Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 16, 1990 TAG: 9003161875
SECTION: BUSINESS PAGE: BUS2 EDITION: METRO
SOURCE: DORON P. LEVIN THE NEW YORK TIMES
DATELINE: MARYSVILLE, OHIO LENGTH: Long
A reason is that Honda Motor Co., which once offered only cars imported from Japan, has in some ways become as American an auto maker as Ford or General Motors.
And that is spurring a growing debate about whether a company like Honda, despite its foreign ownership, should not be nourished as a national asset rather than lumped in with companies that simply flood U.S. markets with products manufactured abroad.
The debate affects a host of issues, including when to apply curbs on imports of autos or auto parts, and which companies' products the United States should champion in world markets.
It involves not only automobile manufacturing but also other industries from consumer electronics to machine tools.
More than any other foreign auto maker, Honda is blurring the distinction between foreign and American.
The proof is Honda's huge plant here, which assembled 363,668 Honda Accords and Civics last year, more cars than any other single auto plant in the United States.
When the plant opened eight years ago, American workers, like many at Japanese-owned factories in this country, were used mainly to assemble parts mostly imported from Japan, to build cars designed by Japanese engineers.
The engines, for example, were built in Japan and shipped so that they could simply be dropped into place.
But now, Honda is sharing skills and ideas with its American work force at levels from the assembly line to the design office, and it has increasingly relied on those workers for more than just relatively simple labor.
Honda has begun to use its American engineers in Ohio and California to design cars for the U.S. market, the company's largest, and to improve the tools and processes used to build them.
"We're not here as puppets," said Dan Smith, 31, a manager who supervises engineers involved in testing cars at the Marysville plant.
Smith was once an engineer with Cummins Engine Co.
The percentage of imported parts used at the Marysville plant has fallen significantly; the number of parts suppliers based in the United States has risen to 194, from 27, since the plant opened.
That group includes U.S. companies, Japanese companies based in this country and joint ventures.
And the engines are now being built from scratch at a new plant near Marysville.
The Accord itself is now a hybrid, built by workers in both Japan and the United States and exported from both countries.
Honda engineers here have designed a two-door version that is now being exported to Japan.
An Accord station wagon and all the machinery needed to build it also will be designed at Marysville, and that car will be exported to the European market as well.
"Eventually we will be able to create full and original vehicle models here, but we have to learn gradually the way Honda wants it done; you have to learn by doing," said John Adams, who supervises 150 engineers who build machines and tools for manufacturing the vehicles.
Honda's strategy is to develop and build cars in the main areas where they are sold - Japan, North America and Europe - and even export them, said Scott Whitlock, Honda's executive vice president for U.S. manufacturing and a former lawyer from Columbus, Ohio.
Viewed in this light, Honda may seem far less threatening to U.S. economic interests than the stereotypical Japanese company.
Indeed, rather than undermining American competitiveness, the cross-pollination at Honda actually increases it, a number of experts say.
They argue that Honda, one of the standard-setters in manufacturing and engineering cars, is helping Americans improve an essential product.
The improvements will soon spread to other manufacturers trying to stay even, the theory goes.
For example, Ford Motor Co. last month became the first U.S. auto maker to switch to the production of a new model without stopping the assembly line for more than a day, a practice Japanese auto makers, including Honda in Marysville, have used for some time to increase productivity.
Normally, a plant might stop work for four or five weeks to install new tools.
But at Honda, by constructing reprogrammable machines that move on tracks, engineers can slow the production line and quickly shift from the old model to the new one.
As another example, Honda has shown its U.S. supplier, Inland Steel Co., how to remove tiny imperfections in its steel that hindered the effectiveness of a corrosion-resistant coating, said Matthew Lofton, Inland's general sales manager.
Inland later signed up Chrysler Corp. as a customer for the corrosion-resistant steel.
"Plants like this force everyone else to put on their track shoes," said David Cole, head of transportation studies at the University of Michigan and an auto industry consultant.
He said Honda's Marysville plant enhances U.S. industrial competitiveness "by introducing new management philosophies and becoming a model for other U.S. firms."
Such arguments have been voiced passionately by Robert Reich, a professor at the John F. Kennedy School of Public Policy at Harvard University.
Reich argues that foreign-owned corporations that invest heavily in U.S. operations can sometimes contribute more to U.S. competitiveness than their U.S.-owned counterparts.
He says the United States must stop favoring companies simply because they "fly the U.S. flag."
As Reich sees it, although profits from Honda go to Japan, that sum accounts for little when compared with the company's outlays for salaries, materials, research and training in the United States.
Moreover, world securities markets allow U.S. investors to buy shares in Honda.
Hence, Reich contends that the nation should develop policies governing foreign investment, trade, antitrust and research and development that encourage "any global corporation that invests in the American work force," like Honda.
Specifically, he argues, the United States should work to open foreign markets to goods built by Americans, even if they work for Honda, rather than just to companies with headquarters in the United States, which might be assembling products abroad.
He opposes import quotas or retaliatory tariffs, protectionist measures suggested by some U.S. automotive concerns.
In the spirit of Reich's arguments, U.S. trade officials seem in some ways to be accepting Honda and other Japanese car makers as among their own, despite frequent criticism of Japan.
Last month, the U.S. trade representative, Carla Hills, strongly warned the European Community that this country would protest any attempt in Europe to restrict imports of cars built by Japanese companies in the United States.
France and Italy are pressing hard for restrictions.
"We would be remiss if we didn't stress how strongly we feel that a Japanese nameplate car made in our country is an American car," Hills told reporters.
But many in the U.S. auto industry disagree.
They have urged the government to take a hard line against Japanese automakers.
The United Automobile Workers union, for example, argues that cars produced at plants like Marysville should be considered imports and counted toward the import quotas voluntarily adopted by Japan.
That would mean that Honda would sell fewer cars in the United States, making it uneconomical to manufacture here.
Other proposals, while not specifically aimed at Honda or the auto industry, could restrict imports of engines or components the Japanese auto makers deem vital.
The Automotive Parts and Accessories Association, a U.S. trade group, has asked the Senate to tighten restrictions on imported auto parts used by Japanese car makers in this country.
The group contends that U.S. auto-parts makers are being excluded from Japanese markets.
U.S. auto executives also criticize the rules and customs hampering U.S. entry into the Japanese market, like the expensive requirement of building exclusive dealerships rather than selling through multibrand dealerships as permitted in the United States.
The attitude of U.S. auto executives toward the Japanese is complex.
Each of the Big Three car makers owns stakes in Japanese auto makers and has joint ventures with them.
But they also feel threatened by the stunning success of their Japanese counterparts.
"I'm uneasy at this stage by the process of Asian ownership," said Donald Petersen, who recently retired as chairman of Ford.
"It's what Peter Drucker calls adversarial trade, rather than competitive trade. Their objective is to eliminate the competition."
Don Hilty, chief economist for Chrysler Corp., said Reich's argument did not hold up.
For one thing, Hilty said, Honda carries out very little research or development work here.
Moreover, as he sees it, the Honda Accord Coupe, which is made exclusively in this country, is no more than "a derivative, strictly a PR exercise."
Frank Joyce, a UAW spokesman, criticizes Japanese car makers for paying less than union wages and benefits at U.S. plants like Honda's.
The union, anticipating a defeat, called off a vote at the Honda plant on recognizing the UAW as bargaining agent.
Like Honda, other Japanese auto makers have increasingly been obtaining parts and components in the United States while giving U.S. engineers, designers and managers additional responsibility.
Nissan, Toyota and Mazda have opened U.S. research and development centers.
Honda management argues, however, that the Marysville plant is the farthest ahead in bringing in Americans at all stages of the process.
Honda workers make many engine parts, assemble engines, turn steel sheet into parts and certify cars for export to Japan.
In addition, workers are designing and building machines that build cars.
The Marysville plant's manufacturing processes are among the most efficient and sophisticated in the world, said James Harbour, an automotive manufacturing consultant.
by CNB