Despite suffering from the appreciation of the Japanese yen, Honda realized a new high in net global sales, up 6 percent to $52.17 million, thanks primarily to automotive and motorcycle sales in North America. Not only did the company make just over a million vehicles in North America during the fiscal year ending March 31, it also sold more than 1.3 million vehicles on the continent, led by the Odyssey minivan and the new Acura MDX SUV. That jives well with Honda president and CEO Hiroyuki Yoshino's aim to focus on developing local markets: Approximately 75 percent of the cars sold in the U.S. were made on the continent.
      That North American sales total constitutes about half of the company's global sales goal for the year ending in March 2002. While world events have no doubt dented that goal, Yoshino wants the company to sell 3 million vehicles worldwide by the same date in 2004, and part of that plan is new North American production capacity. Having begun production on the continent in 1982, Honda just rolled out its 10 millionth North American-made vehicle in April 2001. Among the company's 118 plants in 31 countries are a new plant in the United Kingdom (expected to export both the Civic three-door and CR-V models to North America) and a new vehicle and engine facility for Honda Manufacturing of Alabama (HMA) in Lincoln, Ala. The company's U.S. investment alone is now more than $5.2 billion, and their facilities employ more than 20,000 people. The production capacity breakdown will now come to around 30,000 units from its Mexican facility (after an expansion of Accord-making capacity from 20,000 units that's currently under way), 350,000 units from Canada and 680,000 units from the two U.S. facilities.
      HMA will make Oddysey minivans and V-6 engines, and boost North American production to 1.18 million units by fiscal 2003, according to company estimates. The company is pursuing a new production strategy called the New Manufacturing System. Both the East Liberty, Ohio, plant and the Alliston, Ontario, plant follow the new principles, which incorporate flexibility, lower new model costs and steps both lean and green that reduce waste and energy consumption.
      In the tiny town of Lincoln, Ala., they already knew about the impact of the automotive realm on a regional economy. That's because they're a stone's throw from Talladega Raceway, one of the signature tracks on the NASCAR circuit. Camp, who helped bring the Mercedes project to Vance, Ala., outside of Tuscaloosa, says that Honda's recent decision to locate in Lincoln, halfway between Anniston and Birmingham, follows a similar pattern.
      "It's a very rural area," he says, "and [the facility] already has had a very positive impact, because over 1,000 more people will be working now. Honda will have a very positive effect, and not only on that area. Many of their suppliers have chosen not to locate right at the factory, but sometimes 20 to 60 miles (32 to 97 km.) away, so the impact of the operation is spread throughout the northeastern quadrant of Alabama. There will be dozens of Tier 1 and Tier 2 suppliers there when everything is really stabilized."
      As for the cultural and technical challenges brought on by a major operation in a small community, Camp says, "Everybody I know of has loved to have the challenges brought on by the location of either of these companies."
      Toyota's Jim Wiseman makes a similar observation about his company's location tendencies. "Available labor pool is a key criteria," he says, "Our plants depend on a smart, good workforce, because we depend on such responsibility on the production line. We've gone to rural communities, similar to what Toyota has done in Japan. Toyota likes that rural work ethic, so that is important to us. Another issue we look at is how welcoming the community is. In Georgetown, Princeton, Buffalo, Huntsville and Cambridge, the people and the local leaders have all really opened their arms to us."
      Wiseman points out that relationships the company forms with state officials are a big part of the site location decision, too, exemplified by former Kentucky Gov. Martha Layne Collins's strong influence in bringing the company to her state in 1986. Toyota's deeply embedded culture of continuous improvement also applies to how it selects and moves into communities, as well as how the company deals with crises like Sept. 11.
      "Toyota has an interesting approach to those things," says Wiseman. "We look at it as an opportunity to improve our system. It made us take a second look at alternative plans for getting parts if something like that, or a natural disaster like an ice storm, happens again."
      True to the Toyota creed, Wiseman bristles at the notion that operations are nearly as lean as they can get.
      "Oh no, the whole mark of the Toyota production system is constant improvement -- kaizen," he says. "It's not just a job for management. In fact, the system actually pushes that down. The most important people are the people on the line. There's no such concept as 'lean as we can get.' That job never ends.
      "We spend some $15 billion per year with North American suppliers now," adds Wiseman. "We like to say our supplier base is maturing here. With 500 suppliers now, we're not necessarily looking for a lot of new ones. What that growth has meant is a lot more opportunities and a lot more volume for those suppliers. There's a general trend in the supplier industry to supply entire systems, and all automakers are now rationalizing their supplier base. If we give more business to TRW, those smaller suppliers give more business to TRW. Some governors are starting to understand this. Years ago, the big prize was the OEM, but with this trend, and the growing importance of the biggest suppliers, that's where the real impact is these days in terms of economic development."