Even amid layoffs, American workers boost productivity Making More with less

February 13, 1994|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau of The Sun

Forget what you've heard about workers in Germany or Japan. If you want to see a productive employee, look at Doug Moxley of Aberdeen -- and millions of blue-collar Americans like him.

Mr. Moxley, 32, who makes insulated panels for walk-in refrigerators, is producing twice as much an hour as he did five years ago.

Similar stories are being told throughout the American workplace. Since the recession ended in March 1991, productivity -- defined as output per number of hours worked -- in the manufacturing sector has risen at an annual rate of 4.5 percent, nearly twice the sector's average yearly growth in the 1980s. In all, productivity rose a meager 1.6 percent last year, the government reported last week.

Such rising productivity is crucial in driving an economic recovery and some economists are optimistic that the increases can continue.

"It kind of comes down to all of us working harder," says Diane Swonk, an economist with First Chicago Corp. and an expert on the Midwestern manufacturing heartland. "Will it ever end? Of course not. In a competitive market, it can't end. You are %J constantly pushing to get better."

But what does this mean for the American worker, whose increased productivity has helped drive an economic expansion that has failed to create nearly the number of jobs of other post-World War II bounce-backs?

Indeed, a surge of 7.8 percent in manufacturing productivity in the last quarter of 1993, for example, coincided with the creation of only 39,000 manufacturing jobs, a fraction of a percentage point in the 17.7 million-strong industrial work force.

The questions now are: How much more productivity can be squeezed out of workers before employers are forced to recruit new employees? And what was learned by managers during the recession that can keep productivity increasing even as profits grow and new employees are hired.

Eventually, increasing productivity should sharpen the U.S. edge the global competition for trade and increase the nation's standard of living. This, in turn, should eventually create more long-awaited job opportunities.

But so far, increased productivity has been gained at a heavy human price: layoffs. Corporate downsizing stripped 600,000 workers from payrolls last year and an additional 108,000 in January alone.

For example, at Doug Moxley's workplace, Duracool, a division of Harford Systems Inc., the payroll is down from 140 employees five years ago to 95 today. That is a decline of almost one-third, while revenue has doubled, from $6 million to $12 million.

The increase in manufacturing productivity alone came as the number of manufacturing jobs shrank by 1 percent. There are 75,000 fewer manufacturing workers than when the recovery began 33 months ago and 3.4 million fewer than the sector's peak of 21.1 million workers in 1979.

"In the telephone industry, the airline industry, wherever you want to look, you see that downsizing of major companies is putting a lot of work and a lot of pressure on the workers still there," said Bill Cunningham, an economist at the AFL-CIO.

"If that's how you are getting more productivity, how long can that last?" he asked.

Not since World War II has the average factory workweek been longer. In December, it was 41.7 hours. The length of the workweek affects production, the total output, rather than productivity, the rate of output. Some economists say the workweek is now so long that there is little room for expansion and that employers will increasingly have to hire.

The manufacturing sector hit its payroll low of 17.7 million in September and added 39,000 jobs within three months, the first consecutive gains in five years. The National Association of Manufacturers estimates that a modest total of 200,000 jobs will be created this year.

A handful of them will be at Duracool on Pulaski Highway in Aberdeen, where 10 part-time employees have the prospect of becoming full-time as the company's performance rises.

For many, the increase in productivity came not just from producing the same amount with fewer people. It also came through more efficient production methods and better management.

"There is no question in my mind that, given the recession we had in 1990-1991, we would have been out of business had we not improved," said Arley J. Mead, Duracool's president. "We would have just bellied-up. It was a needed restructuring. We just got very fat, as a society, as an industry. We had to trim."

The secret to the plant's productivity improvements: better supply delivery; streamlined work practices, many of them workers' ideas for saving time and money; and work-force reductions through attrition, not layoffs.

The most dramatic improvement came in the panel manufacturing shop, where Doug Moxley helped increase output per direct hour of labor from 0.809 of a panel in 1989 to 1.575 panels today, a productivity increase of 94.7 percent.

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