COMMENT: From a Honda acorn, the US transplants grew

By Graeme Roberts | 28 January 2014

An early US-made Accord nears completion at Marysville c.1982. Would the planners of that first transplant have foreseen eight North American plants with 1.92m-unit capacity 32 years later?

An early US-made Accord nears completion at Marysville c.1982. Would the planners of that first 'transplant' have foreseen eight North American plants with 1.92m-unit capacity 32 years later?

Interesting to see American Honda was a net US exporter of vehicles last year.

I suspect a little PR smoke and mirrors is in play here as that, of course, cleverly counts in shipments to captive NAFTA market neighbo(u)rs Canada and Mexico - which both have Honda plants, too - but, hey, 31 years after that first four-door Accord rolled off a pioneering Marysville 'transplant' assembly line, it's not a bad achievement.

Honda's US plants have been exporting a long while. US built-only Accord derivatives, like the early '90s coupe and wagon, started to be shipped pretty much worldwide back then, including 'home' to Japan, and over the years volume rose to the point where, at the end of 2012, we reported on Marysville's millionth export unit - a silver Accord, natch, bound for, of all places, South Korea. Under the (then new) free trade agreement, y'see.

All this reflects, to me, two things in particular - the willingness of Japanese companies to be (a) flexible and (b) take the long view.

I saw it in my early motoring writing career tracking automakers in New Zealand - then a 75,000-unit KD kit assembling market much like Vietnam now.

During their early export forays, the Japanese automakers did not hesitate to supply what the new market could best use and, if that was KD kits - of exceptionally good quality - to markets where that was the only way to get any volume by getting round heavy tariffs on built-up cars, so be it. Hence Toyota's early, late-1950s Landcruiser build in Brazil, Tiara (1963) assembly in Australia and Corona (1967) build in NZ. Nissan was much the same, sending KD kits to both Australia (mid-60s) and New Zealand ('63), getting that vital foot in the door even where initial volume was only a few hundred units a year. (It also had a full plant in Mexico, building thousands of cars a year, by the mid-'60s.)

Honda, in contrast, was a relative latecomer to overseas car building. In the mid-'70s, a new New Zealand importer made it clear the Civic had to switch to CKD to get volume in that market, as restricted import licensing and punitive tariffs made full imports too scarce and too expensive. And so it was done, starting in 1976, the automaker's first car assembly plant outside Japan.

Despite the relatively late start even to CKD supply, Honda, just six years later, was to open its first full manufacturing plant outside Japan - in the US. That Ohio plant was the response after fully assembled exports, especially to big markets like the US and the UK/Europe, had built to the point where there were rumblings of discontent over the volume and thinly veiled threats of punitive retaliation. All the Japanese automakers were receptive to such rumblings - hence the 'gentlemen's agreement' to restrict fully assembled car shipments to the UK in the '70s and '80s - and the decisions - led by Honda and followed soon by rivals Nissan and Toyota - to start building 'transplants' abroad, primarily in the US, to make cars in the markets in which they are sold.

Perhaps, having seen VW try - and ultimately fail - with its unionised Pennsylvania plant, Honda set its US sights on southern states and, crucially, non-union labour, and was welcomed with opened arms by state and local governments desperate for employment opportunities. Having earlier tested Ohio waters in 1979 with a Goldwing motorcycle plant, Honda then dived right in with the adjacent Marysville Accord factory in 1982.

The rest, as they say, is history. Today, as we note in our story, just this one Japanese automaker, from next month, will have eight auto plants alone in North America and capacity of 1.92m units a year, building virtually every product in its model line from sub-compacts to light trucks.

And, in total, 15 major manufacturing facilities which also make engines and transmissions, all-terrain vehicles, and power equipment products such as lawn mowers. It's a stunning achievement which has created tens of thousands of jobs, sees billions spent locally for parts and services - and lots of tax dollars/pesos paid annually too.

Achieving 'net exporter' status is surely the icing on the Honda cake.