Management Turnover as Change Agent

Monday, February 23, 2009

Honda Succession Planning Shines - American Car Cos. Are You Watching?

Japanese automakers continue to show how management is performed.  Toyota recently announced a new CEO and now Honda 7267 (Japanese Exchange), Japan’s third largest car manufacturer, has announced a changing of its guard as well.  Honda has continued its traditioTakeo Fukuin of appointing an engineer to its top job, something American car companies should be considering (particularly General Motors).  In a press release, Honda announced that Takanobu Ito, will take over as president and CEO in late June after the company’s annual shareholders’ meeting.  He will replace Takeo Fukui who has served as president and CEO since 2003.  Fukui has done a tremendous job managing the firm but his age 64 in combination with the current worldwide automobile industry crisis has forced the Japanese to act boldly with regard to its top management.   Acccording to the company’s press release,Takanobu Ito

Ito joined Honda in 1978, and began his career in its automobile research and development operations, principally as an engineer in the area of chassis design…  

From April 1998 to March 2000, Ito was stationed in the U.S. as Executive Vice President of Honda R&D Americas, Inc., where he became actively involved in the development of the Acura brand’s first sport-utility vehicle, the MDX…

In June 2000, Ito was appointed to the Board of Directors of Honda Motor, simultaneously gaining promotion to Managing Director of Honda R&D Co., Ltd. (Honda R&D). He subsequently became President and Director of Honda R&D in June 2003. Ito also took on a role in the area of manufacturing as General Manager of Honda’s Suzuka Factory in April 2005.

In April 2007, Ito became Honda Motor’s Chief Operating Officer of Automobile Operations and a Senior Managing Director from June of the same year.

From April 2009, he will again assume the top position of President and Director of Honda R&D, a position he will continue to hold concurrently after the successful appointment as President & CEO of Honda Motor expected in late June 2009.

Honda unlike most automobile companies has managed to remain in the black especially of late but it also finds itself under severe financial pressure and has been making changes to deal with the current circumstances.  As pointed out  in an article by Hans Greimel of Automotive News Honda faces difficulties,

Honda’s vehicle sales in the United States, its most important market, tumbled 27.9 percent to 71,031 units in January. And its market share slid to 9.4 percent, from 10.8 percent.  

Aside from plunging demand, Honda also is fighting a surging yen. The yen’s rise undermines Honda’s international profits and makes Honda’s exports from Japan more expensive.

The Japanese currency traded around 93 per dollar on Monday, not far from a 13-year high near 87 per dollar hit in January. Fukui has called the range unsustainable and has warned Honda may move more operations overseas to counterbalance the foreign exchange hit — including R&D centers.

 According to a story by AP reporter Yuri Kageyama in the Charlotte Observer,

Both Fukui and Ito said the change at the helm is a message of its determination to turn a new leaf and press ahead with technological innovations - its longtime strength - to lift its sagging business, and have the momentum to be prepared to take advantage of a recovery, when it comes.  

“We are facing hardships that come once in a 100 years,” Ito said.

Ito said he would continue in Fukui’s footsteps in developing ecological and affordable products such as the Insight gas-electric hybrid, which has been a hit since going on sale recently.

“Honda’s strength has been its sensitivity to changing times and ability to respond quickly to customer needs,” he told reporters at the company’s headquarters. “My job is to come up with products that can pave the way for new times.” 

 The announced changes at Honda also mean a dual role for the new CEO.  Ito will not only be the CEO of the firm he will also be the head of the firm’s R&D.  As automobile compnaies find themselves forced to reduce their R&D budgets, Honda continues to show how important R&D is to its long term success and survival.  American automHonda One Year Stock Performanceobile manufacturing companies should start learning from the Japanese, even now as they are throttling toward possible bankruptcy.  Honda’s new CEO selection while a smart move is no guarantee of success.  The automobile industry in general will remain in difficult times for a long period.  Honda’s small size while beneficial when making changes rapidly remains a distinct disadvantage in this market when capital and resources are often needed to maintain survival.  Ito while engineer at heart has shown a keen understanding of business and the auto marketplace.  I expect he will carry on the tradition of his former boss, Fukui, and the company’s founder, Soichiro Honda. Keep a close eye on the business moves Honda takes over the next year.  

For more:  


Management Today UK   




Wall Street Journal  


Dayton Business Journal  

International Herald Tribune  

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