Jerry Cook Editor, MPP jcook@clbmedia.ca

Big Three closing productivity gap with Asian competitors

Despite the many problems facing Canadian auto manufacturers, productivity doesn’t seem to be one of them, according to the 2008 Harbour Report.

Oliver Wyman’s The Harbour Report North America 2008 showed that four Ontario auto assembly plants finished in the top 10 most productive assembly plants in terms of fewest labour hours per vehicle in 2007.

The four Canadian assembly operations singled out as being most productive included General Motors of Canada’s No. 1 and No. 2 car assembly plants in Oshawa, ON which finished in second and third place respectively; the CAMI Automotive joint venture of GM and Suzuki Canada in Ingersoll, ON which placed fifth, and Chrysler’s Brampton, ON-based assembly operation which finished ninth on the list.

The Harbour Report on manufacturing efficiency measures assembly, stamping and powertrain productivity performances-plant by plant, and company by company-for North American automotive manufacturers.

“Driven by more consistent, leaner processes and buyouts of tens of thousands workers, the Detroit Three automakers in 2007 nearly erased the productivity deficit against their Japanese-based competitors, despite declining production and shrinking market share,” the report says.

According to the report, the difference among the Big Six auto assemblers from the most to least productive in terms of total manufacturing labor (assembly, stamping, engine and transmission) has dropped to 3.50 hours per vehicle (or about $260 per vehicle), down from 10.51 hours (or $790 per vehicle) in 2003.

The report indicates that Chrysler showed the biggest improvement, cutting its total manufacturing labor hours per vehicle by 7.7% to 30.37, the same number recorded by Toyota. At the same time, GM brought its total manufacturing productivity performance to 32.29 hours per vehicle, while Ford reduced its labor hours per vehicle by 3.7% to 33.88, despite producing 6% fewer vehicles than it did in 2006.

“Improving productivity in the face of lower production is a huge accomplishment, especially with the pressures created by rising gas prices,” says Ron Harbour, partner in Oliver Wyman’s North American automotive practice.

“Toyota remains the industry benchmark through its renewed commitment to lean production. Chrysler made substantial progress with the support of suppliers. GM deserves credit for the growing maturity of its Global Manufacturing System, and Ford is demonstrating that focusing on quality will lead to better productivity,” the report states.

However, the report notes that the profitability gap between Detroit-based and Japan-based automakers remains wide. “Chrysler, Ford and GM are suffering even more with falling sales of profitable fullsize pickup trucks and SUVs as consumers demand much better fuel economy.

“Honda and Nissan led the six largest North American automakers, each earning a pretax profit of $1,641 per vehicle on their North American sales, followed by Toyota at $922 per vehicle. Chrysler lost $412 per vehicle for the first nine months of 2007, while GM and Ford lost $729 and $1,467, respectively, per vehicle for the full year.

“This reflects that the Detroit Three still pay more for health care, pensions and sales incentives.They also support more dealers relative to their respective market shares, than either Toyota, Honda or Nissan,” the report states.

Now that the Big Three are coming to grips with the productivity gap, they have to turn their attention to the equally daunting task of closing the profitability gap.

Joint open house popular with visitors

The annual joint open house recently held by four major Canadian machine tool distributors is quickly becoming one of the “must-attend” events within the sector.

Ferro Technique displayed several machines including the Doosan Puma MX2500LST multi-tasking turning center which provides high flexibility.

“The more we hold this event the more popular it is becoming,” says Brian Donnelly, vice president of Mississauga, ON-based Ferro Technique Ltd., one of four companies that took part in the two-day open house event. The other companies included Elliott-Matsuura Canada Inc., Oakville, ON, EMEC Machine Tools Inc., Mississauga, ON and MAG IAS Canada Inc., Mississauga, ON.

When asked to explain the growing popularity of the joint open house, Donnelly points out that, “Our event is much more personalized. Our customers can come here and look at all of the machines (that we offer) whereas you can only take so many machines to a show. At our event, customers can see the machines and the companies behind those machines. They can also talk to our applications and service people.”

According to Donnelly, Ferro used its open house to focus on a variety of newer technologies. For example, one machine on display at Ferro’s open house was the Doosan Infracore HP 4000 high-speed, high-accuracy horizontal machining center. “The HP 4000 is one of Doosan’s new series of horizontal machines which features faster rapid traverse rates and faster spindles.”

Juergen Moeglich, president of MAG IAS Canada, feels that the wide array of technology displayed by the four firms during the joint open house is a major attraction for attendees.

One highlight at Elliott-Matasuura's open house was Bystronic's ByVention 3015 laser cutting system.

“We’ve had people from (as far away as) North Bay and Alberta come to our open house,” says Moeglich. “People who are coming from further away see a reason to make the trip because they can visit all four distributors. It makes it worth their while,” says Moeglich.

Continues Moeglich, “That was the concept that we had in mind from the beginning. We waned to maximize our customers’ time.”

At this year’s event, MAG IAS showcased an extensive range of machinery from various manufacturers. “We have smaller machines that we are showing here this year but we are showing more of our partner products this year. As well as MAG equipment, we are also showing products from vendors such as TimeSavers, Romi, Emco, and others,” says Moeglich.

All four venues taking part in the event were busy with over 600 visitors attending the open houses.

The event also featured a number of ancillary suppliers who displayed a variety of products such as software, cutting tools, and probing system at all four venues. The ancillary suppliers included Big Kaiser, Renishaw, Sandvik, m&h Probing, and others.

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June 2008 Digital Edition

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Canadian Machine Tool Distributors Association - A resource for Canadian machine tool distributors. www.cmtda.com

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www.ctma.com

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www.cwa-acs.org