If you go to your Honda Motor Co. dealer to
check out a new car, you might notice that the sticker says the
transmission was made in Japan. And, sure, some car models are
assembled in Japan and imported.
But for cars made in North America, much of
the steel comes from American mills. And that's true for many
"new domestic" automakers, including Honda and Toyota Motor
The new domestics can meet most of their
steel needs in North America, according to representatives for
both Honda and Toyota. And high ocean freight costs and the
weak U.S. dollar only boost the incentive to source steel from
While some grades of steel are difficult to
source domestically, most U.S. mills are producing more
high-strength steels than in the past. Toyota even welcomes the
prospect of more new domestics setting up assembly plants in
the United States because it means more mills will make steels
to the specifications of the new automakers, a Toyota
spokeswoman said. "It helps Toyota because it strengthens the
business case for further investment in steel development and
manufacturing in North America."
Honda's operations in North America source
nearly all of their steel from suppliers in the United States
and Canada, and the automaker is boosting the amount of
high-strength steels in vehicles like the Honda Accord sedan
and the Pilot sport utility vehicle, a spokesman for the
company's North American purchasing operations said. "There are
challenges in the marketplace in procuring steel generally but
also for specialty steels."
The key to keeping both mills and automakers
happy good communication. Honda needs to understand the
capabilities and equipment of the mills that supply it, the
spokesman said, and mills have to know what kind of steels
Honda is looking for. "Because we are ramping up the use of
(high-strength steels), the mills have to ramp it up as well,"
he said. "It's not like you go out on the spot market to buy
The Honda spokesman, like executives at most
automakers, declined to comment on specific details of their
steel contracts with mills. "There are always the dynamics of
negotiations involved in it," he said.
But the relationship between mills and
automakers doesn't have to be adversarial, the spokesman said.
"If a steel mill needs to change their process to increase
production of certain types of steel, we work with them."
In addition, Honda can tell mills what kinds
of volumes to expect over the long term. "Any supplier needs to
feel comfortable if they are going to invest in new equipment
or processes that the business is going to be there for a while
and not disappear," he said.
But as even steelmakers acknowledge, there
are problems working with some high-strength steels, the Honda
spokesman said. While strong and lightweight, some grades of
high-strength steels can prove brittle during the stamping
process and difficult to form.
Nonetheless, high-strength steel content
continues to increase as automakers build vehicles that are
lighter, more fuel efficient and safe, the spokesman said,
adding that over the years Honda and its suppliers have
confronted and overcome similar problems.
Nissan Motor Co. Ltd. declined to comment. A
spokeswoman for BMW AG's operations in the United States said
the company was unable to comment on where it sources steel
because it comes from outside stampers.