Saturday, June 03, 2006

Local GM plant grabs first-place honor

Posted on Fri, Jun. 02, 2006

U.S. automakers narrow productivity gap
Local GM plant grabs first-place honor
By Sarah Karush

Associated Press

DETROIT – U.S. automakers continued to narrow the productivity gap between themselves 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.

The Harbour Report, first published in 1989, measures combined 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.

General Motors Corp.’s Fort Wayne assembly plant grabbed first-place honors in the assembly-only segment for full-size pickup trucks. The automaker employs about 2,850 hourly workers at the plant on Lafayette Center Road, where it manufactures the GMC Sierras and Chevy Silverados.

The operation averaged 19.18 assembly hours per vehicle. The average for the 14 North American assembly plants in the same category was 23.18 hours.

Since 1998, GM has closed the assembly production gap between it and Toyota by more than 90 percent, spokesman Dan Flores said.

GM plants finished first, third and fourth in the full-size pickup assembly category, he said.

“That’s obviously very important to us. Full-size pickups are a high-volume product” that contribute to the company’s profitability, Flores said. “Performance like this is helping turn around the company.”

Productivity means money. Ron Harbour, president of Harbour Consulting, said Nissan’s productivity lead amounts to a cost advantage of $300 to $450 per vehicle over less productive manufacturers.

Nissan’s productivity figure compares with 29.4 hours in 2004 and does not include its plants in Mexico, which do not participate in the voluntary data-sharing on which the report depends.

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.

Recent improvements in productivity have come largely from improvements in quality, Harbour said at the report’s presentation in Detroit.

“We live in a world where we think quality costs more, and that’s completely backwards,” he said.

Because quality is up, plants are spending far less time repairing vehicles when they come off the line, he said.

Although the three major Japanese manufacturers stayed on top, two of them saw productivity fall.

Toyota Motor Corp., which took first place in 2004 at 27.9 hours, came in second in 2005 at 29.4 hours. Honda Motor Co.’s third-place score of 32.5 hours was half an hour more than last year’s.

GM was close behind Honda 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.

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

“When you evaluate closing or retaining a plant, there’s hundreds of criteria,” Harbour said. “Productivity is only one of them – certainly an important one, but it’s not the only one.”

The plant’s distance from major supply routes was likely a key factor, he said.

The No. 2 assembly plant for productivity, GM’s Oshawa, Ontario plant, also is scheduled for closure.

Harbour said GM and Ford made productivity gains even as they cut their volumes, something that historically is difficult to do.

Despite the narrowing productivity gap, the automakers remain far apart by other measures, the study’s authors noted. Capacity utilization ranged from 106 percent at Toyota’s assembly plants to 79 percent at Ford’s.

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, according to the study. 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.

On the New York Stock Exchange, GM shares closed 3 cents lower at $26.90, while Ford gained 7 cents to $7.23. DaimlerChrysler’s U.S. shares fell 3 cents to finish at $52.58 on the NYSE, while Toyota’s U.S. shares rose $1.26, or 1.2 percent, to $108.64 and Honda’s U.SA. sales rose 41 cents, or 1.2 percent, to $33.44. Nissan’s U.S. shares rose 49 cents, or 2 percent, to end at $24.74 on the Nasdaq Stock Market.


Local angle

•GM’s Fort Wayne assembly plant ranked first in productivity among 14 full-size pickup truck plants in North America.

Sherry Slater of The Journal Gazette contributed to this story.


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