Both General Motors (GM) and Toyota have production facilities in Texas. GM’s plant was built in 1956 on a 249-acre site and has since undergone billions of dollars in renovations. Toyota’s plant was built in 2006 on 2,000 acres. Each plant has a production capacity of 200,000 vehicles per year. GM averages close to 22 assembly labor hours per vehicle (no data on labor hours per vehicle are available for Toyota). The labor cost per vehicle is $1,800 for GM, which uses a unionized labor force, and $800 for Toyota, which uses nonunion labor. (Based on Lee Hawkins Jr. and Norihiko Shirouzu, “A Tale of Two Auto Plants,” Wall Street Journal, May 24, 2006.) 

Required:

Form groups of two to four students and respond to the following items:

a. Provide at least two reasons for the significant difference in assembly labor cost per vehicle for GM and Toyota.

b. What other production costs should be considered in evaluating the efficiency of each plant?