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Thu, May 18, 2006 - Page 10 News List

Honda announces big expansion plan

BUSINESS BOOMING The auto giant has announced that it will open two new plants in North America and one in Japan, its first new plant there for a quarter of a century

AP , TOKYO

A customer looks over a Honda Civic in Tokyo last month. Honda announced on Tuesday that it will build an engine plant in Canada and new passenger car facilities in the US and Japan. The move is part of the automaker's effort to meet increasing global demand for fuel-efficient cars.

PHOTO: EPA

Honda Motor Co announced sweeping expansions plans yesterday to spend US$1.18 billion on new plants in the US, Canada and Japan, and boost production to meet soaring demand for its cars.

The three factories -- auto assembly plants in Japan and the US and an engine plant in Canada -- are aimed at meeting an ambitious 34 percent jump in annual sales to 4.5 million vehicles a year by 2010, Honda president and chief executive officer Takeo Fukui said.

Honda is tapping record profits and sales to boost output, particularly in North America, a region accounting for about half the company's annual global sales. The upgrade contrasts sharply with the fortunes of US automakers General Motors Corp and Ford Motor Co, which have shuttered plants and laid off workers.

Honda sold 1.65 million units in North America last year, including Mexico and Canada, and forecasts sales to climb to 1.72 million units in the current year.

Demand is especially hot for fuel efficient cars like the Civic, which comes in a gasoline-electric hybrid model. Honda said yesterday it would bring a new hybrid model to market by 2009.

"We have been looking at changes in demand and decided to expand our capacity," Fukui said at a Tokyo news conference. "Competition on a global scale is expected to intensify."

The investment marks the company's sixth assembly plant in North America, and its first new plant in Japan in 25 years.

Fukui did not specify the location of the new US plant, although Ohio and Indiana have expressed interest in hosting it. The automaker already has two plants in Ohio and one in Alabama. It also has a plant each in Canada and Mexico.

The US factory will cost US$400 million and employ 1,500 workers, Fukui said. That plant would boost the company's North American production capacity from 1.4 million to 1.6 million vehicles.

In addition to the new plants, the company will double vehicle production at its plant in Brazil to 100,000 units by 2008, and double output in India to 100,000 by next year, Fukui said.

The Japanese plant will be in Saitama, just north of Tokyo, Fukui said. It will cost ¥70 billion (US$640 million), employ 2,200 workers, and boost Honda's domestic production by 200,000 units to a total of 1.5 million vehicles a year.

The Canadian plant, scheduled for operation in 2008, will be built next to an existing assembly plant in Ontario and cost US$140 million.

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