Monday, August 13, 2007

Problem with American Auto Industry?


The problem with the US auto industry is quite easy to diagnose; but unfortunately not so easy to cure.

Let's compare the American operations of the world's two leading manufacturers, GM and Toyota. In 2005, GM, on average, lost $2331 per vehicle manufactured, whereas Toyota made a profit of $1488 per vehicle. So, the more cars GM sold, the more money they lost.

It takes GM 34.3 hours to produce a vehicle, start to finish. It takes Toyota 27.9 hours. (2005 numbers)

The average line worker at GM makes $31.35/hour; at Toyota they make $27.00/hour. (2005 numbers)

So, Toyota is paying less in payroll but getting greater production from what is ostensibly the same American workforce.


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