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The Dreary Internal Politics eating away at Honda: reported from Japan

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Oishi Kuranosuke, a supporter of BfB from Japan, has kindly provided us with a translation of a Japanese report on the difficulties at Honda. The report places the blame for the Swindon closure squarely on Honda’s problem of chronic over-capacity. Brexit is not viewed as a factor.

Honda’s popularity stems from its [glamourous] jet business and [high-profile] F1 involvement, but the all-important heart of the business operation, automobiles, is in a mess…


Honda [has announced that it] will cut the number of its global derivative models by one-third by 2025, and will also cut its global production capacity from the current (official figure of) 5.4 million units down to 5.07 million units by 2022. By cutting down on development costs and on excessive production capacity, it [aims to] put its auto business back on a profitable footing…

But this plan is being viewed with cynicism by those working on the production lines. A middle manager in his forties says, “There’s a sense that it’s already too late. Honda’s actual production capacity is at nearly 8.0 million vehicles if the figures for KD kits are included. The 5.4 million figure is the officially published figure, but there is a considerable gap compared with [the figures in] internal documentation. Current unit sales are running at 5.32 million units, so the true capacity utilization rate is [only] in the 60% range.” On February 19, 2019 Honda announced that it would cease production at its British and Turkish factories, but the middle manager quoted views it as unlikely that excessive production capacity can be reduced unless further factory closures are made.

Another manager points out that “it is being said inside the company that there are between 30%-40% too many people in Honda’s car operation; what to do with them all has become a big issue. Some of the younger workers are starting to call for the immediate introduction of voluntary retirement packages.” There’s a lot of wasteful development going inside Honda. For instance, there are nearly 4,300 types of gearbox, but it is said that if this [operation] were rationalized, the company could manage with about 400 types, which would, it is claimed, allow Honda to cut the 11 factories it has globally down to six, and the number of workers in the gearbox division from 20,000 down to 15,000…


Source: FACTA ONLINE, July 2019 ed., https://facta.co.jp/article/201907002.html 

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