Lifestyle

Good News/Bad News in Detroit


Who says the Japanese are the best when it comes to building cars? A study just released by manufacturing research firm Harbour Consulting shows that six of America's 10 best vehicle assembly plants are run by Ford (F) and General Motors (GM). But there's a catch. Of those six, four are set to close.

That's rough for the workers toiling on the line, especially in Ford's Atlanta plant, which builds the Taurus sedan. It was the most efficient assembly plant last year, taking just 15.4 hours of labor to build a car. The industry average is around 20 labor hours per vehicle.

ONE-TRICK PONY. But the plant will close at the end of this year as Ford sends the Taurus name -- which now sells only to rental car fleets -- into automotive history. Ford says the plant was too far from suppliers and was tooled to make only one model. Since it makes better business sense for plants to produce multiple vehicles, the company no longer wishes to keep the Atlanta plant open. For the union, "it's a difficult pill to swallow," says Harbour Consulting President Ronald Harbour. "When you look at closing a plant, there are a hundred things to consider."

General Motors has five of the top 10 plants. Of those, only the plant in Oshawa, Ont., that builds the Chevrolet Impala and Monte Carlo will remain. Another plant in Oshawa that makes Buicks and Pontiacs will close, as will the Saturn Ion compact car factory, and a midsize car plant in Lansing, Mich.

Overall, U.S. car companies aren't as efficient as the Japanese, but they have made big strides and are getting close. Nissan (NSANY) is tops, needing just 19 hours to assemble a car. Toyota (TM) and Honda (HMC) are next at 22.3 and 22.4 hours a vehicle, respectively. GM is the most efficient U.S. auto maker, requiring 22.4 hours, while Ford and Chrysler, a division of DaimlerChrysler (DCX), lag at 23.7 hours each.

GM says the company is engineering its cars with easy manufacturing in mind so the company can keep making gains. Meanwhile, Japan's productivity gains have mostly leveled off. "I'm optimistic that we'll be able to achieve more," says Gary L. Cowger, GM's group vice-president for global manufacturing.

BIG EDGE. Then you have to take into account the efficiency of the factories that stamp out body panels, or build engines or transmissions. Add in those plants, and Nissan has an advantage of seven labor hours over last-place Ford -- 28.5 labor hours, vs. almost 36 at Ford.

It adds up to real money, too. Harbour says Nissan's productivity edge makes for a cost advantage of $300 to $450 a vehicle as compared with the competition, he says.

There's another key issue: excess production. Car plants tend to lose money when they use less than 90% capacity. Toyota cranks up its assembly lines in the U.S., using 106% of its capacity. That means the company has little downtime with workers and needs fewer rebates and incentive deals to keep sales in line with production. Nissan and Chrysler use about 95% of their capacity.

STABLE SALES.. Here, too, GM and Ford are at a disadvantage. Even with at least 5,000 workers on paid layoff last year, GM used only 90% of its production last year, Harbour says. And Ford used a paltry 79%. Both companies have some plants using as little as one-third of their capacity. That's a big reason why Ford and GM are losing money in North America.

But there's hope. Once the two companies make all of their planned plant closings and jobs cuts over the next couple of years, GM will be using 105% of their capacity and Ford will be using 113% of its production. That assumes that the two companies keep sales stable with last year's results. Unfortunately, GM's sales are down 8% through May, and Ford's sales are off 3%.

That will be the bottom line. Ford and GM have been getting more efficient for about seven years. GM has made the biggest gains and many of its plants -- including those that will remain open -- are among the most efficient in the business. Now they just need to stop the sales slide.


Race, Class, and the Future of Ferguson
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus