In a modern mill in a small industrial estate in the textile town of Bury, Lancashire, more than 100 whirring machines roll out 11m metres of high strength fabric every year.
When parts of the plant were built in the mid-19th century there would have been 4,000 workers at its rows of looms – today, machines are still weaving, but the workforce is just over 100.
The specialist cloth for Milliken European Airbag Products can be found in most big car brands, but as the plant's vice-president Graham Swann likes to say: "Hopefully you will never see one of our products."
This factory is one of a few to have survived industrial decline in the region. It has become a model for high value manufacturing within its US parent company, the 150-year-old Milliken.
Colleagues visit from Milliken's chemicals and textiles plants around the world to learn how this fabric maker has consistently beaten its productivity targets. Its rising efficiency will be a source of comfort for ministers and of envy to so many other firms in the UK struggling to increase their productivity.
It has become an important question for economists and policymakers, as Britain struggles to keep up with competition from rapidly industrialising countries like China as well as high value manufacturing markets like the US.
But the latest official UK data today is expected to show little improvement from the sluggishness of recent years. For Swann, a textile engineer with Milliken for 27 years, the downturn has been a driver of productivity growth, or what he calls "doing more with less and more with what you have got".
"The old school was if you reached a bottleneck you reached for new equipment and invested. Recent times have taught us that you need to look at your existing equipment," he says over the constant hum from the weave room behind him.
The plant's productivity growth, which it measures in metres-per-man-hour and other ways, has ramped up over the last seven years under what Milliken calls a "lean journey", referring to a Japanese production philosophy that seeks to eliminate waste. That starts with the morning meeting – always standing, never sitting, and with a target time of 10 minutes. "It usually lasts eight," says Swann.
"Meetings are a great way of wasting time if you are not careful." Another Japanese concept, Kanban, is used to cut unnecessary stockpiling and tries to match inventories with demand. This goes for stationery in the office as well as supplies and production on the shop floor.
"If the customer stopped ordering today and we have material, we stop production," says Swann. But that does not mean downtime for employees; they simply report to their "continuous improvement leader" and get redeployed to other work.
The plant has four of these, which in times past would have been known as shift leaders. Workers can come to them with ways to improve productivity.
"It could simply be someone feels they could work better on one side of a machine rather than the other," says Swann.
Changes since 2007 have increased output by 12%, the equivalent of 10 weaving machines. Ministers know that raising productivity – what the UK can squeeze out of every hour worked and pound invested – is key to maintaining economic growth, now the low-hanging fruit of the early recovery is all but harvested.So far, the news has been disappointing.
In 2012, productivity fell as the labour market grew faster than output. Last year, it was more stable as output recovered but was still weaker than policymakers had been expecting. On manufacturing productivity growth alone, the UK performs better than many other countries, but the sector is only a tenth of the economy.
The fact manufacturing has achieved greater productivity growth than other sectors in the UK for decades adds more weight to chancellor George Osborne's call for a "march of the makers".
For UK manufacturing, productivity growth was 2.3% per year between 1980 and 2009, when measured by "total factor productivity" – a broad measure of what goes into production, including investment such as research spending.
That puts ahead of many other advanced economies. But taking in all sectors of the economy, the UK's growth rate was just 0.7% per year, according to the government's recent Foresight report into the future of manufacturing.
Professor Rajkumar Roy, head of Cranfield University's manufacturing and materials department, says true productivity is more than a simple question of output divided by input for one manufactured product in isolation.
Investment in one particular new product can help other similar products. For example, "in manufacturing, in a pure production environment, it is output over input.
People understand that well. Outside that bare process you have to ask how projects have been affected by research and development and other factors," he says.
Roy and his colleagues are working on a white paper on UK productivity to be published in May at the National Manufacturing Debate and asking for contributions to the debate.
The team are also analysing 25 years of press articles on productivity in the UK to pinpoint factors that account for dips in labour productivity. The work is not yet complete but already Roy has identified key culprits, including lack of skills.
"Lack of skilled people, training and education is an issue. There is a big difference in the number of graduates per capita between the US and UK," says Roy. He is not the only one grappling with Britain's so-called productivity puzzle.
For the Bank of England, getting a handle on is vital. In recent times, as output for companies has picked up, there has been a "surprisingly" large pick-up in employment, the Bank says.
What it had actually expected to happen in response to rising demand was for workers to produce more per hour, as well as putting in longer hours – in other words, productivity would increase. Only later would companies really ramp up recruitment as demand continued to rise.
Once companies are recruiting to meet demand, workers have more bargaining power on wages and that has knock-on effects for inflation, hence the Bank's keen interest. More importantly for pay, only with productivity growth can earnings keep growing.
The lack of productivity growth in recent years has meant pay growth has stalled and wages have fallen in real terms. The Bank says it is unclear what has constrained productivity growth in recent years but that there are some reasons to be optimistic it will pick up.
For example, as demand increases, some companies may be able to switch staff from winning business towards producing output. Better access to finance may also improve investment in automation, the Bank says.
But, reassuringly for those working in manufacturing, experts say human contributions are just as important as machines and robots. For the Milliken factory, that means training workers to do more than one job. "Machinery improvements improve the output.
That has been going on for years. But what we try and do is get the best out of people," says Swann.
Erik Bouts, who runs the European arm of the glass bottle makers Owens-Illinois, which has a UK plants in Essex and Clackmannanshire, echoes that. For him, productivity is "producing more bottles with the same machine".But that is just as much about the engineers running the machines as the machines themselves, he says.
"Glass is still a natural material. Every time you create a mix that is from sand or from recycled bottle and soda ash the result is a little different and that's why human talent, experience and skill is important to adjust the machines to get the quality we want."
The TUC says that if companies work with employees to get them to "work smarter and not harder", productivity growth does not have mean increasingly bleak workplaces. But it does worry that for some companies the productivity push could mean exploiting workers and that a long hours culture – with unpaid overtime – makes a return for white collar workers in particular.
"We are in favour of high value added workplaces," says Paul Sellers, TUC policy officer. "We want to see training, technology and better management rather than simply demanding fewer people do more work."
The global picture
International comparisons suggest the UK has plenty of catching up to do on productivity. The gap between Britain and its rivals in developed countries is at its widest in 20 years, according to the Office for National Statistics.
The 2012 figures, published last month, put output per hour in the UK at 21 percentage points below the average for the other six members of the G7 – the US, Germany, France, Italy, Japan and Canada. That is the widest gulf since 1992. UK productivity was 25 percentage points below the average for the rest of the G7 in 2012.
theguardian.com
When parts of the plant were built in the mid-19th century there would have been 4,000 workers at its rows of looms – today, machines are still weaving, but the workforce is just over 100.
The specialist cloth for Milliken European Airbag Products can be found in most big car brands, but as the plant's vice-president Graham Swann likes to say: "Hopefully you will never see one of our products."
This factory is one of a few to have survived industrial decline in the region. It has become a model for high value manufacturing within its US parent company, the 150-year-old Milliken.
Colleagues visit from Milliken's chemicals and textiles plants around the world to learn how this fabric maker has consistently beaten its productivity targets. Its rising efficiency will be a source of comfort for ministers and of envy to so many other firms in the UK struggling to increase their productivity.
It has become an important question for economists and policymakers, as Britain struggles to keep up with competition from rapidly industrialising countries like China as well as high value manufacturing markets like the US.
But the latest official UK data today is expected to show little improvement from the sluggishness of recent years. For Swann, a textile engineer with Milliken for 27 years, the downturn has been a driver of productivity growth, or what he calls "doing more with less and more with what you have got".
"The old school was if you reached a bottleneck you reached for new equipment and invested. Recent times have taught us that you need to look at your existing equipment," he says over the constant hum from the weave room behind him.
The plant's productivity growth, which it measures in metres-per-man-hour and other ways, has ramped up over the last seven years under what Milliken calls a "lean journey", referring to a Japanese production philosophy that seeks to eliminate waste. That starts with the morning meeting – always standing, never sitting, and with a target time of 10 minutes. "It usually lasts eight," says Swann.
"Meetings are a great way of wasting time if you are not careful." Another Japanese concept, Kanban, is used to cut unnecessary stockpiling and tries to match inventories with demand. This goes for stationery in the office as well as supplies and production on the shop floor.
"If the customer stopped ordering today and we have material, we stop production," says Swann. But that does not mean downtime for employees; they simply report to their "continuous improvement leader" and get redeployed to other work.
The plant has four of these, which in times past would have been known as shift leaders. Workers can come to them with ways to improve productivity.
"It could simply be someone feels they could work better on one side of a machine rather than the other," says Swann.
Changes since 2007 have increased output by 12%, the equivalent of 10 weaving machines. Ministers know that raising productivity – what the UK can squeeze out of every hour worked and pound invested – is key to maintaining economic growth, now the low-hanging fruit of the early recovery is all but harvested.So far, the news has been disappointing.
In 2012, productivity fell as the labour market grew faster than output. Last year, it was more stable as output recovered but was still weaker than policymakers had been expecting. On manufacturing productivity growth alone, the UK performs better than many other countries, but the sector is only a tenth of the economy.
The fact manufacturing has achieved greater productivity growth than other sectors in the UK for decades adds more weight to chancellor George Osborne's call for a "march of the makers".
For UK manufacturing, productivity growth was 2.3% per year between 1980 and 2009, when measured by "total factor productivity" – a broad measure of what goes into production, including investment such as research spending.
That puts ahead of many other advanced economies. But taking in all sectors of the economy, the UK's growth rate was just 0.7% per year, according to the government's recent Foresight report into the future of manufacturing.
Professor Rajkumar Roy, head of Cranfield University's manufacturing and materials department, says true productivity is more than a simple question of output divided by input for one manufactured product in isolation.
Investment in one particular new product can help other similar products. For example, "in manufacturing, in a pure production environment, it is output over input.
People understand that well. Outside that bare process you have to ask how projects have been affected by research and development and other factors," he says.
Roy and his colleagues are working on a white paper on UK productivity to be published in May at the National Manufacturing Debate and asking for contributions to the debate.
The team are also analysing 25 years of press articles on productivity in the UK to pinpoint factors that account for dips in labour productivity. The work is not yet complete but already Roy has identified key culprits, including lack of skills.
"Lack of skilled people, training and education is an issue. There is a big difference in the number of graduates per capita between the US and UK," says Roy. He is not the only one grappling with Britain's so-called productivity puzzle.
For the Bank of England, getting a handle on is vital. In recent times, as output for companies has picked up, there has been a "surprisingly" large pick-up in employment, the Bank says.
What it had actually expected to happen in response to rising demand was for workers to produce more per hour, as well as putting in longer hours – in other words, productivity would increase. Only later would companies really ramp up recruitment as demand continued to rise.
Once companies are recruiting to meet demand, workers have more bargaining power on wages and that has knock-on effects for inflation, hence the Bank's keen interest. More importantly for pay, only with productivity growth can earnings keep growing.
The lack of productivity growth in recent years has meant pay growth has stalled and wages have fallen in real terms. The Bank says it is unclear what has constrained productivity growth in recent years but that there are some reasons to be optimistic it will pick up.
For example, as demand increases, some companies may be able to switch staff from winning business towards producing output. Better access to finance may also improve investment in automation, the Bank says.
But, reassuringly for those working in manufacturing, experts say human contributions are just as important as machines and robots. For the Milliken factory, that means training workers to do more than one job. "Machinery improvements improve the output.
That has been going on for years. But what we try and do is get the best out of people," says Swann.
Erik Bouts, who runs the European arm of the glass bottle makers Owens-Illinois, which has a UK plants in Essex and Clackmannanshire, echoes that. For him, productivity is "producing more bottles with the same machine".But that is just as much about the engineers running the machines as the machines themselves, he says.
"Glass is still a natural material. Every time you create a mix that is from sand or from recycled bottle and soda ash the result is a little different and that's why human talent, experience and skill is important to adjust the machines to get the quality we want."
The TUC says that if companies work with employees to get them to "work smarter and not harder", productivity growth does not have mean increasingly bleak workplaces. But it does worry that for some companies the productivity push could mean exploiting workers and that a long hours culture – with unpaid overtime – makes a return for white collar workers in particular.
"We are in favour of high value added workplaces," says Paul Sellers, TUC policy officer. "We want to see training, technology and better management rather than simply demanding fewer people do more work."
The global picture
International comparisons suggest the UK has plenty of catching up to do on productivity. The gap between Britain and its rivals in developed countries is at its widest in 20 years, according to the Office for National Statistics.
The 2012 figures, published last month, put output per hour in the UK at 21 percentage points below the average for the other six members of the G7 – the US, Germany, France, Italy, Japan and Canada. That is the widest gulf since 1992. UK productivity was 25 percentage points below the average for the rest of the G7 in 2012.
theguardian.com
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