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CB77
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JMU R1 wrote:
CB77,
Do you feel like the exodus of some of the old school folks in the motorcycle division has hurt the direction of motorcycles as well?
On one hand I see that Honda has figured out that they need to pay attention to the lower end of the market with bikes like the CBR250 and NC700X. On the other hand I feel like they missed huge opportunities by not producing the CB1100R concept, making a half-hearted supermoto, and not taking a stab at making a cafe racer. Not to mention that the the supersports haven't had a FMC in 5 years.
Of course maybe it's simply that sales have fallen about 50% in the US and the yen is incredibly strong. Maybe Honda simply can't do some of the things they planned to do with motorcycles because of the economic situation.
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Yes, the exodus of experienced people from the M/C division almost 3 years ago has had a strong negative effect on the M/C division of American Honda. But I am not sure those people could have reversed the negative trend that had already begun.
It is hard to exaggerate the trauma that the meltdown of 2008 caused Honda. I knew when I saw the F1 effort being cancelled in December of 2008 that things were extremely serious. It was stunning to see Honda walk away from that effort, based on their racing tradition and the cubic dollars of money we had already invested in it. Motorcycle sales just fell thru the floor, and have not really recovered very much.
But looking back, I can see that the M/C business in the U.S. probably peaked in about the late '90s. All the Japanese makers have artificially been supporting it with larger and larger incentives each year (massive rebates and subsidized financing) to keep the volume of bikes selling at the rate that their production needed to sell. The meltdown of 2008 has pretty much ended that gravy train for U.S. motorcyclists.
To me, the offering of the Voluntary Early Retirement package to all the American Honda M/C employees at that time is a strong indication that Honda Japan has basically given up on the U.S. M/C market. They feel that they will just be able to “squeeze the last of the toothpaste out of the tube” that is left in this market, with the employees that remain.
We were recently told in a national meeting that American Honda contributes only 1.5% to Honda’s total M/C sales (based on $ volume). At first I was shocked by that figure, but on reflection, I thought of all the jillions of step-thru 50s that Honda is selling in China, Viet Nam and India…and it made sense.
Considering that 1.5% number, as much as I hate to say it, I wonder why Honda Japan even bothers with the U.S. M/C market anymore. About all we do (as a market) is cause Honda product liability lawsuits, warranty expenses and advertising and dealer support expenses…the division has not been profitable since the mid-‘90s. Whereas when Honda sells a step-thru 50 to a guy in China or India, he is perfectly happy with it, causes no lawsuits or warranty expense, and we don’t see him again until he comes back for another bike.
The net result will be very few (if any) bikes designed specifically for this market. What we will get, is a continuation of the bikes that are already in production, with very little changes…other than a new stripe on the gas tank, or new color (we laughingly call it "BNG's" for Bold New Graphics). The new bikes that we do get, will be “world bikes” that can be sold pretty much as-is in all the world’s markets, to spread the development costs out over a larger production number. And that may not be all bad, if the new CBR250R and NC700X are examples of those bikes.
I was especially happy to finally see the CBR250R from us, as I had been a loud advocate within the M/C department for years for such a bike. I was furious that we were giving Kawasaki a 15-20 year free-run with the EX250 Ninja.
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CB77
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(Hey Neal, the story I posted earlier this week has finally broken in the Automotive Press. Here are the details)
LOS ANGELES -- American Honda Motor Co. is offering voluntary severance packages to senior employees across its U.S. sales operation.
Employees who are 59 and older and have worked 15 years at the company are eligible for the Voluntary Retirement Program, Honda said in an internal memo dated March 9. Workers can apply until April 23, although Honda has the right to close the program at its discretion.
Honda spokesman Jeffrey Smith confirmed the offer today. A “relatively small” number of the 5,600 employees in Honda’s sales arm qualify to accept it, he said.
"Occasionally, we provide special acknowledgement of our tenured and dedicated associates by giving them the opportunity to retire early with some enhancements to their retirement plan," Smith said in an e-mail today.
Honda is rebuilding sales and production in North America as it recovers from the supply-chain disruptions created by last year’s earthquake in Japan and floods in Thailand.
The parent company’s fiscal third-quarter profits skidded 41 percent to $624 million, and the automaker has forecast a sharp drop in earnings for the full fiscal year that ends March 31. The strong yen is cutting into Honda's overseas profits.
One year's salary
Employees who take the buyout will receive one year’s base salary, a premium for each year of service, retiree medical coverage and COBRA dental and vision benefits, as well as other retiree benefits. The memo said Honda reserves the right to reject early-retirement applicants.
The memo also said the program is “entirely voluntary,” adding that Honda “has no plans to offer this program or any other similar program in the foreseeable future.”
Honda made a similar offer in April 2009, during the global economic collapse, to salaried and hourly manufacturing workers in North America. Eligible employees then had to be at least 55 years old andhave 10 years of service.
The automaker is counting on new models such as the CR-V crossover and Civic compact to boost earnings and lift global unit sales to more than four million vehicles in the next fiscal year. That would mark an increase of at least 27 percent from the 3.15 million unit sales it is projecting for the fiscal year that ends this month.
American Honda is counting on its Honda and Acura divisions to increase their U.S. sales by 25 percent this calendar year.
Mazda North American Operations last week offered voluntary buyouts to its 701 U.S. non-manufacturing workers as it tries to cut costs. Mazda, whose Japanese parent hasn’t made a profit in four years, said employees may be dismissed if the number of workers who take buyouts falls short of goals.
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NealX
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^Thanks for sharing. If few qualify as they say, what's the real $$$ to be found? And if there are too few takers, will it happen by force?
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CB77
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Neal,
Yes, you wonder how much savings could be available with only a certain number qualifying. It could result in just more of a brain-drain, if the wrong people (good people) bail out...with little benefit to the bottom line.
Regarding your question about forced separations (layoffs), I do not think we will see any. I have been through 3 of these at Honda, and the wording in the announcement always is "we hope enough of you take advantage of this offer, so layoffs will not be necessary". In every case, no layoffs occurred.
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CarPhreakD
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Torque wrote:
JMU R1 wrote:
CB77,
Do you feel like the exodus of some of the old school folks in the motorcycle division has hurt the direction of motorcycles as well?
On one hand I see that Honda has figured out that they need to pay attention to the lower end of the market with bikes like the CBR250 and NC700X. On the other hand I feel like they missed huge opportunities by not producing the CB1100R concept, making a half-hearted supermoto, and not taking a stab at making a cafe racer. Not to mention that the the supersports haven't had a FMC in 5 years.
Of course maybe it's simply that sales have fallen about 50% in the US and the yen is incredibly strong. Maybe Honda simply can't do some of the things they planned to do with motorcycles because of the economic situation.
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I think Honda's entry into the 250 class was the smartest thing they could have done. Many countries have engine size restrictions on licenses limiting how powerful of a bike you can initially buy without first being approved, the UK being one. Also, the 250 class is one of the best selling class bikes in the world so since Honda builds the 250 in Thailand for dirt cheap, they are able to export it and probably make a really good per unit profit. I learned on a 250 and still have it but I went with a Kawasaki Ninja 250R.
The last motorcycle show I went to, I spoke to reps from all the major Japanese bikes and there isn't a whole lot of investment in the larger displacement sport bikes right now. Earnings have taken a hit across the board so companies are bolstering the lower end bikes to build up the buyer base just getting into motorcycles for the first time. Kawasaki rules the 250 class and Honda saw an opportunity. I was looking into buying a new Suzuki SV650 but a new model didn't come out last year. A new one might come out in a year or so but the rep didn't know for sure. Most, if not all, motorcycle companies have taken a major hit since 2008 and haven't come close to fully recovering.
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^ The SV650 has been "replaced" by the rather hideous Gladius
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CB77
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Yes, Torque, your unhappy story about Suzuki is likely to be played out again and again by all the Japanese makers. We are witnessing the end of an era, for very sophistcated, high-tech, high-performance, easy-to-afford Japanese motorcycles. And many of us bitched the whole time, not realizing what we had until it starts to go away.
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Fan Koni
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Ok instead of "brain-drain" you could say 59+ sales people are given a nice offer after long service.
Honestly who thinks these senior sales people are going to drive the future product & technology designs anyway??
That is not really their job.
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CB77
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Actually it can be (and is) both, a brain-drain and a nice gesture by the company for people who have given long service. Honda has great concern for how it treats its employees, and it is reflected in this separation package.
But as long as they don't try to control who leaves and who stays (and they don't) we will see some valuable people leave who should stay, and some less valuable people stay. Its just a fact of life with these separation packages. That is the point I was making.
I have worked for no other company, since my college days, so I have no direct frame of reference about how other companies treat their employees...but it is my observation that Honda stands almost alone, in American business, as to how it treats both its employees and customers.
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typer_801
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According to an Autoblog article this morning, the buyouts are subject to Honda approval, so this could prevent some brain drain of good employees if Honda mgmt recognizes top talent and doesn't want to let it walk out the door.
http://www.autoblog.com/2012/03/20/honda-trimming-u-s-workforce-with-voluntary-buyouts/
According to Automotive News, Honda has instituted a new Voluntary Retirement Program that allows employees 59 years of age and older who have 15 or more years with the company "to retire early with some enhancements to their retirement plan." Honda reserves the right to reject applicants, so apparently not everyone will qualify.
Employees who are accepted into the program will receive a year's base salary, a premium for each year they've put in at the company, retiree health care and COBRA dental and vision coverage. Honda last made such an offer in April of 2009 amidst the global economic meltdown and said in a statement that it has no plans to offer any more early-retirement programs in the foreseeable future.
Honda says it is expecting a "relatively small" number of employees to opt for the buyout package.
CB77 wrote:
Well, I guess I shouldn't have been so smug about Mazda announcing the job-cuts and early retirement plans. American Honda just announced the same Friday, effective for all divisions. I fear this will just accelerate the brain-drain for American Honda...further thinning the ranks of those people with Honda DNA, who know what Honda used to be like, and could be again, with the right people.
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CB77
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Yes, typer, but the same caveat was given during the last VSP offered by Honda, 3 years ago, the one in 1999 and the one in 1987...and no one was rejected who asked to participate in those programs. Of course, maybe only people who Honda wanted rid of, asked for the package.
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Torque
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CB77 wrote:
Yes, Torque, your unhappy story about Suzuki is likely to be played out again and again by all the Japanese makers. We are witnessing the end of an era, for very sophistcated, high-tech, high-performance, easy-to-afford Japanese motorcycles. And many of us bitched the whole time, not realizing what we had until it starts to go away.
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What I suspect we will start seeing over the next couple of years is bringing in bikes between the 250cc starter class bikes and the larger 600cc bikes and above. I am afraid between what the reps said and what you are thinking that those days may be coming to and end. You can still buy a sophisticated, high tech Japanese sport bike but where the focus seems to be on is the smaller bikes.
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CarPhreakD
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Torque wrote:
CB77 wrote:
Yes, Torque, your unhappy story about Suzuki is likely to be played out again and again by all the Japanese makers. We are witnessing the end of an era, for very sophistcated, high-tech, high-performance, easy-to-afford Japanese motorcycles. And many of us bitched the whole time, not realizing what we had until it starts to go away.
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What I suspect we will start seeing over the next couple of years is bringing in bikes between the 250cc starter class bikes and the larger 600cc bikes and above. I am afraid between what the reps said and what you are thinking that those days may be coming to and end. You can still buy a sophisticated, high tech Japanese sport bike but where the focus seems to be on is the smaller bikes.
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Don't count on the between 250-600cc class to grow, especially considering the way insurance works in this country (400cc bikes were popular in the 80's due to insurance discounts from the larger supersports). Kawasaki does have a Ninja 400R in Canada; however at the price they're offering for, you may as well step up to the 650R.
What you're more likely to see is a proliferation of commuter bikes. Honda just developed a new (and very advanced) twin for the NC700.
Yet, despite this, I don't think that 600 and 1000cc supersports will disappear. They can't, as they are an important cash cow to the Japanese and even now are pretty much the only reason why they bother setting up a motorcycle presence in North America. The only thing is that I don't believe they will try to compete against the Euro supersports (Ducati Panigale, Aprilia RSV4, BMW S1000RR), instead staying in their current price ranges as a value alternative.
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