Productivity Talk
By JOHN BULL
WI1AT is the point of talking about produc- tivity—even to the Prime Minister at Lancaster House—if the demand for your pro- ducts is collapsing and expensive machinery stands idle? But businessmen have not been terribly interested at times of boom, when good profits can be made without really trying.
One of the most interesting papers at the National Productivity Conference on Tuesday showed how much is demanded from manage- ment and men if the national growth rate of the early 1960s (an uninspiring 31 per cent per annum) is to be achieved again. In the first place, because we will get little help from an expansion in the working population, increased productivity must do virtually the whole job. Secondly, if we rely upon better equipment we should realise that the average life of a piece of plant is ten years, so that when it is renewed an improvement in productivity of some 40 per cent is necessary. But this sort of advance is well beyond the grasp of many service activities. Consequently manu- facturing industry has to do even better if a faintly respectable growth rate is to be sustained. In fact, it is quite unrealistic to believe that the introduction of new machinery can very often produce a 40 per cent to 50 per cent advance in productivity. We must, therefore, learn to use the plant we have got much more effectively. Most other nations do.
Yes, but what about the question at the top of this article? Isn't increased output a positive embarrassment during a recession? Well, it is nor if you can sell it cheaply enough to knock imported goods out of the home market, and it is not if you can enlarge your share of export markets too. At least, that is what the economists say. It is a nice theory. Unfortunately there is little evidence to demonstrate that business has worked this way in the past.
Another line of official reasoning heard at Lancaster House did not wholly ring true. It was said that for the company the great charm of getting higher productivity during the next twelve months is that it increases the availability of cost. Learn to operate on a lower level of stocks, cut down on the variety of your products, tighten up on credit control, do with less men : these measures, it was argued, will significantly ease liquidity problems. So they will—if you can afford the small computer needed to control stock to finer limits, if you can afford to redesign your products into a smaller number of versions and modify your production line accordingly, and if it is humanly possible to tighten up on credit control when the next man is as short of cash as you are.
Do with less men. however, is a most important piece of advice, and as 12.000 BMC workers tramp off to the employment exchanges, it is obvious that it does not need repeating particularly loudly. Some of the learned talk at the Con- ference about pilot schemes or experiments in plant bargaining was hypocritical. With at least
18 months of recession ahead, managements are already seizing the opportunity to make big cuts in their labour forces. Unions learn from the newspapers what is going on. ICI, for instance, showed precious little regard for traditions of consultation when it changed its mind about pros- pects for nylon.
The recession has given industry a chance to get rid of its excess labour, and that it seems to be doing with a will. The next step is up to the Government, it is the best means we have got for turning unemployed men into mobile men. The earnings-related unemployment benefit will help, so will the payment of transfer grants, the redundancy payments scheme, the Industrial Training Boards. But there are doubts as to whether the employment exchanges are up to the job in front of them. They must act as employ- ment agencies not just as unemployment offices.
It is, of course, early days yet to judge the efficacy of Whitehall's labour work. But it is not too soon to state that while the economy is being deflated, while demand is falling, the most effec- tive work on raising productivity in this country can be achieved by such bodies as the Industrial Training Boards. Much of what industry can do must wait until all its plant is back in action and until there is cash with which to back action.
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