Honda saving U.S. jobs by switching models

Tokyo, Japan -- Honda will meet growing U.S. demand for small cars while maintaining North American jobs by moving production of two bigger models from Canada to Alabama, Chief Executive Takeo Fukui said Thursday.

Honda Motor Co.'s Pilot sport-utility vehicle and Ridgeline pickup, now rolling off its plant in Alliston, Ontario, will be produced in Lincoln, Ala., allowing the production of the Civic sedan to be raised in Canada, he said.

"Gas prices continue to rise, and the demand for cars with good mileage is growing," Fukui told reporters at a Tokyo hotel. "Efforts are under way to increase the local production of the Civic."

Even the usually booming Japanese automakers are sensing the pinch from a U.S. economic slowdown and soaring material costs, including steel. But the Japanese are holding up better than their American rivals because of their reputation for fuel-efficient offerings.

General Motors' top managers are working on additional restructuring measures to deal with a declining U.S. auto market and an accelerated shift from trucks to more fuel-efficient vehicles, a person familiar with the plan told The Associated Press late Wednesday.

Such a move would come on top of thousands of job cuts at GM over the past three years mainly through buyout and early retirement offers.

Ford said earlier this week that it's planning involuntary layoffs of salaried employees by August as part of a restructuring in the face of slumping sales and record-high gas prices.

Honda's production changes won't create or cut any jobs in North America. But Fukui noted it will maintain sales momentum.

"And the point is we won't have to reduce employment," he said.

Honda will create American jobs when its plant to build Civics opens in Indiana later this year. That plant, Honda's seventh in North America, is expected to add about 2,000 jobs.

Fukui said Honda's Fit subcompact is another model that is emerging a hit in the U.S., a nation previously known to favor gas-guzzlers.

Still, the overall U.S. auto sales are expected to drop to around 15 million vehicles this year down from 17 million as recently as 2005.

For April, General Motors Corp., Ford Motor Co. and Chrysler all saw double-digit U.S. sales declines compared to last April. But Honda, along with Nissan Motor Co. and Toyota Motor Corp., reported year-on-year gains.

Relatively new auto plants are flexible in production, allowing models to be switched to respond to shifts in demand. At some plants, the same assembly line can produce different models, one after the other.

[Source : Association Press via Detroit News]