Toyota Is Most Productive In New Study

A long row of unsold 2007 Corolla sedans sits at a Toyota agency in the east Denver suburb of Aurora, Colo., on Sunday, May 13, 2007.
Toyota Motor Corp. led all North American automakers in manufacturing productivity last year, but Detroit's three automakers continued to close the productivity gap with their Japanese rivals, according to a study watched closely by the industry.

The annual report, which was released Thursday and prepared by Troy-based Harbour Consulting, compares labor productivity at six companies that have North American plants.

It took Toyota 29.93 labor hours to build components and assemble each vehicle. Nissan Motor Co., 2005's most productive company, finished second at 29.97 hours, but Harbour Consulting had to estimate that figure because Nissan would not provide 2006 data.

Honda Motor Co. finished third at 31.63 hours, followed by General Motors Corp. at 32.36 and DaimlerChrysler AG at 32.9, Harbour reported. Ford Motor Co. finished last at 35.1 hours, but that was nearly a 2 percent improvement over 2005's 35.8 hours.

Harbour Consulting President Ron Harbour said the difference between the most- and least-productive companies last year was 5.17 hours, more than two hours better than the 7.33-hour gap in 2005. Yet the gap still is equal to about $300 per vehicle in favor of Toyota, the study said.

The productivity gain came because Toyota's performance declined while the Detroit Three continued to improve. Ford and GM became more productive by shedding thousands of workers through buyouts and early retirement offers, and all three continued to work with unions to negotiate away work rules that place them at a disadvantage to the Japanese companies, Harbour said. The improvements came even though sales and production declined for all three Detroit automakers, he said.

"I think it's a major point that Ford, Chrysler and GM all made improvements despite the fact that they all had some significant drops in volume," he said. "When you're losing production volume that fast, it's pretty hard to make productivity improvements."

Toyota's labor hour total was 1.8 percent longer than 2005, mainly due to a large number of new models launched at its plants, including the new Camry and Tundra pickup trucks, Harbour said.

Honda, DaimlerChrysler and GM all showed better than 2 percent improvements, according to the report.

Ford, GM and Chrysler could narrow the gap even further in 2007, because they didn't realize the full impact of productivity improvements in 2006, Harbour said. One of them could even overtake Toyota if production volumes don't drop too much, he said.

"We should see a big improvement in the Big Three's numbers overall in 2007," Harbour said.

The Detroit Three have been steadily catching up to Japanese automakers. The difference between the most-productive and the least-productive automakers was 9.1 hours in 2004 and 16.6 hours in 1998.

GM had four of the top 10 most productive vehicle assembly plants, including the most productive plant in the study, Oshawa No. 2 in Oshawa, Ontario.