Honda Plans $70 Million Investment in Alabama Engine Facility

LINCOLN, Ala.—Honda Manufacturing of Alabama, LLC, (HMA) today announced plans for a $70 million expansion of its engine facility that will add 100 new jobs and machining of additional engine components for Honda V6 engines that power the Honda Odyssey and the Honda Pilot, produced at HMA.

HMA’s investment will add new value to the Lincoln plant with the machining of components that are currently supplied by Honda’s Anna Engine Plant in Ohio and Honda’s Mohka Plant in Japan.

“This new investment will challenge our associates to further advance their skills and capabilities,” said Masaaki Kato, president of HMA. “I have every confidence they will succeed and assume an even greater role in Honda’s North American operations.”

HMA began operations in 2001, and now has the capacity to produce 300,000 vehicles and engines per year with a current team of more than 4,000 associates at the $1 billion Lincoln facility. HMA produces the Odyssey minivan and the Honda Pilot sport utility vehicle on two lines, with synchronous engine assembly taking place on two lines under the same roof. This latest investment will boost total employment to more than 4,400 associates after expansion, and will make HMA even more autonomous.

The investment announced today at HMA is a part of Honda’s broader North American Powertrain Strategy, also announced today. The plan includes construction of a new plant in Georgia to produce automatic transmissions for HMA and an expansion at Honda’s Ohio transmission plant to add production of high precision gears.

In Georgia, Honda will invest $100 million to construct a 250,000 square foot plant in Tallapoosa, Ga., 60 miles east of Lincoln, to assemble automatic transmissions beginning in fall 2006. At full capacity, the plant will employ 400 associates and produce 300,000 transmissions per year.

Reflecting Honda’s strategy to base powertrain production near vehicle production for synchronous assembly, the plant will initially support production of Honda Odyssey minivans and Pilot SUVs at HMA.

In Ohio, Honda will invest $100 million to expand Honda Transmission Mfg. of America, Inc. (HTM) in Russells Point, Ohio, and add 100 new jobs in a move that will result in the transfer of the value-added processes of producing high precision gears from Japan to Ohio. Thus, as the new Georgia plant begins production, HTM will gradually shift its responsibility for transmission production for HMA to the new Georgia plant and phase-in the new responsibility of gear production.

The expansion will increase the size of HTM from the existing 361,000 square feet to 631,000 square feet, boost employment to 900 associates, and increase total capital investment at HTM to more than $261 million.

“This powertrain strategy represents the continuation of Honda’s 25-year commitment to localize our operations close to the customer here in the U.S., and creates a new level of autonomy for Honda’s powertrain production in America,” said Koichi Kondo, president of American Honda Motor Co., Inc., and chief operating officer of Honda’s North America Region operations. “Importantly, the growing experience of Honda associates in America is what enables us to take this next step in powertrain production.”

Honda currently has an annual production capacity of one million automatic transmissions in the U.S. and has assembled more than nine million transmissions in America since it began producing automatic transmissions at Honda of America Mfg.’s Anna, Ohio, Engine Plant in 1989. HTM assumed responsibility for transmission production in 1996.

Honda’s first U.S. powertrain operation – the Anna Engine Plant – completed a $20 million expansion in July 2003, adding a new assembly line that further increased its flexibility to produce both 4-cylinder and V6 engines. The Anna Plant now has a capacity of 1.16 million engines per year. Together, HMA and the Anna Plant have annual production capacity of 1.46 million automobile engines and supply all Honda and Acura vehicles produced in North America.

Honda recently celebrated the 25th anniversary of its first U.S. manufacturing plant, September 10, 2004. Collectively, these latest investments will bring to more than $8.5 billion the amount Honda has invested in its North American production, R&D and marketing operations. Using domestic and globally-sourced parts, Honda now has the annual capacity to produce 1.4 million cars and light trucks in North America at five auto plants in the U.S., Canada and Mexico.

Honda began operations in the U.S. in 1959 with the establishment of American Honda Motor Co., Inc., Honda’s first overseas subsidiary. Honda now employs more than 30,000 associates in North America. Honda currently has 12 manufacturing plants in North America, producing automobiles, light trucks, motorcycles, all-terrain vehicles, personal watercraft, engines, transmissions and other components. Nearly 8 of 10 Honda and Acura cars and light trucks sold in America are produced in North America as well. Many of these products are now designed and developed at one of Honda’s U.S. R&D centers. Honda annually purchases more than $12 billion in parts and materials from suppliers in North America.

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