Honda’s Global Local Corporation

In 1962, the Honda Motor Co., a Japanese motorcycle manufacturer founded fourteen years previously, made its first automobile. Entering the four-wheeler business had been a hurried affair, rushed along because it looked as if the Japanese Ministry of Trade and Industry (MITI) would try to prevent new firms from joining Japan’s small automobile industry. MITI’s fear was that the sector’s international competitiveness would be undermined by a plethora of small producers unable to reap economies of scale. Between 1958 and 1962 Honda had moved fast, and its engineers came up with a small truck and a small sports car so that Honda could claim already to have joined the ranks of the automobile producers.

In the previous chapter we suggested that there is a difference between the philosophical approach we tend to use in the West and how firms like Honda think and act. In this chapter we’re going to pursue this difference further, to sharpen up our ideas before we proceed. The discussion is divided into three parts.

Honda is an interesting example of what small companies can do.¹

Japan’s vehicle exports to the United States and Canada boomed during the 1970s, with its share of the big US market soaring from 4 per cent in 1970 to 23 per cent in 1980. All eyes turned to the Japanese automobile industry. Why were the Japanese so successful? What could American industry learn?

When we announced our plan in 1980, industry analysts and many of our competitors thought it was too great a risk. It definitely was not viewed as a competitive threat.¹

Well, right now in the auto business ‘produce here’ is an overstatement. In the typical Ohio Honda or Tennessee Nissan the high-value parts, transmissions and most engines are produced in Japan. That means US workers miss out on jobs offering not only higher pay but greater opportunity for learning and advancement.¹

Competition in the North American market is going to become very tough in the early 1990s. The firms which succeed will be the ones with the best supplier network.¹

Can the peculiar ‘Japaneseness’ of [Japanese industry’s] success be transferred onto the international scene? There is little doubt that Honda, perhaps even more than some other Japanese companies, may have problems. Can one imagine a white-suited, Honda-style manufacturing operation set up in Peoria? Perhaps.¹

That plant is already where we’d eventually like to be.¹

The story of Japanese car manufacturing investment in Europe is both similar to and different from the North American experience. The comparison is fascinating, and has much to tell us about the ultimate shape of the global local corporation.

To negotiate with the British in English in a typical English plant is not easy. They discuss, discuss and discuss, but they do not reach a conclusion .… The greatest thing we learned from Austin Rover is how much we can be internationalized. We learned little technically, a lot culturally.¹

Throughout the world, Honda strives to work in harmony with its host nations. The goal of each Honda business within these countries is to develop and perfect independent technology. This policy helps create products of even higher quality, designed from global perspectives. In Europe, Honda is building a truly European business.¹

We had our share of problems with Honda to start with. Then, after a while, it all sank in. Why all the aggravation? They’re right, we’re wrong. All of a sudden the concept changes, and things fall into place.¹

One of our biggest challenges is how we will establish the ‘Honda Global Network,’ a system whereby Honda production facilities around the world become complementary supply bases for world markets.¹