Keys to US industry comeback: speed, teamwork

"It has to be done fast," said C. Jackson Grayson Jr. "And that's why I insist that labor and management together, in the private sector, are going to have to take a lot of initiative in this."

What has to be done fast, according to Mr. Grayson, chairman of the American Productivity Center in Houston, is to save the US auto industry, now sinking beneath waves of Japanese car imports.

"It doesn't mean we have lost the auto industry," says Grayson. "But it may mean we have to restructuring, because we're going to have a lot of problems."

He ticks them off: "Unemployment, dislocation, retraining, job shift skills. . . . And it's fast. It's not like the telephone industry, where you had lots of time to move those operators out of the plug boards."

As an example that it can be done, Grayson cites textiles -- another old-line , traditional US industry buffeted by competition from overseas. "There are some firms inside the textile industry that have taken hold of themselves, revived, and they're now exporting, strong."

What did they do? "Sloughed off the inefficiency," says Grayson, "and built on what our comparative advantages are."

Neither Grayson nor anyone else claims that huddling workers and management together will revive slumping productivity by itself. The most cooperative workers cannot turn out more and better products in old factories on outmoded machines.

Businessmen insist that tax laws must be changed to leave more investment capital in corporate hands. One way to accomplish this, some experts believe, would be to grant tax benefits to business only on that part of their capital which they actually invest.

Even the most beneficient tax laws, however, would accomplish little if workers and management did not perceive themselves as rowing in the same leaky boat.

Here one runs into the problem of rising expectations -- what Federal Reserve Board Chairman Paul A. Volcker calls the "euphoric" postwar conviction of Americans that they could expect a 3 percent rise in their standard of living every year.

Until 1973 this was largely true, because productivity -- or the output of goods and services per hour of work -- was climbing on average by 2.6 percent a year.

Those were the days when millions of middle-class American families, blue- and white-collar alike, bought a second car, a boat and trailer, and floated stereo sound throughout their homes.

Then, among other things, came the oil price shocks of 1973-74 and 1979. A barrel of oil that cost $3 a few years ago costs, on average, more than $32 today.

Expectations, however, are stubborn, and, as Mr. Volcker puts it, that 3 percent euphoria "became built into wage contracts" which now bear little relationship to US productivity growth.

Indeed, productivity has slowed to a crawl, and even dipped n occasion, while wages in major contracts continue to rise at nearly a 10 percent annual pace, plus indexing to inflation.

To some extent, the traditional adversarial relationship between management and labor -- the prickly feeling that they are on opposite sides of the fence -- has damaged productivity, though Grayson doubts it has been a major cause of decline.

He turns the question around and claims that worker-management cooperation "can be a major way to get over many of the other problems -- investment; how you organize your production inventories, systems, and processes; how you adapt to change, and so on."

He mentions a November 1980 survey of 424 chief executive officers of US firms in which they were asked to name the most important actions business could take to halt the productivity decline.

"No. 1," says Grayson, citing the answers, "change management-employee relations. No. 2, reduce government regulations; No. 3, increase investment."

Grayson finds high-technology firms, such as IBM and Texas Instruments, more aware of the need to improve productivity to stay out front in world markets than old-line industries, such as autos and steel.

"The industries in trouble," he says, "are beginning now -- out of fear and concern, and realizing they are in danger -- to say: 'OK, maybe we ought to start [restructuring]. The climate's there."

At this point, says Grayson, comes the real need for cooperation between workers and management. "If labor does not permit that restructuring," he warns , "they won't make it. They'll find their markets have dried up before they can restructure."

A new series on three US industries which have overcome many problems of productivity and foreign competition will begin soon in the Monitor.