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– ## DISCUSSIONECONO600.docx
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**## DISCUSSIONECONO600.docx**
**DISCUSSION ECONO600 (No more than 300 words)**
Honda uses flexible plants in the manufacturing of its cars. Discuss whether this method of production results in optimum output
reference
WSJ(9/23) Honda's Flexible Plants Provide Edge. (2008, Sep 22).
_Dow Jones Institutional News_ [http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289](http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289)
**ECONO600 Martina (reply no more than 150 words)**
Honda’s use of flexible plants has proven to be an effective production strategy because it allows the company to quickly adjust to changes in consumer demand while reducing costs and improving efficiency. Flexible manufacturing plants are designed so that multiple vehicle models can be produced on the same assembly line instead of dedicating an entire plant to just one model. This gives Honda the ability to respond faster when market trends shift, especially during periods of economic uncertainty.
I believe this method results in optimum output because it helps Honda avoid overproduction and wasted resources. For example, when gas prices rise and consumers begin purchasing smaller, fuel-efficient vehicles instead of SUVs, Honda can shift production more easily than companies with traditional manufacturing systems. This flexibility allows the company to maintain productivity while meeting customer demand more accurately. In addition, flexible plants reduce downtime and improve the use of labor and equipment because workers are trained to handle multiple tasks and models.
Another advantage is cost savings. Honda does not have to invest in separate plants for each vehicle type, which lowers operating expenses. During the 2008 economic downturn, many automobile manufacturers struggled with declining sales and excess inventory, but Honda’s flexible system gave the company a competitive advantage because it could adapt production levels quickly. This shows how operational flexibility can improve both efficiency and profitability.
Overall, Honda’s flexible plant strategy demonstrates how innovation in operations management can create a strong competitive advantage. By producing multiple vehicles in one facility and adjusting production based on market demand, Honda is able to maximize efficiency, reduce waste, and remain competitive in the global automobile industry.
**ECONO600 Benjamin (reply no more than 150 words)**
This article provides an excellent example of how a company can effectively respond to changes in market demand. Honda demonstrates a strong capability to adapt its manufacturing processes, enabling the production of multiple vehicle types within the same facilities. This approach contrasts with traditional U.S. automotive manufacturing plants, which are often more limited in flexibility and require substantial capital investment to retool existing operations. Credit is due to Honda’s management team for recognizing this opportunity and successfully capitalizing on it.
When relating this example to this week’s readings, it is evident that Honda likely conducted extensive cost analyses to identify the most profitable course of action. For instance, if Honda anticipated increased demand for the Civic, it could evaluate several options: constructing a new manufacturing plant (thereby increasing fixed costs) or retooling existing plants to produce both Civics and Accords. By comparing these alternatives, Honda could determine the most cost-effective and strategically advantageous solution.
Opportunity cost is another critical factor to consider. A plant dedicated solely to producing Civics would limit Honda’s ability to adapt if consumer demand shifted toward other models. Although the initial capital investment required for flexible manufacturing systems may be substantial, this investment provides the company with the agility to respond to long-term demand fluctuations. This is evident by shifts driven by rising gasoline prices and increased consumer preference for fuel-efficient vehicles.
The article does not fully address several important variable cost considerations. For example, producing multiple vehicle types within the same facility may complicate raw material and component procurement. If different models require distinct components, such as headlights, steering systems, or seating, Honda may lose some economies of scale in purchasing. Additionally, this complexity could impact warehouse capacity and inventory management. A sudden shift in demand toward a specific model may require rapid adjustments in stored materials and components. Furthermore, the advanced robotics referenced in the article likely necessitate specialized maintenance and technical support, contributing to higher operating costs.
Overall, Honda exemplifies organizational agility in manufacturing. The company’s strong financial performance underscores the effectiveness of its flexible production capabilities and strategic decision-making.
**## HONDAProQuestDocuments-2026-06-24.pdf**
WSJ(9/23) Honda's Flexible Plants Provide Edge
ProQuest document link
FULL TEXT
East Liberty, Ohio — One recent morning, the Honda Motor Co. plant here churned out 120 Civic compacts. Then the
production line came to a halt and workers in white uniforms swept in to install new hand-like parts on the giant gray
robots that weld steel into the cars' frames.
About five minutes later, the line roared back to life, and the robots began zapping together a longer, taller vehicle, the CR-V
crossover.
In the automotive world, this is considered quite a feat. Until a few years ago, most auto plants in North America could
make only one vehicle without substantial investment. Now, other manufacturers have a few flexible plants. A Ford Motor
Co. plant in Oakville, Ontario, for example, makes three different vehicles, and many plants can produce slight variations on
one basic car or truck.
But switching from one model to a completely different one still can take weeks and millions of dollars. Ford will spend at
least $75 million to overhaul a sport-utility-vehicle plant in Michigan to make small cars, and the work will take 13 months.
General Motors Corp. is retooling its Lordstown, Ohio, plant to produce a new model at a cost of $350 million.
The manufacturing dexterity of Honda's plants, now the most flexible in North America, is emerging as a key strategic
advantage for the company. In an era of volatile gasoline prices, Honda can adjust production to inventory levels faster
than its competitors. Earlier this year, when gasoline prices reached $4 a gallon, the company slowed production of its
Ridgeline pickup truck at its Canada plant and increased output of better-selling vehicles.
In recent weeks, fuel prices have eased. If prices continue to fall and demand for larger vehicles improves, Honda has the
ability to adjust faster than its competitors, says Ron Harbour, a partner at Oliver Wyman, publisher of the Harbour Report
on auto production.
It has been a tough year for most auto makers in the U.S. Housing woes and the slumping economy have depressed overall
vehicle sales, and high gasoline prices have spurred American consumers to buy small cars instead of the pickup trucks and
SUVs that were so popular in years past. In the first eight months of the year, sales were down 24% at Chrysler LLC, 18% at
GM and 15% at Ford. Even mighty Toyota Motor Corp. has seen its U.S. sales fall 7.8%
But U.S. sales at Honda, Japan's No. 2 auto maker, are up 1.7% in the period, and its U.S. market share has vaulted to a
record 11.1% in August. It is now the No. 4 auto maker in the U.S., behind GM, Toyota and Ford but ahead of Chrysler. It sold
only 3,600 fewer vehicles than Ford in August.
Honda faces plenty of challenges. Sales of its pickup truck have been disappointing. Its upscale brand, Acura, struggles to
stand out in a segment dominated by Toyota's Lexus unit, BMW AG and Daimler AG's Mercedes-Benz unit. And while Honda
is known for fuel efficiency, it will have to race to catch up to Toyota in gasoline-electric hybrids.
Honda's most obvious strength is a model line of mainly small and fuel-efficient vehicles. It avoided making the kind of big
pickups and SUVs that have heavy steel frames beneath their sheet metal. The Ridgeline and Honda's SUV-like vehicles use
lighter, car-like underpinnings.
In addition, just as demand for small cars is rising, Honda is about to expand its ability to make Civics. A new Greensburg,
Ind., plant is set to start production in a few weeks. By next year, it will make about 16,000 Civics a month.
(From THE WALL STREET JOURNAL)
By Kate Linebaugh
[http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289](http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289)
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But Honda's manufacturing flexibility is almost as key to its success as its product lineup. To respond to changes in
economic conditions, Honda is able to shuffle production among different plants as well as make different models in one
plant.
A decade ago, the company invested $400 million in its three Ohio facilities to make them flexible. That allowed it to stop
importing the CR-V from a plant in Britain when the weak dollar was hurting margins. Later this year, output of the
Ridgeline pickup will be switched from Alliston, Ontario, to Lincoln, Ala., so the Canadian plant can expand Civic capacity.
Auto makers used to design a new manufacturing process each time they designed a new car, and older assembly plants
reflect that. At Honda, a variety of models can be assembled efficiently because almost all of its vehicles are designed to be
put together the same way, even if their parts are slightly different. Here in East Liberty, the doors are installed on the Civic
and CR-V at the same stage of the process, and their side panels are joined to their roofs at the same point in the production
line.
Another key is the gray robots. They use a Honda-engineered device much like a hand to hold the parts during the welding
process. Workers simply put different "hands" on the robots to handle the parts for different vehicles.
Honda's plants are also set up to produce a fast-selling product like the Accord as well as several slower-selling models like
the Element and Acura RDX. That way Honda can adjust production of vehicles that fall out of favor faster.
The new plant in Indiana will start off making Civics but could make any of Honda's vehicles, says Larry Jutte, a senior
manufacturing executive for Honda in Ohio. "We have the flexibility to do what is necessary," he says.
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis
and commentary: http://www.djnewsplus.com/al?rnd=ALzPELgYWIxw1xSbTuiWsg%3D%3D. You can use this link on the
day this article is published and the following day.
(END)
September 22, 2008 23:13 ET (03:13 GMT)
DETAILS
Subject: Robots; Energy efficiency; Vehicles; Gasoline prices; Automobile industry; Automobiles;
Manufacturing; Automobile sales
Business indexing term: Subject: Gasoline prices Automobile industry Manufacturing Automobile sales; Corporation:
Mercedes-Benz Group AG; Industry: 33611 : Automobile and Light Duty Motor Vehicle
Manufacturing
Location: Indiana; United States–US; Canada; Ohio; North America; United Kingdom–UK; Michigan;
Japan
Company / organization: Name: American Honda Motor Co Inc; NAICS: 336211, 423110; Name: Lexus; NAICS: 336110;
Name: Honda Motor Co Ltd; NAICS: 336110, 336390, 336991; Name: Toyota Motor Corp;
NAICS: 336110, 336510, 423110; Name: BMW AG; NAICS: 336110, 336991, 423110; Name:
Ford Motor Co; NAICS: 333924, 336110, 336390; Name: General Motors Corp; NAICS: 333415,
336110, 336390; Name: Mercedes-Benz Group AG; NAICS: 336110
Classification: 33611: Automobile and Light Duty Motor Vehicle Manufacturing
Publication title: Dow Jones Institutional News; New York
LINKS
Check for full text in other resources
Database copyright 2026 ProQuest LLC. All rights reserved.
Terms and Conditions Contact ProQuest
Publication year: 2008
Publication date: Sep 22, 2008
Publisher: Dow Jones & Company Inc.
Place of publication: New York
Country of publication: United States
Publication subject: Business And Economics
Source type: Wire Feed
Language of publication: English
Document type: News
ProQuest document ID: 2243874068
Document URL: http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-
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Copyright: Copyright Dow Jones & Company Inc Sep 22, 2008
Full text availability: This publication may be subject to restrictions within certain markets, including
corporations, non-profits, government institutions, and public libraries. In those cases
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Last updated: 2026-02-05
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– WSJ(9/23) Honda's Flexible Plants Provide Edge
**MGKT600DISCUSSION.docx**
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**MGKT600DISCUSSION.docx**
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**## DISCUSSIONECONO600.docx**
**DISCUSSION ECONO600 (No more than 300 words)**
Honda uses flexible plants in the manufacturing of its cars. Discuss whether this method of production results in optimum output
reference
WSJ(9/23) Honda's Flexible Plants Provide Edge. (2008, Sep 22).
_Dow Jones Institutional News_ [http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289](http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289)
**ECONO600 Martina (reply no more than 150 words)**
Honda’s use of flexible plants has proven to be an effective production strategy because it allows the company to quickly adjust to changes in consumer demand while reducing costs and improving efficiency. Flexible manufacturing plants are designed so that multiple vehicle models can be produced on the same assembly line instead of dedicating an entire plant to just one model. This gives Honda the ability to respond faster when market trends shift, especially during periods of economic uncertainty.
I believe this method results in optimum output because it helps Honda avoid overproduction and wasted resources. For example, when gas prices rise and consumers begin purchasing smaller, fuel-efficient vehicles instead of SUVs, Honda can shift production more easily than companies with traditional manufacturing systems. This flexibility allows the company to maintain productivity while meeting customer demand more accurately. In addition, flexible plants reduce downtime and improve the use of labor and equipment because workers are trained to handle multiple tasks and models.
Another advantage is cost savings. Honda does not have to invest in separate plants for each vehicle type, which lowers operating expenses. During the 2008 economic downturn, many automobile manufacturers struggled with declining sales and excess inventory, but Honda’s flexible system gave the company a competitive advantage because it could adapt production levels quickly. This shows how operational flexibility can improve both efficiency and profitability.
Overall, Honda’s flexible plant strategy demonstrates how innovation in operations management can create a strong competitive advantage. By producing multiple vehicles in one facility and adjusting production based on market demand, Honda is able to maximize efficiency, reduce waste, and remain competitive in the global automobile industry.
**ECONO600 Benjamin (reply no more than 150 words)**
This article provides an excellent example of how a company can effectively respond to changes in market demand. Honda demonstrates a strong capability to adapt its manufacturing processes, enabling the production of multiple vehicle types within the same facilities. This approach contrasts with traditional U.S. automotive manufacturing plants, which are often more limited in flexibility and require substantial capital investment to retool existing operations. Credit is due to Honda’s management team for recognizing this opportunity and successfully capitalizing on it.
When relating this example to this week’s readings, it is evident that Honda likely conducted extensive cost analyses to identify the most profitable course of action. For instance, if Honda anticipated increased demand for the Civic, it could evaluate several options: constructing a new manufacturing plant (thereby increasing fixed costs) or retooling existing plants to produce both Civics and Accords. By comparing these alternatives, Honda could determine the most cost-effective and strategically advantageous solution.
Opportunity cost is another critical factor to consider. A plant dedicated solely to producing Civics would limit Honda’s ability to adapt if consumer demand shifted toward other models. Although the initial capital investment required for flexible manufacturing systems may be substantial, this investment provides the company with the agility to respond to long-term demand fluctuations. This is evident by shifts driven by rising gasoline prices and increased consumer preference for fuel-efficient vehicles.
The article does not fully address several important variable cost considerations. For example, producing multiple vehicle types within the same facility may complicate raw material and component procurement. If different models require distinct components, such as headlights, steering systems, or seating, Honda may lose some economies of scale in purchasing. Additionally, this complexity could impact warehouse capacity and inventory management. A sudden shift in demand toward a specific model may require rapid adjustments in stored materials and components. Furthermore, the advanced robotics referenced in the article likely necessitate specialized maintenance and technical support, contributing to higher operating costs.
Overall, Honda exemplifies organizational agility in manufacturing. The company’s strong financial performance underscores the effectiveness of its flexible production capabilities and strategic decision-making.
**## HONDAProQuestDocuments-2026-06-24.pdf**
WSJ(9/23) Honda's Flexible Plants Provide Edge
ProQuest document link
FULL TEXT
East Liberty, Ohio — One recent morning, the Honda Motor Co. plant here churned out 120 Civic compacts. Then the
production line came to a halt and workers in white uniforms swept in to install new hand-like parts on the giant gray
robots that weld steel into the cars' frames.
About five minutes later, the line roared back to life, and the robots began zapping together a longer, taller vehicle, the CR-V
crossover.
In the automotive world, this is considered quite a feat. Until a few years ago, most auto plants in North America could
make only one vehicle without substantial investment. Now, other manufacturers have a few flexible plants. A Ford Motor
Co. plant in Oakville, Ontario, for example, makes three different vehicles, and many plants can produce slight variations on
one basic car or truck.
But switching from one model to a completely different one still can take weeks and millions of dollars. Ford will spend at
least $75 million to overhaul a sport-utility-vehicle plant in Michigan to make small cars, and the work will take 13 months.
General Motors Corp. is retooling its Lordstown, Ohio, plant to produce a new model at a cost of $350 million.
The manufacturing dexterity of Honda's plants, now the most flexible in North America, is emerging as a key strategic
advantage for the company. In an era of volatile gasoline prices, Honda can adjust production to inventory levels faster
than its competitors. Earlier this year, when gasoline prices reached $4 a gallon, the company slowed production of its
Ridgeline pickup truck at its Canada plant and increased output of better-selling vehicles.
In recent weeks, fuel prices have eased. If prices continue to fall and demand for larger vehicles improves, Honda has the
ability to adjust faster than its competitors, says Ron Harbour, a partner at Oliver Wyman, publisher of the Harbour Report
on auto production.
It has been a tough year for most auto makers in the U.S. Housing woes and the slumping economy have depressed overall
vehicle sales, and high gasoline prices have spurred American consumers to buy small cars instead of the pickup trucks and
SUVs that were so popular in years past. In the first eight months of the year, sales were down 24% at Chrysler LLC, 18% at
GM and 15% at Ford. Even mighty Toyota Motor Corp. has seen its U.S. sales fall 7.8%
But U.S. sales at Honda, Japan's No. 2 auto maker, are up 1.7% in the period, and its U.S. market share has vaulted to a
record 11.1% in August. It is now the No. 4 auto maker in the U.S., behind GM, Toyota and Ford but ahead of Chrysler. It sold
only 3,600 fewer vehicles than Ford in August.
Honda faces plenty of challenges. Sales of its pickup truck have been disappointing. Its upscale brand, Acura, struggles to
stand out in a segment dominated by Toyota's Lexus unit, BMW AG and Daimler AG's Mercedes-Benz unit. And while Honda
is known for fuel efficiency, it will have to race to catch up to Toyota in gasoline-electric hybrids.
Honda's most obvious strength is a model line of mainly small and fuel-efficient vehicles. It avoided making the kind of big
pickups and SUVs that have heavy steel frames beneath their sheet metal. The Ridgeline and Honda's SUV-like vehicles use
lighter, car-like underpinnings.
In addition, just as demand for small cars is rising, Honda is about to expand its ability to make Civics. A new Greensburg,
Ind., plant is set to start production in a few weeks. By next year, it will make about 16,000 Civics a month.
(From THE WALL STREET JOURNAL)
By Kate Linebaugh
[http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289](http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-feeds%2Fwsj-9-23-hondas-flexible-plants-provide-edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289)
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But Honda's manufacturing flexibility is almost as key to its success as its product lineup. To respond to changes in
economic conditions, Honda is able to shuffle production among different plants as well as make different models in one
plant.
A decade ago, the company invested $400 million in its three Ohio facilities to make them flexible. That allowed it to stop
importing the CR-V from a plant in Britain when the weak dollar was hurting margins. Later this year, output of the
Ridgeline pickup will be switched from Alliston, Ontario, to Lincoln, Ala., so the Canadian plant can expand Civic capacity.
Auto makers used to design a new manufacturing process each time they designed a new car, and older assembly plants
reflect that. At Honda, a variety of models can be assembled efficiently because almost all of its vehicles are designed to be
put together the same way, even if their parts are slightly different. Here in East Liberty, the doors are installed on the Civic
and CR-V at the same stage of the process, and their side panels are joined to their roofs at the same point in the production
line.
Another key is the gray robots. They use a Honda-engineered device much like a hand to hold the parts during the welding
process. Workers simply put different "hands" on the robots to handle the parts for different vehicles.
Honda's plants are also set up to produce a fast-selling product like the Accord as well as several slower-selling models like
the Element and Acura RDX. That way Honda can adjust production of vehicles that fall out of favor faster.
The new plant in Indiana will start off making Civics but could make any of Honda's vehicles, says Larry Jutte, a senior
manufacturing executive for Honda in Ohio. "We have the flexibility to do what is necessary," he says.
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis
and commentary: http://www.djnewsplus.com/al?rnd=ALzPELgYWIxw1xSbTuiWsg%3D%3D. You can use this link on the
day this article is published and the following day.
(END)
September 22, 2008 23:13 ET (03:13 GMT)
DETAILS
Subject: Robots; Energy efficiency; Vehicles; Gasoline prices; Automobile industry; Automobiles;
Manufacturing; Automobile sales
Business indexing term: Subject: Gasoline prices Automobile industry Manufacturing Automobile sales; Corporation:
Mercedes-Benz Group AG; Industry: 33611 : Automobile and Light Duty Motor Vehicle
Manufacturing
Location: Indiana; United States–US; Canada; Ohio; North America; United Kingdom–UK; Michigan;
Japan
Company / organization: Name: American Honda Motor Co Inc; NAICS: 336211, 423110; Name: Lexus; NAICS: 336110;
Name: Honda Motor Co Ltd; NAICS: 336110, 336390, 336991; Name: Toyota Motor Corp;
NAICS: 336110, 336510, 423110; Name: BMW AG; NAICS: 336110, 336991, 423110; Name:
Ford Motor Co; NAICS: 333924, 336110, 336390; Name: General Motors Corp; NAICS: 333415,
336110, 336390; Name: Mercedes-Benz Group AG; NAICS: 336110
Classification: 33611: Automobile and Light Duty Motor Vehicle Manufacturing
Publication title: Dow Jones Institutional News; New York
LINKS
Check for full text in other resources
Database copyright 2026 ProQuest LLC. All rights reserved.
Terms and Conditions Contact ProQuest
Publication year: 2008
Publication date: Sep 22, 2008
Publisher: Dow Jones & Company Inc.
Place of publication: New York
Country of publication: United States
Publication subject: Business And Economics
Source type: Wire Feed
Language of publication: English
Document type: News
ProQuest document ID: 2243874068
Document URL: http://ezproxy.apus.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fwire-
feeds%2Fwsj-9-23-hondas-flexible-plants-provide-
edge%2Fdocview%2F2243874068%2Fse-2%3Faccountid%3D8289
Copyright: Copyright Dow Jones & Company Inc Sep 22, 2008
Full text availability: This publication may be subject to restrictions within certain markets, including
corporations, non-profits, government institutions, and public libraries. In those cases
records will be visible to users, but not full text.
Last updated: 2026-02-05
Database: ProQuest Central
[https://apus.primo.exlibrisgroup.com/openurl/01APUS_INST/01APUS_INST:01APUS??url_ver=Z39.88-2004&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&genre=article&sid=ProQ:ProQ:abidateline&atitle=WSJ(9/23)%20Honda's%20Flexible%20Plants%20Provide%20Edge&title=Dow%20Jones%20Institutional%20News&issn=&date=2008-09-22&volume=&issue=&spage=&au=&isbn=&jtitle=Dow%20Jones%20Institutional%20News&btitle=&rft_id=info:eric/&rft_id=info:doi/](https://apus.primo.exlibrisgroup.com/openurl/01APUS_INST/01APUS_INST:01APUS??url_ver=Z39.88-2004&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&genre=article&sid=ProQ:ProQ:abidateline&atitle=WSJ(9/23)%20Honda%27s%20Flexible%20Plants%20Provide%20Edge&title=Dow%20Jones%20Institutional%20News&issn=&date=2008-09-22&volume=&issue=&spage=&au=&isbn=&jtitle=Dow%20Jones%20Institutional%20News&btitle=&rft_id=info:eric/&rft_id=info:doi/)
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– WSJ(9/23) Honda's Flexible Plants Provide Edge
**MGKT600DISCUSSION.docx**
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**## DISCUSSIONECONO600.docx**
**DISCUSSION ECONO600 (No more than 300 words)**
Honda uses flexible plants in the manufacturing of its cars. Discuss whether this method of production results in optimum output
reference
WSJ(9/23) Honda's Flexible Plants Provide Edge. (2008, Sep 22).
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**ECONO600 Martina (reply no more than 150 words)**
Honda’s use of flexible plants has proven to be an effective production strategy because it allows the company to quickly adjust to changes in consumer demand while reducing costs and improving efficiency. Flexible manufacturing plants are designed so that multiple vehicle models can be produced on the same assembly line instead of dedicating an entire plant to just one model. This gives Honda the ability to respond faster when market trends shift, especially during periods of economic uncertainty.
I believe this method results in optimum output because it helps Honda avoid overproduction and wasted resources. For example, when gas prices rise and consumers begin purchasing smaller, fuel-efficient vehicles instead of SUVs, Honda can shift production more easily than companies with traditional manufacturing systems. This flexibility allows the company to maintain productivity while meeting customer demand more accurately. In addition, flexible plants reduce downtime and improve the use of labor and equipment because workers are trained to handle multiple tasks and models.
Another advantage is cost savings. Honda does not have to invest in separate plants for each vehicle type, which lowers operating expenses. During the 2008 economic downturn, many automobile manufacturers struggled with declining sales and excess inventory, but Honda’s flexible system gave the company a competitive advantage because it could adapt production levels quickly. This shows how operational flexibility can improve both efficiency and profitability.
Overall, Honda’s flexible plant strategy demonstrates how innovation in operations management can create a strong competitive advantage. By producing multiple vehicles in one facility and adjusting production based on market demand, Honda is able to maximize efficiency, reduce waste, and remain competitive in the global automobile industry.
**ECONO600 Benjamin (reply no more than 150 words)**
This article provides an excellent example of how a company can effectively respond to changes in market demand. Honda demonstrates a strong capability to adapt its manufacturing processes, enabling the production of multiple vehicle types within the same facilities. This approach contrasts with traditional U.S. automotive manufacturing plants, which are often more limited in flexibility and require substantial capital investment to retool existing operations. Credit is due to Honda’s management team for recognizing this opportunity and successfully capitalizing on it.
When relating this example to this week’s readings, it is evident that Honda likely conducted extensive cost analyses to identify the most profitable course of action. For instance, if Honda anticipated increased demand for the Civic, it could evaluate several options: constructing a new manufacturing plant (thereby increasing fixed costs) or retooling existing plants to produce both Civics and Accords. By comparing these alternatives, Honda could determine the most cost-effective and strategically advantageous solution.
Opportunity cost is another critical factor to consider. A plant dedicated solely to producing Civics would limit Honda’s ability to adapt if consumer demand shifted toward other models. Although the initial capital investment required for flexible manufacturing systems may be substantial, this investment provides the company with the agility to respond to long-term demand fluctuations. This is evident by shifts driven by rising gasoline prices and increased consumer preference for fuel-efficient vehicles.
The article does not fully address several important variable cost considerations. For example, producing multiple vehicle types within the same facility may complicate raw material and component procurement. If different models require distinct components, such as headlights, steering systems, or seating, Honda may lose some economies of scale in purchasing. Additionally, this complexity could impact warehouse capacity and inventory management. A sudden shift in demand toward a specific model may require rapid adjustments in stored materials and components. Furthermore, the advanced robotics referenced in the article likely necessitate specialized maintenance and technical support, contributing to higher operating costs.
Overall, Honda exemplifies organizational agility in manufacturing. The company’s strong financial performance underscores the effectiveness of its flexible production capabilities and strategic decision-making.
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WSJ(9/23) Honda's Flexible Plants Provide Edge
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East Liberty, Ohio — One recent morning, the Honda Motor Co. plant here churned out 120 Civic compacts. Then the
production line came to a halt and workers in white uniforms swept in to install new hand-like parts on the giant gray
robots that weld steel into the cars' frames.
About five minutes later, the line roared back to life, and the robots began zapping together a longer, taller vehicle, the CR-V
crossover.
In the automotive world, this is considered quite a feat. Until a few years ago, most auto plants in North America could
make only one vehicle without substantial investment. Now, other manufacturers have a few flexible plants. A Ford Motor
Co. plant in Oakville, Ontario, for example, makes three different vehicles, and many plants can produce slight variations on
one basic car or truck.
But switching from one model to a completely different one still can take weeks and millions of dollars. Ford will spend at
least $75 million to overhaul a sport-utility-vehicle plant in Michigan to make small cars, and the work will take 13 months.
General Motors Corp. is retooling its Lordstown, Ohio, plant to produce a new model at a cost of $350 million.
The manufacturing dexterity of Honda's plants, now the most flexible in North America, is emerging as a key strategic
advantage for the company. In an era of volatile gasoline prices, Honda can adjust production to inventory levels faster
than its competitors. Earlier this year, when gasoline prices reached $4 a gallon, the company slowed production of its
Ridgeline pickup truck at its Canada plant and increased output of better-selling vehicles.
In recent weeks, fuel prices have eased. If prices continue to fall and demand for larger vehicles improves, Honda has the
ability to adjust faster than its competitors, says Ron Harbour, a partner at Oliver Wyman, publisher of the Harbour Report
on auto production.
It has been a tough year for most auto makers in the U.S. Housing woes and the slumping economy have depressed overall
vehicle sales, and high gasoline prices have spurred American consumers to buy small cars instead of the pickup trucks and
SUVs that were so popular in years past. In the first eight months of the year, sales were down 24% at Chrysler LLC, 18% at
GM and 15% at Ford. Even mighty Toyota Motor Corp. has seen its U.S. sales fall 7.8%
But U.S. sales at Honda, Japan's No. 2 auto maker, are up 1.7% in the period, and its U.S. market share has vaulted to a
record 11.1% in August. It is now the No. 4 auto maker in the U.S., behind GM, Toyota and Ford but ahead of Chrysler. It sold
only 3,600 fewer vehicles than Ford in August.
Honda faces plenty of challenges. Sales of its pickup truck have been disappointing. Its upscale brand, Acura, struggles to
stand out in a segment dominated by Toyota's Lexus unit, BMW AG and Daimler AG's Mercedes-Benz unit. And while Honda
is known for fuel efficiency, it will have to race to catch up to Toyota in gasoline-electric hybrids.
Honda's most obvious strength is a model line of mainly small and fuel-efficient vehicles. It avoided making the kind of big
pickups and SUVs that have heavy steel frames beneath their sheet metal. The Ridgeline and Honda's SUV-like vehicles use
lighter, car-like underpinnings.
In addition, just as demand for small cars is rising, Honda is about to expand its ability to make Civics. A new Greensburg,
Ind., plant is set to start production in a few weeks. By next year, it will make about 16,000 Civics a month.
(From THE WALL STREET JOURNAL)
By Kate Linebaugh
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But Honda's manufacturing flexibility is almost as key to its success as its product lineup. To respond to changes in
economic conditions, Honda is able to shuffle production among different plants as well as make different models in one
plant.
A decade ago, the company invested $400 million in its three Ohio facilities to make them flexible. That allowed it to stop
importing the CR-V from a plant in Britain when the weak dollar was hurting margins. Later this year, output of the
Ridgeline pickup will be switched from Alliston, Ontario, to Lincoln, Ala., so the Canadian plant can expand Civic capacity.
Auto makers used to design a new manufacturing process each time they designed a new car, and older assembly plants
reflect that. At Honda, a variety of models can be assembled efficiently because almost all of its vehicles are designed to be
put together the same way, even if their parts are slightly different. Here in East Liberty, the doors are installed on the Civic
and CR-V at the same stage of the process, and their side panels are joined to their roofs at the same point in the production
line.
Another key is the gray robots. They use a Honda-engineered device much like a hand to hold the parts during the welding
process. Workers simply put different "hands" on the robots to handle the parts for different vehicles.
Honda's plants are also set up to produce a fast-selling product like the Accord as well as several slower-selling models like
the Element and Acura RDX. That way Honda can adjust production of vehicles that fall out of favor faster.
The new plant in Indiana will start off making Civics but could make any of Honda's vehicles, says Larry Jutte, a senior
manufacturing executive for Honda in Ohio. "We have the flexibility to do what is necessary," he says.
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(END)
September 22, 2008 23:13 ET (03:13 GMT)
DETAILS
Subject: Robots; Energy efficiency; Vehicles; Gasoline prices; Automobile industry; Automobiles;
Manufacturing; Automobile sales
Business indexing term: Subject: Gasoline prices Automobile industry Manufacturing Automobile sales; Corporation:
Mercedes-Benz Group AG; Industry: 33611 : Automobile and Light Duty Motor Vehicle
Manufacturing
Location: Indiana; United States–US; Canada; Ohio; North America; United Kingdom–UK; Michigan;
Japan
Company / organization: Name: American Honda Motor Co Inc; NAICS: 336211, 423110; Name: Lexus; NAICS: 336110;
Name: Honda Motor Co Ltd; NAICS: 336110, 336390, 336991; Name: Toyota Motor Corp;
NAICS: 336110, 336510, 423110; Name: BMW AG; NAICS: 336110, 336991, 423110; Name:
Ford Motor Co; NAICS: 333924, 336110, 336390; Name: General Motors Corp; NAICS: 333415,
336110, 336390; Name: Mercedes-Benz Group AG; NAICS: 336110
Classification: 33611: Automobile and Light Duty Motor Vehicle Manufacturing
Publication title: Dow Jones Institutional News; New York
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Publication year: 2008
Publication date: Sep 22, 2008
Publisher: Dow Jones & Company Inc.
Place of publication: New York
Country of publication: United States
Publication subject: Business And Economics
Source type: Wire Feed
Language of publication: English
Document type: News
ProQuest document ID: 2243874068
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