Honda cuts production in Ohio, slashes overtime

From Wire Reports

Honda Motor Co. is cutting production by 18,000 vehicles and slashing overtime at its operations in North America.

In Ohio, that means the cancellation of production Dec. 22 and 23, the last two days of work before a scheduled holiday shutdown. For those two days, workers can take vacation, report for nonproduction duties or take unpaid leave.

In addition, overtime is being eliminated at most plants, in some cases through the end of the company's fiscal year in March.

No layoffs are planned, spokesman Ron Lietzke said.

Lietzke said the overtime decision was based on a need to reduce production, not to reduce payroll expenses. He declined to say how the change might affect a typical worker's take-home pay.

The company brings workers in on Saturdays, on overtime, when it needs to increase capacity to meet orders. That occurred most recently in the summer, when high fuel prices led to strong demand for the Honda Civic.

The cuts are on top of others announced earlier this year and bring the automaker's total production cuts since August to 50,000 units. Honda spokesman Ed Miller cited industry wide drop in demand for new vehicles.

Miller said 12,000 of the cuts will be made at Honda's plant in Lincoln, Ala., which makes the Odyssey minivan and Pilot sport utility vehicle.

The other 6,000 will be made at a plants in East Liberty, Ohio, which makes the Element, CRV and Civic; and Marysville, Ohio, which makes the Accord along with the Acura TL and RDX, Miller said.

With the cuts, Honda said it now expects to produce about 1.41 million vehicles in North America for the fiscal year ending March 31, down from 1.44 million in fiscal 2007.

The changes, although barely a blip compared with the upheaval at domestic automakers, follow one of the worst months in recent memory for U.S. auto sales. Honda's sales were down 25 percent in October compared with a year earlier. Industrywide, new-car sales were down 32 percent.

"Honda isn't immune to a recession of this magnitude," said Erich Merkle, an automotive analyst with Crowe Horwath in Grand Rapids, Mich.

"I think October really spooked a lot of people, including Honda," he said.

For the year, Honda is one of the best-performing automakers, with sales down 3 percent, compared with industry sales that are down 15 percent.

Tough economic conditions and tight credit markets have cut into auto sales across the industry this year, forcing many automakers who produce vehicles in the United States to cut production.