DETROIT – It seems like it's the same headline every year from the “Harbour Report”: Asian auto makers are the most efficient producers in North America, but Detroit's Big Three are “closing the gap.”
That is the story again this year from the closely watched annual study of automotive manufacturing productivity, withMotor Corp. leading the top-six North American producers in productivity this year, followed in lockstep by Motor Co. Ltd. and Motor Co. Ltd.
But 2007 still represents major progress forCorp., Motor Co. and Group.
GM, in fact, had three of the four most-efficient plants in North America in vehicle assembly, engine and transmission production, losing out only tofor the most-efficient stamping facility.
Detroit's Big Three have whittled down what once was a crippling $1,500 manufacturing cost disadvantage to $300 or less says Ron Harbour, president of Troy, MI-based Harbour Consulting Inc., the creator of the report.
Harbour says that decline, which does not include so-called legacy costs such as health care and retirement benefits, means Detroit's competitive woes now are not caused by factory floor problems as they once were.
Instead, he says other issues outside manufacturing now are largely to blame for Detroit's troubles, such as incentive costs, legacy costs and slow response to changing consumer demands.
He adds that recent employee buyouts of thousands of workers and more competitive labor agreements should lead to even more productivity gains down the road.
The difference between the most and least productive in terms of total labor hours for assembly, stamping and powertrain operations was 5.17 hours per vehicle (equivalent to about $300 per vehicle), down from 7.33 HPV in 2005 and less than one-third the 17.17 HPV gap in 1998, Harbour says.
While a Detroit auto maker has never bested Honda,or in overall manufacturing productivity in North America, GM essentially has caught up with Toyota in assembly plant productivity, Harbour says. GM's assembly plant productivity rose 1.2% in this year's report while Toyota's declined 3.3%, in part because of several major product launches.
“Considering they will be building vehicles in 2007 with dramatically fewer employees in the U.S., GM,and likely will reduce their hours per vehicle significantly,” Harbour adds.
Of course, Asian auto makers were not standing still. Even though its productivity slipped from last year, Toyota still led North America's top six auto makers in overall manufacturing productivity, with 29.93 HPV.
Honda was the leader in strictly assembly plant productivity, using just 21.13 HPV and also showed the biggest improvement (2.7%) in the combined measure of assembly, stamping and powertrain.
Nissan, which usually ranks No.1 or No.2 in the study overall, for the first time declined to participate, forcing Harbour to estimate its performance. The auto maker, which has been rapidly expanding in North America, also has been struggling with manufacturing and production issues for the past two years. Harbour estimates its total HPV at 29.97, down 5.3%.
- Chrysler's new Global Engineering Mfg. Alliance engine plant in Dundee, MI, faired well in the study, ranking third in the top-10 best engine plants, behind GM's Spring Hill, TN, facility and Toyota's Buffalo, WV, plant.
- While it may sound counter-intuitive, Harbour says the correlation between quality and productivity continues to strengthen, with the most efficient plants also producing the highest quality products.
- Fewer plants are producing more vehicles and a wider variety of models, thanks to improved plant flexibility and productivity gains throughout the industry.