The great unraveling of globalization (and how it relates to some automakers)

[CIF]

Now this article isn't only about automakers, but there are parts of the article which I felt were very significant.

http://www.washingtonpost.com/busin...5425c2-e82e-11e4-aae1-d642717d8afa_story.html

...
However, in 2014 GM made $2.1 billion in China, about a quarter of its earnings in North America, where it sold 130,000 fewer vehicles. The problem is, around half of the vehicles that GM sells in China are Wulings, inexpensive, low-margin minivans designed by one of General Motors’ Chinese partners, targeted mostly at commercial buyers. Indeed, Chinese customers bought 1.6 million Wulings and only 79,000 high-profit Cadillacs in 2014.
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A few companies are choosing a relatively unorthodox globalization strategy, an approach that could be called localization. The motorcycle and auto manufacturer Honda has been in the forefront of this strategy, which involves setting up full-scale operations — factories, engineering sites, research facilities, suppliers and logistics channels — in regions around the world to provide customized products. In doing so, Honda has quietly remade itself from a Japanese multinational with smaller operations elsewhere into a company whose largest subsidiary is an autonomous U.S.-based producer of cars for the Americas, followed by similar operations in China, Japan, Thailand, Brazil and numerous other places, as well as separate businesses making motorcycles, power products and new technologies such as robots and alternative energy equipment.

I had long suspected this of Honda, and this article proves it. Honda sadly no longer functions as one cohesive company; rather the evidence is clear now that Honda exists now as a collection of autonomous, disparate businesses/companies that happen to share the name "Honda".

For many years, I personally never understood the constant bickering and internal conflicts at Honda. I always though to myself, how could an automaker with that sort of combative corporate culture continue to thrive long-term? Now it seems that this is Honda's combative and conflicted corporate culture taken to a whole new level. To think of it in another sense; this takes the whole concept of "fiefdoms", which were and still are prevalent at some American automakers and companies, to a whole new level.

Compare this to Toyota or Nissan, who still function each as one single, giant company with clear central command. Yes it's true that Nissan and to a greater extent Toyota, have given local regions more authority and a bit more freedom to cater to local regional needs, but local regions have not become completely autonomous companies as it now seems to the case with Honda.

This fully backs up the talk about the new NSX, and how it was completely though up, and developed in America, with pretty much zero input from Honda Japan.

I think the ramifications of Honda doing this are huge, and I think this is going to cause some huge problems for Honda in the years to come.

Lastly, I definitely would not call what Honda has done as "localization". I'd more accurately describe it as "segregation" or "segmentation".

 

[mmcartalk]

Now this article isn't only about automakers, but there are parts of the article which I felt were very significant


I had long suspected this of Honda, and this article proves it. Honda sadly no longer functions as one cohesive company; rather the evidence is clear now that Honda exists now as a collection of autonomous, disparate businesses/companies that happen to share the name "Honda".

Good article.

The points about Honda becoming more and more decentralized are well-taken, but I think it should also be noted that Honda (including Acura) is one of the few companies in the auto industry that has managed to survive on its own, without being either partially or totally bought up by other companies or, in turn, buying them up. It's rare to find a larger mainstream manufacturer that has been able to do that nowadays....almost everyone is connected to someone else in some way.

 

[CIF]

Good article.

The points about Honda becoming more and more decentralized are well-taken, but I think it should also be noted that Honda (including Acura) is one of the few companies in the auto industry that has managed to survive on its own, without being either partially or totally bought up by other companies or, in turn, buying them up. It's rare to find a larger mainstream manufacturer that has been able to do that nowadays....almost everyone is connected to someone else in some way.

Correct, however that no longer technically applies to Honda anymore, since they're not one big cohesive company any longer. Also the big boys of the industry remain (relatively) whole. GM, Ford, VW, Toyota haven't been bought up by anyone (VW is a tricky case with Porsche, but I excluded it). Only Chrysler was bought up/merged with Fiat.

 

[mmcartalk]

Correct, however that no longer technically applies to Honda anymore, since they're not one big cohesive company any longer. Also the big boys of the industry remain (relatively) whole. GM, Ford, VW, Toyota haven't been bought up by anyone (VW is a tricky case with Porsche, but I excluded it). Only Chrysler was bought up/merged with Fiat.

Technically, GM was at least partially bought out by the American taxpayers and the UAW....although much, if not all, of that has been repaid. The UAW even got a seat on GM's board......previously unheard of in the auto industry. Chrysler was also bought by American taxpayers, but to a lesser extent, since Fiat also put up a large share and acquired part-ownership. Ford?....yes, Ford managed to escape a buyout, either from taxpayers or other companies, but they also had to sell off or do away with several upmarket brands that they owned (Volvo, Land Rover, Jaguar, and Mercury) to raise enough money to avoid bankruptcy....not to mention the massive job/personnel cuts. I think that is the difference between companies like that and Honda.........Honda, to my knowledge (and I could be wrong on this?) was never in any kind of ownership or partnership deal with any other auto company, even as decentralized as it has become.

BTW.....I don't want to get too far off-topic, but, given what I have seen with a number of recent products from GM and Chrysler, those bankrupcy/buyout deals were the best thing that ever happened to them. With a couple of exceptions like the under-refined Cadillac XTS and the unrefined drivetrains in the otherwise-nice Dodge Dart, they now make truly competitive products.