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Productivity, Machinery and Skills in a Sample of British and German Manufacturing Plants

Results of a Pilot Inquiry

Published online by Cambridge University Press:  26 March 2020

A. Daly ,
D.M.W.N. Hitchens  and
K. Wagner
K. Wagner
Affiliation:
Technical University, Berlin, and National Institute
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Abstract

On the basis of interviews with management and factory floor employees at 45 matched firms in Britain and West Germany, this article examines the roles of machinery and workforce skills in explaining comparative produc tivity performance. The average age of British machinery was not very different from that found in German plants, but it was less technically advanced, was subject to more frequent breakdowns and breakdowns took longer to correct. Productivity was higher in Germany in each of our matched product groups and the importance of skills at all levels was apparent.

Type
Articles
Information
National Institute Economic Review , Volume 111 , February 1985 , pp. 48 - 61
Copyright
Copyright © 1985 National Institute of Economic and Social Research

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References

(1) A. D. Smith, D.M.W.N. Hitchens and S. W. Davies, International Industrial Productivity, Cambridge University Press, 1982, p.63, gave comparisons for 1976. Changes in output per employee have been very similar in the two countries since then if we take the period as a whole—including the ‘catching-up’ in productivity in the last two years in Britain. Relative productivity in the two countries in 1983 was thus much as it was in 1976 (though the UK's relative position had been slightly lower in 1980).

(2) For some Anglo-German comparisons, see: NEDO, Gauge and Tool Sector Working Party, Toolmaking: A Comparison of UK and West German Companies (NEDO, 1981); A. Sorge and M. Warner, ‘Manpower training, manufacturing organisations and workplace-based relations in Great Britain and West Germany’, British Journal of Industrial Relations, 1980; A. Sorge, G. Hartmann, M. Warner and I. Nicholas, Microelectronics and Man power in Manufacturing (Science Centre, Berlin, 1983). The Anglo-American Council on Productivity was responsible for some fifty sets of comparisons with the United States in the early 1950s; see especially those referred to below, p.59, footnote (1).

(3) See the companion paper, prepared as part of the present in quiry, which examined the results of recent large-scale postal inquiries in the stock of machinery in these three countries, National Institute Discussion Paper no. 78, 1984.

(1) S. J. Prais, ‘Vocational qualifications of the labour force in Britain and Germany’, National Institute Economic Review, no. 98, November 1981; and S. J. Prais and K. Wagner, ‘Some practical aspects of human capital investment: training standards in five occupations in Britain and Germany’, National Institute Economic Review, no.105, August 1983.

(1) S. T. Parkinson, New Product Development in Engineering. A Comparison of the British and West German Machine Tool Indus tries (Cambridge, 1984), passim, especially pp.1, 84. For earlier views see A. Daly and D. T. Jones, ‘The machine tool industry in Britain, Germany and the United States’, National Institute Economic Review, no. 92, May 1980.

(2) We visited nine suppliers in Britain and four suppliers in Berlin; in addition, five suppliers in West Germany (i.e. apart from Berlin) responded in writing.

(3) In addition, three firms were visited by one of us on the US East coast, taking advantage of a journey organised for another pur pose. One each of these firms fell into the first three product groups in table 1. This sample is, of course, too small to permit generalisations about the US, but, taken together with the visits to similar producers in Germany, it reinforces our conclusions on the prob lems faced by British manufacturers in competition with advanced industrial countries. The views of these US firms will be footnoted where relevant.

(1) The questionnaire was developed in the course of the first few interviews, and acted as a broad guide to the main topics covered subsequently. A copy of the questionnaire, together with a summary of some illustrative interviews, are available on application to NIESR.

(1) See the NEDO report on Toolmaking and the paper by Sorge and Warner (op. cit.), which noted fewer managerial staff in Ger many. Similar findings in comparisons with the Netherlands, Sweden and Japan appear in the reports for NEDO by the Process Plant EDC, The Challenge from Abroad (1982), and the Iron and Steel Sector Working Party, A Hard Look at Steel (1982). To keep our interview short we did not ask about indirect labour.

(2) Our US visits yielded a similar impression: the drill bits manufac tured there were designed to be of higher precision; and the screws made there were similarly designed for local specialist application.

(3) See Sir F. Warner, Standards and Specification in the Engineering Industries (NEDO, London, 1977); and the sequel Progress on the Warner Report (NEDO, 1980), which indicates that progress has been unsatisfactory.

(1) The NEDO toolmaking comparisons (op.cit., p. 12) suggest that 20 toolmaking machines would typically be manned by 12 skilled men in Germany and by 15 in the UK, corresponding to a 20 per cent advantage for Germany. See also the example of cigarette manufacture noted by S. J. Prais with the collaboration of A. Daly, D. Jones and K. Wagner, Productivity and Industrial Structure, Cambridge University Press, 1981, p. 104.

(1) We have throughout used the term ‘NC’ to cover both numerically controlled machines operated by punched tape, and the latest generation of computer numerically controlled machines (CNC). The majority of the machines we saw were the more recent CNC machines.

(2) The NC machines were used directly in the production of the three products mentioned, and not simply in making tools for the general machinery used in their plants.

(3) Some other reasons may be footnoted as to why our sample might show much higher proportions of NC machines than to be expected on the basis of previous surveys. First, our survey was carried out at a later date, and incorporated the recent increase in sales of NC machinery (one of the German engineers we spoke to thought the rise had been very rapid in Germany in the past two years). Secondly, our sampled products are perhaps of a kind more suited to NC machinery. Thirdly, earlier statistics generally refer to the percentage of machines that are NC, rather than to the percentage of plants which own an NC machine (inevitably a much higher figure). A comparative survey specifically directed to the use of NC machinery in Britain and Germany was carried out in 1981 by A. Thwaites (University of Newcastle) and Professor J. Ewers (Berlin Technical University); we are grateful to them for telling us of their advance results indicating a significantly higher usage of NC machinery in Germany. On the basis of our limited sample we would not wish to go beyond a qualitative conclusion of that type; though, as made clear in the text above, our particular sample brought that conclusion home to us very forcibly.

(4) This was true also of firms we saw in the United States.

(5) Engineering Our Future: Report of the Committee of Inquiry into the Engineering Profession (Chairman, Sir Montague Finniston), HMSO, 1980 (Cmnd 7794). Between 1965 and 1982 the British share of world exports almost halved to 7 per cent, while that of Germany fell less sharply from 31 to 26 per cent.

(1) The postal survey found only 15 per cent of installed machinery to be imported, whereas our interview survey based on machines in use suggested a very much higher proportion. Part of the reason must be because we were not concerned with machines standing idle, but only with those in use; our sample of products also involved fairly large batchwork, with the attendant need to make use of modern automated machinery which, as explained, tends more often to be imported. import statistics indicate that imports in 1981-3 have risen to account for some 40 per cent of all home purchases (Business Statistics Office, Business Monitor, PQ 3321).

(2) The demise of the British machine tool industry has been the subject of much study and much concern. See, for example, A. Daly and D. T. Jones, op. cit.

(3) If the machines had been built to metric rather than imperial standards repairs might have been effected sooner using German-made parts. The three American companies visited were adamant about repair difficulties in other than American machine tools. The American screw factory would not buy British or any foreign make because of anticipated problems in obtaining spare parts; the spring manufacturer drew attention to the poor productivity of a British coiling machine; the third firm had experienced problems with the electrics on the only British machine they owned. On the other hand, we were told of (but were unable to visit) a competing screw producer who used old British machines, and found them highly acceptable—but these machines are no longer produced (they were sturdy simple machines originally produced in the First World War to make armaments; the company closed about a decade ago).

(4) Since 1982 the Japanese have ‘voluntarily’ agreed to ‘restrain’ their sales to Britain of advanced machinery—CNC lathes and machining centres; this agreement was further extended at the time of this writing (Financial Times, 16 November 1984).

(5) This is in line with the findings of the NEDO toolmaking study. ‘The West Germans achieved more effective earnings differentials for key employees and hence better man motivation’. op. cit. p. viii.

(1) Lawrence, Managers and Management in West Germany, Croom Helm, 1980.

(2) A similar point was made by A. Sorge and M. Warner (op.cit.) in relation to decisions associated with the introduction of CNC tools.

(1) In a similar vein the British ‘Think Tank’ had noted in 1975: ‘despite the fact that British manufacturers employ 50-70 per cent more plant maintenance personnel than their Continental competi tors, on identical equipment mechanical breakdowns result in the loss of about twice as many production hours in the United Kingdom as on the Continent’. More recently ACARD has noted with concern that the introduction of advanced manufacturing technology was hindered by a shortage of maintenance personnel with the requisite diagnostic skills: ‘the complexity of most new manufacturing technologies and related products called for a level of expertise which they had not previously needed’ (ACARD, New Opportunities in Manufacturing: The Management of Technology, 1983, p. 41). The problems of training multi-skilled maintenance men in the context of British demarcation lines amongst traditional craft-skills are considered in a report by Peter Senker et al. for the Engineering Industry Training Board, Maintenance Skills in the Engineering Industry: The Influence of Technological Change (EITB, 1981, especially Chapter 7).

(2) It proved difficult in the course of our interviews to press these distinctions further; but in any fuller inquiry we would propose splitting the sample so that half are interviewed more closely on this aspect.

(3) The findings in this and the following two paragraphs are based on interviews with senior managers and training staff at machine tool manufacturers and distributors in Britain and Germany.

(1) Forty-seven sets of visits in the UK and US were carried out under the auspices of the Council; the reports most relevant to the present inquiry were on Pressed Metal (1950), Valves (1950), Brass Foundry (1953), and Metalworking Machine Tools (1953).

(2) Some argue that North Sea oil has led to a decline in the output of British manufacturing. Without going into the detailed economic mechanism whereby changes in comparative advantage affect the whole structure of industry, it will perhaps be agreed that there is no reason why productivity in manufacturing should be adver sely affected by the discovery of oil (on the contrary, the elimination of marginal manufacturers should raise productivity).

(3) Peter Senker, Strategy, Technology and Skills: A Report on the UK Home Laundry Appliances Industry (Engineering Industry Training Board, 1984); pp.i, 24-6.

(1) NEDO, Toolmaking (op. cit.), p.viii: ‘The fundamental reason for this better performance (by the Germans) is the way … they achieve greater co-ordination, better use of equipment and tighter detailed control with relatively smaller overheads. The role played by the Meisters in West Germany is a key part of this approach and merits very careful study by British companies'.

(2) A scheme is under discussion at the time of writing for joint certification by the Engineering Industries Training Board (EITB) and the City and Guilds of London Institute following a 2-3 year scheme of education and training.

(3) EITB, information Paper 72, Report of Consultations and a Programme for Constructive Reform (April 1984), p.2 (para 7.6).