"GM's labor productivity lags industry"
By Ben Klayman
DETROIT, July 15 (Reuters) - If General Motors Corp.'s
work force was as productive as competitor Ford Motor
Co.'s , it could save about $3 billion a year or operate
with 38,000 fewer hourly workers, according to a study released
on Wednesday by a leading automotive consulting firm.
GM, crippled by strikes at two parts plants in Flint,
Mich., has become more efficient at its assembly, stamping and
powertrain plants, but still lags its U.S. rivals, said Ronald
Harbour, president of Harbour & Associates Inc. in Troy, Mich.
And Japanese automakers Nissan Motor Co. Ltd. <7201.T>, Toyota
Motor Corp. <7203.T> and Honda Motor Co. Ltd. <7267.T> still
set most productivity standards.
"As they beat each other up in Flint, those three (Japanese
automakers) are working hard to expand and get better," Harbour
said during a news conference at a downtown Detroit hotel.
"Who's really losing here? GM is losing, the UAW is losing; so
what happens is Americans lose."
Harbour said the problems are ultimately GM's
responsibilities, although the United Auto Workers share some
responsibility. The strikes have cost GM $1.2 billion already
and the losses have begun mounting again now the automaker has
returned from a two-week summer shutdown.
The study, based on statistics compiled in U.S. plants last
year, comes at a sensitive time when GM is arguing it needs to
become more competitive to thrive in the U.S. automotive
market. The automaker wants to contract out work normally
performed by UAW-represented workers to lower-cost independent
suppliers and shrink its work force.
GM's U.S. work force includes 319,000 hourly workers, most
of whom are represented by the UAW.
The U.S automaker's productivity gap was even more
pronounced with Nissan, the industry's productivity leader. If
GM's workers operated at Nissan's level, it could save $4.4
billion a year or operate with 55,000 fewer hourly workers.
"Those are consistent with our internal studies," GM
spokesman Alan Adler said. "It does reinforce our competitive
disadvantage that we've been talking about these many weeks and
months. That penalty is $500 or $1,000 before we ever go to
market with our product."
However, Harbour, industry analysts and competitors were
quick to point out Nissan's numbers would not be near as
dominant if its product lineup and volume matched those of the
U.S. automakers.
"If Nissan had the same medium-duty trucks, F-Series trucks
and all the other vehicles we sell and build, then perhaps
their numbers wouldn't be quite as low as it is," said Bob
Transou, Ford's group vice president for manufacturing.
He said the $300-per-vehicle advantage Nissan had over Ford
in labor costs was canceled out because the No. 2 U.S.
automaker makes more profits per vehicle than Nissan does. "The
trade-off to me is really a no-brainer," Transou said. "I'd
take the Ford number any day."
The study estimated Ford led the U.S. industry last year
with pretax profits of $1,520 per vehicle, while Nissan only
made $301 per vehicle after four consecutive years of losses.
GM lost $104 per vehicle last year, but after accounting
for a $5 billion write-off, it would have made $825 a vehicle,
said James Harbour, chairman of the consulting firm. McDonald &
Co. analyst Greg Kagay said the difference from Ford's total
could be made up in marketing and distribution.
However, Kagay said the study showed the union's position
in the Flint strikes is tenuous at best.
"The plants on strike and the striking workers really don't
have much leverage," he said. "They're not like stars on a
baseball team saying, 'You're never going to make it to the
World Series without me.' These numbers really, really support
that. In fact, it's exactly the opposite."
The Flint Metal Center, which was struck by about 3,400
workers 41 days ago, received poor grades in the study for its
labor productivity. The stamping plant ranked 31st among 36
such facilities in the number of stamping hits per worker.
A hit represents each time a press stamps out a part such
as a hood or fender used in assembling a vehicle. Flint Metal's
hit rate trailed the industry leader -- Toyota's Georgetown,
Ky., plant -- by 78 percent, although it did finish ahead of
three other GM stamping plants.
GM's stamping plants operate with a bloated work force as
they averaged about three workers per hit, James Harbour said.
That compares to the best plants, which averaged one and a half
workers per hit. GM employs 29,000 hourly workers at its
stamping plants, he said.
Not all the news was bad for GM, however, as it improved
its performance in many areas, Ronald Harbour said. Stamping
plants improved the productivity of their equipment, and even
though GM's labor productivity still trails the industry it has
improved 17 percent since 1994.
The Harbour study showed Nissan led all automakers in the
United States, spending about 17 hours on each vehicle it
builds. Ford was the top performer among U.S. automakers at
less than 23 hours. GM and Chrysler Corp. trailed at
about 30 and 32 hours, respectively.
Toyota had the most efficient engine plant, while Ford was
the top U.S. automaker in that area, according to the study.
Ford also had the most efficient transmission plants.
((--Detroit Newsroom, 248-737-2525))
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