Honda Motor Co. announced Friday that it will invest $400 million to build a new manufacturing facility in Lincoln, Ala., boosting annual production capacity in North America from 960,000 to 1.13 million units by 2003.
The nation’s third-largest automaker also revealed a 36 billion yen project to update and streamline its facilities in Suzuka, Mie Prefecture, and Sayama, Saitama Prefecture, to replace model-specific equipment with more versatile machines over the next three years to increase production flexibility.
The new Alabama plant — the firm’s third auto-assembly factory in North America — will start operations in the spring of 2002 to produce minivans and sport-utility vehicles, the very market where major U.S. automakers are currently generating a large portion of their profits.
“I think models now under development (for the new plant) will be sufficiently competitive,” Hiroyuki Yoshino, Honda chief executive officer and president, said at a press conference held at the firm’s Tokyo headquarters.
But he added that his firm has no intention of making pickup trucks at the proposed plant, indicating it will not compete with U.S. automakers in that market segment.
To meet its production capacity target of 1.13 million units in North America, Honda will also invest $30 million to expand operations at a plant in Alliston, Ontario, and another $30 million to boost engine production at a facility in Ohio, the Honda officials said.
The Alabama factory will operate at full capacity beginning in the spring of 2003, and will have annual production capacity of 120,000 units, officials said.
Honda hopes to employ up to 1,500 people at the new plant, which will produce both bodies and engines, officials said.
Honda now generates most of its profits in North America while suffering from dwindling sales in the recession-hit domestic market.
Honda’s further shift toward overseas markets indicates that its production capacity in North America may eventually exceed that of its domestic plants, which stands at 1.25 million units.
In the new streamlining project at Sayama and Suzuka, Honda will consolidate five lines to four, but will maintain its current workforce, company officials said.
Yoshino stressed that Honda’s domestic production capability of 1.25 million units will also be maintained, adding that one of the main purposes of the project is to reduce the required investment and time to produce new models by increasing the versatility of equipment at the plants.
The project revealed Friday will also make the two plants more environmentally friendly by the end of fiscal 2001 through such measures as cutting energy consumption by 15 percent and processing all waste within the plant compounds, according to company officials.
Yoshino also revealed that Honda will export about 7,000 units of its Accord sedan from a Mexican plant to the U.S. by March 2000 to meet growing demands for the car.