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Honda announced March 31 that it would cut production in North American by 204,000 units, aiming their yearly output at 1.25 million. For the first time ever, Honda is also slashing salaries. Hourly employees and executives all the way to the top get a trim; and bonuses get bounced. Honda’s US sales dipped 7.9% in 2008 (compared to 2007) but the American market overall fell 18%. Honda wasn’t in terrible shape and seemed to have a good product mix. Then the first quarter spreadsheets began to fill in—a 33% drop in sales is a plunge of a different color. Carving will take place at all North American facilities.
18 Comments on “Honda Cuts U.S. Production and Salaries...”
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Well I guess if you’re going to cut that’s the way to do it.
Looks like the hammer just fell on GM and Crysler. Obama just declared bankruptcy the best option for them. Its amazing how fast a market can fall after news is released.
Yep – we were told back in January at the company i work for that bonuses for the year were cut, and we found out Friday that everyone’s salaries are being cut by 3% for the near term. The flip side is mass lay offs were avoided and we’re still in the black, but not by a lot. Better to trim where you can before you hit the red – something a lot of US corporations are not good at doing.
It took an economic downturn to negatively affect many folks’ wages.
My socio-economic group, working-poor citizens, we have seen our wages fall for many years in areas where illegal “immigrants” flooded in.
How does it feel ye who were unaffected or even profited from the entrance of millions of folks upsetting the supply/demand equation of wages, housing costs, etc? Maybe our cries of outrage that have gone unheeded may finally find an audience.
obbop:
We are all sub-prime now.
The sleeping giant that is American is asleep. When it wakes up, it’s going to be pissed….
Well this seems like a great time to release the Acura ZDX.
That should shore up the bottom line quite nicely.
Problems solved!
LOL
Honda Death Watch 1!
What Honda needs is a new perspective. My suggestion is that they bring in Wagoner, just on a consulting basis, at first of course, for some advice. I’m thinking of something like a niche product that would give Honda some juice. Screw this fuel economy, safety shit; that’s not American. What people want are some serious horses under the hood so they can pull their fifth wheeler as soon as they find a job and can get one financed.
Could you imagine what kind of shape the imports would be in if needed to provide healthcare and pensions to their employees, oh yeah, their govt’s do that for them.
roar :
March 31st, 2009 at 10:19 pm
Could you imagine what kind of shape the imports would be in if needed to provide healthcare and pensions to their employees, oh yeah, their govt’s do that for them.
and that’s a bad thing…why? Those societies pay less for health care, cover everyone, and have better outcomes than the wretched American system does.
Not a Death Watch at all.
I always thought this is the proper way to cut expenses. 10% (or other %age) accross the board, rather than so many thousands with NO job. Why don’t more companies do it this way?
Hourly employees and executives all the way to the top get a trim; and bonuses get bounced.
How unAmerican of them. Everyone knows the red-blooded MURKAN WAY is for the executives to demand deep cuts from the hourly employees by painting lurid tales of the dire situation, then trumpet the cost savings ‘they’ achieved to award themselves fat bonuses.
Honda seems like a company that has it’s stuff together a large proportion of the time, and this seems like a continuation of that — no secret privileges, no political games within the organization, everyone takes the hit together and gets on with business. At GM the lawyers would still be writing the secret fine print excluding top executives from cuts because there was sunspot activity on the third Tuesday of the month.
Everyone knows the red-blooded MURKAN WAY is for the executives to demand deep cuts from the hourly employees by painting lurid tales of the dire situation, then trumpet the cost savings ‘they’ achieved to award themselves fat bonuses.
Actually, the American way is first generally to cut first those foolish enough to have gone slightly up into middle management but not far enough up into upper management to be safe. Certainly that holds in the car industry.
The beginning rungs of management are all about trying to get that dream of upper management, like an academic seeking tenure.
Honda also cut its $300-million-per-year Formula 1 racing team as a cost saving measure. The team was not very successful but had just designed an all new car in hopes of turning things around. Last I heard the team management had bought it and were trying to find financial backing from another source.
Seems as if Honda is one of the few car companies run by adults, to wit, sensible cuts now to prevent catastrophe later.
roar :
March 31st, 2009 at 10:19 pm
Could you imagine what kind of shape the imports would be in if needed to provide healthcare and pensions to their employees, oh yeah, their govt’s do that for them.
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Last time I checked, the president of Japan was not a billionaire and didn’t pay for the pension for Honda employees.
There isn’t a single country in the world where the government pays for healthcare/pension. The government merely redirects tax money.
The funds for the healthcare/pension of Honda employees are originated from Honda itself in the form of cooperate and income taxes.
For the US to provide a Japan style healthcare/pension system, either the US government will have to collect more taxes, and/or print more money, and/or cut spending (i.e. cut the war expense).
The F1 team previously known as Honda just took the top two spots with a pole to checkered win in the first race of the season. So it appears they might have pulled the plug on their racing team a tad too quickly. Saving $300 million dollars sounds like a good plan in this economy, but it must be a tough pill to swallow to see your car dominate using a competitor’s engine.
From a business sense I’ve always thought its better to cut pay and keep people around, this way your staff is in place and good-to-go when (if?) the economy rebounds. Laying off people is a costly proposition: you pay tons in severance packages and then have a long rehiring/training period when your trying to get back up to speed ahead of your rivals.
# JMII :
April 1st, 2009 at 10:19 am
From a business sense I’ve always thought its better to cut pay and keep people around, this way your staff is in place and good-to-go when (if?) the economy rebounds. Laying off people is a costly proposition: you pay tons in severance packages and then have a long rehiring/training period when your trying to get back up to speed ahead of your rivals.
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It really depends on the cooperate culture. For some executives, it’s a perfect chance to beat a rival, or force the pretty secretary to the bed (not a joke, very real).
But of course, at the end, those who keep jobs are not necessarily those who have the best work performance …
As someone commented on DRN
Imagine the nerve of that – guy thinking he can use common sense, logic and experience to run his company just because he is the CEO.
Not all decisions made by Honda have had this level of objective thought. Take their hybrid program for instance.
First, they put out a 2-seater vehicle (Insight) where the share of this segment is barely 2% of Worldwide sales. Discontinued after low sales.
Second, they came out with a hybrid version of the V6 Accord whose sales were ordinarily 10% of the Accord’s 400,000 US sales. Introduced December 2005 and discontinued June 2007 again owing to low sales.
-JMII ex-Honda team wins. But not here in NA. See that’s the problem. NA is Honda’s most important market but F1 management in their infinite wisdom somehow decides not to race in NA. I think I am safe in saying that those wins are completely under the radar here, and have no halo effect for america that is in any way relevant to their auto sales. All that happened is that Honda just saved themselves $500 million. I half expect Toyota to exit the same shortly.
With the demise of GM and Chrysler as players, the next version of The Three Tenors, Honda, Ford and Toyota may spark a whole lot of interest competing at NASCAR. Or perhaps even, now that the time is right, go downmarket with an alternative race series pitching the Civic Si against similarly equipped competition. You know, with cars carrying name plates that most people buy.
Could you imagine what kind of shape the imports would be in if needed to provide healthcare and pensions to their employees, oh yeah, their govt’s do that for them.
Yeah!
Hope you get your chance to help pay for the healthcare benefits for American Autoworkers (and mine too, for that matter)! Thanks, buddy!