Efficiency gains may be thorn in economy'sside
Lack of new jobs worries analysts
By Michael Oneal
Tribune staff reporter
Published August 29, 2003
Four years ago, when times were good and business was plentiful, it
took Parker Hannifin Corp.'s manufacturing plant in Rockford three weeks to turn out a hydraulic accumulator. But these days, the Parker team can do it in less than four hours, without breaking a sweat.
"I can get a whole order out in three days--one day if it's an emergency," says Mark Gagnon, the division's 49-year-oldgeneral manager. And because the plant is more efficient, Parker can produce 25 percent more than it could a year ago with the same number of workers.
Casual readers might be excused at this point for stifling a
yawn. Hydraulic accumulator production rates, after all, are
hardly the stuff of Labor Day picnic conversation.
But with the moribund U.S. economy showing strong signs of a turnaround, Parker's Rockford plant illustrates a nettlesome economic reality that has drawn the rapt attention of policymakers from the White House to the Federal Reserve.
While many U.S. companies may be poised to accelerate if a
surge in demand materializes, hard-earned new efficiencies
and low-wage overseas labor mean they aren't likely to start
hiring in big numbers any time soon. And that could extend
the pain for regions like the upper Midwest that have
suffered more joblessness than the country as a whole.
"The Bush administration keeps talking about their `growth
and jobs' program," says John Silvia, Wachovia Corp. chief
economist. "But productivity gains mean you just don't need
the same number of workers you once did to achieve the
same output."
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