HONDA The Power of Dreams

Naturally, consumers expected Honda to join the trend and begin automobile production. However, Soichiro Honda remained somewhat cautious about the matter, offering his opinion in the December 1959 issue of the Honda Company Newsletter (Vol. 50): "We shouldn’t rush into auto production," he stated, "until we conduct thorough research and are absolutely confident that every requirement has been fulfilled, including the performance of our cars and production facilities."

"Honda has decided to develop automobiles," Kudo said, "and I want you to be involved in development. This plan will be handled in strict confidence, for the time being. We can only assign a few people to the project, so be prepared to do more than just body design." With that, seven young engineers joined the new section. Their combined experience, though varied, was consistent with Honda’s goal as a new producer of automotive transportation. Some of the engineers were experienced in airplane development, while others had worked on three-wheeled vehicles during their employment at other companies.

Thus, did the Third Research Section become the prime force in car development at Honda.

The section’s initial task was to develop a mini automobile that would meet the "People’s Car" concept requirements. Drawings were issued in October 1958, and a prototype vehicle was completed the following January, going under the development code "XA170."

The XA170 made use of Honda’s renowned expertise in motorcycle racing with a forced-air-cooled, four-cylinder OHC V aluminum powerplant. Moreover, the FF car adopted a semi-monocoque structure with a flat floor so that it could be transformed into a sedan simply by adding rear seats. Since the prototype had been constructed specifically for test-drives, the fenders and hood were made with formed sheet steel. Patches of fabric constituted the sections where the roof and doors should be.

In the middle of the XA170’s test series, however, the team received an order from Mr. Honda himself for the development of a sportscar. Therefore, in the fall of 1959, the second prototype of XA190 two-seater was completed. Subsequently, the team took up the development of a truck, this time at the request of Senior Managing Director Takeo Fujisawa. It was an effort that ultimately led to the development of Honda’s XA120 mini truck.

Soichiro Honda had given the order to develop a sports car, because he thought it was better to create new demand rather than compete against more established manufacturers that already had a share of the market. He also believed that, as was the case with motorcycles, Honda should develop racecars and test them in actual competition in order to obtain as much expertise and knowledge as quickly as possible. This, he said, would elevate Japan’s automotive industry to a level of expertise and influence equal to the international manufacturers.

Fujisawa, on the other hand, suggested that the team develop a mini truck because he knew from society’s needs and market data that the demand for automobiles was mostly in the category of commercial vehicles. Furthermore, he had considered the fact that Honda would be selling its automobiles through motorcycle dealers.

An initial mini truck prototype was completed in the summer of 1960, after which it went through repeated tests in order to enhance the specifications. These changes resulted in the 2XA120 and 3XA120 units that followed. Therefore, while the development team’s main focus of research was the truck, the team members could not abandon their work on the sports car that Soichiro had requested. The two model developments continued through testing, and the specifications for each underwent considerable refinement.

MITI, in May 1961, came out with a basic administrative policy regarding the automotive industry (subsequently the Temporary Measures Bill for the Promotion of Specified Industries, or the so-called "Specified Industry Promotion Bill"). It was a policy intended to motivate structural reform among industries nationwide, so that preparation could proceed regarding the expected liberalization of trade. The new MITI policy identified three domestic industries that were relatively less competitive in the global market [automobiles (passenger cars), special steel and petrochemicals] and gave them the "specified" designation.

MITI was ready to propose the deregulation of automobile imports by the spring of 1963, and in order to increase the industry’s ability to compete on the global stage, Japan’s auto manufacturers were classified into three groups. This, it was believed, would ensure effective guidance according to the characteristics of each group. The first group would comprise passenger cars from two companies; the second would include special products such as luxury models and sportscars, including two or three companies; and the third would be Japanese micro-cars, or mini automobiles, with two or three companies. Moreover, the bill set rules concerning mergers and acquisitions within the industry, thus limiting the entry of new companies.

Soichiro Honda described a previous discussion with Shigeru Sahashi, then the undersecretary at MITI, in a 1983 television interview that was later excerpted in an NHK broadcast of February 5, 1995, entitled, "The Men Who Built the Post-War Economy:"

"I deluged him with complaints," he said, "because I couldn’t understand it at all. To hell with the Specified Industry Promotion Law! I had the right to manufacture automobiles, and they couldn’t enforce a law that would allow only the existing manufacturers to build them while preventing us from doing the same. We were free to do exactly what we wanted. Besides, no one could say for certain that those in power would remain there forever. Look at history," Mr. Honda continued. "Eventually, a new power would always arise. I shouted at him angrily, saying that if MITI wanted us to merge (form a joint venture with another company), then they should buy our shares and propose it at our shareholders" meeting. After all, we were a public company. The government couldn’t tell me what to do."

Insisting that free competition would motivate the industry’s growth, Mr. Honda objected to the Japanese government’s measures, which were of course intended to foster the industry’s standing among the world’s car companies.

His objections, however, did not prevent MITI from submitting the bill to the Diet, and if it were to pass, the company would not be able to enter the business. It was a critical period for Honda.

Honda’s management, thus compelled to secure sufficient car-production records before the Specified Industries Bill could be passed, hurriedly sent an order to Honda R&D in January 1962, saying that development must proceed immediately. The plan was to develop two mini sports cars and two mini trucks, and to exhibit the prototypes at the 11th National Honda Meeting General Assembly (the so-called "Honda Meeting") scheduled for later that year.

The R&D Center’s targeted date of completion had initially been set for April 15, but it was moved to June 5 to accommodate scheduling of the new Suzuka Circuit’s preopening ceremony. On that day, the new models were displayed and test-driven at the Suzuka Circuit, even though portions of it were still under construction.

"The Third Research Section’s design team was originally made up of seven people, but by 1961, it had grown to around fifteen," recalled Masao Kawamura, the man in charge of exterior design. "At first, I was the only one in the molding group who handled automobiles, but by then that number had also increased, making it three of us. Since the company had decided to develop two models at the same time, that number was again increased to six, as a kind of emergency measure. So, there was a six-member mini truck team, and in order to push development it was divided into two groups."

The new prototype bodies were to be based on the previous XA190 and 3XA120 prototypes, which had already been tested and specifications were refined through numerous improvements. Although the team had the advantage of base models, they would still face the challenge of reflecting Mr. Honda’s detailed instructions in their progress.

Testing moved to the water-cooled, inline four-cylinder DOHC engine designated "XA250" following the discovery of certain limitations in the previous air-cooled engine. With this new base configuration they began developing two engine types for the two models, accommodating their respective body shapes and applications. Therefore, the mini sports car’s engine was given the development code "AS250" and the mini truck’s engine took on the code name AK250.

Kawamura, in preparation for the moment when the dummy model would be shown to Mr. Honda, had painted its body reddish orange for a highly appealing look. Upon seeing the dummy model, though, Mr. Honda announced, "The new car is definitely going to be red, but we should use a more vivid red." It was his assurance that the official development order would be forthcoming.

Kawamura, in eager response, painted the body a rich scarlet color and showed it to Mr. Honda a few days later, who liked it very much, and was obviously excited by the appearance. At that time, though, it was prohibited by law to use red or white on any auto body sold in Japan, since doing so might confuse it with an emergency vehicle such as a fire engine or ambulance. Therefore, to obtain approval for the use of red, Mitsugi Akita, then manager of the Development Management Section at Honda R&D, paid numerous visits to the Ministry of Transportation.

"Their response was cold and harsh, to be sure," recalled Akita. "The person in charge even said, ‘I know Honda, but I’ve never heard of Honda R&D." All the way back to the office I felt thoroughly depressed. I was even hesitant about seeing Mr. Honda. Days went by without any results, and Mr. Honda tried to promote his idea through the various media. At one time, he wrote a column for the Asahi Shimbun in which he said, ‘Red is the basic color of design. How can they ban it by law? I’m aware of no other industrial nation in the world in which the state monopolizes the use of colors.’"

Approval was finally granted, though, and with great excitement, Akita went to Soichiro with the news. To his surprise, however, Mr. Honda was quite calm. "Oh, that’s good," was all he said.

"It was only Honda who fought for the right to paint car bodies red," recalled Akita, "Soon, though, the other manufacturers started using it on many of their commercial vehicles."

Numerous people at Honda R&D had been mobilized in order to expedite last-minute adjustments to the car, continuing their work until the day before the Suzuka meeting. In fact, the final touch-ups were performed at the warehouse in Suzuka, and it was not until Midnight, June 4 that the cars were finally completed. The development team’s schedule had been extremely demanding, taking just four-and-a-half months.

"We relied on our youth and stamina to overcome impossible odds," Kawamura said.

The S360’s thrilling entrance was indeed impressive to the representatives of Honda’s franchised dealers who had gathered at Suzuka. They, after all, had strongly suggested that Honda manufacture cars. They wanted to have products they could sell during the winter months, when motorcycle sales experienced a significant decline.

The 9th Japan National Auto Show, a thirteen-day event, was held at the International Trade Center at Tokyo’s Harumi Wharf starting on October 25, 1962. Record crowds totaling over a million attended the show, amply demonstrating that the nation was ready to take on the car culture. There was Honda, proudly displaying its three new models: the S360 and S500 Honda Sports series, and the T360 mini truck. The company’s booth attracted throngs of people, sending a wave of anticipation across Japan and the world.

Honda had to act swiftly, now that the new models were out. What’s more, a record showing the sufficient production of cars had to be prepared before the passage of the MITI bill on specified industries.

June 1963 saw a massive Honda sales campaign, which featured a high-impact advertisement in the country’s leading newspapers. The ad offered prizes to those who could correctly guess the price of the new Honda Sports 500. More than 5.7 million entries (the record for an ad of that type) were received. The price of 459,000 yen was subsequently announced in July, just a month after the ad had run. Surprisingly, that figure was much less than other makers were charging for comparable models. The T360 mini truck went on sale in August 1963, and the S500 sports car hit the market in October.

Honda had been forced by the expected passage of the MITI bill to expedite its entry into auto manufacturing. Although the company had all the needed merchandising technology and expertise in quality control, certain basic requirements had gone unanswered, among which were the essential production technology and facilities for mass production of cars.

Honda’s facilities at the time were designed for motorcycle production, just a small portion of which could be used in the making of cars. Honda contacted its existing parts suppliers for help, along with several new suppliers, all the while investigating ways to utilize the existing infrastructure. Further, the layout of each plant was reviewed in order to secure the space needed for auto production.

Accordingly, it was decided that Saitama Factory (now Wako Plant) could produce engines for the T360 and S500, along with final assembly of the T360. Final assembly of the S500 would be handled by Hamamatsu Factory. The bodies for both models were built at Suzuka Factory for shipment to Saitama and Hamamatsu, while the differentials and transmissions were to be made at Saitama Factory and Hamamatsu Factory, respectively.

The Honda Company Newsletter (Vol. 93) of August 1963 featured an article in which Mr. Honda discussed his ideas regarding the construction of a dedicated auto production plant:

"They say Japan’s economy is stable today, but it’s still heavily influenced by the U.S. Now, Japan has its own automobiles, which is quite an achievement for a "semi-independent" economy such as ours. However, it would be very risky to rush into building a plant.

"We are now manufacturing sports cars in Hamamatsu and trucks in Saitama. However, we are asking our Suzuka Factory and manufacturing machinery factory, not to mention Hamamatsu and Saitama factories, to do their utmost to improve the quality of motorcycles, which are generating profits for us even now. We also want them to utilize their idle machinery, standardize parts and press-dies as much as possible, and do everything they can to utilize the existing facility [for car production]. We should consider building a [dedicated automobile] plant only when we are 100 percent sure that the construction of such a plant will bring us satisfactory results.

"We have become one of the world’s leading makers of motorcycles, and that should remain our foundation. We have to spend some time gathering various ideas that will improve our automobiles, just as we did when developing the Cub. And that’s what I want: an automotive version of the Cub."

The company’s widely dispersed system of production, however, involved every factory and was thus lacking in the efficiency Mr. Honda wanted. It did have certain advantages, however, since all factories were able to acquire some experience in car production. Those involved in production at the factories obtained invaluable insight by applying themselves to develop necessary solutions on a day-to-day basis. This experience at the beginning of Honda’s expansion phase was particularly useful in building Sayama Factory (now Saitama Factory’s Sayama Plant), and ultimately facilitated the launch of auto production at Suzuka.

Several key conditions, however, were identified with regard to the construction of Honda’s first full-scale, mass production auto plant:

[1] Since a car has many parts (nearly ten times as many as a motorcycle), the location must be close to Honda’s key parts suppliers, who have been doing business with Honda since its establishment.

[2] The experience with the initial T360 and S500 production determined the need for a collaborative effort between the research/development side and the manufacturing side. Therefore, the location must be close to the R&D Center.

[3] The location should provide for easy distribution, facilitating the delivery of parts and shipment of completed cars.

The scheduled site of construction for the new manufacturing machinery plant satisfied all these conditions. The location would also ensure collaboration with the Production Engineering departments. For these reasons, Honda decided to build its automobile plant next to the manufacturing machinery plant. The special planning offices for the two plants were merged in June, the same year that the Sayama Special Planning Office was established. In anticipation of the auto facility’s future expansion the site area was increased to 380,190 square meters, an area four times that of Saitama Factory.

The overall concept of the plant was based on Suzuka Factory, a state-of-the-art plant with an air-conditioned, windowless building. To that were added specific requirements, such as a dedicated automobile plant. Just next to the automobile assembly plant (housing the welding, painting, final assembly, and final inspection lines) were the manufacturing machinery plant, which would make the production equipment used by the assembly plant, and the metal casting plant, which would accommodate future needs for in-house pressing, casting, and resin processing. Cafeterias, along with facilities for power generation and employee-welfare, were laid out within the premises, and the entire configuration was divided into three distinct areas.

The land was improved in May 1964, and construction began in June. The entire facility was completed in November.

"We had only a short time once the plan was finalized in order to begin the scheduled plant operations, so the work had to be rushed," remembered Katsumi Hosoda, a member of the Manufacturing Machinery Factory’s Special Planning Office, who was involved in the project from site selection through construction. "To meet the construction schedule, we visited the Business Enterprise Bureau of Saitama Prefecture every day, asking them to expedite certain portions of the Kawagoe/Sayama Industrial Park’s development plan. The requested work included the development of the plot purchased by Honda, the piping of a drainage main to the Iruma River, construction of access roads leading from National Highway Route 16, and the paving of roads around the Honda site. So, at the time Honda was ready to begin operating its plants, other plots were still under development.

"For employee commuting, we also wanted the Seibu Railway to build a new train station near the plants before they began operation," said Hosoda. "It wasn’t that easy negotiating with Seibu to ask that they accommodate our request."

However, the Seibu Shinjuku Line’s Shin-Sayama Station, temporarily housed in a prefabricated structure, opened on November 15. The manufacturing machinery plant completed its relocation from Shirako and immediately began operating.

In November, production of the S600 was transferred from Hamamatsu Factory to the new auto assembly plant. The first production car was completed at Sayama Factory on December 1, signaling the start of Honda’s first dedicated automobile plant. In April of the following year, T360 production, too, was transferred from Saitama Factory.

Sayama Factory was given a unique role among all Honda factories, serving as a dedicated final assembly plant for the production of automobiles.