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NINETY EIGHT REGENCY

GM Plants Score Well In Harbour Reoprt

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Toyota is tops in new Harbour manufacturing report

Automotive News

May 31, 2007 - 10:16 am

UPDATED: 5/31/07 10:40 A.M.

Toyota was the top-ranked automaker in the 2007 Harbour Report on manufacturing in North America, with a combined 29.93 labor hours per vehicle. That score covers stamping, engine production, transmission production and vehicle assembly.

General Motors plants were ranked at the top of three of those four categories.GM's Oshawa, Ontario, No. 2 plant was top-ranked in vehicle assembly; the Spring Hill, Tenn., plant was top-ranked in engine production; and the Toledo, Ohio, plant was top-ranked in transmission production.

Honda's Marysville, Ohio, plant was top-ranked in stamping.

The gap in productivity among the six major North American automakers continued to narrow as quality advances and more-flexible labor agreements drove improvements, according to the report.

Honda Motor Co. Ltd. showed the biggest improvement this year of 2.7 percent in the combined assembly, stamping and powertrain operations, the report said.

In overall productivity, GM, Honda, the Chrysler group and Ford Motor Co. showed improvement in 2006.

"General Motors essentially caught Toyota in vehicle assembly productivity," Ron Harbour, president of Harbour Consulting, said in a statement. "Considering that they will be building vehicles in 2007 with dramatically fewer hourly employees in the U.S., GM, Ford and Chrysler likely will reduce their hours per vehicle significantly."

Harbour Consulting measures productivity at North American plants, calculating the labor hours needed to make vehicles.

Productivity improved for each of the Detroit-based automakers over 2005, but they still trailed Toyota and Honda.

GM trimmed total production hours per vehicle by 2.5 percent in 2006 to 32.36 hours. Chrysler improved 2.4 percent in 2006 to 32.90 hours across its assembly, stamping and powertrain plants. Ford productivity improved 1.9 percent, but trailed all of the surveyed automakers at 35.10 hours.

Nissan Motor Co. Ltd., which has long been among the top-ranked companies in the report, did not participate in this year's report, but Harbour estimates it took 29.97 hours to build a vehicle last year.

All three Detroit automakers are in the midst of shutting plants and cutting jobs in North America as they restructure operations. On a combined basis, they are closing more than two dozen plants and cutting over 80,000 jobs in North America.

By closing plants in the next two years, all three should improve capacity utilization, the report said.

While production times narrowed among the automakers, big gaps remained in profitability, however.

Toyota and Honda each earned an average pre-tax margin of more than $1,200 on vehicles sold in North America. In contrast, Chrysler lost $1,072 per vehicle, while GM lost $1,436 and Ford lost $5,234 per vehicle in 2006.

The losses reflected a variety of factors, including the large difference in health care and pension costs, as well as rebates and low-interest-rate financing, the report said.

Reuters contributed to this report.

Harbour Report press release

This is the press release detailing the results of the 2007 Harbour Report:

PRESS RELEASE: Toyota Leads in Total Manufacturing Productivity, Says Harbour Report 2007, but Domestics Continue to Narrow the Gap

-- Toyota leads the six largest competitors in total manufacturing productivity (assembly, stamping, engine and transmission), using 29.93 labor hours per vehicle.

-- General Motors wins 3 of 4 Best Plant awards.

-- Honda leads the six largest in vehicle assembly productivity with 21.13 labor hours per vehicle.

-- The gap among the six major North American automakers continues to narrow.

-- The correlation between quality and productivity continues to strengthen.

-- Improved labor productivity allows money to be redirected to make future vehicles more appealing.

-- Flexibility through more competitive labor agreements is beginning to pay off, but more must be done.

-- GM and Ford buyouts partially offset volume losses, and will have a bigger impact in 2007.

-- Fewer plants are producing more vehicles and a wider variety of models supported by flexibility and productivity gains throughout the industry.

Best Plant Awards

Vehicle Assembly -- GM Oshawa #2

Stamping -- Honda Marysville

Engine -- GM Spring Hill

Transmission -- GM Toledo

The manufacturing productivity gap among North American automotive manufacturers continued to narrow as quality advances and more flexible labor agreements drove major improvements, according to The Harbour Report™ North America 2007, the annual study released today by Harbour Consulting.

The larger gap in financial performances of the Detroit-based and Japan- based automakers reflect domestic companies' higher incentive costs, legacy costs and their slower response to shifts in consumer choices more than any large competitive disadvantage on their factory floors.

"Improving productivity in the face of lower production is a huge accomplishment, but none of the domestic manufacturers can afford to let up," said Ron Harbour, president of Harbour Consulting. "General Motors essentially caught Toyota in vehicle assembly productivity. Considering that they will be building vehicles in 2007 with dramatically fewer hourly employees in the U.S., GM, Ford and Chrysler likely will reduce their hours per vehicle significantly."

The UAW and CAW were more proactive in 2006 than ever before in creating a more competitive environment among the companies whose hourly workers they represent. Chrysler, General Motors and, especially Ford, negotiated more flexible local labor agreements prior to this summer's pivotal national talks with the UAW. However, they must go further to overcome their persistent health care and pension cost disadvantage vs. Honda, Nissan and Toyota. Restrictive labor agreements that create cost disadvantages still exist and could jeopardize the survival of certain automakers.

The difference between the most and least productive in terms of total (Assembly, Stamping and Powertrain) labor hours was 5.17 hours per vehicle (or about $300 per vehicle), down from 7.33 hours per vehicle in 2005, and less than one-third the 17.17 HPV gap in 1998.

This year, Honda's showed the biggest improvement (2.7%) across this combined assembly, stamping and powertrain measure.

In overall productivity, four of the six companies with assembly, stamping and powertrain operations in North America -- GM, Honda, Chrysler and Ford -- showed improvement in 2006.

Nissan Motor Co. did not participate in this year's report. Toyota's total manufacturing hours per vehicle, while leading the way among the participating companies at 29.93 HPV, was not as strong as its 2005 performance of 29.40. Honda was second at 31.63 HPV.

Among vehicle assembly plants, GM's Oshawa #2 plant, which assembles the Pontiac Grand Prix, Buick LaCrosse and Buick Allure, set the individual plant benchmark for labor productivity with a measure of 15.68 hours per vehicle, followed closely by its adjoining Oshawa #1 plant that produces the Chevrolet Impala and Monte Carlo, Oshawa #1 posted a 16.34 HPV performance.

"GM Oshawa historically has had one of the best work forces of any assembly plant in the industry and the data proves that," Harbour said. "The total site builds 20% of GM's North American volume and does it well."

The Harbour Report™, 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.

This year's Harbour Report™ provides an even broader assessment of factories, adding Volkswagen's Puebla, Mexico, plant; General Motors' new Delta Township assembly plant near Lansing, Mich.; and Toyota's plant in Baja, Mexico.

DaimlerChrysler, Ford and General Motors still have a wider variation in capacity utilization among their assembly plants, while they continue to work on plant flexibility. By closing plants in the next two years, all three domestics should see improvement on capacity utilization. Others, such as Toyota, which had its assembly plants running between 95% and 108% of capacity, are leveraging their design, engineering and manufacturing organizations to increase flexibility and use common parts and processes.

The other differentiator is profitability. Toyota and Honda each earned a pre-tax margin of more than $1,200 on every vehicle they sold in North America. In contrast, Chrysler Group lost $1,072, while General Motors lost $1,436 and Ford lost $5,234 on each vehicle sold in 2006.

This reflects a variety of factors, including the large difference in health care and pension costs, lower average revenue, as well as higher costs of rebates and low-interest rate financing required to trim inventories.

Other highlights from this year's Assembly, Stamping and Powertrain chapters include:

Vehicle Assembly

Honda led all multi-plant companies in assembly performance with 21.13 hours per vehicle, but CAMI Automotive, which produces the Chevrolet Equinox, Pontiac Torrent and Suzuki XL-7 in Ingersoll, Ontario, achieved a 17.85 HPV and the New United Motors Manufacturing Inc. (NUMMI) plant in Fremont, Calif., posted an impressive 19.34 HPV.

General Motors had four of the 10 most productive assembly plants: Oshawa #2 (15.68 HPV for Pontiac Grand Prix, Buick LaCrosse and Allure); Oshawa #1 (16.34 HPV for Chevrolet Impala and Monte Carlo); Fairfax, Kan, (17.89 HPV for Chevrolet Malibu and Saturn Aura); and Lordstown, Ohio (19.17 HPV for Chevrolet Cobalt, Pontiac G5 and Pursuit).

Toyota's Georgetown #2 plant, which produces the Camry and Solara, ranked 10th with 19.77 HPV, an impressive feat considering that it launched the new Camry and the Camry Hybrid during 2006. Overall, Toyota's assembly performance declined 3.3% from 2005. Despite a 13% increase in North American sales Toyota's North American production volume actually declined 4% at the five assembly plants participating in The Harbour Report™ North America.

GM also led in 12 of the 23 vehicle segment ratings: compact non-premium conventional car (Saturn ION/Spring Hill), large non-premium conventional car (Chevrolet Impala/Oshawa #1), large non-premium pickup (Chevrolet Silverado- GMC Sierra/Fort Wayne), large non-premium SUV (Chevrolet Tahoe, GMC Yukon/Arlington, Texas), large non-premium van (Chevrolet Express, GMC Savana/Wentzville), full-size luxury sedan (Cadillac DTS/Detroit-Hamtramck), large premium SUV (Cadillac Escalade/Arlington, Texas), mid-size non-premium sports car (Chevrolet Monte Carlo/Oshawa #1), mid-size premium conventional sedan (Cadillac STS/Lansing Grand River), mid-size premium crossover (Cadillac SRX/Lansing Grand River); premium sports car (Chevrolet Corvette, Cadillac XLR/Bowling Green, Ky.), mid-size premium SUV (Saab 9-7X/Moraine, Ohio).

Ford led in five segments: compact non-premium SUV (Ford Escape, Mercury Mariner/Kansas City #1), mid-size non-premium conventional car (Ford Taurus/Atlanta), large premium pickup (Lincoln Mark LT/Dearborn), mid-size non-premium crossover (Ford Freestyle/Chicago) and large premium sports car (Ford GT/Wixom).

Chrysler led in two segments: mid-size non-premium van (Dodge Caravan, Chrysler Town & Country/Windsor) and mid-size non-premium SUV (Jeep Grand Cherokee/Jefferson North).

Stamping

Harbour uses a stamping index that weighs each of several labor and equipment measures in a process that creates a composite score of stamping productivity. On that basis, Honda's Marysville stamping shop ranked first, followed by Toyota Georgetown, Toyota Cambridge and Honda East Liberty. Of the 10 best stamping plants, Toyota had three; Honda, two; DaimlerChrysler, two; and Ford, General Motors and NUMMI, one each.

"In 2006 Honda 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 2.85 HPE. Honda finished second at 3.34 HPE while GM was a close third at 3.44 HPE.

GM's Spring Hill 4-cylinder engine lines turned in the best performance by an engine plant at 2.27 hours per engine, edging out Toyota's Buffalo, W.Va., plant (2.29 HPE), which had captured the top spot for five straight years.

The Global Engine Manufacturing Alliance plant in Dundee, Mich., finished a respectable third in its first year participating with 2.68 hours per engine. GM had four engine plants in the top 10.

Chrysler maintained the lead it assumed last year over GM and Ford in transmission productivity, improving to 3.39 HPT from 3.55, while GM came in at 3.68 and Ford came in at 3.75 HPT. For the second time in the last four years GM's Toledo plant led all plants producing rear-wheel drive transmissions (2.54 hours per transmission) and was the No. 1 plant overall. Chrysler Kokomo had the best productivity measure among producers of front- wheel-drive transmissions (A604 line) at 3.52 HPT.

Overall

More than just year-over-year performance, The Harbour Report™ looks at several years of results to determine which companies are developing systems and processes related to quality, lean manufacturing, continuous improvement, worker involvement, technology, level of product complexity, process design and layout.

"Since our company started 27 years ago, we look at how companies are managing their resources," Harbour said. "Lean manufacturing and continuous improvement efforts do not always produce immediate improvements, nor are they immediately recognizable. But as shown in The Harbour Report™ 2007 results, companies that are producing consistent, sustainable improvements to their manufacturing operations are providing automakers with a cost advantage over their rivals."

Edited by NINETY EIGHT REGENCY
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I don't know why Nissan never participates in this study and why they get away with it every year. Lots of good news for GM in there. That's the first time I ever saw Lordstown get any recognition as a top plant.

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"Best Plant Awards

Vehicle Assembly -- GM Oshawa #2"

Yeah for me and my Pontiac Grand Prix GXP! :yes:

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Winning this HPV criteria is:

Good for the company and pro-robotization.

Bad for American line workers, and the big 3 employee's "the big 3 employs more Americans than the foreign companies" argument.

It's more of an internal statistic used to measure one way of increasing the company's profits.

It's not very meaningful, except to say Toyota robots are rocking the house more than other company's robots.

The main effectors of HPV would be the extent of robotization, and engineering the car parts to be easy to construct and assemble.

Cue the Hyundai robot dance. Destroy the humans.

Edited by JT64
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good job GM.

Bill Ford in 2009. "Would you like fries with that?"

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I don't know why Nissan never participates in this study and why they get away with it every year. Lots of good news for GM in there. That's the first time I ever saw Lordstown get any recognition as a top plant.

That way Carlos the Great can cover his ass of how he has screwed up Renault and Nissan.

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The Smyrna plant has been the US's top plant for a while.

Hasn't there been reports the last few years on how the Altima has the lowest HPV?

Maybe someone remembers those...

Perhaps Nissan's HPV went up since they implemented extra quality assurance measures.

ANOTHER reason why winning the HPV criteria means jack.

Edited by JT64
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Nissan has been #1 for years, a decade even.

http://www.usatoday.com/money/autos/2006-06-01-harbour_x.htm

Same random accusations on the Tundra... timing belt on the 5.7L? Who came up with that crap?

Stop pulling nonsense accusations out of thin air.

In general, anyone who makes a statement without a link is talking $h!.

This forum is going to hell with idiots.

Please refrain import bashing to fact based bashes.

Edited by JT64
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Nissan has been #1 for years, a decade even.

http://www.usatoday.com/money/autos/2006-06-01-harbour_x.htm

Same random accusations on the Tundra... timing belt on the 5.7L? Who came up with that crap?

Stop pulling nonsense accusations out of thin air.

In general, anyone who makes a statement without a link is talking $h!.

This forum is going to hell with idiots.

Please refrain import bashing to fact based bashes.

If I recall correctly, Nissan selected particular plants to participate in the Harbor Report while not allowing others (I don't think Canton was ever included. I could be wrong.) The point is Nissan was top based on incomplete data. GM, Ford, and DCX participate in this study 100%. I believe Toyota and Honda have excluded selected plants from this study as well. I don't need a link to back this up. Just go back and read previous years reports. They usually come out and say which company excluded which plants and then speculate why.

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Nissan has been #1 for years, a decade even.

http://www.usatoday.com/money/autos/2006-06-01-harbour_x.htm

Same random accusations on the Tundra... timing belt on the 5.7L? Who came up with that crap?

Stop pulling nonsense accusations out of thin air.

In general, anyone who makes a statement without a link is talking $h!.

This forum is going to hell with idiots.

Please refrain import bashing to fact based bashes.

You know I have never ONCE seen you speak good of GM. Soooooo why are you here?

Our local paper (Fort Worth Star Telegram) had the story on the Arlington plant winning an award on the front page :)

Edited by deftonesfan867
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