Honda Opens First New Domestic Plant In Nearly 50 Years
A weakening yen and a rebounding economy have occurred just in time for Honda. The auto maker is opening its first new Japanese plant in 49 years, bucking a trend by Japanese auto makers of opening new plants in every locale but Japan.
Numerous trends, including a shrinking population, a strong yen and the 2011 tsunami spurred Japanese auto makers to open plants across the globe as a hedge against those factors. Localization of production was the dominant theme of the last couple years, with Nissan, Honda, Toyota and even smaller players like Mazda busying themselves with establishing factories in North America and the BRIC countries.
Honda’s new plant in Yorii, an economically depressed city northwest of Tokyo, will still build cars solely intended for the Japanese market, rather than for export. While Yorii will build vehicles like the Fit for domestic consumption, Honda’s new Mexican plant will build that model for North American markets.
More by Derek Kreindler
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It'll be a new flexible assembly line where Honda VTX 1800 motorcycle engine will show the Fit how to make 75 foot-pounds at 1,250 RPM.
I cannot help wanting good things for Honda. The way they took Formula 1 by storm with their engines still amazes me decades later. Their engineering solutions were truly elegant whether for the CVCC Civic, an OHC 450 CL motorcycle or double wishbones on the cars. Jenson Button owes his title to Honda, as the Brawn car was engineered by Honda. Soichiro deserves his legacy. Now, can the current company live up it?
The action by the Bank of Japan to quantitatively ease the Yen down to a more amicable rate for exporters is only a couple months old. There must be some inside communication between Honda, the BOJ, and Japanese government that indicates this policy will be a long-term policy. Otherwise why would Honda all of a sudden do an about face and start building new long-term high capital investments in Japan? Gentlemen, place your bets!
Interestingly Honda stopped US motorcycle production (the Gold Wing) in 2009, moved it to Japan, and shifted the space and personnel to expand automobile production (most likely Accords). So it's not unprecedented for Honda to expand production in Japan, as counterintuitive as it might sound.