair and reasonable” became a guiding principle
for the new MOVE system, requiring new checks and balances
to ensure that a repeat of past abuses could not occur.
One of the key changes was to reduce the discretionary
vehicle allocation pool each zone office controlled, from
15 percent to 5 percent. This change reflected both Honda’s
effort to prevent the possibility of
manipulating the system and the
The phrase
expectation that the accuracy of MOVE
“fair and
would require less intervention by the
reasonable”
zones. Any discretionary allocation by
became
a zone office of more than 5 percent
a guiding
required the written approval of then
principle for
Senior Vice President Dick Colliver.
the new MOVE
But the original goal of MOVE had
system.
not changed. “The whole reason for
cathy m c evilly
doing MOVE was to give more voice to
the dealer in terms of what we order
and build,” said Andrea Whobrey, then
ISD senior project lead, and currently
ISD auto applications manager. “The
get the project up and running until ISD could take over the daygoal was to get them the right car for
to-day management. But it was an arduous process that took
the customer.”
almost two years of countless meetings, trials and teamwork.
The concept of the MOVE system is
As the first manager of MOVE, former associate Kathleen
based on the idea of lot size balancing.
Schultz was leading meetings three times per week up through
Honda auto plants generally produce
the launch. “We had people with very strongly held opinions
vehicles in lot sizes of 60 units. The
and ideas, so there was natural tension between the business
MOVE system could match dealer orders
side and the development teams,” said Whobrey. “In addition,
and shipments from Honda’s various
there was a sense of urgency to implement the new system to
manufacturing plants easily and more
relieve the manual workload. We had deadlines being missed,
equitably by taking dealer requests
andrea
and as a result, some very intense and emotional meetings.”
on a zone-by-zone basis one month
whobrey
prior to production and creating a
the hna audit team, led by Honda associate Mary Hitt,
single production order for the
was working to ensure that the entire system had sufficient
manufacturing plants.
documentation of the rules and rationale applied to each
The process was designed so that
monthly allocation, so in the case of a future audit Honda
each dealer is given a suggested order,
could demonstrate the reason why an action was taken.
including the trim level and color of
In response to requests from dealers concerned about
each vehicle. The dealer is able to change the model type,
their allocation, “Mary knew that we might need to go back
trim level color, and transmission. Or the dealer can choose
two or three years later and recreate what happened,” said
to turn down its allotment. Some aspects of vehicle ordering
McEvilly. “There was a lot of frustration because we did a
are easier to anticipate and to forecast. For instance, at the
number of runthroughs and everyone would think the system
beginning of a product’s life cycle, higher trim levels are
was almost set, and she would say: ‘No, how could you prove
always more popular. At the end of the life cycle, lower trim
this?’ She was very passionate about it and very concerned
levels are generally more in demand, when value pricing
with being able to audit it later.”
packages are offered. However, as Honda has added more
There was a learning curve for everyone in the process.
and more features and options to its vehicles, it has been a
“The audit team didn’t completely understand
more difficult task to forecast customer behavior.
the business, and they had to slow us down to
For instance, demand was higher than expected for
We all
understand it,” said Burrell. “They were looking for
navigation systems in Honda brand vehicles.
learned a lot
very specific markers they could use to determine
The MOVE software balances all of these requests
more about
whether our zones were doing it fairly. They had
and forecasts in terms of what Honda can actually
each other’s
to be certain about what they were enforcing and
build. MOVE also seeks to minimize transportation
day-to-day
how to measure it.”
costs by determining whether dealers should be
business.
“We weren’t there to tell people how to do
supplied with vehicles from Honda’s North American
jim burrell
their jobs, but to listen to what they were doing
plants or import vehicles from West Coast ports.
and to make sure that the allocation process would
Two information technology consultant teams were
be fair and reasonable,” said McEvilly. “Without it
employed to support the project. The first team helped
[the scandal] there probably wouldn’t have been
conceptualize what the new system would do. The
as much open and full discussion of the business
second consultant team wrote the software and helped
The whole
reason for
doing MOVE
was to give
more voice to
the dealer in
terms of what
we order
and build.
of
A U.S. Patent was
awarded to a team
including 15 American
Honda associates
and contractors to
the Information
Systems Division, for
the lot size balancing
system that is key to
the MOVE system.
process, but in the end this made it a
stronger system.”
Sadly, just as the system was ready
for launch, Mary Hitt, who had played
such a key role in establishing the
accountability measures, passed away
after a surgical procedure.
Ultimately, MOVE would significantly decrease processing
time. Yet, incredibly, the MOVE system was first implemented
as a manual system, with associates in Sales and Production
Planning manually executing what software would ultimately
accomplish. “We had the program concept and reporting
system, but when the programming to create the factory order
system wasn’t ready, we had to do it manually,” said Burrell.
To meet the timetable required by the manufacturing
operations, Sales and Production Planning had less than
24 hours to take the data that had been submitted by the
dealers and the zones and get it into the format required to
submit a factory order. The team generally started around
3 p.m. Pacific Time, working until almost 6 a.m. “We were
getting great data back from the dealers, but we had a limited
window to fashion it into the required 30- and 60-unit lots
for the factory,” explained Burrell. “I would tell the car line
analysts to stay home and sleep or whatever they needed to do
because we knew it would be an all-night ordeal.”
Finally, with the software still being refined, the team
made a collective decision to move ahead with implementation
with the must-have portion of the system and defer other
elements of the program. “We did a huge Phase 2 project that
added all of the support pieces that were needed to integrate
MOVE with the rest of the auto sales system,” said Whobrey.
In fact, the continued effort to refine and evolve the
MOVE system after its initial introduction earned a U.S. patent
for a “lot size balancing system.” Awarded based on the
improvements to the initial program, the patent is held by
15 Honda associates and ISD contractors. It was issued in
May 2008 — eight years after the application was submitted.
The parties behind the MOVE system
have continued to work together on a
number of follow-up projects with the
factories to reduce lead time and to
eliminate other constraints.
“A project we call ‘Value Chain’ gave
us additional flexibility from our domestic
factories in order to respond to market
conditions and dealer needs,” said Jim
Foley, a former manager of MOVE and now
senior manager of Sales and Production
Planning. “With customer preferences
constantly changing, we needed a buffer
ISD has been
a great
business
partner for
us, not just
a technical
partner.
jim foley
to deal with market fluctuations.”
Sales and Production Planning gives
the manufacturing plants a forecast several
months before placing the actual production
order. “After we learn what dealers want
through MOVE, Value Chain gives us flexibility
from the original forecast to adjust to dealer
requests. This gives us some wiggle room
and enables us to meet dealer demand over
90 percent.”
When Honda launched the all-new 2006
Civic with a navigation system, it was difficult
to estimate the customer adoption rate for
a technology feature that was available for
the first time in an entry-level segment. “So
in a case like that, you introduce the product
The MOVE software provides dealers with a greater voice
to market and find out what the real demand
in the products that Honda orders and builds.
is,” said Foley. “Then we go to the factory and
wasn’t all that good. We were more order takers than business
tell them we have demand greater than the
partners. Now, business involves us up front, instead of just
forecast given to the supplier for that part, and we do
bringing us in to execute. There can still be conflict, but we
our best to meet the demand.”
have a lot more trust. We work more as partners.”
In addition to better aligning dealer orders with
Based on the positive learning experience of the original
production capabilities, projects such as MOVE and Value
MOVE system and the collaborative relationships that have
Chain have provided other benefits. “In the past, the district
resulted, under the leadership of Jim Foley the various divisions
managers had to spend much of their time on distribution,”
and departments continue to work together to enhance MOVE.
said Burrell. “Now, they can talk with dealers about retailing,
“The original MOVE system gives the dealer the ability to
advertising, and sales effectiveness. They are just better
indicate their preference for the specific model, trim, color
enabled to focus on the customer.”
and transmission that they think is right for their customers,”
“We all learned a lot more about each other’s day-tosaid Foley. “The major challenge we face today is to get the
day business,” said Burrell. “We got a better idea of the
right vehicle in the right place in an environment where we are
parameters ISD has to work within. Up to that point the
increasing sales volume with enhanced model proliferation and
programmers didn’t care so much about the business need.
feature content. This has added complexity to a system that
Now, there are a lot of people in ISD who have a very good
was built in 1997.”
understanding of the business processes, which has been key
“ISD has been a great business partner for us, not just
to making improvements.”
a technical partner,” said Foley. “It’s kind of hard to find that
“It was a good learning experience for everyone on the
team,” said Whobrey. “There used to be a lot of friction between blend. We can’t ask for a better partner than Andrea [Whobrey]
and her whole team, because they have the commitment and
ISD and the business side because there wasn’t a lot of trust.
dedication to go with the knowledge.”
We missed opportunities where maybe the communication
associate teamwork in America | purchasing
Creating a Diverse
Supply Base
mentor. “Within Honda, we don’t always realize the power that
the name ‘Honda’ has in the purchasing area, especially at the
grassroots level,” said Tony Piazza, vice president of American
Honda’s Administration Division. “The greatest impact is not
always in attending the big, national events, but working with
After almost two decades of increasing the diversity
small businesses at the local level.”
of American Honda’s supply base, in 2005 Honda agreed to
Honda’s first ‘mentee’ was Bonique Edwards, owner of
take a lead role as mentor to minority small-business owners
a Web development and graphic design company in Culver
in a unique program developed with the Greater Los Angeles
City, California, called Kaleidoscope Consulting. Honda,
African-American Chamber of Commerce (GLAAACC). Called
represented by Charles Franklin, manager of Corporate
the Business Evolution Program, the program works by pairing
Services, took the lead in the program, and employed a range
a major corporation with a minority supplier for one year.
of in-house Honda expertise. The Finance Division conducted
The goal is to provide the supplier with business knowledge
a financial review of the business. Studio 540 and the company
and opportunities to grow.
print shop developed collateral materials to support Edwards’
Honda’s ongoing participation has far exceeded
marketing activities. Ultimately, Kaleidoscope experienced
GLAAACC’s request for it to serve as the first corporate
a 100 percent increase in
revenue due to the year-long
mentoring relationship.
Honda agreed to serve
as a mentor again in 2006.
Franklin, together with
Charles Harmon, manager
of Corporate Procurement,
provided the same type of
assistance to Abdi Ahmed,
owner of an Irvine, California,
information systems support
company called NetServe
Systems. Piazza, Harmon
and Franklin also introduced
Ahmed to a host
of business opportunities.
“Not only has Honda
been instrumental in our
success from the standpoint
American Honda Vice President of Administration Tony Piazza (right) reviews plans for the Honda Aero, Inc.,
of business guidance, but
headquarters and jet engine factory in Burlington, North Carolina, at the 2007 groundbreaking for the facility
they give us opportunities to
with construction manager Lonnie Miles (center). Tyrone Baines (left), is a consultant hired in North Carolina
to help increase involvement of minority sub-contractors in the construction of the Honda Aero facility, as well
demonstrate our capabilities to
as the Honda Aircraft Company, Inc., headquarters and HondaJet plant in Greensboro, North Carolina.
other businesses,” said Ahmed.
of
Honda also uses events where it serves as a table sponsor
to literally give suppliers, such as Ahmed, a seat at the table
and proactively introduce them to prospective clients. This
opportunity has benefited NetServe. “Taking us to events
where we met other large companies as a Honda mentee
created an opportunity to be listened to and we translated that
into lots of business,” said Ahmed. NetServe has experienced
a 30 percent increase in revenue during its year as a mentee,
and it has earned business with American Honda’s Information
Systems Division.
After his own positive experience as a GLAAACC Business
Evolution Program mentee under Honda, Ahmed stepped up
to serve as a mentor — helping to guide an up-and-coming
minority supplier.
“GLAAACC is just one example of our commitment to
a diverse supply base,” said Harmon. “We believe strongly
in cultivating relationships with suppliers that reflect the
demographic diversity of the consumer marketplace.”
Honda proactively uses its relationship with diverse
organizations as an opportunity to network. Piazza met
Fred Flores, president and CEO of Diverse Staffing Solutions,
Inc., at a Rainbow PUSH symposium. “I think Fred didn’t
know exactly what he was doing there,” said Piazza. “But
we had some problems with our temp agency at that time,
and he ended up with a contract to handle our temporary
staffing needs.”
American Honda’s comprehensive approach to working
with a diverse group of business partners has included new
startup companies developed with Honda’s support. This
includes a food service called Creative Cuisine, which is owned
by African-American Sharon Johnson. Creative Cuisine serves
the Torrance campus. The contract security services company,
RMI International, owned by Latino-American Rick Rodriguez,
protects the Torrance campus and numerous other company
facilities across the country.
Creative Cuisine has been a supplier since 2003.
“We first approached Sharon about starting a business,
and she hesitated for about nine months,” recalls Piazza.
“Starting a small business is not an easy thing to do. She has
associate teamwork in America | purchasing
had a few bumps along the way. But we would do it all over
again in a second, because it is the right thing to do.”
RMI received its first contract with American Honda in
2003, with total employment of just 20 employees. “We knew
Rick very well because he had worked for us as part of the
management of our previous security firm,” said Piazza. “He
took the initiative to start his own certified minority enterprise
and when the other company wanted to raise our rates, we
asked Rick to bid on our business. We knew he would do a
great job, and then he came in with a very competitive bid.”
In 2009, RMI employed 300 staff for Honda alone —
serving American Honda in 18 different locations across the
country, as well as both Honda Aero, Inc., and Honda Aircraft
Company, Inc., in North Carolina, Honda of South Carolina
Mfg., Inc., and Honda Performance Development, Inc., in Santa
Clarita, California.
In considering any minority business partner, Honda
makes certification by the National Minority Supplier
Development Council (NMSDC) a basic requirement. “It gives
us assurance that we are dealing with a certified minority
supplier,” said Harmon. “For each facility we have, Honda
joins the local council of the NMSDC.
When we are contracting for goods and
We believe
services, we can call the local council
strongly in
for a list of certified vendors.” As Honda
cultivating
operations expand, the American Honda
relationships
Facilities Planning Group is responsible
with suppliers
for the design and construction of the
that reflect the
new facilities. Tom Fromdahl, manager of
demographic
Facilities Planning, hired certified minority
diversity of
contractor Miles McClellan to construct
the consumer
the Midwest Parts Consolidation Center
marketplace.
in Troy, Ohio. That opportunity resulted
charles
harmon
in the firm obtaining more business
with Honda.
“Miles McClellan built that [Troy
facility] under budget and delivered it
early, so I thought that if they can do that,
why not bring them to North Carolina?”
said Fromdahl. Led by CEO Lonnie Miles,
Miles McClellan served as the general
contractor managing construction of
both the Honda Aircraft Company, Inc.,
headquarters and R&D facility in
Greensboro, North Carolina, and the
Honda Aero, Inc., headquarters and
turbofan jet engine plant in nearby
Burlington, North Carolina.
In North Carolina, Honda also retained
minority business consultant Tyrone Baines
to assist in increasing opportunities for
minority companies to work on the two
aviation facility projects. With Baines’ help,
prior to the start of construction, Honda
conducted a symposium in Greensboro
geared toward minority subcontractors.
With advertising in both Spanish and
English to reach all interested suppliers,
the event outlined Honda’s construction
plans, as well as the bid packages that
would soon be issued. “We expected about
80 attendees. We had 470 people attend,
in 16 categories such as concrete, steel,
drywall,” said Fromdahl. A number of the
companies that attended — including many
Rick Rodriguez,
small businesses — ended up working on
president and CEO
one or both of the Honda projects.
of RMI International
Not every effort has a fairy tale
(center), consults with
two members of his
ending — there have been companies that
security team on the
failed to meet Honda’s expectations. Piazza Torrance campus of
is undeterred. “We are not going to let a few American Honda.
problems hurt the majority of our minority
business entrepreneurs who are doing a great job,”
said Piazza.
The drive to increase its procurement activity with
minority business enterprises (MBEs) is consistent with
Honda’s challenging standards for achieving the highest
quality, cost, and on-time delivery performance. “We
want the best suppliers for Honda, and we want some of
them to be MBEs,” said Piazza. “At the end of the day, we
want good pricing and we want outstanding customer
service. This not only benefits Honda, but it enables the
MBE to go to other customers and say: ‘I am a competitive
supplier who just happens to be a minority- or woman-owned
business and to prove it I have Honda as a valued customer.’ ”
“We have talked to a number of large companies that say
they are committed to small business and minority companies,
but they don’t all make things happen like Honda,” said Ahmed.
“They [Honda] honestly walk the walk. When it comes to really
doing the work, no one does it like Honda. They hold you
responsible, but you will have an opportunity.”
associate teamwork in America | finance
Harnessing Honda’s
Independent Spirit
When Sheri Bullock came to the Finance Division
in 1982, she joined a team reporting consolidated financial
results for only the few Honda companies operating in America.
Now vice president of the division, Bullock and her team
report on the results of 17 different Honda companies in North
America — including all of the manufacturing operations,
as well as Honda’s captive insurance and finance companies.
In addition to consolidating financial reporting for each
company, the Finance Division ensures regulatory compliance.
“Every time Honda adds a new company in North America,
we are involved somehow to assist and support,” said Bullock.
“The work has grown exponentially, but we have maintained
a comparably sized staff in the area of finance and reporting.
We’re proud that we’ve been able to continue to support
a much larger organization with minimal growth in the
Finance Division.”
Working across all company and divisional lines in North
America, the Finance Division helped coordinate the effort to
bring Honda in compliance with the Sarbanes-Oxley Act (SOX)
of 2002. Following the public outcry over corporate accounting
scandals, including Enron, the U.S. Congress passed the SOX
Act which increased the requirement for corporate governance
controls to protect investors from accounting errors and
fraudulent activities within corporations. The SOX Act holds
senior management directly accountable for the accuracy
and integrity of financial reporting and related information
technology sources that process and manage that data.
“This was a big challenge to work with Honda Motor
and pull together all of our operations to prove compliance,”
said Bullock. “Our First SOX compliance audit found no
material weaknesses in control, which was an excellent
result for a company of our size.”
A main focus of the Finance Division has been to improve
communication and collaboration among all of the companies.
“We all go out with our independent spirit, so it can be a
of
green building
challenge to bring us back to a consistent place,” she said.
“It is very important to make sure all of our North American
companies are doing things consistently. We get together
and collaborate on rules and policies, something that we will
continue and improve upon for our internal customers.”
Now the division has begun to tackle perhaps an
even greater challenge — a fundamental change in accounting
practices from the rules-based U.S. General Accounting
Principles (USGAP) to the International Financial Reporting
Standards (IFRS) system of conceptual-based accounting.
Every country has its own system of general accounting
principles such as USGAP. To create a unified global system,
the U.S. Securities and Exchange Commission recently put
a road map in place for companies to move to the IFRS
system. IFRS is already used for financial reporting in
Europe and large parts of South America. It is expected to
be followed worldwide within the next four to five years,
because it is the most broadly based system.
Working with a team from Honda Motor Co., Ltd.,
the American Honda Finance Division is now studying
the differences between USGAP and IFRS. In the future,
Honda’s accounting will be governed by broad concepts
that must be determined by Honda
itself. This means that instead of
Every time
simply pointing to a USGAP standard
Honda adds a
to explain an accounting move,
new company
Honda will be required to write position
in North
papers explaining why the company
America, we
is following a certain standard.
are involved
The changes won’t be noticeable
somehow to
to everyone in the company, but there
assist and
will be changes in some business
support.
practices and systems, such as how
sheri bullock
R&D expenses are recorded. “For a time,
we will have to keep two sets of books,
until we complete the full transfer to
IFRS,” said Bullock. “This is another
challenge we are ready to tackle.”
Green from
the Ground Up
In early 2000 as construction began on the new
American Honda Northwest Regional Center in Gresham,
Oregon, Charles Harmon, then manager of Facilities Planning,
assigned associate Barbara van Gaasbeek to lead the effort
to make the new facility a “green building.”
Actually, the target was higher than that. The goal was
for the new parts center to be the first mixed-used industrial
building in America to earn Gold certification from the
U.S. Green Building Council for Leadership in Energy and
Environmental Design (LEED).
“It was a very steep learning curve at first,” recalls
van Gaasbeek. “At the time, the green movement was still
relatively new, so our options for sustainable materials were
fairly limited. However, we did specify some intriguing items,
including crushed
sunflower seeds
in a resin base for
table tops, recycled
telephone books for
wallpaper, chair
seats and backs
made from recycled
car seat belts,
and rubber
flooring fabricated
from discarded
auto tires.
“The building
Barbara Van Gaasbeek (right), of the
American Honda Facility Planning
also has several
Department, marks the 2002 recognition
innovative
of the Northwest Regional Center in
Gresham, Oregon, as a certified LEED
design features,
Gold building with Christine Ervin, then
including rainwater
president of the U.S. Green Building
Council (center), and American Honda
harvesting —
associate Donna Holcombe. The facility
collecting rainwater,
was certified as LEED-EB Platinum in 2008.
filtering it, and
associate teamwork in America | green building
using it to flush toilets and irrigate the
landscaping. A passive, nonmechanical
heating and air conditioning system
harnesses the power of local winds.
An intelligent lighting system learns to
dim or increase light levels, depending
on the amount of daylight coming into
the office. The facility is also “green
cleaned,” and associates actively
participate in a recycling program.
The Gresham facility was LEED Gold-certified in 2002
and LEED-EB Platinum-certified in 2008, making Honda the
first automaker to achieve Platinum certification. Honda is
now a leader in the development of more environmentally
responsible office and warehouse facilities in America.
It has achieved “green building” status for a number of
its U.S. facilities.
The Facilities Planning Department supported other
Honda companies in taking the green building route, including
Honda R&D America’s (HRA) central plant facility in Raymond,
Ohio, and the new corporate headquarters of Honda Canada,
Inc., in Markham, Ontario. By the end of 2008, Honda had
In addition to running
48 percent more
efficiently than a
conventional building,
the American Honda
Northwest Regional
Parts Center in
Gresham, Oregon,
has served as a
source of information
and education for
other individuals
and companies.
six LEED certified green buildings in America, including
HRA’s Acura Design Studio in Torrance, California; American
Honda’s Midwest Consolidation Center in Troy, Ohio; the
American Honda Data Center in Longmont, Colorado, the
first data center in America to achieve LEED Silver version 2.2
certification; and, most recently, Honda
Aircraft Company’s world headquarters
We have green
in Greensboro, North Carolina.
products
Further, van Gaasbeek shares Honda’s
and green
experience both inside and outside of
factories,
Honda. By 2009, the Gresham facility had
and the next
played host to more than 2,500 visitors
logical step
from all over the world with an interest
was to make
in learning more about green buildings.
our buildings
“It’s been a wonderful opportunity to
green.
contribute to our company’s focus on the
barbara
van gaasbeek
environment,” said van Gaasbeek. “It was
the right thing to do, and it is part of our
business plan to be good environmental
stewards. We have green products and
green factories, and the next logical step
was to make our buildings green.”
Honda’s commitment to reduce the environmental impact of its North
American operations extends to its offices and buildings, including
(from top to bottom) the Acura Design Studio in Torrance, California,
the Honda R&D Americas, Inc., Central Plant, and American Honda
Motor Co., Inc., Midwest Consolidation Center, both in Ohio. Honda
is incorporating sustainable concepts into facility construction
and operation, including locally harvested and manufactured
construction materials, cool roofs, dual-paned glass, high-recycledcontent materials, and energy-efficient lighting.
associate teamwork in America
Learning Life Skills
at Honda
Soon after the new Torrance headquarters of American
Honda opened in 1990, former Honda associate Diane Maxie
had an idea: Employ people with mental disabilities in the
new building through a program run by the state of California,
called Social Vocational Services.
Embraced by then vice president of human resources
Michiaki Shinkai, Social Vocational Services (SVS) has been
a major success story far beyond the services provided to
the company.
“Initially, we had a lot of associates coming in and asking:
‘Who are those people?’ ” recalls Tony Piazza, who helped
advance the project and is now vice president of American
Honda’s Facilities Group, which oversees the program. “But
over time, our associates
began to put their arms
around the SVS workers
and befriend them,
help them and protect
them. I think it has given
many Honda associates
a deeper appreciation
for what they have in
terms of health, family
and work.”
Ten people work
daily in the core areas in
Building 100 to supply
copy paper, handle
The Social Vocational
Services workers
deskside paper recycling each evening,
handle recycling
and sort the recycled paper for baling
on each floor of
Building 100 on the
during the day. The level of dedication
Torrance campus.
exhibited by most of the workers is
unsurpassed. Three of the workers have never missed a day
in their 12 years of service. And that perfect attendance
includes being on time. “They are never too tired or too
of
The state of California provides supervisors
bored to do a good job,” said Piazza.
for
the
SVS workers, but managing the program
The SVS program at Honda is not simply a
We look at
takes real commitment from American Honda.
“do-gooder” project. It is an important part of
each worker
A few of the workers have experienced issues with
Honda’s recycling strategy, and it earned Honda
as an
their disabilities that have required action including
recognition from the Waste Reduction Award
individual
time away from the job. But Honda treats each
Program (WRAP) — an award offered to businesses
and make
case individually and has allowed workers to return
for their waste reduction efforts. Honda has earned
the effort to
after receiving the appropriate counseling. “We
the award for nine consecutive years, including one
make it work
look at each worker as an individual and make the
year in which Honda won the “WRAP of the Year”
for them.
effort to make it work for them,” said Savage.
award — the state’s highest award given to only
john savage
It is a different frame of reference from the
10 businesses each year.
lives of most people. “We have one worker, whose
“We don’t look at our SVS workers as being
simple goal is to have his own checking account,”
individual disabilities, but a part of how we do
said Piazza. “His ultimate goal is to live on his
business,” said John Savage, administrator of the
own with a roommate. He has to learn how to
Records Management Department, who manages
handle that responsibility. His work here at Honda is helping
the SVS program. “It is truly a situation of inclusion.
him do that.”
We have basically adopted them as associates.”
The program has turned into
something of a model for how the
state would like corporations to
embrace the SVS program. “We have
made it work here where apparently
most companies can’t seem to
figure out how to make it work,” said
Savage. American Honda was one
of five employer sites throughout
the state featured in a 2009 video
entitled We Include, produced by the
state’s Department of Developmental
Services and featuring California First
Lady Maria Shriver.
Honda has also earned
numerous awards for the program,
including the Los Angeles County
Commission on Disabilities’ Access
Award for Outstanding Employer in
2002, and the prestigious SVS Dolphin
Workers from the Social Vocational Services program have become an integral part of
Award for Outstanding Employer of
American Honda’s recycling efforts — and welcome team members on the Torrance campus.
more than 300 people in 1998.
associate teamwork in America
Serving Internal
Customers
“All parts of the company exist under the notion that
ultimately everyone serves the customer,” said Gary Kessler,
executive vice president of American Honda. Honda is widely
recognized for its S-E-D system in the area of new product
development, which achieves a high level of collaboration
among sales, manufacturing and R&D. But the same spirit of
close collaboration can be found throughout the company.
It is fundamental to Honda’s way of doing business.
Often this spirit of cooperation is represented by
associates who do not directly interact with customers, but
who play an important role in making it possible for the sales
divisions to focus on satisfying the customers who buy the
company’s products and services. Honda associates who play
this important role inside the company are said to be serving
“internal customers.”
As a lean company with a focus on achieving the highest
efficiency and flexibility, this aspect of Honda’s corporate
culture has always placed great value on teamwork and the
contributions of associates “at the spot,”
who are knowledgeable, responsive
There are
and reliable.
people like
For the past 40 years, Velma von
[Velma]
Bloeker has carried forward the values
throughout
she learned shortly after joining American
this
Honda in 1968. “We were a much smaller
organization,
company back then,” she said. “When
and I think
I wasn’t doing my regular job, I would
that’s what
help count parts in our Gardena parts
makes Honda
warehouse. Everyone had to pull together
so special.
to get things done.“
dennis manns
Continuing to follow the same
script, von Bloeker — now a member
of the Vehicle Planning and Allocation
group in Auto Operations — has earned
a reputation through many parts of the
company for her quick and thoughtful
responses.
“Velma is the keeper of all sales
records. She is the final word,” said Steve
Center, vice president of marketing and
advertising, and formerly an executive in
Auto Sales. “She is 100 percent accurate
and reliable.” von Bloeker joined Honda
as a clerk in American Honda’s credit
department. She served in numerous
roles, including a stint in the word
processing department, before joining the
Auto Sales Division in the mid-1970s, where
In one of the few surviving photos of the team that led American Honda in its earliest days,
she did market studies and later helped set
associates gather with general manager Kihachiro Kawashima (standing, sixth from left).
Associates made contributions beyond their assigned role to support the team.
up new dealer packages.
In May 1992, von Bloeker joined
American Honda’s newly formed Sales and Production Planning with the company. “It’s kind of funny. In Gardena, we worked
in different buildings, which meant you had to walk around to
department. She quickly developed a reputation for being a
meet with people. But I think you knew many more people, and
source of key sales data and other company information.
had more face-to-face communication,” she said. “Today, we
“She tries to anticipate what people might need, not just
may be in the same building, but people have e-mail, and there
waiting for them to ask,” said Dennis Manns, assistant
are not as many opportunities to get to know people.
vice president of American Honda. “That’s really
I guess that’s one thing I miss about the old Honda.”
the Honda way. There are people like her throughout
When I wasn’t
Recently, American Honda restructured its
this organization, and I think that’s what makes
doing my
planning function into two groups, for sales planning
Honda so special.”
regular job,
and production planning. But von Bloeker continues
Ironically, von Bloeker came into her role
I would help
to play a critical role as the keeper of all American
almost by accident. “There was another person
count parts.
Honda’s past and present sales data.
responsible for sales reporting, but I would fill in
Everyone
“Velma has been the one thread in Sales and
for him sometimes, and I started collecting all this
had to pull
Production
Planning throughout the years,” said
data. I had these files on my desk — that was before
together
Center. “She is a rock. She works very hard, stays
records retention — and people would ask me why
to get things
very late, never complains, and does whatever is
I kept all these files. I just thought we might need
done.
needed to satisfy the request of other associates
this information someday.”
velma
von bloeker
without ever seeking or expecting special attention.”
“Velma is cool, calm and collected,” said Eddie
“I’ve known Velma for 25 years. She is one of
Okubo, senior manager of Product Planning. “She
those extraordinary people who really embody the
has helped me through many challenging questions
Honda spirit,” said Manns. “She’s never reluctant
where I was at a loss for answers.”
to go the extra mile in her own work or to help others
Reflecting on her four decades with Honda,
in solving their problems.”
von Bloeker misses some aspects of her early days
Community Partnership
in America
onda has always applied a Challenging Spirit in
H
the communities where its customers and associates
live and work. Honda gets directly involved to pursue
new and better ways to enhance its value to society.
Honda founder Soichiro Honda
poses with Keith Davis (left),
a YMCA volunteer who helped
establish the National Youth
Project Using Minibikes in 1969,
and a participating youth.
The program is American
Honda’s longest-standing
community project.
of
community partnership in america | community relations
Partnering with
the Community
As the American Honda Community Relations department was being established in the early 1980s,
a third-party organization contacted American Honda with an offer to manage American Honda’s
community giving through its annual campaign.
President Tetsuo Chino based the company’s direction on Honda’s philosophy of going “to the spot.”
“He said, ‘We shouldn’t have a third party deciding where our money goes,’” said Steve Morikawa, assistant
vice president of Community Relations, but who was then a young member of the new department.
Chino’s words had a decided impact on the direction of American Honda’s community activities.
“That was our start,” said Morikawa. “There should be no middleman between Honda and the community.
It was our job to work directly with the organizations that would be our partners in the community.”
By the end of the decade, Morikawa had expanded this
Under the leadership of Willie Tokishi, who established
approach to more activities undertaken at American Honda
the Community Relations department and led it for two
decades, Honda sought to apply what he calls “Honda kokoro” facilities around the country. “Community relations in the
zones is different, because they have their regular jobs to do
(kokoro is the Japanese word for “heart”) to organizations
in sales or parts,” said Morikawa. “We provide our template
primarily in Southern California, especially the South Bay
and ask them to involve associates as volunteers and get out
communities near American Honda headquarters. A number
in the community.”
of unique relationships were formed, including the South
Often, Honda found that the best solution was
Bay Youth Orchestra and the Friendship in Bloom
to provide in-kind contributions that creatively meet
Wine Festival.
the needs of a community partner. For example, the
A fundamental principle of Community Relations activity
American Honda print shop absorbs some
is to proactively go to the spot to discover the
costs for Honda’s community partners by
real needs of the community. “The more we
Our goal is
printing event programs and other materials
know about them, the better we can identify
to be an active
at no cost to the organizations. “Every
how to help,” said Morikawa. When it supports
partner to
organization needs money; that is a given,”
a community organization, Honda also looks for
[community]
said Morikawa. “But if we can save them
opportunities for associate involvement.
organizations,
$10,000 in printing costs, that’s like raising
In support of the San Francisco Bay earthquake
not just a
$10,000 for them.” Honda also occasionally
relief in 1989 or the tragedy of 9-11 in 2001, rather
donor.
loans generators and other Honda products.
than simply making a corporate contribution,
steve morikawa
Each year, American Honda hosts
associates are given the opportunity to contribute,
back-to-back-to-back fund-raisers on the
with a matching gift from American Honda. “It
Torrance campus — For Our Children to
wasn’t a matter of how much they gave, but the
benefit the Little Company of Mary Hospital,
idea of giving them the opportunity to get involved.
The Main Event to support the Palos Verdes
That must be at core of everything we do.”
Peninsula Education Foundation, and the Ride for Kids to
support the Pediatric Brain Tumor Foundation.
“It takes a lot of time to do it this way, with staff and
volunteers constantly working late hours and weekends,”
explained Morikawa. “That’s one reason we encourage
associates to involve their families in it. It becomes more than
just a company effort. One of the biggest differences we have
made is that the community organizations that we work closely
with should feel they know Honda.”
“Our goal is to be an active partner to those organizations,
not just a donor,” said Morikawa. “That sets us apart.”
The number of associates participating as volunteers
has grown steadily — from about 300 in 1999 to more
than 1,400 in 2008. Key to this growth was the establishment
of a Volunteer Community Action Team that provides
associates more involvement. The associate action team
has monthly meetings, and it has developed During National
roughly half of the volunteer activities
Volunteer Week,
American Honda
through its own ideas. “It has made a big
honors associates
difference in our efforts,” said Morikawa.
who volunteer their
time to the community.
community partnership in america | american honda foundation
Building a Foundation
“At the Spot”
One of the unique points of the American Honda
Foundation’s grant making process can be traced directly
to Honda’s “go to the spot” philosophy. No organization
receives funding without a personal visit from a Foundation
staff member.
This practice was initiated by retired former Manager
Kathy Carey, who helped lead the research that still underpins
The Aquatic Adventures Science Education Foundation in San Diego,
the Foundation’s approach. Today, it remains a point of
California, has used two grants from the American Honda Foundation for
distinction. “It’s one thing to read about an organization,”
its Science Education and Awareness (SEA) series program. It gives young
explained Alexandra Warnier, Foundation manager. “We go see
participants lessons in plant identification.
the conditions in the community around the organization, talk
to the kids that are benefiting from the program, and assess
115 million individuals through more than 500 grants totaling
the difference that it’s really making, which is something
more than $25 million.
that not all foundations do. A lot of times, a colleague [with
With nine board members, the American Honda Foundation
another foundation] may say, ‘I saw that you funded a program focuses its grant making on youth and science education and
and we’re thinking of funding them as well. What did you see
key social concerns, with an intention to support innovative
at your site visit?’”
programs that can achieve systemic change. Carey explained
Warnier remembers a visit to a program in
the primary focus on youth and science education:
Illinois that was helping teen dropouts in foster care
“A single foundation can’t solve all the problems on
It’s one thing
to obtain a GED (graduate equivalency diploma).
its own. You must be very streamlined and focused in
to read
“Part of the program was teaching them how to
order to make an impact and a contribution.”
about an
interview for a job,” she said. “The day that I arrived,
The Foundation now funds organizations for
organization.
they started an interview with one teen, and they
one year at a time, in part to ensure that no
We go see the
asked, ‘What are some of the things that you’re good
organization is overly dependent upon Honda.
conditions in
at?’ She just froze and started crying. Later, I learned
“We have to ask, ‘What happens when we don’t
the community
that in her home environment, they never told her
provide funds? Does the program go away?’” said
… and assess
that she did anything right. A lot of these kids are
Warnier. “Our goal is to make sure that it’s stable
the difference
just so fragile. You take that same kid and without
and that these programs continue.”
that it’s really
that opportunity to figure out what kind of question
The Foundation also encourages its grant
making.
they’re going to ask, she would crumble in a real
recipients to share successful strategies with
alexandra
warnier
job interview.”
other organizations. “You may have a great program
that’s working in Los Angeles, and one of the things
Since it was first capitalized with $5 million
that we ask the organizations to do is to look at
by then American Honda President Tetsuo Chino on
how that same program can be used by different
the occasion of the company’s 25th anniversary in
schools in different areas,” said Warnier.
1984, the American Honda Foundation has served
of
eagle rock school and professional development center
“Our Extraordinary
Contribution”
Tom Dean and Makoto “Mak” Itabashi had spent
almost a year, beginning in May 1989, researching how
American Honda might make a lasting contribution to the
youth of America and strengthen its actions as a “good
corporate citizen.” Now, they were prepared to present their
plan for a project called “Future Trek” to members of the
board of directors of the Honda Motor Co. It was not their
first partnership. The two had also shared the experience of
establishing American Honda Service Training in the 1970s.
Six months earlier, American Honda CEO Koichi Amemiya,
who had commissioned the project, selected Future Trek, a new
concept in high school education, from four options Dean and
Itabashi presented for consideration as Honda’s new corporate
citizenship activity.
“Go see the actual
situation,” Amemiya
told them, and the pair
proceeded to tour America.
They got perspectives from
prominent universities and
juvenile detention centers,
from ranking government
officials and grassroots
leaders of virtually every
A jutting rock that
towers above the Eagle ethnic minority in America, as well as
Rock School campus
both public and private high schools.
provided the name and
They returned to present their
inspired the logo for
the school.
ideas to the board of directors who
had assembled in Anna, Ohio, for an event marking a major
expansion of the engine plant on April 12, 1990. Dean and
Itabashi had mapped out a detailed plan for a residential
high school focused on individualized instruction, with
an emphasis on experiential learning. It would teach both
basic academic skills and life skills, and it would develop
feelings of self worth. The plan was to be “innovative,” with
community partnership in america | eagle rock school and professional development center
“direct/active involvement” by Honda, “no direct benefit”
to Honda, and a “long-term commitment” from Honda. The
direction was clearly stated in the mission statement created by
Dean and Itabashi, A School for Young People and A School for
Educators. Their blueprint for what would become Eagle Rock
School and Professional Development Center in Estes Park,
Colorado, was approved by the board of directors.
There would be obstacles to overcome. The quiet
community of Estes Park had natural concerns about a
school for disadvantaged youth entering the neighborhood.
But transparency and sincerity in communicating helped
overcome local concerns.
In February 1991, the American Honda Education
Corporation was established to manage the project. Even
before the choice of a site in the Rocky Mountains of Colorado,
Robert Burkhardt was hired as head of school. Burkhardt, who
had been serving as director of the San Francisco Conservation
Corps and whose past included performing as a juggler in a
small circus and founding a private school, became more than
simply a head of school. He was a collaborator and partner in
executing the vision for the school.
Tom Dean (right) and Mak Itabashi (left) established a vision for
Eagle Rock School that was fulfilled through partnership with the
school’s head of school, Robert Burkhardt (seated).
Eagle Rock School opened
in 1993, as a tuition-free
residential high school for
students who haven’t quite fit into
traditional school environments.
The challenging setting in the
Rocky Mountains made possible
an Outward Bound-type
wilderness activity as part
of each student’s education.
“Eagle Rock is a place that
values the goodness of people and
believes that each individual can
make a difference in the world they
work in, live in, and in the greater
society,” said Dean. “Eagle Rock
is a place where we trust people.
Everybody holds each other
responsible to live the values of
the community.”
Every minute of the school’s
daily program builds the students’
sense of responsibility to
themselves and the community.
“Gatherings” of the entire student
body and faculty begin each day.
High standards and expectations
Each day at Eagle Rock
exist for academic accomplishment School begins with the
morning “gathering.”
and behavior. “When you put all
Head of school Robert
Burkhardt (above) shares
that together, you have a trusting
a moment with students.
environment,” said Dean.
The Professional Development Center has attracted more
than 10,000 professional educators who study new methods in
learning for possible application in schools across the country.
“Regularly, I look at the original document sent to me
by Tom Dean in June 1990,” said Burkhardt, reflecting on
the foundation of his school. “I believe the work he and Mak
[Itabashi] did created a very strong foundation and an inspiring
vision for the school. As I think of the many students, staff
and visitors whose lives have been touched by Eagle Rock
since 1991, I believe we have been faithful to the intent of
the founders. I am humbled that I was given the privilege
of stewardship. Eagle Rock was created to be and it remains
a haven of hope for all who dare.”
Honda’s corporate culture also informed the culture
of Eagle Rock School, but not in a deliberate manner.
“Mr. Amemiya said, ‘It may be the best example of our
ideal culture put into practice,’ ” said Dean.
As Dean and Itabashi closed their presentation to the
company’s global top management, they offered a simple
definition of the project that still holds true: “Future Trek
is our extraordinary contribution.”
community partnership in america | honda campus all-star challenge
Earn the Right To Be
in the Community
science, literature, the arts, social sciences, popular culture,
and African-American history and culture.
The event was held in Los Angeles for several years
before finding a home in Orlando, Florida, a move that also
brought a major change in format. Whereas the original
A unique convergence of events helped lead to
program focused only on televising championship matches,
one of Honda’s most fulfilling — and competitive —
the revised format brought the teams from the HBCU schools
community programs.
to one big event in Florida. Honda underwrites the expenses for
As Honda sent deep roots down into the community
the teams and provides grant money, which the schools
it became more aware of the need to reach out
use to improve their campuses and academic programs.
to diverse sectors of society. This need became
At one of the
“At one of the first events in Orlando, I told the
even more urgent in the 1980s, when damaging
first events in
students, ‘You’re only going to be competitors for a few
news reports alleging racial insensitivities in
Orlando, I told
Students from Tennessee State University celebrate their victory
minutes, but you’re going to make friends for life,’ ” said
Japan caused some African-American leaders to
the students,
in the 2006 Honda Campus All Star Challenge, a stirring academic
Conn,
who
is
now
retired.
“Friends
for
Life”
became
a
be wary about all Japanese companies.
“You’re only
competition that matches teams from Historically Black Colleges
and Universities (HBCUs) in an original program created in 1989.
lasting theme for the event. Activities and social events
Guided by the mission statement “Earn the
going to be
were added to the annual gathering to help students
right to be in the community,” Eric Conn, then
competitors
from different schools get to know one another.
about more than the money the company gives to the program,
manager of American Honda Advertising, set out
for a few
but about what the company enables Honda associates to give
to find the appropriate opportunity.
minutes, but
to it,” said Hammond.
Through a new relationship with the Muse
you’re going
The program became a prominent fixture
HCASC requires hundreds of volunteers, many of whom
Cordero Chen advertising agency, a connection
to make
on many HBCU campuses. Some schools
come back year after year, using vacation time
was made with an entrepreneurial television
friends for life.” meet for practice rounds prior to the formal
and structuring their jobs around the event.
producer in Los Angeles named Nelson Davis.
competition to sharpen their competitive
eric conn
I could see
“A great number of the volunteers are actually
He created an academic competition for students
skills. “I like to think that we helped make
that what
alumni from HCASC,” said Hammond. “They
from America’s historically black colleges and
it cool for these kids to be on campus as
we were doing
appreciate that a corporation is trying to reach out
universities (HBCUs). Modeled on the College
scholars,” said Conn.
was truly
in their communities and they want to contribute
Bowl International program, the Honda Campus
Guest speakers have included
making a
that back to the program.”
All-Star Challenge (HCASC) was born.
Ambassador Andrew Young, Yvonne King
difference for
Cheryl Crowder, from Associate Relations,
Started in 1989, the program was initially tailored for
(daughter of the late Rev. Martin Luther King, Jr.),
these kids
currently sits on the HCASC advisory board in
broadcast and filmed in the Washington, D.C., studios of BET
and television personality Tavis Smiley.
and changing
addition to her work as a volunteer in the HCASC
(Black Entertainment Television). Within a few years, it was
Significantly, a number of American Honda
their idea
student union, where competitors congregate
refocused by American Honda so that the preponderance of
associates have served as volunteers at the
about what
between competitions. She has been able to spend
the benefit and the company’s investment would go to the
annual event, taking key roles in scoring, judging
can take place
a great deal of time with the students. “There
students involved in the competition. “The cost of television
and logistics.
in their lives.
is so much energy that it gives me hope for life.
became prohibitive,” said Conn. “Further, as a made-for-TV
Donna Hammond, senior program officer
donna hammond
I try to take that energy back to work with me,”
event, the director would yell cut in the middle of the game
with the American Honda Foundation, has been
said Crowder. “It is great to see young people
if something happened that didn’t look right. We wanted the
volunteering at HCASC for more than a decade. There
doing such positive things. These are people we
program to be about the students.”
are up to eight matches between schools during
will be hearing about, who will be making changes
During the three-day competition, teams showcase their
the elimination rounds of the competition, and she
in our world.”
intellectual skills and teamwork in the areas of world history,
serves on one of the judging panels. “This program is
of
community partnership in america | national youth project using minibikes
Local Seed Leads to
National Program
In 1969, an unproven 19-year-old youth worker at the
Northeast branch of the Los Angeles YMCA had an idea. Interest
in minibikes had skyrocketed. In the late 1960s, more than a
million units were sold annually in the United States. Keith Davis
thought he could use that interest to combat teen drug use in
the community. He had an idea for a program that would offer
minibikes to teens who stayed away from drugs and crime.
American Honda Public Relations Manager Matt Matsuoka
took the idea to Hirohisa Nakamura, American Honda’s third
general manager, who agreed to test the program by providing
15 50cc Honda Mini-Trail motorcycles to the Northeast YMCA.
The project, initially called “Y-Riders,” kicked off in August
1970. Additional support included helmets donated by Bell
and 40 gallons of free gas each month by Chevron.
That fall, Kihachiro Kawashima, the top executive for
American Honda, in his position as a Honda Motor Co.
executive in Japan was briefed on the program during a visit
to the United States. After American Honda staff informed
A group of young riders heads out on
Honda Mini-Trail motorcycles from the Northeast YMCA,
where the NYPUM program was founded.
Kawashima of the growing concerns
about teenage drug use in America, he
I am very
encouraged the company to approach the
proud of what
YMCA about making Y-Riders a national
Honda has
program. Identifying with the young Davis,
achieved with
Kawashima recalled how people had tried
NYPUM.
to discourage him from trying to enter the
willie tokishi
U.S. motorcycle industry just a decade
earlier. “Everyone told me you’d better
save your money and go back to Japan,”
he said at the time. “If today we can help
communities better the character of their
youth by using our products, then maybe we should think in
terms of a national program.”
In June 1971, American Honda provided $25,000 and
10,000 minibikes, a contribution valued at almost $4 million,
to create the National Youth Project Using Minibikes (NYPUM)
and to support it through its first six years. The National YMCA
had limited funds for additional support. But Fred Hoshiyama
of the YMCA leveraged the program’s early success to solicit
roughly half-a-million dollars in federal funding in its first year,
and more than $2.3 million in funding over three years. Since
A young rider learns to care
for a motorcycle as part of his
participation in NYPUM.
the program began, Honda has
contributed some 21,000 bikes.
More than 300,000 youth
have participated.
As the federal funding ended,
the YMCA proposed various program
changes. American Honda wanted
to keep the focus on at-risk youth. In 1995, Honda took over
the program, which is now managed by the Robert F. Kennedy
Children’s Action Corps.
NYPUM continues to have
an impact on the lives of
young people, with more
than 50 active programs,
all run independently in
urban, suburban and
rural communities in 23
states from coast to coast.
There have been thousands of success
stories involving youth who participated in the
program. Willie Tokishi, who managed the program
in the 1970s and went on to become vice president
of Community Relations, believes a recent example
might best illustrate the value of the program.
Mario was a young man who was associated with
a Los Angeles gang before he encountered NYPUM.
Tokishi, now retired, attended Mario’s graduation
from the University of California at Berkeley in
2008. Tokishi recalls, “Mario began to cry. He said,
‘Without this program, I would not be here tonight.’
It’s one of thousands of stories of young men and
women whose lives were changed by this effort.
I am very proud of what Honda has achieved
with NYPUM.”
community partnership in america
One of the most important elements of
Honda’s community involvement in America is
the engagement of individual associates who take
an active role in community life as volunteers.
Greg Williams of the Information Services Division
is one of many associates who volunteers time to
the annual Sharing is Caring event organized by the
Salvation Army on the day after Christmas. American
Honda partners with the Torrance Marriott Hotel,
the site for the event, and local community leaders
to provide this meal for less fortunate families.
of
Torrance-based associate John Savage reads to elementary
school students at the Carson Street Elementary School. He
is a volunteer in the Rolling Readers program. Savage, one of
hundreds of American Honda associates who have participated
in this national program since it came to Southern California in
1992, remembers the moment when he realized the value of the
program. “After weeks of wondering if my reading was making
a positive impact, one day two of my most shy students raised
their hands and asked to read aloud before the class,” said
Savage. “They were quite proud that they could read. And, shortly
after that, all of the students wanted to read. They were not just
reading the books. They understood what they were reading,
and they appreciated the importance of reading. That was a
proud moment for me.”
Honda’s relationship with the
L.A. Marathon has sparked associate
involvement on many levels. Many
associates participate in the race or
in the Acura Bike Tour, while others
serve as marathon volunteers or
contribute their time to related
activities, such as Students Run L.A.
Hundreds of Honda associates
and their families volunteer their
time to support beach cleaning
activities in Torrance, California.
With the FCX Clarity serving as the pace car, Honda’s 2009 Tournament
of Roses Parade float featured an original Honda 50 motorcycle, and
a giant-size replica of ASIMO, Honda’s advanced humanoid robot. In
honor of American Honda’s 50th anniversary, the float led the 120th
Rose Parade on, Jan. 1, 2009, in Pasadena, California. American Honda
first entered a float in the Tournament of Roses parade in 1977. From the
beginning, Honda has made the development of the float a community
project, with local youth groups and Honda associates involved in
decorating the creative floats. Motoko Nishioka (above, small photo) of
Honda Access America helped prepare the Honda float in 2007.
community partnership in america
Phil Tsuji, an associate in
the American Honda Product
Regulatory Office, awards
a medal to a participant
in the Honda-sponsored
Special Olympics event.
Ten of America’s top historically black colleges and
universities [HBCU] marching bands participate each year
in the Honda Battle of the Bands Invitational Showcase,
which marked its seventh year in 2009. Held annually in the
Georgia Dome in Atlanta, the event showcases the pageantry
and showmanship of HBCU bands. Honda also funds the
nation’s only HBCU scholarship of its kind, a contribution to
the music scholarship program of each school.
In 1984, a group of Atlanta motorcyclists pooled their
funds to support a local boy stricken with brain cancer.
Twenty-five years later, Ride for Kids is still a driving
force in pediatric brain tumor research. Honda and
the Honda Rider’s Club of America have served as
the presenting sponsor since 1991. In 2008, the 25th
anniversary year of the event, a record-breaking
$5.2 million was raised for the Pediatric Brain Tumor
Foundation of the United States.
of
Acknowledgements
The editors wish to thank
all of the Honda associates,
past and present, who sat for
interviews or contributed their ideas,
materials, photographs, and
other information for this book.
Publisher
American Honda Motor Co., Inc.
© Copyright 2009 American Honda Motor Co., Inc.
All Rights Reserved
Writing and Editing
Andrew Woods & Associates, LLC
Design
Paul Bussmann, LLC
Printing
Lithographix, Inc.
50th Anniversary History Book Committee
Kurt Antonius, Steve Bailey, Carrie Carroll, David Iida,
Tetsuo Iwamura, Gary Kessler, Cheryl Masukawa,
Steve Morikawa, Ben Nakamura, Mark Pearlstein,
Takashi Sekiguchi, Jeffrey Smith, Richard Veronese,
Alexandra Warnier, Erik Wedin
Book Review Team
Ray Blank, Tony Brandwie, Sheri Bullock, Dick Colliver,
Ed Cohen, Laura Cuddy, J.R. Cunningham, John Dirrig,
Chet Hale, Jay Joseph, Jeff Helton, Don Hensley, Ron Kamiya,
Stephen Keeney, John Mendel, Mark Morrison, Greg Norval,
Jim Roach, Jennifer Sepull, Steve Smith, Yumiko Unoki,
Yasuhiro Wada
We also would like to thank the following individuals
and organizations for their special support of this project:
Randy Lubert, Martin Brinkerhoff Associates, Inc.
Gerry Rubin, Rubin Postaer and Associates
TIME magazine
fif t y y ea rs
of
Many stories have become part of the legend of Mr. Soichiro Honda.
At their essence, most have a common theme — revealing a man who always placed the highest priority
on serving the needs of people and who fashioned a business around that ideal.
In 1990, following the grand opening of American Honda’s new Torrance headquarters, a special dinner was held
in honor of Mr. Honda in Newport Beach, Calif. He surprised and pleased the audience of Honda and Acura dealers and
American Honda associates with a touching gesture of thanks. Willie Tokishi, then vice president of community relations
recalls the event: “Mr. Honda was seated across from me, and I could see that he was quite restless, like something was
wrong. He was looking around the room, and finally he pointed to a waiter across the hall. We didn’t know what he
wanted at first, but he was gesturing for the waiter’s jacket. I was a little concerned, but Mrs. Honda said it was OK.
I explained to the waiter that Mr. Honda would like his jacket and Mr. Honda stood up, took off his own coat and put on
the waiter’s jacket. Apparently, he had been looking around the room for someone his size! Then, he put the napkin
on his arm and took the bottle and served wine to everyone in the room. There was quite a bit of excitement and
satisfaction. He made quite an impression.”
Soichiro Honda
pours wine for
Marge Cushman (left),
wife of Steve Cushman
(right), at the time
a Honda and Acura
dealer in San Diego,
California.
For Soichiro Honda, a customer was not only the person who bought one of his products.
A customer was virtually anyone he encountered.
The ultimate lesson of Soichiro Honda is that we can all find joy in serving others.
of
f i f t y y e a rs
of
American Dreams
of
american dreams
Fifty Years

83052_pg1-7_Book Intro 0708_R2.indd

Transcription

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Honda City Modulo Package