The Impact Of New Product Introduction On Plant Productivity In The North American Automotive Industry
Using 7 years of plant-level data for the North-American automotive industry, the authors empirically study productivity losses during new product launches. Using propensity scoring, they estimate an average productivity drop of 20% during the year of a new product launch, and they find that the manufacturers do not seem to launch products better over time. After controlling for the endogenous choice of launch plants, they identi1 several possible ways to mitigate this productivity decrease. Product flexibility in the body shop is found to mitigate more than a third of the productivity loss. Furthermore, a plant's previous experience with product launches and a plant's experience with the product platform are found to mitigate productivity losses even further.