Honda Expands With New Factory In Japan

Honda Motor Co. is planning to do something it hasn’t done for almost 50 years: open a car factory in Japan this July. In 1964, just as the country was preparing to host the Olympic Games, Honda inaugurated a plant in Sayama, near Tokyo. That factory, along with two older ones, met surging Japanese domestic demand as the country prospered. And since the early 1990s, when asset prices collapsed, ushering in Japan’s “lost decade,” there has been little need for expansion.
The new factory, with an annual capacity of 250,000 vehicles, is opening just as a weaker yen is making Japanese manufacturers such as Honda more profitable. Plans for the new plant were unveiled in July 2010 as part of Honda’s efforts to build smaller, more fuel-efficient vehicles.
In recent months, investors have flocked back to Japan, pushing the benchmark Nikkei 225 Stock Average to levels unseen since 2008. Evidence of a broader recovery is growing as economists predict the economy will emerge from recession this quarter. The factory, in Yorii, a downtrodden city of about 36,000 two hours northwest of Tokyo, illustrates how that optimism is spreading from Tokyo’s trading floors to smaller towns.