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Production Facility Locations and Reasoning Behind Why They Are Chosen

The philosophy: “Respect for the Individual” has proven to be Honda’s foundation when

it comes to decision making as a firm; whether it be major managerial choices or, seemingly

small, decisions like procuring new production facilities. When making the decision to secure a

new location for a factory or facility, Honda considers cultural and social factors, far more

dynamic than just costs and profitability. Production Facility Locations

Japan Saitama, Mie,


Honda has manufacturing, producing, and distributing Tochigi, Kumamoto,
Shizuoka
facilities that span all across the globe. They currently have U.S.A. Alabama, Indiana,
Ohio, South Carolina,
North Carolina,
facilities in about twenty-five different countries with numerous Georgia
Canada Ontario
facilities within many of them. Honda’s original factories were built Mexico Jalisco
Brazil Sao Paulo,
and developed in Japan, where the company was founded, and Amazonas, Manaus
Argentina Buenos Aires

slowly grew to occupy sites across dozens of other countries, Peru Loreta
U.K. Wiltshire
including the United States, UK, France, Spain, China, Thailand, France Ormes
Italy Abruzzo, Bologna
India, and Australia; among many others. Spain Barcelona
Kenya Nairobi
The framework Honda has developed to systematically Nigeria Ogun
Turkey Kocaeli
decide where to build its facilities is quite extensive and places China Hubel, Guangdong,
Chongqing,
significant value on the satisfaction of customers. Honda Shanghai, Huizhou
Thailand Ayutthaya, Bangkok
Bangladesh Gazipur
continuously strives to support communities wherever it goes while
India Pradesh, Haryana
consistently exceeding expectations. On Honda’s website, there is a Indonesia Jakarta, Jawa Barat
Malaysia Penang, Malacca,
Melaka, Kedah, Johor
statement that reads: “Building our products close to our customers Pakistan Karachi, Lahore
Philippines Laguna, Batangas,
helps us support the communities where we work and live. We’re Binan Laguna
Chinese Pingdong
especially proud to have been the very first international automaker Taipei
Vietnam Vin Phuk, Hung Yen
Australia Victoria
capable of complete product creation in the U.S., and that in 2014,

97% of Honda vehicles sold in America were manufactured here using globally and locally-
sourced parts” (Honda Operations). This statement illustrates Honda’s ambition to aid their

customers in ways most other car manufacturers do not even consider to. Many companies tend

to deter from prioritizing their customer’s satisfaction, due to their preeminent priority of

augmenting profits. Honda, however, has proven the value of keeping their customers happy

beyond what is expected.

Honda has been able to efficiently balance productivity with customer satisfaction by

establishing its foundation with a set of core values. With that foundation, Honda has since

developed various strategies that have been very effective and successful when choosing

locations to build factories. When looking at Honda’s accomplishments and success, it is evident

that they do not only focus on their customers but also work to develop efficient operations by

creating “a flexible manufacturing system that enables the company to quickly and efficiently

move production of products from one plant to another and to build multiple products on the

same line. By staying flexible, Honda’s manufacturing plants can adjust to market demand while

maximizing capacity, which helps to provide a stable production base for associates, dealers, and

suppliers in America” (Honda in America).

Another strategy that Honda has, is starting all new foreign operations at a small scale

and steadily growing them as demand increases and operations start running more smoothly.

Honda strives to build its facilities to be completely autonomous by only relying on local

resources rather than unnecessarily importing them. Similarly, Honda tends to hire their

employees locally, rather than transferring in employees from existing facilities. This strategy is

built on the idea of marketing globally but producing locally, which has proved to be very

advantageous to Honda.

When it comes to the final decision Honda has three over arching factors that it considers

to finalize the locations for facilities. The first factor is whether or not there is a big enough
target market for the products that Honda offers. Honda manufactures a wide variety of products

so there are various markets that Honda target within any given region. The second factor for

consideration is the availability of land or real estate large enough to meet Honda’s needs. When

making this determination, Honda also needs to consider whether the location is somewhere they

can easily access resources and their customers. The final factor is whether or not the site meets

Honda’s extensive list of company requirements. These requirements are technical and wide

ranging, depending on which products they wish to manufacture and at what scale. If these three

requirements are met, then Honda goes on to building its facilities there.
Honda Motor Co. “Investing in America.” Honda Operations and Locations | Honda,

www.honda.com/operations.

Honda Sustainibility. “Supply Chain.” Our Fundamental Approach, pp. 4–5.

Mair, A., Florida, R., & Kenney, M. (1988). The New Geography of Automobile Production:

Japanese Transplants in North America. Economic Geography, 64(4), 352-373.

“Manufacturing.” Honda In America, hondainamerica.com/manufacturing/#flexible-system.

Peavler, Rosemary. “How Just-in-Time (JIT) Inventory Management Can Benefit Your

Business.” The Balance, www.thebalance.com/just-in-time-jit-inventory-management-

393301.