Honda offers buyouts, cuts pay in North America

[April 01, 2009]  COLUMBUS, Ohio (AP) -- Honda Motor Co. is offering voluntary buyouts, cutting workers' pay and imposing 13 non-production days at its North American plants to reduce its output this summer by 62,000 vehicles.

Honda spokesman Ron Lietzke said Tuesday that the buyouts will be offered at most of the Japanese automaker's facilities in North America, where it employs 35,600 people. Sweetened retirement packages are also being offered, he said.

Overall compensation will be reduced for its North American employees, with top executives experiencing the biggest cuts, Lietzke said. He would not say how much salaries would be reduced.

Bonuses will be greatly reduced or eliminated, but pay rates for production and hourly workers will not be affected, Lietzke said.

"There is a continuing need to reduce our inventory," Lietzke said. "Regardless of job title or level within our organization, each Honda associate will share the responsibility of doing what we must do to remain competitive."

The company builds Honda Accords and Acura TLs and RDXs in Marysville, Ohio; Honda Civics and Elements at a factory in East Liberty, Ohio; and engines and other components in Anna, Ohio. The company also has a plant in Lincoln, Ala., that makes the Odyssey minivan, Pilot sport utility vehicle and V-6 engines. It also builds transmissions in Tallapoosa, Ga., and builds all-terrain vehicles, lawnmowers and other products in the U.S.

Between May and July, the 13 non-production days will include up to two days per month on which employees can't go into work. They can choose to either cover that time with vacation or take no pay.

In Mexico, Honda will suspend production for 13 days between May and September at its plant in western Jalisco state, but doesn't plan reductions among the 1,800 workers at the facility, said company spokesman Javier Gonzalez. The plant produces the CR-V model and exports much of its production to the United States.

The Tokyo-based automaker has been cutting auto production aggressively in North America in recent months in an attempt to lower inventories of unsold cars. In December, it said it was removing 119,000 vehicles from production for the fiscal year ending Tuesday and it cut production even further in January.

Spokesman Edward Miller said the company produced about 1.3 million vehicles in North America during the 2008 fiscal year. Miller declined to provide a production or sales target for fiscal 2009.

Honda has not been immune to the troubles plaguing the broader auto industry, brought on by the downturn in consumer confidence and the lockup in the credit markets. The automaker's U.S. sales are down by about a third for the first two months of the year.

In February, Honda announced it was replacing its chief executive and reshuffling its board of directors in a bid to provide fresh leadership.

Still, the company is faring better than its Detroit-based counterparts and is counting on interest in its smaller, fuel-efficient vehicles to propel a rebound. Earlier this year, Honda unveiled its new Insight hybrid, which will be priced under $20,000 when it arrives in the U.S. in the coming weeks and is expected to compete head-on with rival Toyota Motor Corp.'s Prius.

Toyota, Honda's chief rival, last month took similar moves in the U.S., announcing cuts to production, executive compensation and offering buyouts to about 18,000 workers. Both automakers have said they are seeking to avoid layoffs -- an extremely rare practice at Japanese companies, which have a culture of lifetime employment.

U.S.-traded shares of Honda rose 31 cents on Tuesday to close at $23.70.

[Associated Press; By MEGHAN BARR and DAN STRUMPF]

AP Auto Writer Dan Strumpf reported from New York.

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