U.S. automakers now as productive as the Japanese?

U.S. automakers continued to narrow the productivity gap between them and Japanese manufacturers last year, with DaimlerChrysler AG's Chrysler Group making the biggest strides, the authors of a closely watched study said Thursday.

Meanwhile, the assembly plant designated the most productive of 2005 by the Harbour Report, is one that is scheduled to close: Ford Motor Co.'s facility near Atlanta.

The annual study, which compares labor productivity at six companies with North American plants and is published by Troy-based Harbour Consulting, put Nissan Motor Co. in the lead with an average of 28.5 hours per vehicle. Ford was last at 35.8 hours.

Ron Harbour, president of Harbour Consulting, said in a statement that Nissan's productivity lead amounts to a cost advantage of $300 to $450 per vehicle over less productive manufacturers.

The domestic Big Three have been steadily catching up to Japanese automakers. The difference between the most productive and the least productive narrowed to 7.3 hours in 2005 from 9.1 hours in 2004 and 16.6 hours in 1998.

Japan's Toyota Motor Corp., which took first place in 2004, came in second at 29.4 hours, followed by Honda Motor Co. at 32.5 hours. General Motors Corp. was close behind at 33.2 hours, followed by Chrysler at 33.7 hours.

Chrysler improved 6 percent over its 2004 average of 35.8 hours, the biggest move of the six automakers.

The report, first published in 1989, measures productivity at assembly, stamping and engine and transmission plants. It calculates the number of hours worked by salaried and hourly employees at a plant and divides that by the number of units produced.

"The relative ranking of the six largest automakers is likely to change in the next couple of years, and the leaders could be anyone," Ron Harbour said in the statement.

Among assembly plants, the Ford facility outside Atlanta stood out with 15.4 hours per vehicle. The plant is one of seven Ford announced it is closing by 2008 as part of its restructuring.

"Ford Atlanta has had one of the best work forces of any assembly plant in the industry and the data proves that," Harbour said. "The decision to close the plant had nothing to do with the dedication of the people, from whom Ford has learned many competitive practices over the years."

Despite the narrowing productivity gap, the automakers remain far apart by other measures, the study's authors noted. Capacity utilization hovered at around 100 percent for Toyota, Nissan and Chrysler, while Ford's assembly plants ran at 79 percent of their potential output.

Another big difference is profitability. Nissan, Toyota and Honda each earned more than $1,200 before taxes on every vehicle they sold in North America in 2005. In contrast, Chrysler Group earned $223, while Ford lost $590 and GM lost $2,496 on each vehicle. This reflects differences in health care and pension costs, as well as rebates and low-interest financing used to cut inventories, the report said.

Source: Harbour Consulting http://www.harbourinc.com

dblo7 - 6/1/2006 1:34:44 PM

+1 Boost

Gotta love the UAW. Japan Gov't helps Toyota and Honda with medical and other needs for their employees which is a big help. TM and Honda also do not have the burden of unions. GM and Ford gets stuck with the bill for every employee and theres the UAW (PAY ME $50/HOUR OR I AM ON STRIKE! WHAT! I DON'T NEED NO HS DIPLOMA FOR THIS JOB!)

Hmmmmm wonder why TM and Honda make profit. Gov't support maybe?!?

sedaine - 6/1/2006 2:19:02 PM

+1 Boost

I guess the Ford Atlanta plant went against compnay productivity policy! How dare they be the most productive in the US. Let's shut them down!

XYZZ - 6/23/2006 8:14:29 AM

+1 Boost

you must have also read the book, The Machine that changed the World.

all that you say is absolutely true.

the part that most struck me, was when the researchers asked the germans working in the MB "set aside" area fixing faulty cars before shipment, what exactly they were doing.

the response was something like, "We are using our reknowned German Craftsmanship to ensure that only quality vehicles leave the workshop."

the researchers had to RESTRAIN themselves from pointing out, that they were spending more time to FIX the sloppily assembled cars, than it took toyota to COMPLETELY assembly near perfect cars to begin with.


to clarify for others who've not read the book, the authors classified assembly processes thusly: 1) craft builders (essentially using "fitters" as in pre-Ford factories), 2) mass assembly factories, and 3) lean assembly, as developed by the japanese.

most euro makers did not switch from "craft" to mass assembly until after WWII. and have STAYED there, too proud to consider the lean system which gives japanese-type plants better efficiency AND quality. the gm/opel exception stunned traditionalists who bothered to investigate.

the book was published in the late 1980s, and i wonder if things have actually changed much since.

ted_in_boston - 6/27/2006 9:59:32 PM

+1 Boost

This is a quote from a recent Wall Street Journal article "A Tale of Two Auto Plants", which compared GM's best performing SUV plant (Arlington, TX) to Toyota's soon-to-be built Tundra plant in San Antonio:

"In Arlington, GM pays union-scale wages of $26.50 to $30.50 an hour to its 2,800 hourly workers there. On average, GM pays $81.18 an hour in wages and benefits to U.S. hourly workers, including pension and retiree medical costs. At that rate, labor costs per vehicle at Arlington are about $1,800, based on the Harbour Consulting estimate of labor hours per vehicle.

In San Antonio, Toyota will use non-union labor and will start its 1,600 hourly workers at $15.50 to $20.33 per hour, which will grow after three years to $21 to $25. Harbour Consulting President Ron Harbour estimates Toyota's total hourly U.S. labor costs, with benefits, at about $35 an hour -- less than half of GM's rates. The brand-new plant won't have any direct retiree costs for many years. So if the San Antonio factory does no better than match the Arlington plant in productivity, it could still enjoy a labor cost advantage of about $1,000 per vehicle"