DETROIT-The manufacturing productivity gap among North American automotive factories is smaller than ever, thanks to continuing quality advances and the fact that manufacturers-both foreign and domestic-are getting more from their workforces and capital investments.

According to "The Harbour Report North America 2006," an annual study by Harbour Consulting (Troy, MI), the difference between the most and least productive U.S. factories in terms of labor expenditures on automotive manufacture was 7.33 hours per vehicle (HPV) in 2005. This is down from a 9.08 HPV range in 2004 and a range of 16.56 HPV as recently as 1998.

DaimlerChrysler's Chrysler Group showed the fastest rate of productivity improvement, improving productivity by 6 percent in 2005. Since 1997, Chrysler has improved its assembly labor hours per vehicle by 31.7 percent to 23.73 HPV. Similarly, in that same period, General Motors has improved its total manufacturing efficiency by 31.3 percent to 33.19 HPV.

Nonetheless, leading the field is still a foreign-owned concern, Nissan, which expends just 28.46 labor hours per vehicle in its U.S. plants. Similarly, Toyota Motor Corp. logged an HPV of 29.4 in 2005 and Honda Motor Co. registered an HPV of 32.51. Productivity at Ford Motor Co. was 35.82 HPV.

"Nissan's labor productivity lead equates to a $300 to $450 per-vehicle cost advantage relative to less productive manufacturers," says Ron Harbour, president of Harbour Consulting. He adds, though, that the major automakers are now so close that Nissan's edge could easily vanish.

"The relative ranking of the six largest automakers is likely to change in the next couple of years, and the leaders could be anyone," Harbour says. "Even General Motors' and Ford's incremental progress, despite significantly lower production, is noteworthy and a testament to [GM's] global manufacturing system and [the] Ford Production System."

Overall, the report finds that four of the six companies with assembly, stamping and powertrain operations in North America-Chrysler, Ford, General Motors and Nissan-showed improvement in 2005.

Among assembly plants, Ford's Atlanta plant set the benchmark for labor productivity with a measure of 15.37 hours per vehicle, followed closely by General Motors' Oshawa, Ontario, plant, which produces the Pontiac Grand Prix, Buick Lacrosse and Buick Allure midsize sedans. Ironically, Ford will close the Atlanta plant as part of its "Way Forward" restructuring, and GM will idle the Oshawa plant in 2008.

The report notes that while the six major manufacturers are closer than ever in terms of labor productivity, there remain large gaps with regard to a number of other manufacturing attributes, including capacity utilization.

During the study period, Toyota, Nissan and DaimlerChrysler operated their North American plants at between 94 percent and 106 percent of capacity. Honda and General Motors operated at 91 percent and 90 percent respectively, while Ford's plants ran at 79 percent of their potential output.

The other differentiator is profitability. Nissan, Toyota and Honda each earned a pretax margin of more than $1,200 on every vehicle sold in North America. Chrysler Group earned $223, while Ford lost $590, and General Motors lost $2,496 on each vehicle sold in 2005.

These returns are affected by a number of factors, including the large difference in health care and pension costs, lower average revenue, and the high cost of rebates and low-interest rate financing that Ford and GM used to trim inventories.

Harbour Consulting has been publishing an annual report on auto industry manufacturing efficiency since 1989. The report measures assembly, stamping and powertrain productivity performance, plant by plant and company by company, for all of the major North American automotive manufacturers.

The labor hours per vehicle measure calculates the total salary and hourly labor content required to produce one vehicle. For additional information, or to order a complete report, visit the company's Web site at