Adversity Brings Out the Best

Automotive Industries,  June, 2001  by Ron Harbour

• E-mail
• Print
• Link

The results of this year's Harbour Report prove that making your company more competitive in good times pays dividends in a downturn.

Everyone knows the automotive industry's unprecedented run of record sales came to an end in 2000. And so did the record profits. But when it comes to manufacturing, a lot of people still don't know what impact the industry slowdown had on productivity performance.

And so there is more interest than usual this month as Harbour and Associates releases The Harbour Report North America 2001, our company's annual study of manufacturing productivity in the North American automotive industry.

What did we find? Well for that you'll have to buy the book. But if there is one thing to be learned from this year's report, it's this: The performances of the automotive manufacturers in 2000 proved that the factors making companies more competitive in good times are even more critical when times get tougher.

Through most of the 1990s, most automotive manufacturers have been working on lean manufacturing, quality and safety, and improving product and process engineering. They all tried to eliminate waste and reduce cost, as well as improve their production systems and their products. But the reality is that some companies were working harder at it -- and better at it -- than others.

Some manufacturers were taking hard looks at their overall operations, and then going about the task of changing everything from product and process engineering to the delivery of final product out the plant door. But some companies used these times of great prosperity to justify changes not taking place at their operations.

With capacity utilization near or above 100 percent, they reasoned, there was no time to plan or implement changes -- they were working as hard as they could just to meet customer demands. Their operations were continuing to show improvement, even if those improved measures came through increased line speed or the elimination of a few jobs on the factory floor. And besides, who could argue with record profits?

Well, the end-of-the-year slowdown had a dramatic impact on the bottom lines of many companies. And changes in production schedules also impacted performance measures in The Harbour Report. But the companies and plants that were most aggressive in the areas of lean manufacturing, continuous improvement and other strategic initiatives generally were impacted less in productivity performance. For example:

* Poor sales forced Nissan's operation in Smyrna, Tenn., to operate at lower capacity levels for several years. But during that time the plant implemented a number of lean manufacturing aids and assigned workers to special projects to improve overall operations. Combined with a 16.5 percent increase in volume, the Smyrna assembly plant moved to No. 1 in The Harbour Report's car (16.33) and truck (18.06) hours-per-vehicle rankings.

* General Motors Corp. has been implementing an aggressive modernization program throughout its powertrain organization. GM'S hours-per-engine measure has improved 23 percent since 1993, including a 6.1 percent improvement in 2000 -- even though the company's engine capacity utilization fell from 96 percent to 87 percent.

* And Toyota, which sets the standard for continuous improvement with its Toyota Production System, led all companies in stamping's labor productivity measures, as well as in hits/pieces per hour.

There are other good stories in this year's Harbour Report -- as well as some not so good results. But the big story in 2000 was that manufacturers could no longer count on record sales to drive performance improvement and profit.

With sales slowing down, successful manufacturers had to combine solid productivity with low-cost designs and investments, as well as high-quality products that sold well in the marketplace.

That's the way it should be -- in good times or bad.

RON HARBOUR is president of Harbour and Associates, manufacturing consultants in Troy, Mich.

COPYRIGHT 2001 Diesel & Gas Turbine Publications
COPYRIGHT 2008 Gale, Cengage Learning