Honda to end motorcycle production in USA

**Bob** · 29th February 2008, 01:40

Honda is to stop producing bikes in the USA as they switch their US production focus to automobiles.

The 450 workers at the Marysville, Ohio, factory will be assigned to other Honda facilities in the state, with no layoffs, spokesman Ed Miller said. The plant, which opened in 1979, will close in the first half of 2009.

The large and mid-sized motorcycles now built at Marysville and at a Japanese plant in will be consolidated at a new factory in Kumamoto, Japan.

**Hinny** · 29th February 2008, 08:16

The demise of 'the Most American Motorcycle.'

**Finn** · 29th February 2008, 08:17

Good ol unions screwing up another industry. They'll never learn

**Bob** · 29th February 2008, 09:32

Originally Posted by Finn

Good ol unions screwing up another industry. They'll never learn

OK, now I'm confused!

What has Honda deciding to rationalise their bike production to one site, as the US operation is going to concentrate on auto manufacture got to do with unions?

The fact that they're not laying off any staff is a bloody good thing and well done to Honda I say.

**Finn** · 29th February 2008, 10:06

Originally Posted by Bob

OK, now I'm confused!

Clearly. Do you think that if they could produce Motorcycles more efficiently in the US they would close the plant down. Do you also think that Honda would disclose the real reason?

For example, take this recent article in Fortune Magazine. They lay out all the reasons why America’s automakers are failing, and points out that a big problem are the labour costs foisted upon them by the unions.

As analyzed by Harbour-Felax, labour costs the Detroit Three substantially more per vehicle than it does the Japanese.

Health care is the biggest chunk. GM (Charts), for instance spends $1,635 per vehicle on health care for active and retired workers in the U.S. Toyota (Charts) pays nothing for retired workers - it has very few - and only $215 for active ones.

Other labour costs add to the bill. Contract issues like work rules, line relief and holiday pay amount to $630 per vehicle - costs that the Japanese don’t have. And paying UAW members for not working when plants are shut costs another $350 per vehicle.

For those of you keeping score at home, that’s approximately $2,615 in costs per vehicle manufactured which GM has to pay (and thus pass on to its customers) that foreign automakers don’t. But that’s just the beginning. Labour work requirements, which state that workers can’t be laid off even when the auto company has no work for them, cost the auto industry even more:

If an assembly plant with 3,000 workers has no dealer orders, it has two options. One is to close the plant for a week and not build any cars. Then the company still has to give the idled workers 95 percent of their take-home pay plus all benefits for not working. So a one-week shutdown costs $7.7 million or $1,545 for each vehicle it didn’t make.

If the company decides to go ahead and run the plant for a week without any dealer orders, it will have distressed merchandise on its hands. Then it has to sell the vehicles to daily rental companies like Hertz or Avis at discounts of $3,000 to $5,000 per vehicle, which creates a flood of used cars in three to six months and damages resale value. Or it can put the vehicles into storage and pay dealers up to $1,250 apiece to take them off its hands.

Chrysler experienced the vicissitudes of over-production last year when it built cars without dealer orders and was forced to store them in open-air lots all around Detroit while it frantically sought buyers. It damaged relations with its dealers and was eventually forced to cut production anyway.

What’s more, not only is the union work force a terrible expense for the auto industry it’s just flat-out less productive than it’s non-union counterparts:

Non-union U.S.based auto assembly plants made 1.1 million more vehicles in 2005 than they did in 2001, while production at unionised plants fell by 1.1 million, he said.

Of course, one way to look at that statement is to say that the non-union automakers (Toyota, etc.) are just selling more cars than the union automakers. And that’s probably true, but it still proves the point that a union labor force is bad for business. Companies like Toyota are selling more cars because their cars are cheaper (thanks to lower labour costs) and better made (thanks to better workers). Both of those facts are an indictment of the union workers.

And it also exposes a larger truth. The more we foist costs like health insurance, high taxes and heavy regulation on American businesses the worse they’ll do in competing with their international counterparts. Something that will drive jobs and economic growth overseas.

You can't have your cake and eat it too. Why do you think NZ manufacturing is in the shit?

**scumdog** · 29th February 2008, 10:29

Sadly it is the way of the present world.

Those in poorer countries are improving themsleves at the expense of the already developed countries where the standard of living is higher.

Those said countries are at risk of losing some their high standard of living as time goes by.

When the poorer countries have elevated themselves by a considerable amount who knows how the already developed ones will fare?

Just my thoughts.

**twotyred** · 29th February 2008, 16:20

Originally Posted by scumdog

Sadly it is the way of the present world.

Those in poorer countries are improving themsleves at the expense of the already developed countries where the standard of living is higher.

Those said countries are at risk of losing some their high standard of living as time goes by.

When the poorer countries have elevated themselves by a considerable amount who knows how the already developed ones will fare?

Just my thoughts.

good on honda for making the effort to reassign it's staff!, note they are NOT moving their production to China which is a rarity in itself in todays world.

**pete376403** · 1st March 2008, 23:15

Japanese factories started building bikes in the US after the Reagan administration introduced a (large) tariff on imported bikes over 700cc in an attempt to protect US manufacturers (ie Harley). This is when a 750 was considered a big japanese bike, and when the superiority of Japanese made bike was killing Harley. An interim measure was to reduce the 750s to 700, until they could start making bikes on US soil. It was expecially important to Honda to build in the US as the Goldwing even back then was an 1100 or 1200and impractical to reduce to 700 - plus it was a direct competitor to the ElectraGlide - which the tariff would the Wing cost more than the HD . The tariff has long been dropped, so there's no real reason to build the bikes in the US anymore, and they need the floor space to build the cars.

**skidMark** · 1st March 2008, 23:42

No layoffs, but honda always discharge men.

**Jiminy** · 2nd March 2008, 01:26

If we want an open market economy AND keep our living standards in so-called developed countries, then it's normal to transfer production work to places where the labour is cheaper or where there is more automation.

I don't think cutting health insurances or holidays to be able to compete with, say, China is a wise or successful idea. That would be a serious step backward. Instead, our industries need to evolve towards niche markets or value added services (which requires a good education system, btw).

I too think that Honda did well in avoiding lay-offs.