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Friday, July 17, 1998

`GM labour productivity lags industry' 

Ben Klayman  
Detroit, July 15: 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 US rivals, said Ronald Harbour, president of Harbour & Associates Inc. in Troy, Mich. And Japanese automakers Nissan Motor Co. Ltd, Toyota Motor Corp and Honda Motor Co Ltd 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 Workersshare 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 US plants last year, comes at a sensitive time when GM is arguing it needs to become more competitive to thrive in the US 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 US work force includes 3,19,000 hourly workers, most of whom are represented by the UAW.

The US 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 andmonths. 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 line up and volume matched those of the US 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 labour costs was cancelled 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 US industry last year with pre tax 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 accountingfor 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 Centre, which was struck by about 3,400 workers 41 days ago, received poor grades in the study for its labour 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 industryleader -- Toyota's Georgetown, Ky., plant -- by 78 per cent, 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.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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