It’s time for U.S. manufacturers to focus on productivity or they will lose their long-term advantage. Productivity is fundamentally about increasing output rather than decreasing costs and inputs while output remains static. We faced this challenge during the 1980s and 1990s but didn’t learn much from that experience. We periodically revisit this issue but fail to move forward with a productive, profitable, paycheck-enhancing agenda.
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As Peter Drucker observed many years ago, “Without productivity objectives, a business does not have direction. Without productivity measurements, it does not have control.” Unfortunately, we’ve lost sight of this objective. Nearly 45 years ago, the MIT Commission Made in America Report laid out an ominous outcome: “To live well, a nation must produce well... American industry is not producing as well as it ought to produce or as well as industries in... other nations have learned to produce. If true... and the trend cannot be reversed... the American standard of living must pay the penalty.”
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Comments
Promises and doesn't deliver.
"From 2012 to 2022, manufacturing productivity declined by 3.8% (–0.4% CAGR), and real output slowly—by only 1.7% (0.2 CAGR). However, hours worked rose 3.4 times faster than output, increasing by 5.7% percent (0.6% CAGR) between 2012 and 2022. That isn’t a good recipe for raising productivity, and it explains why manufacturing productivity is falling. Manufacturing employees are working more hours to produce a slight increase in output."
It explains why manufacturing productivity is falling? No it doesn't! It literally just describes the situation in a certain way: no explanation whatsoever. That's like saying, "I can see why our vehicle's speed is dropping: the wheels are slowing down!"
There's nothing in this article about strategies for actually increasing productivity: just lip-service to all of the obvious things that are, to various degrees, related to the issue.
I will submit that the secret sauce to increasing productivity is getting quality in order (Quality: manufacturing parts/materials/products on target with minimum variance). Quality in US manufacturing is abysmal. Businesses do not listen to their processes effectively, so they do not improve them effectively; the processes break down over time, leading to scrap and rework costs, in addition to the wasted time of quality and process engineers who lack the robust support for using SPC to penetrate process issues and end up doing what are effectively box-checking exercises after the fact (e.g., "root cause analysis" for a root cause that came and went weeks ago without being detected on the floor at the time). Hardly anything at all is manufactured in the United States, and a huge amount of US manufacturing is medical devices, where arbitrage due to the regulated nature of the industries leads to higher margins that help to make up the costs of having terrible quality (worst case: just make 10 of something, and sell the 5 that are conforming).
In this situation, the key to increasing productivity is to understand and apply Shewhart and Wheeler. Existing resources are more productive when they are not wasted making scrap or attempting to solve problems in the absence of insightful analysis from process data.
Focus on quality: costs go down and productivity goes up.
Focus on costs or ambitiously target all the things that are conceivably related to producitivity, and it is very likely that you simply add to the chaos, confusion, and conflict that are the causes of costs, waste, and low productivity.
Not sure I understand your point.
Not sure I understand your point, objections, or your goal. The purpose is to focus on productivity and why it is not growing.
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