Biggest automaker in Ohio scrambles to recover from slump

A worker installs fittings on doors at the Marysville, Ohio, factory, where too different models can be produced side by side on the same assembly line. JONATHAN QUILTER / COLUMBUS DISPATCH Enlarge

Honda Accords roll toward final inspection before they leave the Marysville, Ohio, assembly plant. JONATHAN QUILTER / COLUMBUS DISPATCH Enlarge

MARYSVILLE, Ohio - Every 54 seconds, a new vehicle rolls off the Honda assembly line in this west-central Ohio factory.

It's a pace so steady that an observer might be surprised to know that the company has just endured the worst two-year stretch in its history.

The recession and the turmoil it sparked followed a time of almost nonstop growth for the Japanese automaker, which until then had avoided the forces that crippled many of Ohio's other manufacturers.

This was more than a normal cyclical decline. It was a threat to the entire auto industry. And it arrived at a unique and vulnerable time for Honda Motor Co.

Now, as the industry regains its footing, Honda officials are preparing for what might come next.

"Even though we're seeing signs of improvement, we can't rest," said Tim Reisinger, a senior manager at the Marysville, Ohio, assembly plant.

Honda has become the largest auto employer in the state, with about 13,500 workers, surpassing General Motors Co. At the same time, Honda had the largest U.S. job cuts in its history last year, offering buyouts that reduced its Ohio work force by about 1,500.

The company's vehicle lineup also is a mix of good news and bad news, analysts say. Honda has some of the industry's best-known and most-respected models, such as the Accord and the Civic. But recent additions to the lineup have failed to produce a hit.

"They've been hitting singles and striking out, for the most part," said John Wolkonowicz, analyst for IHS Global Insight, a research group in Lexington, Mass. By his count, Honda has gone four years since it had an outstanding design: the most recent update of the Civic.

The company's U.S. sales peaked in 2007 at 1.6 million. Then, in mid-2008, high fuel prices sapped larger models' sales, followed by the wider turmoil of the recession and credit crunch. Sales fell to 1.4 million. Last year's number was 1.2 million, a level not seen since 2000.

Another key indicator of the automaker's strength - market share - remained about the same at 12.9 percent last year, down 0.1 percentage point from the previous year, which was the highest in Honda history.

The company could raise market share by providing more sales incentives, but it has stuck to its long-standing avoidance of heavy discounting.

"We don't chase market share inordinately," John Mendel, Honda's top sales executive in North America, said this spring.

"Essentially, [use of incentives] devalues the product and hurts resale value," Mr. Mendel said.

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Columbus Dispatch 07/01/10