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Management : Harbour Report 2002

NISSAN, HONDA, TOYOTA CONTINUE PRODUCTIVITY LEAD; GENERAL MOTORS DRIVES PAST FORD FOR FIRST TIME IN HARBOUR REPORT

DETROIT, June 13, 2002 - Foreign-owned manufacturers Nissan, Honda and Toyota continued to have the most productive assembly, stamping and powertrain manufacturing operations in North America in 2001. But the gap with domestic challengers continued to narrow, according to The Harbour Report North America 2002, the annual study released today by Harbour and Associates, Inc.

Nissan led all 10 companies in the report in overall assembly productivity for the eighth consecutive year. Honda was second in assembly productivity and first in engine productivity. And Toyota finished second in engine productivity, and led several categories across stamping's basket of measures.

General Motors and Mitsubishi also achieved significant performance improvements. GM, with a 4.5% overall improvement, led the domestic manufacturers in assembly, engine and transmission productivity, which marked the first time in the history of The Harbour Report that GM finished ahead of Ford in the assembly and overall hours per vehicle (HPV) measures. Also for the first time ever, a GM plant (Oshawa #1, with a 16.79 HPV) led all North American car and truck plants in assembly productivity.

General Motors and DaimlerChrysler were the only two companies to improve their combined assembly, stamping and powertrain HPV performances in 2001 despite double-digit volume losses.

Mitsubishi's North American operation in Normal, Ill., continued its rise as one of the fastest improving assembly plants in The Harbour Report. The plant's HPV measure improved 8.6%, more than any other company, and enabled Mitsubishi to pass Toyota in the assembly rankings. Mitsubishi's HPV has improved 41% over the last four years.

"GM's performance in The Harbour Report 2002 measures is a direct result of the company's commitment to building a strong foundation in lean manufacturing," said Ron Harbour, president of Harbour and Associates. "At long last, the company's systems and processes are paying off in improved productivity, higher quality - as shown recently in the company's improved performance in J.D. Power's initial quality scores - and lower costs.

"This year's results further confirm the strong correlation between quality and productivity," Harbour added. "Many of the plants producing the highest rated vehicles in the quality rankings also fared well in The Harbour Report."

The Harbour Report, which was first published in 1989, measures assembly, stamping and powertrain productivity performances - plant by plant, and company by company - for North American automotive manufacturers. Here are some of the highlights from this year's report.

ASSEMBLY

Nissan (excluding its operations in Mexico) led the company rankings for the eighth consecutive year, with an overall HPV measure of 17.92. The plant's car line finished second overall in the car assembly rankings, and its truck lines finished 1-2 in truck productivity. However, while Nissan's assembly performance at its operation in Smyrna, Tenn., may have bested the other 10 participants, the plant's overall performance degraded 3.2% in 2001, reflecting the launch work required for the new Altima.

Mitsubishi, with a 21.82 HPV, had the biggest improvement in assembly productivity. The company's 8.6% improvement in 2001 followed an even bigger 21.6% improvement in 2000. "Mitsubishi's operation deserves credit for the dramatic improvements in its assembly productivity measures over the last few years," Harbour said. "The plant has undergone a remarkable transformation in a very short time."

General Motors produced some notable achievements in assembly manufacturing. Three GM car plants - Lansing C (in the Compact segment), Oshawa #1 (Midsize) and Detroit-Hamtramck (Luxury) - led their respective segments, as did three of the company's truck plants - Arlington (Full-Size SUV), Oshawa (Full-Size Pickup) and Doraville (Minivan). And seven of the 10 most improved plants were GM operations, led by Flint Assembly, which was the most improved plant in the report. After moving ahead of Ford and Auto Alliance, GM finished sixth overall in the company productivity rankings. In the last two years alone, GM has improved its HPV by nearly 4 hours. "Harbour has been charting GM's progress in the development of common systems and processes, as well as the common approaches to quality, safety and continuous improvement that have been taking place at the company's assembly operations," Harbour said. "Over the last five years, GM has seen the most improvement of any manufacturer with more than one plant. The company's manufacturing productivity performance continues to improve even though, like other companies, its percentage of higher content vehicles continues to grow."

STAMPING

Toyota again had the strongest performances across stamping's basket of measures. The company led all participants in specific measures of hits per labor hour (HPLH) and pieces per labor hour (PPLH), as well as hits per hour and (HPH) and pieces per hour (PPH).

GM and DaimlerChrysler both showed improved performances in several key labor or equipment measures, as did Ford Motor Company.

"GM and DaimlerChrysler have invested heavily in their stamping operations to create higher output with fewer press lines and less labor hours, and to develop common and standard processes throughout the operations," Harbour said. "These well thought out strategies are producing labor, equipment and cost improvements, as well as improvements in quality and safety measures."

"Ford also made a significant step in moving to common systems and measurements in 2001, which helped the company improve efficiencies throughout its stamping operations."

POWERTRAIN

Honda and Toyota finished 1-2 in the engine productivity rankings, and GM had the best performance among the former Big Three. Toyota led the 4-cylinder segment with a hours per engine (HPE) measure of 2.71, Honda was first in 6-cylinder productivity with a 3.47 HPE, and GM led the way in V8 productivity with a 4.55 HPE.

Ford and GM each had three of the 10 most improved engine plants, but DaimlerChrysler had four of the most improved plants. DaimlerChrysler, at 6.4%, was the most improved company in engine productivity, and moved past Ford in the company HPE rankings.

GM also narrowly led DaimlerChrysler and Ford in transmission productivity. DaimlerChrysler, which passed Ford for the No. 2 spot in the hours per transmission (HPT) rankings, led all participants in front-wheel-drive productivity, while GM led the rear-wheel-drive HPT rankings.

OVERALL

Harbour said the North American automotive industry felt the impact of the economic downturn and catastrophic events that occurred in the United States in 2001. The automotive companies were forced to take a number of dramatic steps to maintain vehicle sales, which had a profound impact on their bottom lines. As a result, many companies struggled - and sometimes failed - to turn profits despite one of the best selling years in automotive history.

"More than ever, 2001 showed the critical importance production and manufacturing systems play on a company's profit and loss margin," Harbour said. "Today, lean manufacturing, and emphasis on quality, safety, and product and process engineering are key elements in almost every manufacturer's continuous improvement efforts. As shown by results in The Harbour Report, some companies are making greater strides than others."


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