U.S. Automakers Continue To Lose Money In North America |
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Anthony Fontanelle
June 3, 2007
Each of Detroit's automakers lost money in North America. That information is contained in the latest Harbour Report. The much-watched study on labor productivity earlier released found that the Ford Motor Co. lost $5,234 on each vehicle it built in North America in 2006, a shortfall that is nearly eightfold of what it was in 2005.
The Nissan Motor Co. again was the most profitable car manufacturer on a per vehicle basis followed by the Honda Motor Co. and the Toyota Motor Corp. Nissan made $1,575 per vehicle sold in North America. In contrast, Toyota made $1,266 per vehicle, while Honda made $1,368.
The General Motors Corp. was the only automaker to enhance its profitability per vehicle. But despite improvement, the automaker lost $1,436 per vehicle, followed only by Ford. Meanwhile, the Chrysler Group lost $1,072 per vehicle.
The report said that the difference between the Asian and American automakers could be attributed to several factors, including the huge difference in health care and pension costs, slashed average revenue and the increased costs of rebates and low-interest financing required to trim inventories. Buyouts at GM and Ford helped the automakers save money. But its impact is expected to continue until this year.
The annual report compares labor productivity at six companies that have North American plants. According to the study, Detroit’s Big Three narrowed the productivity gap with their Asian competitors but failed to overthrow any of them in manufacturing productivity in the previous year. Toyota ranked best in total manufacturing productivity. Of the Big Three, GM ranked first, followed by the Chrysler Group and then Ford.
The Harbour's study also found that it took Toyota 29.93 labor hours to build components and assemble each vehicle. Nissan, the most productive company in 2005, fell to second at 29.97 hours. That figure is an estimate because Nissan would not present Harbour with 2006 information. Honda ranked third at 31.63 hours.
It took GM 32.36 hours labor hours to manufacture components and assemble every vehicle. In the annual survey, GM won three of four best plant awards. "The GM team has worked very hard to improve productivity over the last ten years," GM spokesman Dan Flores said. "We anticipate continued improvement."
DaimlerChrysler AG has 32.9 hours. Ford finished last at 35.1 hours. However, the company showed nearly a two percent improvement over 2005's 35.8 hours. "We're trending in the right direction. We've made some improvements. But we're certainly not satisfied with where we stand," Ford spokeswoman Anne Marie Gattari said. "We expect to see significant improvement as a result of our Way Forward actions next year."
The gap among the six major North America automakers continues to narrow, the study added. Harbour Consulting President Ron Harbour said that the difference between the most and least productive companies in 2006 was 5.17 hours, compared with a 7.33-hour gap in 2005. But the difference still amounts to a $300 per vehicle cost in favor of Toyota, the study divulged.
Domestic automakers showed an increase while Toyota's performance decelerated as if EBC Active Brakes Direct was applied. In addition, the Big 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, Harbour said. "Improving productivity in the face of lower production is a huge accomplishment, but none of the domestic manufacturers can afford to let up," he added. "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."
Source: Amazines.com