Honda endures worst two-year stretch ever

By Dan Gearino

Columbus Dispatch

MARYSVILLE, Ohio

Every 54 seconds, a new vehicle rolls off of the Honda assembly line. It’s a pace so steady that an observer might be surprised to know that the company has just endured the worst two-year stretch in its history.

The recession and the turmoil it sparked followed a time of almost nonstop growth for the Japanese company, which until then had avoided the forces that crippled many of the state’s manufacturers.

This was more than a normal cyclical decline. It was a threat to the entire auto industry. And it arrived at a unique and vulnerable time for Honda.

Now, as the industry regains its footing, Honda officials reflected on how their company dealt with the challenges and looked ahead to its future.

“Even though we’re seeing signs of improvement, we can’t rest,” said Tim Reisinger, a senior manager at the Marysville assembly plant.

Honda has become the largest auto-employer in the state with about 13,500 workers, surpassing General Motors. At the same time, Honda had the largest job cuts in its history last year, offering buyouts that reduced its Ohio work force by about 1,500.

Like the employment situation, the vehicle lineup is a mix of good news and bad news, analysts say. The company boasts some of the industry’s best-known and most-respected models, such as the Accord and Civic. But recent attempts to add to the lineup have failed to produce a hit, at the same time that other brands have invested heavily in new products.

“They’ve been hitting singles and striking out for the most part,” said John Wolkonowicz, analyst for IHS Global Insight, a research group in Lexington, Mass. By his count, Honda has gone four years since it had an outstanding design: the most recent update of the Civic.

The company’s U.S. sales peaked in 2007 with 1.6 million vehicles sold. Then, in mid-2008, high fuel prices sapped the sales of larger models, followed by the wider turmoil of the recession and credit crunch. Sales fell to 1.4 million.

Last year, sales bottomed out at 1.2 million, a level not seen since 2000.

Another key indicator of the automaker’s strength, market share, remained about the same at 12.9 percent of the U.S. market last year, down 0.1 percentage point from the previous year, which was the highest in Honda history.

The company could boost its market share by providing more sales incentives, but it has stuck to its long-standing avoidance of heavy discounting.

“We don’t chase market share inordinately,” said John Mendel, Honda’s top sales executive in North America.

Right in the middle of the sales slump, the company changed leadership. Takanobu Ito became the CEO at the Tokyo headquarters, replacing Takeo Fukui, and Hidenobu Iwata became CEO of American manufacturing, based in Ohio, replacing Tsuneo Tanai.

Ito came from the research-and-development side of the company, which some observers saw as an attempt by Honda to move more quickly into new technologies.

Iwata had been a plant manager in Tokyo after rising up through the engineering side of the company. In an interview last year, he said he would try to bring the U.S. operations back to the basics of manufacturing.