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Honda in north america
- 1. Presented by, Aniket Lokhande Shruti Lotlikar Ashay Duri Vikrant Datar CASE ON HONDA IN NORTH AMERICA Khushbu Nehita Ashay Chaudhari Harshal Parikh
- 2. CONTENTS • Honda • Honda Overseas • US market potential • Restraint Agreement • Why Ohio? • Challenges in Ohio • Management success story
- 3. HONDA • Founded by Mr. Soichiro Honda and Mr. Takeo Fujisawa in 1946 • Mr. Honda was in-charge of engineering and Mr. Fujisawa of management • Honda found it difficult to remain profitable in Japanese industry.
- 4. HONDA OVERSEAS • In 1958, a study grouped formed by Honda for study of overseas market bypassed US because it foresaw little demand for its motorcycles • In 1959, a small team was sent to california • Honda first attempted to sell cars in US in 1969 • By 1976, Honda was dependent on US for 50% of its sales • In 1977 Honda established a motor assembly plant in US. • In 1979 Honda established an auto assembly plant in Ohio.
- 6. RESTRAINT AGREEMENT Sharpe decrease in US Auto makers Share
- 7. WHY NORTH AMERICA? • Sharpe decrease in auto-makerss means unemployment for auto workers • Union of Auto Workers was very excited about new investment in North America as it meant more jobs • UAW put pressure on government to attract Honda to put plant in north America
- 8. WHY OHIO? • Honda received several forms of assistance from state of Ohio- • Improved infrastructure around the plant site • Abatement of property tax • Access to Transportation Research Center operated by Ohio State University • Setting up of Special foreign Trade zone
- 9. WHY OHIO? • Ohio took on the obligation to build a 30 km Four lane highway to connect Honda plant with nearest interstate highway • Ohio had largest number of Japanese supplier, about 20% of total Japanese suppliers as compared to 15% in Michigan and Kentucky
- 10. CHALLENGES IN OHIO • Cultural differences • Unskilled workers • Language • Creating supplier base
- 11. MANAGEMENT SUCCESS STORY • Corporate culture: Neither Japapese nor American • Extensive process for selecting associates • Investment in people • Respect for individual • Honda installed pride in associates • High level of service
- 12. THAT’S ALL FROM OUR SIDE…..
Editor's Notes
- In 1979, domestic sales contributed 77% of total sales. Domestic cars werof bad quality whereas japanese cars with far better quality had captured 17.4%. This 77% market was available for take over. In 1981, domestic sales dropped to 70%. Hence the america was afraid. Hence they made japanese sign a ‘VOLUNTARY RESTRAINT “ agreement limiting import in US to $1.68 million
- Governer Rhodes flew to Tokyo with Ohio’s director of development within twenty four hours of first hearing that a japanese auto maker was interested in building a plant in US. Didn’t know which firm, so visited each until he learned it was Honda. Promised $22 million in infrastructure