From: Terry W. Colvin (fortean1@mindspring.com)
Date: Thu Aug 21 2003 - 16:12:24 MDT
Hubba Hubba Honda Honda
By Brad Edmonds
[Posted August 21, 2003]
That title is from a Car and Driver article of the mid-1980s, about the results
of the editors' putting two engines into a little Honda CRX. The Hubbas are even
more fitting today, as Honda keeps building the best cars in the world, forcing
other automakers to work hard to keep up. Some are having more success than
others. How does Honda do it?
In Honda's case, as with any corporation, much of what the consumer sees comes
from the top. Soichiro Honda, the founder, was a daring, hard-headed, friendly
entrepreneur and engineer. He thwarted the good-ol'-boy Japanese business
environment of the mid-20th century by working around government discouragement
and restrictions, ignoring social and business pressure, and making his little
machines. He began by manufacturing piston rings, moved to motorcycle engines,
then motorcycles, and then he took on the auto industry.
Since he wasn't one of the good ol' boy corporations, he had to accept less
promising college and trade school graduates as employees. Soichiro attended
engineering school, but didn't bother taking tests or attending classes he
didn't want; he was already too busy attending to his new business. He told his
new employees he had faith in them, and if they didn't like the way he did
business, they could leave. This was exceptional—traditionally, Japanese
employers viewed new hires as lifetime vassals.
Soichiro put customers first, and he adapted quickly to customer input. He
introduced his motorcycles to the American market in 1959. The bikes quickly
developed a reputation for unreliability—they couldn't handle the hard paces
through which Americans put them. So Mr. Honda immediately improved his engines,
and by 1963 Honda was the best-selling motorcycle in the US. In 1960 he decided
to build cars, and within 5 years of that decision a Honda won the Mexican Grand
Prix.
The company continues to damn the torpedoes. When the American government went
(more) protectionist against Japanese imports in the 1980s, Honda, along with
other foreign manufacturers, built plants in the US. Today, a Honda Accord's
"domestic content" for us is 97%, which makes the Accord less of an import than
the Ford F-150.
The Marysville, Ohio plant that builds Accords is worth mentioning. Considered
the most efficient auto plant in the world, it is where the Honda people bring
young Japanese managers to show them how a plant should work. (Note that the
Marysville workers decided to go nonunion when the plant opened.) Today, the
Japanese continue to outstrip American automakers in auto quality, performance,
and manufacturing efficiency.
The big three American automakers habitually beg the government for protection,
and the Japanese just put on softer gloves and keep beating us up. Are Japanese
government subsidies a competitive advantage? The Americans get subsidies, too.
As to whether the Japanese restrict American cars entering Japan: Heck, suppose
the Japanese allowed no American cars at all on their shores. Should that make
us build inferior vehicles?
Here's part of the answer: An American, Edwards Deming, developed approaches to
measuring and improving quality and efficiency in manufacturing in the 1950s.
Deming was ignored by American manufacturers at the time, but the Japanese
embraced him and his ideas, and later named their national manufacturing prize
for him. From following Deming's advice, Japanese cars are the best in the world
for the money (my high-strung S2000, street legal but built to be raced in
amateur meets, needs its first full tune-up at 105,000 miles).
Many Japanese cars are now better than even German cars. Just as one example,
the rear-drive Infiniti G35 is a four-door sedan that competes directly with the
BMW 5 series in interior space, amenities, and performance. The G35 can be had
fully equipped for about $33,000, the engine is good for 260 hp and 260 lb-ft of
torque, and the interior is the same size as the BMW's. The BMW 530i develops
225 hp and 214 lb-ft while it weighs 100 pounds more than the Infiniti, and the
BMW starts at $8,000 more.
I would assume everything Honda manufactures (ATVs, engines for riding lawn
mowers, generators, motorcycles, outboard motors, personal watercraft, pumps,
scooters, and snow blowers) lives up to the same quality, reliability,
affordability, and style standards as their cars. Honda continues its record of
successful adaptation to external constraints and demands by leading the
industry in developing government-mandated alternative fuel vehicles. Their
Insight hatchback is the only consumer gas/electric hybrid vehicle you've
probably already seen on the street (the one with the rear-wheel skirts).
Americans invented many of the biggest ideas—Henry Ford made automobiles
affordable; Deming showed the way to continuing quality and efficiency
improvements; our marketers probably did much more than the Japanese to develop
the customer responsiveness the Japanese have mastered; and we invented SUVs,
pickups, and minivans. Engineering isn't the only issue, either: Style matters
to car buyers, so some of the more expensive Japanese brands have hired American
designers in California to make their cars look so good inside and out.
We invent great ideas, and the Japanese—Honda in particular—adopt them and put
them to work. We should have the advantage in the auto industry, but our
automakers want profits without sweat. Hey, it's easier to get the government to
hurt the competition. One example: In the 1980s, we passed a $2000 tariff on
Japanese minivans. Our automakers immediately raised our prices by $2000. It's
too bad for us that our corporations would rather stiff us than learn from their
own great ideas. Until they change their habits, get yourself a Honda.
------
Brad Edmonds is a banker in Alabama.
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