Productivity Up

Toyota Motor Corp. was the most efficient vehicle producer in North America last year, Chrysler Group is the most improved, and almost every major manufacturer managed to squeeze out some year-over-year productivity improvements in 2004 despite falling volumes, says Ron Harbour, president of Harbour Consulting Inc.

Revealing the results of the Harbour Report North America 2005, a measurement of the productivity of North American vehicle manufacturers, Harbour says the improvements logged by the Big Three — during a year of slowing production, shows manufacturing no longer is Detroit's Achilles' heel.

Toyota's superior overall efficiency, which jumped 5.5% last year (in the operations that participated in the study), still amounts to a $350 to $500 per vehicle cost advantage relative to General Motors Corp., Ford Motor Co. and Chrysler, he says, but falling revenue per vehicle now is the root of Detroit's profitability problems, not manufacturing efficiency.

Even though GM makes lots of expensive vehicles, from Cadillac Escalades to highly optioned Chevy Suburbans and fullsize pickups, the average transaction price for a GM vehicle is a mere $20,659, Harbour says, far below its major competitors in North America and almost $6,000 less than the average price of a Toyota.

When Harbour first started tracking labor efficiency 15 years ago, there was a huge gulf between the productivity numbers of Japanese auto makers vs. Detroit. Now there is little.

Harbour says GM is the auto maker that has improved its efficiency most over the last five years and has the best-established Toyota-style lean manufacturing methods of the Big Three.

But he also gives Chrysler kudos for quickly moving up the rankings. Thanks in part to a 9.5% leap in engine manufacturing productivity, the company has improved its overall efficiency 19% since 2001 in assembly, stamping and powertrain operations, giving it the “most improved” title over the last three years.

Giving another example of GM's manufacturing prowess, however, Harbour points out that GM's Oshawa No.1, Ont. Canada, plant is ranked the most efficient plant overall, with just 15.85 labor hours per vehicle (HPV), overtaking Nissan Motor Co. Ltd.'s Altima assembly line in Smyrna, TN, which has won top honors more often than any other in the history of the study.

Nissan's performance was hurt by the movement of some Altima production from Smyrna to the auto maker's plant in Canton, MS, a spokesman says.