POWERPOINT:

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  • Harbour Experience Experience Manufacturing, Mechanical and Industrial Engineering People Have visited most of the world’s Automotive Plants Strong Technical Knowledge - Assembly - Welding - Stamping - Machining - Molding - Painting & Finishing - Casting - Miscellaneous Processing Union and Non-Union Environments
  • DCX improved overall utilization significantly, but still have extremes of over and under utilized plants GM and Ford dropped dramatically particularly in use of car plants Lack of plant flexibility and no-close labor agreements hurt domestic Big Three Flexible Japanese plants keep required capacity fully utilized (Honda Accord example) (Pilot Launch cause outlier) Extremes High Low DCX Saltillo Belvidere – 1 plant @ 50%, 5 over 100% GM Flint C/K Wilmington – 6 PLts @ 50%, 8 over 100% Ford KY Truck Cuautitalan Truck – 6 Plants @ 50%, 8 over 100% Toyota Princeton E TMMK1 (Avalon/Camry) Nissan Canton Smyrna Car Honda Aliston2 (Odyssey/MDX/Pilot) Lincoln ( Pilot-Launch)
  • The gap between the Japanese and domestics stayed about the same – 6 to 9 HPU or about $350-500/vehicle Ford, GM and DCX difference now small, but roots of lean are deeper at GM [GM to DCX = 1.52, Ford to DCX = 1.13] Toyota has reinvigorated TPS, particularly at Cambridge and Georgetown DCX most improved % last 3 years Much of Ford and DCX’s improvements from powertrain Adjusted for non-participants, Mexico would drive the Nissan number up by about 2 HPV
  • POWERPOINT:

    1. 1. Ron Harbour President, Harbour Consulting Automotive News World Congress January 18, 2006 The Changing Face of the North American Auto Industry
    2. 2. Areas of Expertise <ul><li>Harbour Performance </li></ul><ul><ul><li>Manufacturing Assessments </li></ul></ul><ul><ul><li>Lean Manufacturing Implementation/Transformation </li></ul></ul><ul><ul><li>Strategic Planning </li></ul></ul><ul><ul><li>Product and Process Design </li></ul></ul><ul><ul><li>Product Launch Support </li></ul></ul><ul><li>Harbour Benchmarking </li></ul><ul><ul><li>Total Cost and Investment Modeling </li></ul></ul><ul><ul><li>Cooperative Benchmarking Studies </li></ul></ul><ul><ul><li>Cost and Investment Benchmarking </li></ul></ul><ul><ul><li>Product Teardowns </li></ul></ul><ul><ul><li>State of the Industry </li></ul></ul><ul><li>Harbour Report Global </li></ul><ul><ul><li>North America annually since 1993 (public) </li></ul></ul><ul><ul><li>Europe annually since 1996 (private) </li></ul></ul><ul><ul><li>Heavy-duty truck study (future) </li></ul></ul><ul><ul><li>South America and Asia (future) </li></ul></ul>Harbour Performance Harbour Benchmarking Harbour Report Global
    3. 3. Recent Clients
    4. 4. North American Automotive Manufacturing Vehicle Assembly 13 21 25 7 4 7 9 86 Stamping 7 9 18 3 3 4 6 50 Engine 6 7 10 4 2 2 1 32 Transmission 3 4 6 1 1 2 0 17 Total 185 Harbour has visited most of these plants over the last 5 years and tours 30 to 40 each year Others Total
    5. 5. North American Vehicle Sales (Millions) 14.8 16.5 19.8 19.6 Millions of Vehicles U.S. 73.1% 10.8 M Japan 23.8% Korea 0.9% Europe 3.6% U.S. 71.6% 11.8 M Japan 21.5% Korea 1% Europe 3.3% U.S. 65.2% 12.9 M Japan 25.3% Korea 2.7% Europe 6.9% U.S. 56.9% 11.1 M Japan 32.2% Korea 4.3% Europe 6.5% Domestic brands still have 69% of assembly plants
    6. 6. North American Vehicle Assembly Plant Openings and Closings (1990 -- 2005) <ul><li>DaimlerChrysler 4 2 +2 </li></ul><ul><li>Ford 1 2 - 1 </li></ul><ul><li>General Motors 3 16 -13 </li></ul><ul><li>Toyota 2 - +2 </li></ul><ul><li>Honda 3 - +3 </li></ul><ul><li>Nissan 2 - +2 </li></ul><ul><li>Total - 6 </li></ul>New Plants Closed Plants Net Change
    7. 7. Chrysler Group North American Vehicle Assembly Capacity Millions of Vehicles Change from 1992 to 2005 NA Capacity rose 14% (11 to 13 plants) 2.5 2.75 2.95 2.87
    8. 8. Ford North American Vehicle Assembly Capacity* Millions of vehicles 4.3 4.83 4.8 4.0 * Includes AutoAlliance Inc. Capacity rose through the1990’s, but fell 18% from 1995 to 2005 (22 to 21 plants)
    9. 9. Millions of vehicles General Motors North American Vehicle Assembly Capacity 7.35 6.4 6.2 5.1 Change from 1992 to 2005 NA capacity fell 31% (38 to 25 plants)
    10. 10. Honda North American Vehicle Assembly Capacity Number of Vehicles Change from 1992 to 2005 NA Capacity rose 129% (4 to 7 plants)
    11. 11. Nissan North America Vehicle Assembly Capacity Number of vehicles Change from 1992 to 2005 NA Capacity rose 192% (3 to 4 plants)
    12. 12. Toyota North American Vehicle Assembly Capacity* Number of Vehicles * Includes Toyota production from NUMMI Change from 1992 to 2005 NA Capacity rose 216% (5 to 7 plants)
    13. 13. North American Vehicle Assembly Capacity Millions of vehicles GM GM GM GM 16.3 17.3 16.9 15.9 Ford Ford Ford DCX DCX DCX DCX Toyota Toyota Toyota Honda Nissan Honda Ford Honda Nissan Nissan Others Others Others Others
    14. 14. North American Stamping (Domestics) GM No. of Stamping Plants No. of Stamping Plants Ford No. of Stamping Plants dcx 92 LINES 66 LINES 33O Lines 241 Lines 162 Lines 109 Lines More stamping facilities, but most are smaller plants with fewer, better and more productive presses 14 18 9 9 7 7
    15. 15. North American Stamping (New Domestics) Number of Stamping plants Toyota 14 lines 22 lines Number of Stamping plants Nissan 11 lines 14 lines Number of Stamping plants Honda 6 lines 4 lines Japanese assembly plants always include a small on-site Stamping plant
    16. 16. North American Engine Capacity (Domestics) Millions of engines GM Millions of engines Ford DCX Millions of engines 2.16 2.78 5.95 5.39 3.95 2.98 <ul><li>Domestic </li></ul><ul><li>7.5% less capacity </li></ul><ul><li>9.8% less production </li></ul><ul><li>15% fewer plants </li></ul>How will shrinking assembly capacity impact powertrain capacity?
    17. 17. North American Engine Capacity (New Domestic) Toyota Number of Engines Number of Engines Nissan Honda Number of Engines <ul><li>New Domestics </li></ul><ul><li>125% more capacity </li></ul><ul><li>113% More production </li></ul><ul><li>Grew from 4 to 9 </li></ul><ul><li>engine plants </li></ul>Stronger yen has driven the shift in powertrain capacity
    18. 18. 2005 North American Vehicle Capacity Utilization
    19. 19. Flexibility Drives Capacity Utilization <ul><li>No. of No. of No. of 2005 capacity </li></ul><ul><li> lines platforms body styles utilization </li></ul><ul><li>Honda East Liberty 1 2 3 81% </li></ul><ul><li>Honda Alliston #2 1 2 3 95% </li></ul><ul><li>Nissan Smyrna 2 3 5 124% </li></ul><ul><li>Toyota Cambridge 2 2 3 109% </li></ul><ul><li>Ford Chicago 1 1 3 98% </li></ul><ul><li>GM Oshawa 2 1 4 93% </li></ul><ul><li>DCX Brampton* 2 1 3 127% </li></ul><ul><li>* Operated on 3 shifts for most of 2005 </li></ul>
    20. 20. What Caused Today’s Overcapacity Predicament? <ul><li>Significant market share loss </li></ul><ul><ul><li>Domestic manufacturers slid from 73.1% in 1992 to 56.9% in 2005 </li></ul></ul><ul><li>Lack of factory flexibility </li></ul><ul><li>Restrictive labor agreements </li></ul><ul><li>Overly optimistic sales projections </li></ul><ul><li>Significant performance improvement </li></ul><ul><ul><li>Better throughput </li></ul></ul><ul><ul><li>Higher first-time through quality </li></ul></ul><ul><ul><li>Improved equipment uptime </li></ul></ul><ul><li>New shift patterns </li></ul><ul><ul><li>3 crews working 2 shifts </li></ul></ul><ul><ul><li>3 shifts </li></ul></ul>
    21. 21. North American History of Total Hours per Unit – (Assembly, Stamping, Powertrain) 0% 23% 4% 2004 vs. 1998 GM excludes medium duty. Honda, Nissan and Toyota data includes partial reporting of North American plants. 26% 0% 8%
    22. 22. J.D. Power Initial Quality Survey Problems per 100 Vehicles
    23. 23. Translating Perception to Reality
    24. 24. Translating Perception to Reality

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