March 7, 2008: 5:46 AM EST
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Honda (pg. 2)

By Alex Taylor III, senior editor

Right now, for example, scientists at the Honda Research Institute, established in 2003 as part of R&D, are conducting experiments in material and computer science that may never pay off. One recent project financed the development of nanocars the width of a single strand of DNA. The nanocar features a chassis, a pivoting suspension, and rotating axles, and yes, it can move. The market for cars too small to see is not a large one, but the point is that such efforts get Honda's car-obsessed researchers thinking. Now HRI is looking into the use of high-strength nanotubes made from carbon to use in automobile bodies.

As an engine company that specializes in transportation - it is still the world's largest manufacturer of motorcycles - Honda allows its engineers wide latitude in interpreting its corporate mission. "We've been known to study the movement of cockroaches and bumblebees to better understand mobility," says Frank Paluch, a vice president of automotive design. Honda R&D gets about 5% of Honda's annual revenues. Most of the money goes to vehicle development, not cockroach studies, but there is plenty left over for special projects, in part because Honda limits the number of models it makes: There are 15 for sale in the U.S., compared with 28 for Toyota.

Honda R&D has a distinct identity within Honda - a cult within a cult. All employees at research centers (there are 13 in North America) wear white uniform pants and jackets with a red Honda logo embroidered over the pocket. In the U.S. there are more than 2,000 R&D engineers; they have a reputation within the company for a kind of edgy attitude. At the offices in Dublin, Ohio, a stone's throw from Honda's Marysville factory, engineers often roar to work on motorcycles. "We have a lot of boy racers," says Paluch, vice president of automotive design at Dublin. "Not a heck of a lot of bean counters drive in here."

The birth of the Hondajet captures R&D's spirit. In 1986 a young engineer named Michimasa Fujino was plucked from his work on the NSX sports car to join a team beginning research into aviation. Honda later put the project on the back burner, but the group persisted, toiling away discreetly in a corner of the research center outside Tokyo. In 1997, Fujino proposed a new design for the plane with the engines mounted above the wings; this made for a roomier cabin and greater fuel economy. The unconventional design won over management, and the project moved from the corner to the heart of things.

The Hondajet made its first flight in 2003, and the company began accepting orders for it in 2006. One of the first of a new class of very light passenger jets, it is due to go on sale in 2010 for $3.9 million - or about 125 times more than the most expensive Accord. Honda has already booked more than 100 orders and thinks it can sell 70 planes a year, mostly to corporate fleets and the nascent air-taxi industry. Kato anticipates a "ten- to 20-year payout."

To channel its freewheeling ways, R&D managers meet annually to review the most promising projects. Each gets specific timelines that are closely watched. Within this disciplined framework, though, R&D's expansive charter leads it in directions no other car company would attempt. For instance, Honda isn't just developing exotic engines but the infrastructure to service them as well, such as a hydrogen home-refueling station that takes up the space of a refrigerator.

For the more conventional work of developing new models, R&D is reined in to a degree, working with the parent company's sales and manufacturing divisions. When R&D wanted to introduce a new body structure to protect pedestrians as well as occupants in a frontal crash, it meant redesigning components like the bumpers and windshield wipers and raising the profile of the hood. That changed the way the cars looked and introduced some wrinkles into the manufacturing process. Those kinds of competing priorities can make cooperation stressful.

CEO Fukui likes to say that Toyota "spends a lot of money on advertising but not so much on R&D." At times, however, Honda R&D's lack of consumer orientation has led it astray in a way that would be almost unthinkable at Toyota. When Honda launched the hybrid Insight in 1999, for example, it beat all manufacturers to the U.S. market (the Toyota Prius came six months later). But while the Prius looked like a conventional small car, the Insight resembled a science project; it didn't even have a back seat. Honda halted production in September 2006 after sales dropped to embarrassing levels. Toyota sold more than 180,000 Priuses last year.

Such miscues can happen when scientists are behind the wheel. Recognizing that, Honda reorganized R&D two years ago to tie it more closely to specific business functions. The intent is not to clip R&D's wings; Honda scientists are still encouraged to think expansively. But as a project approaches the market, the company is asserting more supervision. Besides, mistakes like the Insight are also the exception. R&D has provided Honda with a long list of engineering firsts that consumers liked, including the motorcycle airbag, the low-polluting four-stroke marine engine, and ultralow-emission cars. Honda thinks it has another winner next year - a small hybrid (still unnamed), that will sell for less than $20,000. Details are still secret, but this one is likely to have a back seat. Asimo is quiet about it; the robot is not programmed to have an opinion just yet. Paluch, though, has a vision: "Asimo, jet planes, automobiles - they are all going to converge at some point," he predicts. No, he doesn't know how or when. Neither does Kato. But then, they don't need to. Honda is willing to let them dream.  To top of page

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