The Economy

Viewpoint -- Productivity In Question

Dec. 21, 2004

Manufacturing's managers need to seek serious answers.

Will U.S. productivity re-accelerate as soon as GDP gets going again? Conventional wisdom, economists, and trade groups such as the Washington-based National Assn. of Manufacturers (NAM) contend that it will. "We have the best workers and technology in the world, and the factors that drove the productivity boom of the late-1990s are still in place," states Jerry J. Jasinowski, NAM's president. And yet a return to stellar performances from U.S. productivity isn't a given, in part because the speed and strength of the U.S. economy's recovery from a severe downturn remain in question. What's more, there's the undismissable fact that U.S. productivity gains for the five years between 1996 and 2000 decidedly were not as stellar as originally reported. For the non-farm business sector of the economy, a category that includes manufacturing, productivity advanced at an annual average of 2.5%, not the 2.8% rate previously reported, reveal revised U.S. Labor Dept. data released in August. For the year 2000, the downward revision was even more dramatic, with productivity actually growing at a still-healthy 3% rate, not the spectacular 4.3% pace initially calculated. A recent article in the Wall Street Journal suggests that that these revisions may mean the long-term, non-inflationary U.S. growth rate is in the 3% to 3.5% range rather than between 3.5% to 4%, as many economists now believe. In any event, the numbers should raise questions among business economists and manufacturing executives -- as well as among the securities analysts who track a globe full of goods producers. They should be questioning the extent to which IT generally and the Internet in particular have affected -- and continue to affect -- efficiency. Do the revised numbers challenge the notion of a post-1980s U.S. economy distinctly different from the pre-1990s U.S. economy, the "Old Economy" and "New Economy" paradigm? Or alternatively do the numbers give more credence to the idea of technology-driven economic evolution and less significance to the notion of a technology-engineered economic revolution? In answering those questions, manufacturing's managers need to keep in mind that productivity is more than a simple measure of the relationship between the volume of goods and services and the time workers take to produce them. Productivity also is a product of technological changes, levels of capital investment, prices and types of energy, kinds of materials -- and a product of management skills and the workers' attitudes. For executives keen on improving productivity during the developing economic recovery, U.S. worker attitudes should be their primary cause for concern. Only 47% of manufacturing employees would recommend their company as a good place to work, reveal selected data from a national workplace study done this year by Walker Information Inc., Indianapolis. Only 41% of manufacturing workers believe they are getting the resources necessary to do their jobs. And just 31% of manufacturing workers think excellence is rewarded in their companies. Significantly, the full study -- which in addition to workers in manufacturing and other businesses includes employees of non-profit groups and government-shows that measures of employee loyalty and commitment have not changed notably in the two years since another Walker Information study demonstrated "a clear need" for companies to improve relationships with their employees. Whether or not recent U.S. productivity gains are miraculous and whether or not some people are being silly are not the issues. The critical issue is whether or not manufacturing executives will take seriously the need to improve relationships with their employees -- and, particularly in the wake of Sept. 11th's awful reminder of the worth of individuals, not regard employees simply as productivity statistics. John S. McClenahen is an IW senior editor. He is based in Washington.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.