Honda to Double Production Capacity in Alabama

LINCOLN, Ala., July 9 -- Honda Manufacturing of Alabama, LLC (HMA) today announced plans to expand its operations with the addition of a $425 million assembly line that will employ another 2,000 associates and eventually double production capacity to 300,000 engines and vehicles per year.

The expansion is part of an overall Honda strategy to increase its production operations in North America to meet growing customer demand -- on the heels of American Honda Motor Co.'s five consecutive record annual auto sales performances.

Construction of the second line at HMA will begin as early as fall 2002 and is expected to be completed in early 2004. The new line will raise Honda's investment in Alabama to $1 billion, increase total employment to approximately 4,300 associates and will add more than 1.1 million square feet to the existing 1.7 million-square-foot facility.

"With demand continuing to increase for Honda products, the dedication and commitment of our associates to build quality products for our customers is what has made further expansion in Alabama the right choice for Honda," said HMA president Masaaki Kato. "We have forged a strong bond with the Alabama community and we are excited that this bond will now grow even stronger."

HMA currently employs more than 2,300 associates and is increasing production to meet the existing plant's designed capacity of 150,000 Odyssey minivans and V-6 engines each year. HMA is expected to reach this capacity rate in September 2002.

A decision regarding what model will be produced on the new line will be made closer to the mass production start-up. As with HMA's existing operations, the new line will incorporate Honda's New Manufacturing System, which allows for production flexibility based on customer demand.

HMA's new production line will be constructed adjacent to the existing facility on the 1,350-acre site near Lincoln and will mirror the current facility's operations with synchronous body and engine assembly under one roof. The new line will utilize the operations for stamping, plastic injection molding, and die-casting and machining for engines from the current facility, where capacity of the existing facility will be increased to supply both lines.

Production of engine blocks and heads also will be increased at HMA's existing engine operations.

This expansion marks the second time in seven months that HMA has announced plans to increase capacity. In December 2001, HMA announced an expansion of annual production capacity from 120,000 engines and vehicles to more than 150,000, an increase in total capital investment to $580 million and an increase in employment from 1,500 associates to more than 2,300 by the end of 2002. In its first year of operation, HMA has purchased more than $500 million in parts and services from Alabama-based businesses.

"Our associates have certainly embodied Honda's 'challenging spirit' since the production of our first Odyssey just a few months ago," Kato said. "We look forward to the challenge ahead."

An infrastructure improvement package developed by the state of Alabama and the community will make necessary utility, highway, infrastructure and site improvements and provide resources for workforce development for the second line.

This latest expansion announcement came as part of a new North American production strategy unveiled today by Honda, which will add flexible capacity to manufacture vehicles and powertrains in North America. Honda will increase vehicle production capacity in North America to 1.4 million units in late 2004.

In addition to the expansion at HMA, key components of Honda's strategy for North America include:

Increasing production capacity at Honda of Canada Mfg. to 390,000 units by early 2003. The Anna Engine Plant (AEP) of Honda of America Mfg., Inc. (HAM) in Ohio will replace one of three current lines, which assembles only 4- cylinder engines, with a new flexible line for increased V6 engine production. Engine production at AEP will also be increased by 120,000 units, from 1.04-million units per year to a total capacity of 1.16 million units annually. These new investments will increase Honda's capital investment in North America to more than $7 billion, and North American employment to more than 26,000 associates.

Honda began operations in North America in 1959 with the establishment of American Honda Motor Co., Inc., Honda's first overseas subsidiary. Using domestic and globally sourced parts, Honda began assembling motorcycles in America in 1979, with U.S. automobile manufacturing starting in 1982. Honda designs, manufactures and markets its products in North America and worldwide. Honda currently builds products in 11 manufacturing plants in North America, with three major R&D centers in the U.S.

Honda also is the world's preeminent engine-maker and built more than 12 million engines globally in 2001 for its diverse line-up of automobiles, motorcycles and power products.