World Class Vehicle Launch Timing: Honda and Toyota (Part 5 of 6)

The World Class Vehicle Launch series is investigating the launch performance of five leading vehicle assembly firms operating in North America, and their past, and future launch strategies. The companies reviewed in our analysis include Chrysler, Ford, General Motors, Toyota, and Honda. This article focuses on the two Japanese-based firms, Toyota and Honda, and is the fifth in the series. It is important to note that there are many measures of a successful launch. This series analyzes a launch event in only the most basic form: the time it takes a facility to return to capacity in terms of production. This series is not meant to be an exhaustive study on launch performance, but instead is meant to further the understanding of the vehicle launch process.

PART 5 of 6

We identified a total of 3 vehicle launches by Honda, and 3 launches by Toyota during the period investigated. Casual observers of the automotive industry often perceive the many Japanese manufacturers as a single entity. The data collected is further indication that this is not the case. And, although both Toyota and Honda are among the best in North America at returning to full production, there are interesting differences.

The data for this article was gathered fromWard's Automotive Reports. For each launch, a production start date was determined. Monthly production data was collected for the 12-month period prior to the start date, and the 12 months subsequent to the start. We compared this data to Harbour and Associates (Troy, MI) capacity estimates to facilitate direct comparison between plants of differing capacities. Annual capacities for each plant gathered from The Harbour Report and similar tables published in Automotive News. These estimates were divided by 12 to give a monthly capacity estimate for each plant. They were divided by actual production to give a monthly performance to capacity measures. Figure 1 shows Honda and Toyota's launch performance. Also included in Figure 1 is the North American industry average. The chart shows that, on average, Honda was truly the gold standard in this measure. It also shows that Toyota was well above the industry average, and, in fact, was second among North American manufacturers in launching a new vehicle.

 

Selected Honda and Toyota Plants and Launch Events
Plant Launch Date Product
Honda    
Marysville Accord September 1994
East Liberty Civic September 1995
Alliston Civic September 1995
Toyota    
Georgetown Camry September 1991
Cambridge Corolla September 1992
NUMMI Corolla September 1992

Table 1 shows the six launch events that were evaluated in this analysis. Because Honda and Toyota have far fewer North American facilities than any of one the Big Three and therefore fewer launches, we relaxed the single plant-single product plant requirement. However, we believe the launches analyzed are representative of each company's capabilities and therefore the comparison is relevant.

Recently, both Toyota and Honda launched key products. Toyota launched the replacement for the Camry in 1996 and introduced the Sienna—a minivan based on the new Camry—one year later. In the fall of 1997 Honda launched the redesigned Accord. These launches offer the opportunity to add perspective to the analysis.

 

Product Launch: percent of Capacity
Product Launch: Percent of Capacity - Honda, Toyota and Industry average, 12 months prior and 12 months following vehicle launch.

Because the Sienna is produced on the same line as the Camry at Toyota's Georgetown, KY, plant, it is difficult to get a fair capacity utilization measure for the minivan. Therefore, it makes a comparison to our plant and company averages difficult. However, it is interesting to look at the actual monthly production numbers to garner some sort of update on Toyota's capabilities (below). The data suggest that Toyota was able to bring the new minivan up to `full' production in about 2 months. This performance closely mirrors the data collected from the earlier launches. Interestingly, the data for the launch of the 1997 Camry in August of 1996 is remarkably similar to that of the Sienna. Within two months of initial production, the Camry was at `full' volume. Further, the third month was actually a high point in volume for both products—almost a sort of payback for the downtime.

 

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
1997 Camry 7,405 23,074 30,399 28,230 21,895 32,089
Sienna 1,714 4,864 7,573 6,421 6,266 7,523

The launch of the 1998 Accord cemented Honda in place as the high-speed launch company. Honda's stated goal was 0.1,750 (vehicle per day) in 20 days. This measurement is fundamentally different than other industry participants whose changes are measured in weeks and for some, even months.

During the 1980s a common automotive industry tenet was that Honda and Toyota gained a quality advantage for their North American produced products by first launching the vehicles on production lines in Japan. The reasoning was that the lead plant in Japan could `work out the bugs', thus allowing for a higher initial quality rating in the U.S. on their North American production. Some have drawn parallels between that assumed quality advantage, and the speed at which Honda and Toyota were able to changeover. That is, since they have already gone through the launch of a given vehicle in Japan, the North American plant would gain significantly from the lessons learned. The concept of a lead plant is entirely common within the automotive industry—General Motors' Oshawa, Ontario, plant was the lead plant for the new GM full-size pickup. And GM rightfully expects the following launches at the other full-size truck plants will be made more efficient by the lessons learned at Oshawa this summer.

Yet, the lead plant concept can only be given a small amount of the credit for Honda's and Toyota's outstanding launch performance. In fact, both companies have used their North American plants as `lead' plants recently, and achieved equal or better performance. It is more likely that Honda, and to a somewhat lesser extent Toyota, approached the launch of a vehicle significantly differently than do other North American (and even European) manufacturers. Arguably, the essence of the difference is that some suggest Honda is the only manufacturer that does not use some form of `flex space' for a product launch. Honda started building pre-production 1998 Accords on-line in March of 1997. The flexibility to quickly move tooling into (and out of) position allowed Honda to gain first hand experience, without interfacing with 1997 production. That kind of flexibility also allowed for a launch that happened over a weekend.

Driving home that on-line flexibility is Honda's close working relationship between manufacturing and Honda Research and Development, Americas (HRA). Erik Berkman, from Honda R&D, Americas, addressed the connection at the 1998 University of Michigan Management Briefing Seminars this past August in Traverse City Michigan.

 

Figure 2
Figure 2 graphically shows the Honda launches reviewed for this article. This figure illustrates two rather interesting points. First and foremost is the lack of significant downward spike during changeover—especially when contrasted to other manufacturers. Second is the unusually high level of month-to-month variation, again when compared to other manufacturers.
Figure 3
Figure 3 presents Toyota's launches during the period studied. Unlike Honda, there is a considerable spike downward during the changeover month, but within two months, the Toyota facilities are producing near their estimated capacity. An interesting comparison is that of Toyota's launches and more recent vehicle launches by Ford. Ford, on average, has a more severe decline in production during the changeover than does Toyota (19 percent of capacity for Ford, compared to 34 percent for Toyota), but by the second month, Ford and Toyota are virtually identical. It is important to note that this comparison is for Toyota facilities from the early part of the analysis period and Ford's performance from 1995 and 1996.

According to Berkman, "The 1998 Accord was the most significant full-model change for the Marysville Auto Plant since we began production in 1982. And it was a mother-line-less launch—the first time an all-new automobile went into mass production first at a Honda plant in Ohio and not in Japan!"

Critical to the launch was the proximity—and the capabilities of HRA. The center was originally established because of Honda's recognition of the importance of teamwork between the R&D and manufacturing disciplines. "Imagine having a complete development company with nearly 700 engineers within five minutes where the product will be built," said Berkman.

John Adams, of Honda of America Manufacturing, was also a speaker at the Traverse City Conference. He also addressed Honda's launch philosophy. "Full model changes are always a challenge. At HAM we have more experience with these major changeovers than most other automakers—eight full model changeovers or new model introduction in 13 years. And each one a rolling model change," he said. "But the 1998 Accord was a challenge even by those standards. We were able to reach full production capacity of 1,750 units a day in only 20 days. During the launch period, we were actually increasing production. And we did it all with no increase in plant size and no increase in manpower."

According to Adams, "To achieve this aggressive rolling model transition we installed tooling and plant equipment throughout the year on weekends, on third shifts and during our two annual weeklong plant holiday shutdowns. Associate training was done on the line. And the result was our fastest launch ever."

This meant fewer `lost' units during new model ramp-up. "We built early production lots of '98 Accords even before the '97 model was finished—in early August—and increased these early production builds to nearly 200 a day prior to the actual mass production launch on August 19," Adams said. "We actually began producing '98 Accords on-line in March, the earliest ever for us. The advantage is to mature associate training and production equipment quicker and more effectively prior to mass production start-up."

While Toyota may not match Honda's quick-change standard, they are certainly a strong second. Not surprisingly, Toyota also credits the close working relationships as a key to their quick changeover ability. In his speech at the U of M conference, Yuji Okamoto, vice president engineering design, Toyota Technical Center, U.S.A. elaborated on the connection.

"It is true that we engage in simultaneous engineering, and we encourage vigorous involvement by everyone. This offers the advantage of bringing to bear the expertise of all of the functional areas before problems occur," said Okamoto. "But, although everyone has a voice, let me quickly add that it is the Chief Engineer who has complete authority over virtually every facet of any Toyota program."

Toyota also works hard at ensuring the product is ready for the launch long before Job One. "Within a vehicle program, we use the P-D-C-A Management Cycle to manage the process of continuous improvement. In fact, it permits us and our suppliers to implement quality improvements four times prior to the start of production. The plus side of this is that the vehicle is very current, and as near perfect as we can get it, prior to launch."