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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (20730)	7/3/2002 11:10:50 PM
From: AC Flyer	Respond to of 74559

Hi Don: >>a majority of the companies in America has spent the last two or three years announcing massive layoffs<< This may be a widespread perception, but it's anecdotal. The fact is that unemployment is 5.8% - hardly a high level by historical standards. My explanation for this is that, while there has been carnage in telecomm and high tech, much of the rest of the economy has been and still is on a tear for reasons that you've heard from me before - principally baby boom demographics. >>The fact is that improved productivity is far more often a cost of survival, than a source of improved profits. Most productivity improvements are available to all competitors, and most additional profits are competed away.<< Isn't that wonderful! It means that the benefits of productivity mostly wind up in the pockets of customers (lower prices) and employees (higher wages). It's just what those nasty, greedy corporations deserve. >>The assemblers will be terminated before the shippers, and the ratio of shipments to employees will continually increase, resulting in the phantom high measures of productivity that we see.<< This point of view is based on a 1950s conception of manufacturing when material moved through sequential production processes in huge batches at a snail's pace. The only companies that still work this way are defense contractors - gu'ment's paying the bills, so why change? Did you know that a Toyota assembly plant in the US runs over 100 inventory turns - this means that there is never more than three and a half days of work-in-process material in the plant. The process is so synchronized that if one process stops, everything stops. In any case, even assuming that you were right, which you are not, this "dark satanic mill" view of manufacturing would result only in a small, transitional effect as the poor 'ol doomed shippers shipped gloomily away for a week or two before fading quietly away. >>Your claim that weak competitors falling by the wayside doesn't result in higher measured productivity overlooks the fact that the customers of the disappearing companies don't just disappear in general, but redistribute themselves to the remaining companies, which now have a larger market share and absolute production without greatly increased employment.<< Oh, I see, the weak companies fail but the demand for their product doesn't go away. That's just peachy, it's what we should be rooting for. It means that "the remaining companies, which now have a larger market share and absolute production without greatly increased employment," just as you say. That's productivity, alright.