[Porsche_monkey]

Driven by more consistent, leaner processes and buyouts of tens of thousands workers, the Detroit Three automakers in 2007 nearly erased the productivity deficit against their Japanese-based competitors, despite declining production and shrinking market share.

The difference among the Big Six from the most to least productive in terms of total manufacturing labor (Assembly, Stamping, Engine and Transmission) has dropped to 3.50 hours per vehicle (or about $260 per vehicle), down from 10.51 hours (or $790 per vehicle) in 2003.

Chrysler showed the biggest improvement, cutting its total manufacturing labor hours per vehicle by 7.7% to 30.37, the same number recorded by Toyota, according to Oliver Wyman's The Harbour Report(TM) North America 2008, the annual study released today. Oliver Wyman acquired the report in January 2008.

Some Toyota plants are under 16 hours per car, Hyundai Alabama is under 21 hours.

The innovative agreements the United Auto Workers reached with the three domestic companies likely will enhance their competitive position in the future.

First, the union agreed to a lower-tier wage -- about $14.20 an hour -- for new hires. GM can hire these new workers to perform "non-core" work such as delivering parts to the assembly line, custodial services, and most work that doesn't involve putting a part on the body of a car or truck. Ford and Chrysler can hire the lower-wage people for any hourly position as long as they don't exceed 20% of their U.S. hourly workforce.

The hourly 'advantage' is disappearing.

Benefit cost per car?

And make no mistake, GM is in a horrible bind. That $1.1 billion loss in the first quarter doesn't begin to tell the whole story. The carmaker is saddled with a $1,600-per-vehicle handicap in so-called legacy costs, mostly retiree health and pension benefits.

Granted it's a problem. But G.M.'s problems go much deeper than a $1,600 penalty on a $45,000 truck.