CBJ Onsite: Honda Canada
The biggest surprise, approaching the Honda Canada facility, is the sprawl of the space. The Markham-based warehouse is located on a large piece of land set apart from the rest of suburban GTA. It’s a surprise because one might think “why would Honda ever want to be all the way out here?” There are plenty of reasons, those to come.
One thing that is hard to miss is the cleanliness and bareness of the Honda facility site. On the day CBJ interviewed a few employees milled around but, for the most part, Honda employees were doing what they do best—and that’s business.
When CBJ looks at the operations and strategy of a company, we often focus on strengths, on milestones, on overcoming challenges and the nitty-gritty of financial reports. With Honda, we focused on something entirely different: fun.
The motorcycle lifestyle
The motorcycle lifestyle, if you were to ask any Canadian on a bike, is about adventure. Canadians who ride are Canada’s freedom-seekers. These are the people who buy Honda motorcycles.
However, freedom, although a product of what comes with owning a motorcycle, is not the be-all-end-all for Honda. Freedom comes with a price. Honda, as Honda customers know, is about quality, safety, and reliability. The best people to talk to about this mantra are the people at Honda, many of whom have worked there their entire careers.
Getting back to the setting of the Honda facility. It is situated in a large picturesque green area, offering a perfect backdrop for the facility’s intended existence as a “green” property. When CBJ arrived at Honda, we were immediately greeted by the facility’s biggest “green” proponent, Lois Ferg Senior Manager, Administrative Services. Ferg explained that there’s more to the venue than meets the eye, and the facility’s environmental attributes support Honda’s overall commitment to sustainability.
Honda calls its sustainability efforts “Blue Skies for our Children”. As part of their commitment, Honda believes it is important to create cleaner, more fuel-efficient engines. They have focused for years on engine technology. The original 1975 Civic CVCC engine was the first to meet tough low-emission standards of the U.S. Clean Air Act, and over the years Honda has continued to introduce Low-Emission Vehicle (LEV) and hybrid technologies to the Canadian market. They also refined a VTEC engine, and the fuel efficiency of any Honda, as owners know, is superior to most others on the road. Honda also has a prototype electric vehicle and has experimented with a solar powered car.
Honda offers the Honda Insight, a hybrid geared for the traditional car market, and also produces the world’s only hybrid snow blower.
But as we see at the warehouse, it’s not just about fuel-efficient cars; it’s about the bones of the Honda facility itself. One of Honda’s biggest initiatives at the Markham facility is with regards to storm water. The plant is situated on 54 acres and Ferg says that because a significant amount of this land portion is asphalt, something Honda wanted to deal with “responsibly.”
The auto maker has created a filtration system in the parking lot which takes run-off from all the parking lots. The resulting product of this water system is cleaner. In addition to the filtration system, Honda uses its warehouse in an environmentally friendly way. The roof of warehouse collects water and snow, which then is filtered into underground tanks that Ferg says is used to “water the 8,000 plus plants Honda has on the property.”
Honda’s plant also features solar panels, light harvesting in the office interior (lights automatically turn up and down depending on need), and ground-up air conditioning and heating.
Ferg leaves us by saying that Honda’s goal is “to reduce greenhouse gas emissions by 500 tonnes per year,” a lofty goal, but not unrealistic considering the effort put into the warehouse’s “green” initiatives.
Honda Canada began over 40 years ago selling only motorcycles and power equipment, so it only makes sense that this division is critical to the business today. Honda Canada is truly Canadian, in that Honda Canada has sold more Canadian-made vehicles domestically than any other manufacturer and the company buys over $1.3 billion in goods from Canadian suppliers each year. The company employs 4,300 Canadians nationally.
Jerry Chenkin, Executive Vice President of Honda Canada, has been with the company for 35 years, so his experience with the motorcycles and power equipment division spans from its humble beginnings. In the first year that Chenkin worked with Honda, the company sold 80,000 motorcycles—the industry was big at the time. He says that the industry goes through cycles, just like any industry, however, the motorcycle industry also deals with the ebbs and flows of changing demographics.
Motorcycles are not generally commuter vehicles, and in a market like Canada where so many people commute, motorcycle riding is generally sought as an after-work activity. Motorcycles are for fun, and so Chenkin says that “when the economy goes, so goes the motorcycle industry,” which is just one of the challenges Honda has to meet.
Over the years, there have been incredible changes in the motorcycle business, as well as in Honda’s ATV and power equipment businesses. “When people have money, they buy these products,” Chenkin says, reasonably pointing to economic cycles as indicators for the recreational vehicle market. “We know the recession is behind us today because we can see business is improving,” he adds.
Adapting to demographic shifts
How does Honda adapt to shifts in the market? They do the simplest thing an auto manufacturer can do: listen. “Our philosophy is to listen to the voice of the customer, try to figure out what they want, and give it to them,” Chenkin explains. However, he adds that the demographic challenge adds an element to the Honda strategy to promote motorcycle riding.
“We also need to create customers too. So we have been really focusing on how to bring people back to motorcycling. A lot of people left the lifestyle [with the economic shifts] and younger people have not really been into motorcycling. Honda identified several reasons for that, and found out that the environment to buy a motorcycle was not conducive to young people,” Chenkin says. “If you look at all the people riding the traditional big motorcycles there’s a lot of grey hair appearing,” he chuckles.
Clearly, Honda needed to address the demographic challenges of a changing ridership. “We knew we needed to take a counter measure, and then the question was how can we create an environment where people expect very high levels of service, would be happy doing business, and how we would source the products to accomplish this strategy. The motorcycle has to be affordable, easy to ride, and good quality.”
Honda is still addressing how to talk to younger demographic of motorcycle riders. “We need people to tell people, so we’re investigating social media marketing. Our job is to tell them that once they’ve decided motorcycle riding’s going to be fun, come try a Honda. You’ll have everything you’ve ever needed from a motorcycle.”
Honda’s experts realized that they could not control economic shifts, and so they would need to control the product and what the company brought in to ensure that all the stakeholders in the industry would survive and be profitable, and not to mention, safe.
Keeping the company’s focus on the environment and safety has always been critical to the business. That’s the other thing that is noticeable about the Honda Canada facility in Markham—it’s hard to miss the giant safety presentation trailer in front of the entrance to the lobby. We made sure to stop and take in the messages conveyed by the trailer that capitalize on Honda’s safety commitment “Safety For Everyone” which includes various training programs for new riders (New Rider Program) and those who just need a little bit of direction. There is also the Junior Red Riders program for kids aged 6-12.
Chenkin says that Honda has always worried about safety and the environment, long before they were buzz words in the industry. “We have continued with our strategy to make motorcycling and ATVing as safe as they can possibly be, and that starts with education,” he explains. “We’re training people as best we can on how to use the product, and the product itself needs to have safety attributes.”
The newest invention from Honda is the motorcycle airbag. The airbag is designed to help lessen the severity of injuries caused by frontal collisions. Crash sensors located on the front fork measure the change in acceleration caused by the impact, and then send this data to the airbag Electronic Control Unit (ECU). If the calculations warrant an airbag deployment, a signal goes off to inflate the airbag. Currently, the airbag is only available on the 2007/2008 GL1800 AD Gold Wing motorcycles. However, Chenkin says that customers are willing to pay for these added safety features when they feel strongly about them—so Honda will continue innovation in airbags. “It is extremely challenging to produce [the airbag] from an engineering point of view, so Honda is leading the way,” Chenkin says. “Customers basically design those types of attributes. If customers demand it, and they’re prepared to pay for it, then why not [develop it]? The model with the airbag has been extremely successful,” he adds.
Honda is a leader in safety training, and has developed programs (illustrated in the safety trailer) to use around the world. But the buck doesn’t stop at training—Honda believes that the need to ride responsibly and safely needs to be instilled in every new rider. “We want everyone to enjoy riding their motorcycle, and from a hospital bed, that doesn’t work very well,” he comments. Responsible riding is key. “Any bike, if it’s used irresponsibly, can be dangerous. You’re exposed. Under certain conditions anything can happen,” he continues. Chenkin takes safe riding seriously, and personally. “When I see motorcycles being used irresponsibly, those people are painting the industry in this unfavourable light. If people believe that riding a motorcycle is dangerous, then parents prevent their children from riding. That in itself has made it a struggle to get fresh riders into the industry.”
Thus, Honda is working to increase ridership in the younger demographic, and attracting this crowd starts with Honda’s extensive dealer network across the country.
The Canadian dealer network
Motorcycle fanatics, especially those who prefer a Honda, are likely familiar with the Honda Powerhouses located across the Canada. These locations have the most knowledgeable staff, highest quality parts and service available and carry a wide selection of motorcycles, ATVs/MUVs, personal watercrafts, scooters, parts and accessories.
Honda’s dealer network has grown over the years, with one of its biggest challenges being that as the industry fluctuates, the size of the network has fluctuated. “We found out that younger people weren’t interested in a traditional dealership,” Chenkin says. So Honda had to change the way it sold motorcycles throughout its dealer network. They decided to model their motorcycle sales and retail process after their auto process.
“We have 270 auto dealers across Canada, and overall, we want to make sure that our customers who visit those dealers get the best experience. So we decided, if we can use this model with cars, why not do the same with our motorcycle dealers? We revamped our Powerhouse concept so that our auto dealers offer one-stop-shopping,” he continues.
Honda developed retail showrooms where customers can now look at cars, and shop for motorcycles as well. The next step was training Honda sales and technical staff throughout the network, and so Honda implemented an electronic training mechanism, e-training. The company also offers e-conferences and uses electronic means to send out blanket messages to all the dealers in Canada.
It’s all about fun, durability, quality, and reliability
The sales pitch for Honda is an easy one: the brand has always stood for quality, reliability and durability. But the message that Chenkin wants people to remember is that Honda is all about fun. “All of the products we have developed over the years is geared to make life more fun. We want to enable people to take up motorcycling in Canada. It’s all about fun.”
Of course, riding doesn’t just mean having a hot bike. The company’s testament to reliability and quality is reflected in the manufacture of all of their products, including their power equipment lines. Honda products are “fun to use, fun to drive, and fun to ride,” and that means every product: from the lawn mower to Honda’s cars, to their motorcycles. That, says Chenkin, is what “separates Honda from the rest in the industry.”
He adds that their power equipment line is “one of the best kept secrets in Canada.” Honda has been selling their power equipment products for more than 30 years, and quality is high on the list of reasons people stick with Honda power equipment. Chenkin reasons that Honda machines like lawnmowers are purchased because they last forever. “Why do people like our products? Because, for instance, they always start, they are durable. You’ll never have a problem with them. As long as the oil’s been changed, in the spring, you can go out and turn your lawnmower on. The commercial users” like landscapers, he adds, “love Honda products because this is their work and they can rely on our products.”
There are plenty of reasons to buy a motorcycle. Whether you are young or old, experienced or not, motorcycling is fun. But there are even more reasons to buy a Honda motorcycle: from Honda’s environmental approach to business, their commitment to safe riding, right down to their message of “fun”, Honda has stood the test of time. The best evidence of Honda’s success: you’ll find them on the road.