Closing the productivity gap

By David Brandt

In May 2007, Harbour Consulting released its annual report on the productivity status of North America’s six largest automobile industry competitors.

The report tracks automotive efficiency by measuring assembly, stamping, and powertrain productivity performances by plant and by company for the North American automotive manufacturing industry. The labor hours per vehicle total calculates the salary and hourly labor content required to produce one vehicle.

According to the report, Toyota Motor Co. leads its rivals in total manufacturing productivity. In 2006, Toyota led with 29.93 hours per vehicle (HPV), though it was slightly longer than its 2005 performance of 29.40 HPV. Honda was second in 2006 with 31.63 HPV, while General Motors ended the year in third at 32.36 HPV.

“Toyota’s edge in the auto industry is its consistency, discipline, and training of its production system,” said Harbour spokesman Greg Gardner. “They have designed and built their plants with the strong belief that they will sell all that they produce at each site – which is uncommon and unlike Honda, Nissan, and others – because their market share is growing in each region (of North America).”

But the gap between the most and least productive companies has been shrinking for several years. For assembly, the gap is less than four hours, Gardner said, and the gap between Toyota and General Motors is approaching one-tenth of an hour per vehicle.

“General Motors has been reducing its labor per vehicle at a time when its market share continues to fall,” Gardner said. “That’s extremely hard to do.”

Change in total manufacturing productivity from 2002 to 2006

  • Toyota
     2002 total: 31.22 HPV
     2006 total: 29.93 HPV
  • Nissan*
     2002 total: 29.37 HPV
     2006 total: 29.97 HPV
  • Honda
     2002 total: 34.53 HPV
     2006 total: 31.63 HPV
  • GM
     2002 total: 37.14 HPV
     2006 total: 32.36 HPV
  • Ford
     2002 total: 39.95 HPV
     2006 total: 35.10 HPV
  • DaimlerChrysler
     2002 total: 40.60 HPV
     2006 total: 32.90 HPV

(*Data estimated by Harbour with publicly available data)

Change in engine productivity by hours per engine (HPE) from 2002 to 2006

  • Toyota
     2002 total: 2.95 HPE
     2006 total: 2.85 HPE
  • Honda
     2002 total: 3.33 HPE
     2006 total: 3.34 HPE
  • GM
     2002 total: 4.00 HPE
     2006 total: 3.44 HPE
  • DaimlerChrysler
     2002 total: 4.87 HPE
     2006 total: 3.60 HPE
  • Ford
     2002 total: 5.47 HPE
     2006 total: 4.59 HPE

(Nissan engine productivity data not available in 2006 Harbour Report)

Change in stamping by parts per hour (PPH) from 2002 to 2006

  • Toyota
     2002 total: 764 PPH
     2006 total: 803 PPH
  • General Motors
     2002 total: 709 PPH
     2006 total: 624 PPH
  • Honda
     2002 total: 638 PPH
     2006 total: 789 PPH
  • DaimlerChrysler
     2002 total: 631 PPH
     2006 total: 684 PPH
  • Ford
     2002 total: 624 PPH
     2006 total: 687 PPH

(Nissan stamping data not available in 2006 Harbour Report)

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