New Benchmarks Set in Auto Manufacturing Harbour Report 2004 Measures

* Chrysler Group is most improved manufacturer and passes Ford in overall HPV * General Motors' consistent performance produces 5.2% overall improvement * Nissan Smyrna plant sets new standard in assembly hours per vehicle rankings * Ford has 3.4% overall gain as turnaround gains traction * Honda, Toyota rebound from 2002 degradations

DETROIT, June 10 -- North American automotive manufacturers made significant gains across their manufacturing operations in 2004, according to The Harbour Report North America 2004, the annual study released today by Harbour Consulting.

The Harbour Report, which was first published in 1989, measures assembly, stamping and powertrain productivity performances -- plant by plant, and company by company -- for North American automotive manufacturers. The hours per unit measure calculates the total salary and hourly labor content required to assemble one vehicle.

Among assembly plants, Nissan's Altima operation in Smyrna, Tenn., again set the benchmark for labor productivity, and established a new standard for labor hours per vehicle (HPV) with a measure of 15.33. Smyrna broke its own mark of 15.74, which was established last year.

"Nissan Smyrna has consistently been at or near the top of the assembly rankings," said Ron Harbour, president of Harbour Consulting. "Once again in 2003, Smyrna found ways to improve its performance, and take its assembly operation to a higher level of productivity."

In overall productivity, all six of the companies with assembly, stamping and powertrain operations in North America -- Chrysler, Ford, General Motors, Honda, Nissan and Toyota -- showed improvement in 2004, led by the 7.8% overall gain for the Chrysler Group. The surge in productivity enabled Chrysler to pass Ford in overall productivity for the first time in report history, even though Ford achieved an overall 3.4% improvement. Chrysler improved 7.2% in assembly productivity, 8.5% in stamping productivity, 9.5% in engine productivity and 9.2% in transmission productivity.

Honda, General Motors and Ford also improved their measures across all manufacturing segments. Honda had an across-the-board 7.1% improvement, GM had a 5.2% gain and Ford improved 3.4%. GM's gain was particularly noteworthy because the company has improved its total HPV 25% over the last six years, and each segment achieved 5% or more gains in 2003.

"The Harbour Report highlights the efforts every automaker in North America is making in the areas of lean manufacturing, continuous improvement and other manufacturing activities that drive down costs and drive up quality and productivity," said Ron Harbour, president of Harbour Consulting. "Manufacturers that are using disciplined, common processes to drive consistent, sustainable improvement are seeing the most progress in the report's measures."

Other highlights from this year's Assembly, Stamping and Powertrain chapters include:

Assembly

NUMMI (New United Motor Manufacturing Inc.), the joint-venture operation between General Motors and Toyota in Fremont, Calif., led the overall company assembly rankings with a labor hours per vehicle measure of 21.92 after a 22.9% gain in labor productivity. The plant bounced back from a difficult 2002, which included a 25.4% degradation in its HPV measure.

"NUMMI reduced its non-scheduled overtime and increased its line rates and overall volume, which resulted in a dramatic rebound in the plant's performance," Harbour said.

This year, only the companies that fully participated with all of their North American plants were included in the company rankings (plant rankings continued to include all participating plants). Nissan was not included in the company rankings because its operations in Mexico and Canton, Miss., did not participate in the report measures. Honda and Toyota also were not included in the rankings. Honda's Alliston #1, Alabama and Mexico plants did not participate in this year's report, nor did Toyota's assembly plants in Princeton, Ind., and Cambridge North, Ontario.

Among the seven companies that fully participated in the assembly segment, GM was second to NUMMI with a 23.61 HPV measure, as 25 of 30 GM plants improved their labor productivity measure, including five that had double- digit percentage improvements and seven with gains of 5% or more. After Smyrna's benchmark-setting performance, GM operations had the next four spots on the top 10 list of assembly operations in Oshawa #1, Oshawa #2, Lansing M and Lansing C. GM also had four of the 10 most improved plants, led by Flint, which was the most improved plant in the report with a 30% gain in its HPV measure. And GM plants led eight of the vehicle segments.

"GM's story has been much the same for the last seven years," said Laurie Harbour-Felax, Harbour Consulting vice president. "GM's solid progress is the result of lean product and process design, development of common systems and processes, and a strong focus on quality and throughput."

Five of the seven companies improved their productivity performance in the 2004 report, including AutoAlliance, the joint venture between Ford and Mazda in Flat Rock, Mich., which posted a 10.2% gain in labor productivity. However, Mitsubishi, which led the company assembly rankings a year, fell to third place after a 19.2% degradation in HPV as plant volume dropped drastically. Low vehicle volume also was the major cause of a 19.5% degradation in HPV at CAMI, the joint venture between General Motors and Suzuki in Ingersoll, Ontario.

Stamping

GM's modernization program, which includes investing in higher volume and higher speed presses, continued to pay dividends, as the company led the way in stamping's equipment productivity measures. GM also had three of the top individual plants, with Toyota Georgetown and GM Parma finishing as top-ranked plants across the balance of the stamping measures.

"Sustained progress, momentum and focus on continuous improvement are all apt descriptions for General Motors' Metal Fabricating Division, which has shown significant, broad-based improvement in The Harbour Report's labor and equipment measures," Harbour said. "GM's stamping operations have averaged 5% improvement in its productivity measures over the last four years."

Nissan edged Toyota for the top spot in stamping labor productivity. Nissan had a 3.5% gain compared to Toyota's 9.5% degradation. Toyota was the only stamping company to degrade in its 2003 performance. Chrysler had an 8.5% improvement and finished just behind the two Japanese-based manufacturers in stamping productivity. Honda's 13.3% improvement was the biggest of any company, but Honda remained last in stamping productivity among the six major manufacturers.

"Nissan's stamping has lagged behind its vehicle assembly performance, but the company has been making solid improvement across nearly every stamping measures," Harbour said. "Progress continued in 2003, even though Smyrna was challenged by the launches of four vehicles, and decreased truck volume."

Powertrain

All four participants improved their engine productivity, with Toyota again finishing first in the hours per engine (HPE) measure. Toyota's HPE of 2.82 was more than 1 hour ahead of GM, which finished second in the engine productivity rankings (Honda and Nissan were not ranked because of partial reporting by their engine plants). Chrysler finished third and was the most improved engine manufacturer with a 9.5% gain. Toyota's 4-cylinder engine lines at West Virginia and Georgetown finished 1-2 in the individual rankings. GM had four plants in the top 10, and Chrysler had four and Ford had two of the 10 most improved engine plants.

"Toyota remains the benchmark in engine productivity," Harbour-Felax said. "But it will be interesting to see Toyota's performance when V8 engine production from the new plant in Alabama is reported because it will give Toyota a more comparable engine mix to GM, Chrysler and Ford."

Chrysler narrowly led GM and Ford in transmission productivity. GM's Toledo plant led all plants producing rear-wheel drive transmissions and was the No. 1 plant overall. Chrysler's Kokomo, Ind., had the best productivity measure among producers of front-wheel-drive transmissions, and Ford's Sharonville, Ohio, facility was the most improved transmission plant.

Overall

More than just year-over-year performance, The Harbour Report looks at several years of results to determine which companies are developing systems and processes related to quality, lean manufacturing, continuous improvement, worker involvement, technology, level of product complexity, process design and layout.

"We're looking at how companies are managing their resources," Harbour said. "Lean manufacturing and continuous improvement efforts do not always produce immediate improvements, nor are they immediately recognizable. But as shown in The Harbour Report results, companies that are producing consistent, sustainable improvements to their manufacturing operations are providing automakers with a cost advantage over their rivals."

More information and performance results can be found in The Harbour Report North America 2004, the annual study created and published by Harbour Consulting, a Troy, Mich.-based manufacturing and management consulting and automotive research firm. Harbour Consulting completed its first study of automobile manufacturing in 1981. Today, The Harbour Report is considered the authoritative guide to automotive manufacturing in North America, and is a leading competitive analysis tool used by OEMs and suppliers to benchmark performance, develop strategies and improve operations. Copies of The Harbour Report North America 2004 can be ordered through the company's website at http://www.harbourinc.com/ , or by calling 248-641-0707 or toll-free at 800-208-1353. The report is $495 and payment by credit card is accepted. More information about the report and Harbour Consulting is available on the company's website.