US manufacturing’s declining productivity growth; can it be reversed?

Us Manufacturing productivity chartThe US leads the world in manufacturing labor productivity.  Productivity is defined as output per labor hour.   In addition US manufacturing was sustaining the highest productivity growth of the western industrialized nations in the late 1990s and early 2000’s (includes Europe Australia, Canada and UK,).  US Manufacturing productivity growth have slowed over the last 8 year in the US, while productivity in China and India has surged.

Below is the US Manufacturing Productivity Growth Graph

As one can see from the graph (data taken from US Dept of Labor Statistics) productivity growth over the last 25 years reached a peak in the year 2000 and  has been declining since.  Possible reasons for this decline:

  • The recession caused many companies to curtail productivity investments
  • Companies opted to move manufacturing overseas rather than improve productivity
  • There is a shortage of skills needed for the manufacturing needs today.

In short, it appears that US manufacturing companies are currently spending less effort at productivity improvements than in the past.  At the end of the last century, there was a productivity/quality revolution in the US as programs such as lean manufacturing, 6 sigma,  theory of constraints,  just in time and total quality management were being adopted by entire industries.   Has the adaption of these productivity improvements slowed, or is the industry just reaching a point of diminishing returns on these efforts.

Capital equipment spending also declined during the recession which affects longer term productivity gains.  Does the recent rebound in certain manufacturing segments such as equipment and machining mean that industry is starting to reinvest in automation?

We at Packnet understand that productivity improvements can come in areas other than the assembly line.   Material handling, storage, packaging/crating and shipping are also areas that can be improved.   Some of the custom packaging and container solutions that Packaging provides can save time and money in a number of ways including:

  • Designs that improve efficiency for packing and unpacking material
  • Reusable packaging and container systems that saves on material costs
  • Designs that reduce product damage from shipping and handling
  • Container systems that improve in-plant material handling efficiency
  • Mobile crating services that free up internal  resources

Productivity improvement should be a never ending effort by manufacturing, failing to do so will result in the decline of your business.    Packnet offers solutions that can reduce your costs, both today and in the future.