Newspaper article THE JOURNAL RECORD

Better Factories Bring Fewer Jobs

Newspaper article THE JOURNAL RECORD

Better Factories Bring Fewer Jobs

Article excerpt

HOUSTON _ Manufacturing in the United States is going great guns. Factory output has reached its highest point in seven years.

So where are the jobs? You know, those good jobs at good pay that manufacturing is supposed to bring?

"Most people in this country and the world still believe manufacturing production and employment are one and the same thing," said Peter Drucker. "The last time in which manufacturing employment grew faster than production was in 1894.

"For 100 years, the labor unit of production has been going down 1 percent, compounded, a year. Which means today we need only one-third the employment."

Drucker is the person most people believe invented the study of management. He's written numerous books on the subject and consults for major corporations.

Indeed, much modern business jargon was invented by Drucker. Take the term "profit center," used to designate a company unit that is expected to earn a profit on its own.

Drucker adds that it is also one of the more stupid ideas he ever came up with.

"The only true profit center is a customer whose check has not bounced," Drucker said recently in a speech before top manufacturing executives attending the American Production and Inventory Control Society convention in San Diego.

In the early 1950s, Drucker said, 40 percent of the workforce had jobs in manufacturing. Today, that's down to 16 percent.

Before World War II, half of a product's cost represented wages. Today, even the least-efficient manufacturers, like General Motors, have gotten labor costs down to 25 percent. Toyota's newest factory is building cars with a labor cost of 11 percent and Ford's newest is 12.5 percent, Drucker said.

Lately we've seen a huge burst of what Drucker calls the rethinking of manufacturing and others call restructuring.

We can thank the computer for making that possible. …

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