What a difference a year makes.

DaimlerChrysler AG was renowned for its ability to make profitable vehicles while Nissan Motor Co. Ltd. held fast to its title as the manufacturing efficiency king while losing $17 a unit. The Japanese carmakers were heralded for efficiency, even if they made predominantly cars and a few small engines in North America. General Motors Corp. was the drifting battleship struggling to turn into the wind and embrace productivity head on.

And it all seemed so entrenched.

The June 14 release of the 2001 Harbour Report, an independent annual study of productivity in North America, shows the mighty can indeed fall, the beleaguered can improve, and the efficient can add complexity and still reign.

The financial freefall that beset DaimlerChrysler Corp. in the second half of 2000 and continues into 2001 is almost breathtaking. The carmaker has gone from making $1,497 profit per vehicle in 1999 to a mere $170 in 2000 and losing an incredible $1,874 per vehicle in the first quarter of 2001. Ron Harbour, president of Harbour and Associates, says if DCC's one-time charges are factored in, the Chrysler Group loses $5,900 on every vehicle it builds!

It's a theme that runs through cash-rich Ford Motor Co,. which topped the field in 1999 at $1,735 profit per vehicle, only to see that erode to $999 in the first quarter of this year. Completing the Big Three fortunes is GM's descent from $1,224 in 1999 to $176 per vehicle to start 2001.

Honda Motor Co. Ltd. remains atop the profit podium, despite a small slip in profits to $1,573 in 2001 (fiscal year ended March 31). Toyota Motor Corp. rises to $1,119 in 2000 and drops to $932 in 2001.

The big gains belong to Mitsubishi Motors Corp. and Nissan. Mitsubishi stays in the $650 range in 1999/2000 and jumps to $943 for 2001. Nissan, under the leadership of Carlos Ghosn, has found a way to marry productivity and profit. The company whose Smyrna, TN, assembly plant is perennially the most efficient, sees its profit per vehicle climb to $1,198 in 2001.

The Japanese may have fewer and newer plants in North America, but they have reigned as the most productive since their arrival, says Mr. Harbour. “This is the competition, and these are the numbers to beat.”

As they expand into profitable light trucks, their numbers will only improve at the expense of the Big Three, says Mr. Harbour. Their efficiency may dip slightly, but not enough to lose their supremacy. “Nissan added an SUV, and Smyrna is still 18 to 19 hours per vehicle.” Mr. Harbour expects the new plants to be in the 20- to 23-hour range.

Nissan remains the benchmark for the seventh consecutive year. Total hours to build a vehicle (stamping, powertrain and assembly) is 27.63. Honda (29.11 hours) leapfrogs Toyota (31.06). Ford has lost ground from a couple of years ago, but retains fourth (39.94), with GM less than an hour behind at 40.52.

Among assembly plants, Nissan's Smyrna remains tops at 17.37 hours per vehicle, a 7.1% improvement over last year, showing even the best can continue to improve, followed by Honda and Toyota. Mitsubishi sets a turnaround record in Normal, IL. “They've gone from over 40 hours to less than 24 hours (23.89) in under two years,” says Mr. Harbour, a 40% improvement at a plant making five cars on two different platforms. Part of that was taking out automation that was impeding product flow.

Among the domestics, “Ford is still the best in performance, but GM is improving most rapidly and has the most momentum,” says Mr. Harbour. GM officials credit a 30% reduction in unscheduled overtime as well as quality initiatives dating back to their joint venture with Toyota at New United Motor Mfg. Inc.

Ford clocks in at 25.74, GM at 26.75 and DC pulls up the rear at 31.27.

GM posts the largest multi-plant improvement (9.4%), but Mr. Harbour doesn't expect Ford to relinquish its lead. “It will be a real dogfight in the coming years.”

Mr. Harbour applauds the Big Three improvements, but cautions that double-digit improvements are harder to achieve once you reach the 25 hour/vehicle mark.

Those who are not lean pay a steep price.

If GM were to operate its plants at the same level as Nissan's Smyrna, it would require 38,288 fewer workers. Ford could get by with 30,427 less and DC could lose 26,423 — ironic given its restructuring plan calls for the loss of 26,000 workers over three years.

It adds up to a cost difference of $500 to $700 per vehicle between the best of the Japanese and the best of the Big Three. That is on top of the additional $1,000 to $1,500 per vehicle the Big Three are losing on incentives compared to the Japanese. “So you're looking at $2,000 to $2,500 total cost advantage for the best competitors that could be plowed back into product,” says Mr. Harbour.

And product is key if Detroit wants to reverse this sobering trend of Japanese success at Big Three expense.

“From a manufacturing standpoint, GM looks good, but they need to pair it with products that people want to buy,” says Mr. Harbour.