The manufacturing productivity gap among North American automotive manufacturers continued to narrow as quality advances and more flexible labor agreements drove major improvements, according to The Harbour Report North America 2007, the annual study released by Harbour Consulting.

      The larger gap in financial performances of the Detroit-based and Japan-based automakers reflect domestic companies’ higher incentive costs, legacy costs and their slower response to shifts in consumer choices more than any large competitive disadvantage on their factory floors.

      “Improving productivity in the face of lower production is a huge accomplishment, but none of the domestic manufacturers can afford to let up,” said Ron Harbour, president of Harbour Consulting.

      “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., GM, Ford and Chrysler likely will reduce their hours per vehicle significantly.”

      The UAW and CAW were more proactive in 2006 than before in creating a more competitive environment among the companies whose hourly workers they represent. Chrysler, General Motors and, especially Ford, negotiated more flexible local labor agreements prior to this summer’s pivotal national talks with the UAW. However, they must go further to overcome their persistent health care and pension cost disadvantage vs. Honda, Nissan and Toyota. Restrictive labor agreements that create cost disadvantages still exist and could jeopardize the survival of certain automakers.

      The difference between the most and least productive in terms of total (assembly, stamping and powertrain) labor hours was 5.17 hours per vehicle (or about $300 per vehicle), down from 7.33 hours per vehicle in 2005, and less than one-third the 17.17 HPV gap in 1998.

      This year, Honda’s showed the biggest improvement (2.7 percent) across this combined assembly, stamping and powertrain measure.

      In overall productivity, four of the six companies with assembly, stamping and powertrain operations in North America – GM, Honda, Chrysler and Ford – showed improvement in 2006.

      Nissan Motor Co. did not participate in this year’s report. Toyota’s total manufacturing hours per vehicle, while leading the way among the participating companies at 29.93 HPV, was not as strong as its 2005 performance of 29.40. Honda was second at 31.63 HPV.

            Among vehicle assembly plants, GM’s Oshawa #2 plant, which assembles the Pontiac Grand Prix, Buick LaCrosse and Buick Allure, set the individual plant benchmark for labor productivity with a measure of 15.68 hours per vehicle, followed closely by its adjoining Oshawa #1 plant that produces the Chevrolet Impala and Monte Carlo, Oshawa #1 posted a 16.34 HPV performance...

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