Ford and General Motors could not compete on the world market -- even if they built their vehicles with unpaid slaves.
In 1999 GM's total labor cost per automobile was only $2,052 while Ford's total labor cost per automobile was $1,566.
If GM and Ford automobiles were reduced by $2,052 and $1,566 respectively, do you think the public would rather buy a GM than a Toyota? Of course not, because GM makes crappy cars, even if labor were free and they cost $2,052 less.
Just as the poor design is a management problem, the "labor problem" is actually a management problem as well.
GM designed automobiles require 25% more labor to assemble than do Toyota designed vehicles.
GM uses 45.6 labor hours to manufacture each vehicle, while Honda and Nissan plants in North America use 30.76 hours and Toyota uses only 30.38 hours.
Honda, Nissan and Toyota automobile plants in North America, operate with essentially the same labor contracts that GM and Ford do. American companies have a slightly older work-force which costs a little more. Yet Japanese cars use less labor and are more popular with consumers. How is a new labor contract going to correct the intractible management problems which have crippled GM and Ford?
Japanese Keep Labor Cost Lead
findarticles.com
When it comes to highest productivity and lowest labor costs, Japanese automakers' North American plants continue to beat their General Motors, Ford and DaimlerChrysler counterparts by a long shot.
That's one of the major findings of the 1999 Harbour Report, the annual analysis of auto industry plant efficiency published by Harbour and Assoc., a Troy, Mich.-based manufacturing consultancy.
As the accompanying chart shows, Toyota, Nissan and Honda again needed many fewer total labor hours, in their assembly, powertrain and stamping operations, to build each 1998 vehicle, than the former U.S. Big Three required. As a group, the Japanese' North American HPV performance last year were virtually identical, with Honda lagging benchmark Toyota by less than haft an hour's labor on each vehicle. Of the domestics, Ford was far ahead of GM and DC, but still over 4.5 hours off the Toyota mark. Likewise, industry leader Toyota enjoyed an almost $1,000 labor cost advantage on each vehicle it produced, compared with GM and DC, and a $502 advantage over Ford.
All three Japanese automakers also improved their 1998 labor cost per vehicle compared with 1997. Toyota's costs fen by $305 per unit, while Honda and Nissan dropped theirs by $337 and $112, respectively. According to Harbour, Japanese labor rates average $35/hour, about $10/hour less than the domestics.
"It's the unscheduled overt/me that's killing them (GM, Ford and DC)," observes company President Ron Harbour. "It's a premium cost, and it's particularly a problem in the high-demand truck plants."
The UAW has made overtime an issue in its National Contract bargaining now underway. But Harbour notes that "the (union) locals love overtime. Many of those guys are making over six, figures working overtime. I wonder if the International UAW is talking to its locals on this," he says.
1998 LABOR PRODUCTIVITY COST PENALTY
Daimler
Chrysler Ford GM
Labor Hours Per Vehicle
(Assembly, Stamping,
Powertrain) 44.25 34.78 45.60
Labor and Benefit Costs
Per Vehicle (*) $1,991 $1,566 $2,052
Labor end Benefit Costs
Penalty to the Benchmark
(millions) $928 $502 $989
Annual Volumes (million) 2.906 4.299 4.946
Annual Labor and Benefits
Cost Penalty to Benchmark
(millions) $2,697 $2,159 $4,890
Equivalent Excess Workers
to the Benchmark 21,442 10,084 40,041
Honda Nissan Toyota
Labor Hours Per Vehicle
(Assembly, Stamping,
Powertrain) 30.76 30.76 30.38
Labor and Benefit Costs
Per Vehicle (*) $1,079 $1,077 $1,063
Labor end Benefit Costs
Penalty to the Benchmark
(millions) $16 $13 --
Annual Volumes (million) .695 .309 .647
Annual Labor and Benefits
Cost Penalty to Benchmark
(millions) $11 $4 --
Equivalent Excess Workers
to the Benchmark 170 62 --
Honda, Nissan and Toyota transmission labor hours are Harbour estimates.
(*) Labor rate of $45 per hour for DC, Ford and GM and $35 per hour for Honda, Nissan and Toyota
. |
