Thursday, November 20, 2008

Honda v. GM/Ford:5 Minutes v. $75-350M, 13 Mos.

HONDA -- One recent morning, a Honda plant in Ohio churned out 120 Civic compacts. Then the production line came to a halt and workers in white uniforms swept in to install new hand-like parts on the giant gray robots that weld steel into the cars' frames. About five minutes later, the line roared back to life, and the robots began zapping together a longer, taller vehicle, the CR-V crossover.

The manufacturing dexterity of Honda's plants, now the most flexible in North America, is emerging as a key strategic advantage for the company. In an era of volatile gasoline prices, Honda can adjust production to inventory levels faster than its competitors. Earlier this year, when gasoline prices reached $4 a gallon, the company slowed production of its Ridgeline pickup truck at its Canada plant and increased output of better-selling vehicles.

In recent weeks, fuel prices have eased. If prices continue to fall and demand for larger vehicles improves, Honda has the ability to adjust faster than its competitors. At Honda, a variety of models can be assembled efficiently because almost all of its vehicles are designed to be put together the same way, even if their parts are slightly different.


FORD AND GM -- Switching from one model to a completely different one still can take weeks and millions of dollars. Ford will spend at least $75 million to overhaul a SUV plant in Michigan to make small cars, and the work will take 13 months. GM is retooling its Lordstown, Ohio, plant to produce a new model at a cost of $350 million.

Source: WSJ article "Honda's Flexible Plants Provide Edge"

MP: Another reason that the future of the U.S. automotive industry, regardless of temporary bailout measures, will shift towards the nonunionized, nimble, flexible foreign transplants like Honda (see chart above), and away from the rigid, unionized, "work-rule burdened," Soviet-style Big Three.

6 Comments:

At 11/20/2008 11:25 PM, Anonymous Anonymous said...

The politicians made them keep those plants open. It's all political. The auto makers are all screwed up because of politicians and unions.

 
At 11/21/2008 8:35 AM, Blogger save_the_rustbelt said...

"Soviet-style Big Three."

How below the dignity of any educated person.

 
At 11/21/2008 11:28 AM, Anonymous Anonymous said...

This article dealt with the flexibilty of the newer foreign factories vs domestic. In what way has the union dictated that domestic manufacturers have a more rigid line setup?

 
At 11/21/2008 6:49 PM, Blogger @sethstorm said...

Problem is that the time for them to retool for a V8 in any of their cars, much less putting a V6/I6 in a Civic is always longer than the Big Three of Detroit. Never mind seeing them try to do that for a car under $30000 for a V8, or an V6/I6 for under $20000.

Tempting cars, but they've yet to come up with compelling engines at affordable prices. But that will be what they have to do to pick up the loyal GM/Ford/Chrysler owners.

 
At 11/23/2008 8:04 PM, Blogger Anon A. Mus said...

"In what way has the union dictated that domestic manufacturers have a more rigid line setup?"

Hmmm, do you think dictating more workers than necessary in a production line has anything to do with it? Or those fights against automated processes that reduce worker count might affect the flexibility of a production line?

 
At 11/23/2008 8:13 PM, Blogger Anon A. Mus said...

" "Soviet-style Big Three." How below the dignity of any educated person. "

What type of educated person are you referencing? A high school dropout perhaps? An educated person might know or remember how "Soviet-style" production was to build for the sake of building to make the numbers look good to the planners. It also could change the direction of production as fast as an loaded oil tank trying to do a u-turn.

 

Post a Comment

<< Home