Chrysler Most-Improved Automaker-The real scoop

[Steve03GT]

Originally posted by Jody

Chrysler Group Is Most-Improved Automaker in The Harbour Report 2003

Auburn Hills, Michigan, USA, June 18, 2003

Chrysler Group achieved a significant milestone by improving its overall manufacturing efficiency by 8.3 percent in 2002 compared to 2001, according to The Harbour Report North America 2003. The results are the best year-over-year improvement in the company's history and the second best of any auto manufacturer since The Harbour Report's inception in 1981.

"It is rare to see an automaker improve in one year as much as the Chrysler Group did in The Harbour Report," said Ron Harbour, President of Harbour and Associates, Inc. "The breadth of their improvement shows the consistency of their approach, and that they have the foundation for greater achievements down the road."
The approach being to sell less for more by continuing to delete parts from the previous year without telling the customer.

The Chrysler Group has been committed to becoming more efficient, in order to increase its competitiveness. As a result, every one of the company's plants in North America (assembly, engine, transmission and stamping) posted a gain in manufacturing efficiency in 2002.
"These broad-based achievements underscore the consistency of the Tom W. LaSorda company's manufacturing strategy," stated Tom LaSorda, Executive Vice President of Manufacturing for Chrysler Group.
See comment above.

"We've set high standards and we intend to live up to them. This is a long journey, but you don't get to be a leader in productivity without setting objectives and making steady progress toward them. This is a solid step in the right direction."
Objective being to screw the customer without him knowing it. As Dalite says, "Pay no attention to the man behind the curtain."

LaSorda credits efficiencies across all of the Chrysler Group plants, in the areas of quality, throughput and productivity, as the key reasons why the company had such a significant overall improvement in this year's Harbour Report. Future efforts will continue in these areas, along with a renewed focus on engineering hours per vehicle and common parts sharing.
I read the Harbour Report's subject to be about improved quantity NOT quality. See link below.

The Harbour Report is one of several efficiency measures the Chrysler Group uses to help improve its operations. Harbour measures hours per vehicle (number of hours worked/number of vehicles produced).
http://www.freep.com/money/autonews/...8_20030618.htm
The Harbour Report ranks automakersand their North American plants on labor hours per vehicle. It figures in the hours it takes to stamp a part, build an engine or transmission and assemble an entire vehicle.
Note: The "quality" mentioned below is tracked by Chrysler, NOT The Harbour Report, as confirmed in the statement above.
Other areas that are tracked include quality, safety, cost and delivery improvements, all of which contribute to manufacturing performance.
source: DC

Also, from the link above:
Because labor is 12 to 17 percent of the manufacturing cost of a new vehicle, the Harbour Report is widely followed and cited by auto insiders, manufacturing experts and Wall Street. A UAW worker's labor hour at GM, for example, runs about $62.78, including wages, health care, vacations and pension.The 2002 report showed Nissan took an average of 29 labor hours to build a vehicle. Honda and Toyota averaged 31 hours. GM was the top-ranked domestic automaker at 39.3 hours. Ford took an average of 40.8 hours, and Chrysler was last out of 10 automakers ranked, taking an average of 44.2 hours.

Taking the numbers above: average labor hours to build vehicle:39.3m/h
average labor cost/hour:$62.78
39.3($62.78)= ~15% of total vehicle cost.
=$2468./.15=$16,448 average cost of GM vehicle--plus/minus 3%

On the other hand

[DTs_PTGT]

Steve03GT,

Would the difference between Chrysler and GM actually be closer to (44.2 - 39.3)($62.78) = 307.62 if you're accounting only for the difference in labor? To me, your calculation ( 1.125(16448) ) adds in the cost of parts as well.

This is assuming that the parts for the car cost exactly the same amount.

IMHO, the real savings would probably be the net effect of more cars / plant / time cycle or the same amount of cars taking a shorter time to build.

[Steve03GT]

quote:Originally posted by DTs_PTGT

Steve03GT,

Would the difference between Chrysler and GM actually be closer to (44.2 - 39.3)($62.78) = 307.62 if you're accounting only for the difference in labor? To me, your calculation ( 1.125(16448) ) adds in the cost of parts as well.

This is assuming that the parts for the car cost exactly the same amount.

IMHO, the real savings would probably be the net effect of more cars / plant / time cycle or the same amount of cars taking a shorter time to build.

Good point, but yes, I ASSumed parts costs to be similar since the article stated labor is ~15% (12-17%) of the cost of a vehicle. Does that make sense?; I'm very [:I] at this moment. I'll look at it later - afterall, I could be wrong.