Editor’s Note: Squeezing Productivity Dry

Manufacturing shed 2 million jobs in the recession between December 2007 and June 2009 but has added back only 327,000 in four years since. These are sobering but official numbers from the Labor Department, which tallied just 71,000 manufacturing jobs created last year.


Automation and computerization have carried manufacturing on a post-recession mini-renaissance. Manufacturers note they have gone to automated plant floors to compensate for the skills crisis as much as for efficiency advantages. However, the Labor Department calculated that in 2013, unit labor costs shrunk by 0.9 percent and productivity growth stagnated at 1.8 percent (same as 2012). There also exists a counterview that the labor shortage is not all about the skills gap; the lack of wage increases is another reason. The sub-2 percent growth in average hourly compensation since 2009 and three straight years of declines in manufacturing real wages would support this view.

John Maynard Keynes would describe the situation as a new era of technological unemployment, The Economist suggests. We are entering a disruptive period where manufacturing jobs are being remodeled. But before the fourth Industrial Revolution and a new machine age completely arrive, have manufacturers already reached a point where they cannot squeeze anymore out of the current ratio of automation to labor? The data would indicate so.
William Ng, Editor-in-Chief, wng@thomasnet.com.

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  • C. 'Barry' McIlvain
    April 1, 2014

    I appreciated your article.

    I wish more people would wake up to the fact that unemployment and underemployment numbers are higher than forecasting has reported.

    The hardest to find workers currently are the Mechanics / Millwrights that keep all of the equipment running.

    Until there is an autobot that can repair equipment and machinery when it breaks down, these are the hardest to find and the most valuable workers.


  • Anonymous
    April 2, 2014

    From the standpoint of a 41-year veteran manufacturing engineer, there are tons of opportunities for costs savings in industry. The biggest obstacles: lack of capital money and engineering manpower to implement even the lucrative projects. Because big US firms are being run by bean-counters, or those beholden to the bean counters, the push is to look good “this quarter”, never mind what we look like in 5 years. In five years, your top brass will be in a different job, usually with another company. Why should they care? So cut your engineering staff to the bone, cut your capital spending, and look good now.

    The next big obstacle: uncertain markets. I work for a military vendor, and we can only guess what the sales will be for a particular product. The DOD is clueless. It is hard or impossible to justify a cost-reduction project for a part, without a solid sales volume.

    Kudos to the car companies, and many family-owned businesses, that are bucking the trend, spending to improve their businesses.


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