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National Press Release
 | Lean Improvements, Worker Buyouts Bring Detroit Three Productivity Closer to Asian Rivals, says Oliver Wyman's Harbour Report(TM) 2008Published 2008-06-05 10:04By Oliver Wyman |
DETROIT, June 5 /PRNewswire/ --
- Gap between the most and least productive companies shrunk to 3.50 labor
hours per vehicle.
- Toyota and Chrysler led the six largest multi-plant North American
automakers in total manufacturing productivity (assembly, stamping,
engine and transmission), each averaged 30.37 labor hours to manufacture
a vehicle.
- New UAW contracts will further reduce the total labor cost gap between
Detroit Three and competitors over the next three years.
- Hyundai's Alabama plant posted a very competitive 20.62 assembly hours
per vehicle in its first year participating in The Harbour Report(TM).
2008 Best Plant Awards for Labor Productivity
Vehicle Assembly -- Chrysler Toledo South
Stamping -- Toyota Georgetown
Engine -- Global Engine Manufacturing Alliance (GEMA)
Transmission -- General Motors Toledo
Driven by more consistent, leaner processes and buyouts of tens of thousands workers, the Detroit Three automakers in 2007 nearly erased the productivity deficit against their Japanese-based competitors, despite declining production and shrinking market share.
The difference among the Big Six from the most to least productive in
terms of total manufacturing labor (Assembly, Stamping, Engine and
Transmission) has dropped to 3.50 hours per vehicle (or about
Chrysler showed the biggest improvement, cutting its total manufacturing
labor hours per vehicle by 7.7% to 30.37, the same number recorded by Toyota,
according to
It is worth noting that Toyota fabricates and assembles a greater percentage of its vehicle parts with its own employees, while the Detroit Three purchase many modules and subassemblies from suppliers, thus saving labor. Toyota also has retained nearly all its employees even in plants that experienced lower production. In contrast, GM, Ford and Chrysler have used buyouts and layoffs to reduce labor costs.
General Motors brought its total manufacturing productivity performance to 32.29 hours per vehicle, its 15th consecutive year of improvement. Ford reduced its labor hours per vehicle by 3.7% to 33.88, despite producing 6% fewer vehicles than it did in 2006.
"Improving productivity in the face of lower production is a huge
accomplishment, especially with the pressures created by rising gas prices,"
said
Despite the convergence of productivity numbers, Toyota proved most impressive during Harbour's visits to their plants. Its productivity improvements, in some cases, were offset by a broader mix of vehicles, including the Tundra pickup and Sequoia SUV, more V8 engines and higher volume of the Camry hybrid. In addition, Toyota showed the most improvement in energy conservation, opening more floor space, reducing manufacturing time and line length, and increasing capital efficiency.
Unfortunately, the profitability gap between
"There is no doubt, based on our visits to more than 20 plants over the
last year that continuous improvement in manufacturing processes are taking
hold in just about every company," said
Harbour noted that despite the focus on low labor costs in
The innovative agreements the United Auto Workers reached with the three domestic companies likely will enhance their competitive position in the future.
First, the union agreed to a lower-tier wage -- about
The lower-tier wage may lead Chrysler, Ford and GM to consider bringing the production of certain components and modules back into their assembly plants that have been out-sourced to suppliers who have paid their workers considerably less. How soon and how far any of the three bring work back in-house will depend on the number of high-seniority workers accept buyouts in the coming months.
In its first year in The Harbour Report(TM)
In overall productivity, four of the six companies with assembly, stamping
and powertrain operations in
Among vehicle assembly plants, Chrysler's new
Chrysler's Toledo South plant features an innovative collaboration with
three suppliers. Kuka Group manages the body shop.
The Harbour Report(TM), the auto industry authority on manufacturing efficiency first published in 1989, measures assembly, stamping and powertrain productivity performances -- plant by plant, and company by company -- for North American automotive manufacturers. The labor hours per vehicle measure calculates the total salary and hourly labor content required to produce one vehicle.
By comparison, automakers in
Despite their continuous improvement in plant-floor productivity, Chrysler, Ford and General Motors still use significantly less of their assembly capacity than Toyota and Honda. For example, Chrysler and GM each assembled 88% of the potential number of vehicles they could produce on two 16-hour shifts for 235 days a year. Ford's assembly capacity utilization was 84%, up from 77% in 2006, but well below Toyota's 100% and Honda's 97%. The domestic manufacturers also have a wider range between their least and most utilized plants. Toyota had no plant running at less than 92% of capacity and none running at more than 107%. By contrast, GM's North American assembly plants ranged from 44% to 137%. Ford's were between 47% and 129%, while Chrysler's spanned from 46% to 126%.
Other highlights from this year's Assembly, Stamping and Powertrain chapters include:
Vehicle Assembly
CAMI Automotive, which produces the Chevrolet Equinox, Pontiac Torrent and
Suzuki XL-7 in
Chrysler had four of the 10 most productive assembly plants: Toledo South
(13.57 HPV for Jeep Wrangler); Belvidere (17.09 HPV for Dodge Caliber, Jeep
Compass and Jeep Patriot);
GM's
Toyota averaged 22.35 labor hours per vehicle across the five North American assembly plants included in this year's report, compared with 22.05 hours per vehicle in 2006.
GM led in 11 of the 20 vehicle segments in which it competes: midsize
non-premium conventional car (Buick LaCrosse and Pontiac Grand Prix/
Chrysler led in four of 12 segments in which it competes: compact
non-premium conventional car (Dodge Caliber/Belvidere), compact non-premium
CUV (Jeep Compass, Jeep Patriot/Belvidere); compact non-premium utility (Jeep
Wrangler/Toledo South), and mid-size non-premium SUV (Jeep Grand
Cherokee/
Harbour estimates show Honda remains very competitive. However, Nissan's
performance suffered due to a drop in truck and minivan production at its
Stamping
Harbour uses a stamping index that weighs several labor and equipment
measures to create a composite score of stamping productivity. On that basis,
Toyota's
"In 2007 Toyota was the best stamper, on balance, in the industry," said Harbour. "It is not a matter of spending more than competitors. It reflects regular kaizen improvement activities and the flexibility that comes with well coordinated engineering and manufacturing."
Powertrain
Four of the six largest companies improved engine productivity when comparing plants that were included in last year's report. Toyota still led the field at 3.13 HPE. Chrysler finished second at 3.35 HPE while GM was a close third at 3.44 HPE.
Chrysler's Global Engine Manufacturing Alliance plant in
Toyota's
Chrysler maintained the lead it assumed last year over GM and Ford in
transmission productivity, improving to 3.36 HPT from 3.39, while Ford came in
at 3.62 and GM came in at 3.68 HPT. For the third time in the last five years
GM's
Overall
More than just year-over-year performance,
"Lean manufacturing and continuous improvement efforts do not always
produce immediate improvements, nor are they immediately recognizable," said
More information and performance results can be found in The Harbour
Report(TM)
SOURCE
