Honda Becomes Latest Automaker to Announce Sweeping Cuts

Not even the rock-solid Honda Motor Company is immune from the lethargic automobile market. Honda announced Tuesday it would cut production in North America by 62,000 vehicles by shutting factories for 13 days starting in May and reduce pay for salaried and factory workers.

The Japanese automaker also offered buyouts and early retirement incentives to most of its 32,400 workers in the United States and Canada.

It was the the first time Japan's No. 2 automaker offered such a sweeping program to reduce payroll costs, a spokesman said.

Honda has assembly plants in Indiana, Ohio and Alabama in the United States, as well as in Canada and Mexico. It also operates two engine plants and two transmission plants in North America.

Like Toyota Motor Corp., Honda previously paid its non-union hourly workers even when it shut down factories to reduce the inventory of unsold vehicles. But the automaker said this time hourly workers would not be paid for 6 of the 13 days, which will be scattered between May 1 and July 31.

Salaried workers will also see compensation reduced in the new fiscal year, which begins today, said spokesman Ed Miller.

Honda did not provide details about its buyout program, a measure Detroit automakers have used to cut payrolls sharply since 2005 by offering up-front payments of up to $100,000 per employee.

Miller said Honda told its employees it expected bonus payments to both hourly and salaried employees would be reduced or eliminated this year.

The steps taken by Honda will have the effect of reducing its hourly wage costs at its U.S. factories just as General Motors and Chrysler LLC face pressure to bring their own compensation levels in line with the pay of workers at U.S. plants run by Honda, Toyota and Nissan Motor Co.

Honda would not provide an overall production or sales forecast for the new fiscal year, Miller said. The company's U.S. sales fell 33.3 percent through February from year-earlier levels.

Source: Automotive News