North American Auto Suppliers Need Re-Focus

Aggressive actions must be taken now by North American automotive suppliers to win future business with Asian automakers, who are projected to hold a 37% market share in North America by 2008, according to Harbour Consulting (Troy, MI).

Significant supply performance gains will be required for

parts makers to continue to attract business from Japanese and Korean automakers in the near future, according to Harbour Consulting vice president Laurie Felax, who recently addressed Tier I and II suppliers. "We know all automakers are continually demanding that suppliers improve the efficiency of their operations and realize further cost savings," Felax says. "Some suppliers are now pushing back aggressively, saying there are no more efficiencies to be made. In truth, there is room to better align product design, process design, and manufacturing, to find the necessary quality and cost gains that will be needed to secure Asian OEM business."

Productivity gains also will help protect future Big Three component sales from being sourced elsewhere by the automakers, Felax adds, and suppliers should not count on significant sales growth through GM, Ford Motor Co., and DaimerChrysler AG, as those automakers will face a declining market share in the next few years.

Harbour Consulting also recently released its latest annual Harbour Report North America 2004, which notes Chrysler Group as the most improved manufacturer. The report measures assembly, stamping, and powertrain performance by plant and company with an hours per unit measure, calculating the total sales and hourly content required to assemble a vehicle.

Among assembly plants, the latest Harbour study rates Nissan's Altima operation in Smyrna, TN, as again setting the standard for labor productivity. The plant set a new standard for labor hours per vehicle (HPV) with a measure of 15.33 hr, breaking its own mark of 15.74 hr set last year. "Nissan Smyrna has consistently been at or near the top of the assembly rankings," notes Ron Harbour, Harbour Consulting's president. "Once again in 2003, Smyrna found ways to improve its performance and take its assembly operation to a higher level of productivity."

The report says Chrysler, Ford, GM, Honda, Nissan, and Toyota all showed improvements in their assembly, stamping, and powertrain operations in North America. Chrysler led with a 7.8% overall gain, allowing the Chrysler Group to surpass Ford for the first time in the report's history, even though Ford posted a 3.4% gain in productivity. For more information or to order a copy of the report, see www.harbourinc.com.