SWINDON, UK - Honda Motor Manufacturing Ltd. says the new Accord that goes into production here in July will prove that it can survive without long-time partner Rover Cars.
Honda has become a low-volume, niche manufacturer in Europe. While cooperating with Rover, it was a 500,000-unit-a-year mid-size company. The 15-year relationship with Rover ended in March 1994 when BMW bought Rover.
Honda and Rover will continue to share engines and parts until 2000 at least.
Rover cars have been based on Hondas, with more than 80 percent of parts in common. Components for both carmakers continue to come from long-term Rover suppliers. Honda and Rover share 248 suppliers.
This will begin to change with the arrival of the new Accord and, in late 1999, the successor to the Rover 600. The two carmakers' ranges will diverge from then on.
Rover will cease stamping body parts for Honda around 2000. Honda constructed a $50 million stamping shop in 1995 to make those body panels unique to its cars.
The following year it started cutting and maintaining the stamping dies. Honda will stamp all the panels of the new Accord.
About 70 percent of the Accord's suppliers also provide parts to Rover, and Honda expects to take several years to develop its own supply chain, says A.J. Boughton, Honda's senior purchasing manager.
'We have to rely on a smaller volume and be self-reliant,' he said. 'We had economies of scale purely because of our past volume.' Honda also has to decide whether to shift towards modules and systems.
The Swindon plant has only built cars since October 1992, even though Honda has occupied the site since February 1985. Rover built Honda's cars, starting with the Ballade in 1986. It added the Legend in 1987 and the Concerto in 1990. Production of the Concerto ceased in 1995.
Swindon started making engines for both the Concerto and the Rover 100/200 in 1989.
The first car made at Swindon was the European Accord in October 1992, followed by the Civic five-door in 1994. The Civic station wagon, the Aerodeck, goes into production this year with a planned volume of 30,000 units a year.
Honda made 105,919 cars in 1996 and around 113,000 in 1997. The target for 1998 is 150,000 units, following a $100 million investment to raise capacity. Honda produced 137,824 engines in 1996, including 38,929 for Rover.
About 1,900 workers are on the assembly line that makes 13.9 cars an hour. Total employment is 2,600 now; 400 jobs will be added in the spring for the Aerodeck.
Swindon follows the Japanese philosophy of manufacturing and consensus decision making, said Dave Taylor, plant manager for pressing and welding. Managers and workers wear the same white uniforms, steel-toed shoes and green and white caps.
The factory culture is a mixture of Japanese and British.
'The Japanese go to the Nth degree of detail and go for months looking at concepts and examining each option,' said Boughton. 'We have our own skills and are good at putting it right and firefighting in the British tradition. We can make the decisions more quickly.'
There is still a Rover presence at Swindon. Rover engineers and technicians roam the plant, although their company's office here has been closed.
Rover continues to make the main side stamping, roof panel and doors for the Honda Civic, as well as for its own 200 and 400 series models. Honda makes the Civic's front and tailgate.
For the Accord and 600, Rover stamps the door panels and roof. Honda does its own side panel, hood and trunk panel.
The increasing independence from Rover has advantages, says Mike Godfrey, manager for safety and the environment. 'Total independence in producing the Accord and Aerodeck will improve quality and give us better control over quality and delivery.'
Is Rover's quality that much worse? 'Honda standards are quite tough and we have to be diplomatic,' says Boughton. 'Their production is different.'
New ties with suppliers
The biggest effect of its separation from Rover on Honda is the loss of strength it used to enjoy through joint purchasing. Still, Honda's volume car, the Civic, is protected from the full impact until 2000, when a licensing agreement with Rover expires.
Major changes could occur then. These might include a shift to modular production and the sourcing of modules and systems from suppliers.
Honda uses few modules currently, and only the seats come in fully pre-assembled. Doors and instrument panels are pre-assembled in-house.
Honda will begin painting its bumpers in-house next year. Magna, the current supplier, will not be able to meet higher emissions standards at a satisfactory cost, say Honda managers.
The carmaker also manufactures manual transmissions, but production is below capacity.
Besides new supplier relations, the 1998 Accord will mark other changes for Honda.
For the workers, says Godfrey, it means 'we will have only one customer, Honda Motor Europe. The transfer pricing is between us and them.'
The new Accord is also the first that is different in Europe from the models available in the USA and Japan.
The European version will share the same floor and location points for the suspension, but the interior and exterior body panels and engines will be unique.