Energy and Productivity, Two Sides of a Coin in the U.S. Auto Industry 2006-01-0833

Productivity is a significant issue in the US auto industry that is often viewed as the success or failure that a vehicle assembly plant can make or break their production schedule. In other words, productivity is often looked at in terms of the number of assembled vehicles produced per year. While high production volume is an important indicator in a manufacturing environment, it certainly does not necessarily imply high productivity. By definition, Productivity is the ratio of output (number of vehicles produced) divided by all input resources such as labor, material, capital, overhead, health and energy costs. Improvement in productivity can be achieved in two ways: a reduction of inputs while output remains constant, or an increase in output while inputs remain constant. Energy is the single most controllable cost parameter in the input parameters of the productivity equation. In today's competitive marketplace, energy efficiency can provide means to improve productivity through reducing the manufacturing energy cost. This paper addresses this missing link between energy and productivity in U.S. auto industry. Furthermore, it outlines a methodological approach for driving improvements in energy usage in a major vehicle assembly plant in US. It is hoped that efforts in this direction would pave the road to better understand role of energy as an important factor in the assembly plant's vision to productivity improvement.