Crash Course

by Paul Ingrassia

  But when the Americans asked for detailed technical specifications about the Honda engines while avoiding any commitment to buy them, Honda negotiators grew suspicious. What’s more, the UAW had gotten wind of Ford’s plans and opposed the idea, viewing it as a threat to union jobs in Ford’s own engine plants. In the end, Iacocca was more interested in Honda engines than was the one man whose opinion mattered—Henry Ford II. After a couple of years of on-and-off negotiations, Henry II declared: “No car with my name on the hood is going to have a Jap engine inside.” His decision was almost as pivotal, and as disastrous, as his rejection of Volkswagen nearly thirty years earlier.

  Had Ford agreed to buy Honda engines, the little Japanese company might never have entertained the unlikely idea of building motorcycles, cars, or anything else in America. Japan’s automakers would have increased their exports to the United States, but almost certainly would have sparked a political backlash strong enough to limit their U.S. sales—if not forever, then at least for many years. As it happened, however, the collapse of the Ford negotiations convinced Honda executives that they had to take the risk of making cars in America. Not only did they fear a potential U.S. backlash against rising imports, but they also viewed their growth prospects in Japan as severely limited by the dominance of Toyota and Nissan.

  Honda’s story, as the first Japanese company to build cars in the United States, is critical to the understanding of Detroit’s downfall. The company successfully managed and motivated American workers, giving the lie to Detroit’s excuses. Honda’s Ohio motorcycle plant, and the car factory it opened next door five years later, blew open the dam of Big Three and UAW dominance. Even as it embarked on its risky American strategy, Honda hewed to cautious and conservative tactics. But Honda’s American adventure was anything but a straight line upward. On the contrary, it was a wild ride, with periodic crises overcome by improbable and increasing success. Its yin-yang approach reflected the contrasting personalities of the two men who had built Honda Motor amid the bleak ruins of postwar Japan.

  Soichiro Honda, who founded Honda Motor in 1948 when he was forty-two years old, was a self-taught engineer with enormous determination. The fledgling company’s business expertise came from Takeo Fujisawa. Honda was a Japanese party animal while Fujisawa loved nights at home listening to Wagner’s operas and didn’t even have a driver’s license. What he and Honda had in common, however, was a terrible temper. Fujisawa was nicknamed “Godzilla” by his underlings, while Honda’s nickname was “Mr. Thunder.” By late 1954 the company’s hectic expansion caused quality to deteriorate, sales to drop, and money to run short. Only Fujisawa’s intervention with Japanese banks kept the company alive. But in 1961 Honda stunned the rarified world of motorcycle racing by sweeping the top five positions in the world’s most demanding and prestigious race, England’s Isle of Man TT. The reputation of Honda’s bikes soared. So did sales.

  As for its cars, well, in 1961 there weren’t any yet. Not for another two years would Honda enter the automobile business, and then only by defying its own government. In the early 1960s, Japan’s powerful bureaucrats believed that their country already had enough car companies and were preparing to ban new entrants. To beat the ban, in October 1963 Honda rushed out an awful little car called the S500, which Japanese journalists promptly derided as “just a four-wheeled motorcycle.” They were right, but the S500 served its purpose merely by existing. Honda had entered the game.

  Meanwhile, in 1959, as it was building its car business in Japan, Honda Motor began exporting its little Super Cub 50 motorcycle to the United States. The Super Cub’s open, step-through design made it easy to get on and off, even for women. The bike had a peppy, clean-burning “four-stroke” design that didn’t require mixing gasoline with oil like the noisy, two-stroke engines on other motorcycles.

  To offset the Hell’s Angels image then associated with motorcycles, the company launched the advertising slogan “You meet the nicest people on a Honda,” and sales took off. In 1964 the Super Cub got another image boost from the song “Little Honda,” which was written by the Beach Boys but popularized by a group called, conveniently, the Hondells. Songs about Corvettes and muscle cars were by now predictable, but a hymn to a glorified motor scooter showed the depth of America’s attachment to engines on wheels.

  But motorcycles can be faddish products, and a couple years later Honda’s fortunes dipped again. In 1966 the company’s bikes suddenly went out of style in the United States, and sales plunged nearly 30 percent overnight. For the second time in a dozen years, Japanese banks had to see the company through the crisis.

  Despite the money woes, one department that remained untouched was the company’s engineering center, Honda Research and Development. Honda R&D, a subsidiary of Honda Motor, was funded by a share of the parent company’s revenue and thus was safe from cost-cutting drives. Its elite group of young engineers took pride in being driven, and often browbeaten, by Soichiro, the irascible founder himself.

  The denizens of Honda R&D reveled in their elite status, sometimes referring to other Honda employees as “civilians.” But their snobbery was justified. After making Honda into the scourge of motorcycle racing, in 1972 they unveiled a revolutionary automotive engine that stunned rival car companies. The CVCC—for Compound Vortex Controlled Combustion—passed air through the engine in a way that burned gasoline more cleanly, making it the only engine that could meet America’s new clean-air standards without a catalytic converter. Detroit, inexcusably, had been out-engineered.

  The CVCC boosted sales of Honda’s subcompact Civic model and solidified the status of Honda R&D as the power center at Honda Motor. Just as General Motors was led by financial people, Honda would always be led by engineers—all of them “graduates” of Honda R&D. Put another way, the bean counters ran GM, while the car guys ran Honda. It would make a critical difference between Honda’s success and GM’s failure.

  After Honda-san and Fujisawa retired in 1973, their successors wrestled with whether, and where, to build Honda cars on American soil. To do the legwork for the project, they reached down into the ranks of the company’s “civilians.” One had worked for several years on Honda’s American sales staff.

  Shige Yoshida joined Honda Motor in 1962, when he was thirty years old. He had been working for a small company that made car components when Honda’s growth in motorcycles and its ambitions in automobiles grabbed his attention. Yoshida, methodical by nature, asked people who supplied parts to Honda what the company was like, and their answers weren’t encouraging. Most suppliers found the company difficult and demanding, constantly changing its engineering specifications and saddling the suppliers with the resulting extra costs. But one man told Yoshida that while Honda was difficult to please, he always found himself learning something from the company. The answer convinced Yoshida to give Honda a try.

  In January 1973, after eleven years with the company, Yoshida was asked to help build Honda Motor America, the company’s fledgling automotive-sales subsidiary.

  One problem, he quickly spotted, was that Honda was shipping boatloads of cars across the Pacific but then bringing the boats back empty, a practice that was inefficient and expensive. So Yoshida started Honda International Trading Company to export U.S. farm products back to Japan. Once a bunch of Civics was accidentally left onboard and shipped back to Japan, flattened under tons of grain. Nonetheless the subsidiary soon became a money machine for Honda. Thanks to its success, Yoshida’s career flourished. Improbably, a Japanese boy who grew up during World War II was becoming a successful businessman in America.

  In 1975, with Civic sales in America hitting new heights, one issue loomed particularly large for Honda Motor. Company executives were concerned that rising American protectionist sentiment would produce trade restrictions and put Honda’s U.S. business at risk. So they assigned Yoshida to a small team that would study establishing a Honda manufacturing operation in America. The task, at least to Yoshida, seemed overwhelming a
t first.

  No other Japanese automakers, not even mighty Toyota and Nissan, were building cars in America. Honda, despite its modest American sales success, remained a fairly small company that couldn’t withstand the financial fallout from a significant botched investment, such as an unsuccessful factory. And among the many things that could torpedo a Honda factory in the United States would be the wrong location.

  America was a big place: in contrast to homogeneous Japan, the country was filled with myriad local customs and a diversity that baffled the Japanese. Yoshida and his colleagues needed a place reasonably close to the American auto-parts manufacturers clustered in the Midwest. Location near a major population center would help in hiring a local workforce and would mitigate the cost of shipping motorcycles and cars to dealers. Most important, they decided, would be to find an area where the local culture put a high premium on diligence and hard work.

  One location eliminated early on was Las Vegas, which had made a pitch for Honda, but California was another matter. Even though it was far from the auto-components companies of the Midwest, Honda seriously considered it, both as America’s most populous state and as the epicenter of Japanese car sales in America. Honda’s image in the state was critically important.

  So in early 1976 Yoshida and his colleagues met with Governor Jerry Brown, whose embrace of the California counterculture and public musings on existential philosophy had earned him the nickname “Governor Moonbeam.”

  “Please explain to us, Governor,” Yoshida asked, “why we should consider putting a factory in the state of California.”

  There was a momentary pause before Governor Moonbeam spoke. “Hippies,” he said. “Blue jeans. All the important trends start in California.” A surprised Yoshida thanked the governor for his most helpful thoughts, and soon crossed California off the list.

  Carefully keeping their search out of the headlines, Yoshida’s team increasingly focused on four states: Tennessee, Indiana, Illinois, and Ohio, where nobody called Rotary Club Republican Jim Rhodes “Governor Moonbeam.” But luring new companies to his state was the core ideology behind “Jobs and Progress.”

  In April 1976, Rhodes’s business development director, Jim Duerk, showed him an article in a Columbus newspaper saying that an unnamed Japanese car company was looking for a manufacturing site in the United States. Rhodes suggested that he and Duerk take a trip to Japan to check it out, and Duerk said he would need two or three weeks to make the necessary appointments. “No,” replied Rhodes. “We’re going tomorrow.”

  It was nutty to go without appointments—in Japan proper protocol meant everything. But Rhodes wouldn’t be deterred. The next morning he and Duerk hopped on a plane to Tokyo. They arrived late in the afternoon, only to learn that the next day was the emperor’s birthday and thus a national holiday. They managed only one appointment that day, with a Toyota executive who just happened to be at work. Toyota, he assured them, wasn’t planning a U.S. factory. On day two the men met with Nissan and struck out again. Only on their last day in Japan did they meet with Honda, where executives confirmed they were indeed studying a U.S. factory site—though only for a small motorcycle plant. The entire trip lasted just four and a half days, for which Duerk was particularly relieved: their return flight touched down in Columbus just two and a half hours before his daughter’s wedding was to begin.

  It took another fifteen months for the Honda study team to settle on Rhodes’s state, and buying the land, building roads, and installing sewer lines took three more. But by October 1977 it had all been approved. Building motorcycles first enabled Honda to limit its risk; the investment was much smaller than an auto-assembly plant would require. Starting small was the essence of pursuing a bold strategy with conservative tactics. American workers were being portrayed in the media as disaffected shirkers, so many Honda executives in Tokyo were skeptical that their company could build quality products in the United States. In essence, Honda was taking a test drive. Still, some Americans wanted to go along for the ride.

  One of the first to apply was thirty-seven-year-old Al Kinzer, a manager at a diesel engine factory in Canton, Ohio. A soft-spoken, easy-drawling Southerner, Kinzer made two trips to Columbus for interviews with multiple Japanese managers, after which Yoshida called to say that he and a Japanese colleague wanted to drive to Canton to have dinner with Kinzer and his wife. A husband-wife interview was weird, Kinzer thought, but both Kinzers passed muster, and he became the first American manufacturing manager to be hired by Honda. Two American secretaries were already on board. Another sixty-one employees would be hired to start the motorcycle plant; the group would become known in Honda history as the “Original 64.”

  Kinzer’s husband-wife interview was just one example of the painstaking care that Honda took in hiring. Yoshida subjected applicants to multiple hour-long job interviews, asking them about their life goals and aspirations and giving them little tasks that were designed to test their attention to detail—which he deemed the key to success in any factory. He invariably asked applicants, for example, to write their first name on a name tag and to place the tag on their left shoulder. Some applicants would put it on their right shoulder, and others even forgot to wear it at all. They were crossed off the list. Those who did get jobs often hailed from the small towns surrounding Columbus. With farming or working-class backgrounds, they were grateful to get hired at a time when farms were consolidating and factories were closing.

  Kinzer was impressed with Yoshida’s methodical methods but was less impressed with his other ideas. After Kinzer was hired, Yoshida informed him that Honda’s factory employees would be called “associates” instead of workers. The managers would wear the same white jumpsuit uniforms as the, um, “associates,” instead of the shirt-and-tie managerial uniform of American factories. Managers wouldn’t get assigned special parking places close to the factory, let alone the heated parking garages—where cars were washed and gassed up daily—that were accorded to senior managers and executives in Detroit. At Honda, parking would be strictly first-come, first-served, regardless of rank.

  What’s more, the managers would have no executive dining room, no separate bathrooms, and no separate locker room to change into their work clothes—all in sharp contrast to Detroit. Kinzer protested that Honda was ignoring American customs, which to Yoshida was precisely the point. Symbols were important, he explained, in getting managers and associates to view themselves as part of a common purpose. So Honda’s managers would have lockers right alongside the associates. It would be the duty of bosses, Yoshida added, to explain the reasons for managerial decisions and to get consensus where possible.

  For the first few weeks Honda’s “Original 64” Ohio employees did little but sweep floors and paint them with yellow lines. Then they started building motorcycles, but only three to five a day. And at the end of each day they would disassemble each bike, piece by piece, to evaluate the workmanship. The goal was to develop diligence and discipline, which most Detroit factories sadly lacked. One of the associates, a recent high school graduate, hated it and kept getting grief from his older brother for working for a Japanese company. “I thought I had made a mistake by going to work there,” he recalled decades later. “It was like, ‘What the heck am I doing here?’” But he stuck with it. (Thirty years later he would be managing a new Honda car factory in Indiana.)

  On September 10, 1979, after months of repetitive training, the little plant at Marysville started building motorcycles. Just a few days later Yoshida received an overnight fax message from Tokyo headquarters. The Honda people in Ohio, the fax instructed, were immediately to begin planning for an automobile-assembly plant right next to the motorcycle factory.

  Yoshida was shocked. Honda had barely begun making motorcycles in America; the order to start building a car plant seemed unduly hasty. But by mid-1980 one of Yoshida’s colleagues, Toshi Amino, found himself negotiating with an American construction company to build the new auto-assembly plant. The contract
or, the Lathrop Company of Toledo, Ohio, laid out the building plans and timetable on an elaborate cardboard-mounted chart that was nearly ten yards long.

  The presentation was detailed and impressive, except for one thing: the Lathrop people said the construction project would take three years. Amino expressed appreciation for their work, then informed them that the factory would have to be finished in eighteen months. The Lathrop people protested that that timetable was impossible. Not without reason: auto-assembly plants are enormous facilities, as big as indoor shopping malls, and are filled with electronic robots, multi-ton stamping presses, and supersensitive paint shops.

  But Honda couldn’t afford to carry the construction costs for three years. The sooner the factory was finished, the sooner it could start building cars and producing revenue. In a bind, Amino took the posterboard factory layout home overnight, spread it out on the floor, and stared at it in hopes of finding a solution. Finally he grabbed scissors and sliced out the middle portion of the plant’s proposed construction schedule. “It was all about speed, crazy speed,” Amino would recall nearly thirty years later. “I really didn’t know what I was doing, but we Japanese have a saying: ‘A blind man is never afraid of a snake.’ ”

  Building a factory in record time was one thing; training a workforce to build cars that met Honda’s quality and productivity standards was quite another. In the spring of 1982, when the company was gearing up to begin building cars in Ohio, Honda decided to send dozens of American workers from the Marysville motorcycle plant to Japan to gain experience at the company’s car factories there.

  When one employee asked, “Where is the airport in Columbus?” someone asked, “And how do we get there?,” Yoshida got a vivid reminder of just how green and naive Honda’s young Ohio employees really were. For many, this would be not only their first trip to Japan, but also the first airplane ride of their lives.