Strong job numbers came out again this month with the economy adding over 200,000 new positions. Most hail this as great news for all concerned, but I’m not so sure. Unemployment sits at 2.6% in Wisconsin and the job market is as tight as it has been during my lifetime. If you’re searching for new workers to grow your business, you are in a tough spot. In fact, our entire economy may be at risk.
Economic growth is a simple equation: workforce growth plus productivity growth. Manpower projects the Wisconsin workforce to grow by just 15,000 workers between now and 2040. That’s virtually no growth and — if nothing changes — means that all of our economic growth must come from productivity gains. That’s scary to me because that means that even a modest 3% growth requires us to sustain productivity growth that we have not seen since World War II. It’s not a terrific scenario.
We need a different approach to productivity in order to keep the economy growing and strong. We must understand the elements leading to higher productivity and boost those levels in new ways. The vast majority of our companies are small- and medium-sized and we must provide them access to the same tools as larger companies. We must redefine our market approach and become proactive in order to create the 30-40% productivity growth we need in the coming decade.
A group of experts from across the state, supported by the WEDC, is taking a new approach. Experts from industry, government, and academia created the Transformational Productivity Initiative (TPI) as our answer to this challenge. The goal was to boost productivity by at least 30% in our manufacturing operations. The team engaged around practical solutions for Small- and Medium-Sized Manufacturers (SMMs) in a year-long development effort with promising results.
The team explored much of the research and the various approaches used to create significant productivity improvements in a variety of situations. Their efforts resulted in an impressive collection of services for SMMs, all designed for impact under precise conditions. It’s a valuable portfolio, especially when leveraged with accurate diagnoses and the proper implementation talent.
TPI opened a surprising new pathway for growing productivity. The initial pilots demonstrated the possibilities, improving productivity by 9-51% in a variety of manufacturing environments. Traditional efforts involve standardized programs and one-size-fits-all approaches. Those work…for incremental improvements. The TPI path requires more effort and specialized attention, but creates productivity improvements above 30%!
The first pilots taught us two key lessons about transformational productivity growth. First lesson: Each situation is unique, requiring a custom approach. Each operation will leverage different actions in differing conditions. Every manufacturer knows they are unique. We just proved it again. The TPI requires a custom approach to leverage the two to three key actions that make the biggest impact and set the foundation for future improvement. It’s a door-to-door effort. This makes any particular solution hard to scale over a broad base of manufacturers.
Second lesson: People lead transformational productivity efforts, not technology. It’s vital to have a strong operational base in place before applying any new technology; yet most manufacturers do not clearly understand how they create value for their customers. This is where the hardest and most valuable work done. These analyses build a firm foundation to apply the most appropriate technology in the most leveraged way.
I’m encouraged with the progress made through the TPI. We recognize that workforce constraints will limit our ability to grow and improved productivity provides one way to keep strong growth continuing into the future. Productivity growth also keeps the economy strong and our manufacturers competitive with the rest of the world.
Next time you see strong job numbers, think about the critical need for productivity growth as well as new jobs. We’re entering a new economic era and all of us must challenge traditional paradigms as new facts emerge. Job growth in an era of sub-three percent unemployment.