Japanese Auto Plants Run Closer to Capacity

Ford Motor Co. and General Motors Corp. trailed Japanese rivals in operating North American plants close to capacity in 2005 while giving up additional U.S. market share, an auto industry analyst said Wednesday.

Ford, the No. 2 U.S. automaker, was ranked the lowest among six automakers, using 79% of its production capacity, said Ron Harbour, president of Harbour Consulting. GM, the world’s largest automaker, was at 87% and DaimlerChrysler’s Chrysler unit, 93%. Toyota Motor Corp., Japan’s biggest automaker, ran its plants at a 111% rate, followed by Nissan Motor Co. and Honda Motor Co. at 97% each.

“Plants run by GM, Ford and Chrysler are set up to be profitable when times are good, producing lots of vehicles,” said Art Smalley, a consultant for the Lean Enterprise Institute in Brookline, Mass. “When times aren’t good, they lose money. The Japanese automakers tend to be more conservative in their assumptions about the market.”

Excess capacity adds costs for U.S. automakers, which must pay for nonworking employees while carrying the expense of unused equipment. Ford is scheduled to announce plans for additional plant closings on Monday as it adjusts to a 1-million-unit drop in annual U.S. sales since 1999.

GM Chief Executive Rick Wagoner said in November that he intended to close nine factories and eliminate 30,000 jobs by 2008. GM now sells about 1 in 4 U.S. vehicles, down from about 1 in 2 in the early 1960s.

Toyota, which lags behind only GM in global vehicle sales, has had 10 consecutive years of U.S. sales gains and ended 2005 with a 13.3% share of the market.