Nissan lead auto productivity with an average of 28.5 hours per vehicle

U.S. automakers continued to narrow the productivity gap between them and Japanese manufacturers last year, with DaimlerChrysler AG's Chrysler Group making the biggest strides, the authors of a closely watched study said Thursday (via AP)

The annual study, which compares labor productivity at six companies with North American plants and is published by 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. 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.

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.

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

. Toyota came in second at 29.4 hours.
. Honda's third-place score of 32.5 hours was half an hour more than last year's.
. General Motors was close behind Honda at 33.2 hours
. Chrysler was at 33.7 hours, improving 6% over its 2004 average of 35.8 hours, the biggest move of the six automakers.

The Harbour Report, first published in 1989, measures 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.

Harbour noted that 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.
. 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.

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