Honda, Toyota Shift More Production to America

Japan's automakers are moving more and more of their "crown jewels" to the U.S. market, which promises to continue to transform the brands both home and abroad into more of a "Made in America" proposition than anyone would have imagined just a few years ago.

Honda plans to give the lead to its North American operations for a growing number of global vehicle-development projects of the type which traditionally were executed in Japan. Company executives hope the moves would help Honda fend off competitive challenges in the North American market and also hedge against a strong yen.

The U.S. R&D team, most of it located in Raymond, Ohio, already stands at about 2,000 people, and Honda could add to that for engineering and development work on the new-generation Acura NSX sports car, the next-generation Civic and other models, said Erik Berkman, the new president of Honda R&D Americas, according to Automotive News.

"As an organization, our U.S. facilities and the skill level of our engineers have achieved full citizenship in R&D," Berkman said. Honda already has been gearing up a huge shift of auto production to the United States from Japan because of the stubbornly strong yen, which makes U.S. manufacturing less expensive.

Still, Berkman commented, "I don't want people to attach too much significance to the idea that there is now an American president of Honda's U.S. R&D operations. Certainly, within an organization, leadership is something that must come from individuals. It's critical to success."

Toyota is considering moving some production of its Lexus luxury brand to the United States as well as the many Toyota-brand vehicles already built in Kentucky and elsewhere. Jim Lentz, Toyota's head of U.S. sales, told the conference that the strong yen and Toyota's increased capabilities at its engineering center in Ann Arbor, Mich., are responsible for the possibility that Toyota might shift production of the Lexus ES sedan to America.

Already, about 70 percent of the vehicles Toyota sells in North America are made there. But all Lexus models, except the Canadian-built RX SUV, have been made in Japan. Historically, preserving output of its highest-margin vehicles in Japan was considered one way that Toyota executives could keep closest track of quality levels and not risk tarnishing the Lexus brand.

But as the yen continues to hold its high relative value, and the U.S. market becomes still more important, and the cautious Japanese brands become ever more convinced about the capabilites of American engineering, the tide of R&D and production work moving east across the Pacific Ocean will continue.