Honda to Suppliers: Increasing Commitment to Technology and Flexibility

Honda leaders shared their vision for continuing success at the company’s annual supplier conference today, saying the path forward is a commitment to applying new technologies and increasing flexibility to build the kinds of fuel-efficient vehicles that customers are seeking today.

Honda also recognized its top suppliers for their performance last year in the critical areas of quality, on-time parts delivery and productivity improvements. A total of 79 awards were presented in these areas, as well as corporate citizenship, to 63 Honda suppliers throughout North America for top performance.

“Improving quality, delivery and productivity is especially important as prices for raw materials continue to increase,” said Akio Hamada, Honda of America Mfg., Inc. president and CEO, and leader of Honda’s North American manufacturing. He added that these cost pressures are mounting even as consumer spending declines and fuel prices impact the types of products people buy.

“We will continue to increase production volume and flexibility in our auto business, and to exceed customer expectations,” Hamada told leadership from more than 500 suppliers. “To meet the specific challenges we face will require innovation, strong collaboration with all of you, and focused execution based on a clear commitment to customers.”

Honda is increasing production capacity* in North America with the addition of a new auto plant in Indiana and a new engine plant at Honda of Canada Mfg. The new operations will increase Honda’s annual parts purchases in North America by more than $1.5 billion. In 2007, Honda purchased more than $18.8 billion in parts and materials from 650 North American suppliers, including $6.7 billion worth of parts from Ohio companies.

Pointing out the challenging business climate and economic slowdown, Bob Nelson, North American Purchasing division manager, said collaboration between Honda and its suppliers is even more important to focus together on strengthening production processes, improving business efficiencies and at involving all their associates in innovation.

“To provide customers with new technologies and increasing fuel efficiency, as well as cost and quality, Honda is looking to align with suppliers who will join with Honda to focus on innovation,” Nelson said. “In short, your success and our success is based on innovation that helps bring to market the best product at the best price.”

As with Honda, our suppliers need to be “driven by the future” to create a solid foundation to consistently achieve improvements in production, said Larry Jutte, Honda of America senior vice president. “The North American supplier award recipients you see here today understand their core business objectives,” Jutte said. “This is helping to make them globally competitive locally.”

In North America, Honda automobile plants produced a record 1,432,731 vehicles. U.S. auto production topped one-million for the first time with a total of 1,015,462 units. In addition to Ohio, Honda has North American auto plants in Alabama, Ontario Canada, and Mexico. As a result, Production in North America totaled more than 76 percent of American Honda’s record automobile sales in 2007.