U.S. Big Three Trail Japan in Productivity – New York Times
Sometimes, in the course of my reading and research, I stumble across something interesting in the NY Times archives. Keep in mind this is from 1995:
The Big Three American auto makers lag behind the Japanese in productivity at North American plants but are ahead in profits, according to a survey released today.
American car makers have done a better job of anticipating buyers' preferences, and Japanese makers have suffered from slow sales at home, a rising yen and cars with expensive features that Americans do not want, said James Harbour, lead author of the Harbour Report.
Nissan, at the time, was the most efficient (in terms of direct assembly labor, which is only one measure) but had the largest loss per vehicle.
For cars, the Toyota No. 1 plant in Georgetown, Ky., was second in 1994 at 2.42 worker-days for each vehicle, followed by the Toyota No. 2 plant in Georgetown (2.49); the Ford Motor Company's Atlanta plant (2.63); the Ford plant in Chicago (2.64), and the Chrysler plant in Bramalea, Ontario (2.67).
The General Motors Corporation had no plants in the top 10 for cars. Its plant in Fort Wayne, Ind., was No. 7, with 2.92 days, for trucks, the report said.
My understanding is that Toyota never chased after these singular productivity goals — who are they trying to impress? — instead, focusing on total system cost. Nowadays, the “Detroit Three” are catching up in productivity, but not in profits. Is that what you would have predicted in 1995?
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It is easy to see that they would be making more profits. If they are putting those extra cars into inventory, they are turning those labor costs into assests, therefore helping profit. Very non lean, and short term solution. Maybe they didn’t even realize they were doing this.