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Honda Sets Up To Join Aviation Industry
Honda Motor Co. is gearing up to add aviation construction to their company portfolio, investing $27 million to build a factory in North Carolina. The plant will be located in Burlington and is intended for the manufacturing of engines for small jet planes. It is estimated that the factory will produced 70 new jobs for the area.
Honda has already committed to spending $127 million to build various aviation facilities including $40 million for a factory in Greensboro, North Carolina.
The Greensboro plant will be used to produce an eight-passenger HondaJet in competition with Cessna, a Textron Inc company that is currently the largest producer of business jets.
Richard Aboulafia is an analyst who has consulted with Honda about their plans. "It’s going to be a slow uphill battle," said Aboulafia, "That are going to get a receptive market, but will have to pay to enter it. They’ll probably have to spend as much in marketing costs as they are for facilities."
The factory in Burlington is set to begin production of an HF120 turbofan engine by 2010. Initially the plant will build 200 units, which will then be sold through a partnership created in 2004 with General Electric Co.
The HF120 engine will offer up to 50% more fuel-efficiency that competing turbofan engines, according to Honda. The program manager for the GE Honda Aero Engine partnership also states that the engine will be "the lowest cost to own and operate." Price is estimated to be lower than $500,000 each.
Under the terms of the joint venture, Honda will be responsible for final assembly of the engines while General Electric will provide repair and maintenance for the engines. The venture has already sold over 200 engines according to GE representative Rick Kennedy.
Until now the Honda Aero division has been based in Reston Virginia, and they plan to relocate 15 individuals from that unit. Honda Motor is currently the second-biggest car manufacturer in Japan, behind Toyota Motor Corp. Honda Motor is also the largest motorcycle producer in the world.
The company’s United States automotive base is located in Torrance, California. Honda’s American depositary receipts have fallen a total of 6.2 percent this year.
