48

PRODUCTIVITY, MACHINERY AND SKILLS IN A SAMPLEOF BRITISH AND GERMAN MANUFACTURING PLANTS

Results of a Pilot Inquiry

by A. DALY, D. M. W. N. HITCHENS and K. WAGNER*

*The third author is at the Technical University, Berlin, and aconsultant at the National Institute.

On the basis of interviews with management and factory floor employees at 45 matched firms in Britain and WestGermany, 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 Germanplants, but it was less technically advanced, was subject to more frequent breakdowns and breakdowns tooklonger to correct. Productivity was higher in Germany in each of our matched product groups and the importanceof skills at all levels was apparent.

Introduction

This paper is based essentially on some three dozeninterviews carried out in matched manufactur-ing in Britain and Germany in 1983-4. Theplants were in the metal-working trades, andselected as producers of relatively simple products;the plants were of small to medium size, with

generally between fifty and five hundred employees.The central object of the study, in brief, was to castlight on how present-day productivity is affected bydifferences in the type of machinery used and bydifferences in the skills and qualifications of theworkforce on the factory floor; was it, for example, inusing advanced that Britainwas deficient and, if so, in what ways?

By way of background, it is worth recalling recentcomparisons of the results of Censuses of Produc-tion in Britain and Germany. These indicated that bythe mid-1970s German output per employee in

manufacturing as a whole was about 50 per centhigher than in Britain, and higher still in mechanicalengineering and vehicle production (in the region of80 per these differentials have remained moreor unchanged since then.(1) There have beenmany earlier comparisons of individual British andforeign plants. (2) Taken separately, such case

studies have been too limited to be regarded as fullyrepresentative; yet, taken as a whole and togetherwith the statistics based on the Censuses, it seems

inescapable that there is in fact a wide productivitygap between the countries-and one that deservesintensive investigation.Even in the plants that we selected as producing

relatively simple and ostensibly similar products inthe two countries, a considerable variety of productspecifications and processes was encountered; a fair rrange of efficiencies was also apparent even withineach country. This was of course not unexpected,and it was recognised from the outset that a largersample might ultimately prove necessary to reachdefinitive conclusions. With limited resources we

were thus content to treat this as a ’feasibility study’.Our inquiries in fact met with wide interest. No

doubt this was related to two puzzling aspects oafBritish and German industry which had become fairlywidely known from previous investigations. The firstis that the stock of machinery in Britain is not in anyobvious way out of date; the postal survey of themetal-working industries by Metalworking Produc-tion in 1982 showed, for example, that 24 per cent ofall machine tools in British plants has been installedin the fife years, compared with only 5 per centshown by a similar German survey for 1980, and 13per cent by a similar US survey for 1983.(3) Thosepostal surveys did not achieve high response-rates(roughly a quarter in each country) and it is dearlyworth attempting to obtain supplementary evidence,with the help of direct interviews, on ages of

machinery. !f it confirms that our machinery is noolder than Germany’s, it would make it even more

important to know why our productivity record is nobetter.

The second aspect, much publicised in the pasttwo years in relation to the Government’s plans for

(1)A. D. Smith, D.M.W.N. Hitchens and S. W. Davies, InternationalIndustrial Productivity, Cambridge University Press, 1982, p.63,gave comparisons for 1976. Changes in output per employee havebeen very similar in the two countries since then if we take theperiod as a whole—including the ’catching-up’ in productivity in thelast two years in Britain. Relative productivity in the two countries in1983 was thus much as it was in 1976 (though the UK’s relativeposition had been slightly lower in 1980).(2)For some Anglo-German comparisons, see: NEDO, Gauge andTool Sector Working Party, Toolmaking: A Comparison of UK andWest German Companies (NEDO, 1981); A. Sorge and M.Warner, ’Manpower training, manufacturing organisations andworkplace-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). TheAnglo-American Council on Productivity was responsible for somefifty 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 postalinquiries in the stock of machinery in these three countries,National Institute Discussion Paper no. 78, 1984.

49

youth training, is that a much greater proportion ofthe German workforce is trained to craftsman stan-dard : something like two-thirds have passed qualify-ing examinations at the level, for example, of atrained fitter (similar to our City and Guilds part 11

examinations) in a wide range of occupations, com-pared with well under a third of the workforce inBritain.(1) Can it be that British productivity would besignificantly improved if the typical worker were atrained and person as in Germany?The selection of firms to be compared is described

in the immediately following section, together withthe products they made and the average productivitydifference between the two countries. This isfollowed by three sections dealing, respectively, withthe q~ality of machinery, the quality of manpowerand the quality of raw materials. The implications arediscussed in a final section.

The of the inquiryA selected sampleThe crucial decision in the present inquiry was tofocus the sample on matched, simple, products. Bychoosing the sample in this way we hoped to reducethe diversity of ancillary factors affecting productivityelicited in many earlier comparisons; in turn, this

might be expected to yield more trustworthy resultson the central aspects of interest here (the effects oftypical differences in machinery and skills on produc-tivity). A restriction in the range of variation is particu-larly important here given the need to limit the size ofsample on grounds of cost.We ~.ccordir~gly chose simple matched products in

the two countries, such as coil springs, rather thancomplex products such as laundry machines or inter-nal combustion engines. This would permit an easierunderstanding of the efficiency factors at work on thefactory floor. One of the crucial questions surround-ing training policy today is whether it is sufficient to

provide training for engineers, technicians and thefew others that are at ’the tip of the iceberg’, or

whether there are substantial benefits to be obtained

by extending training-at very great cost-to themassive numbers below that level, as is done in

Germany. The role of the few staff members in thedesign, drawing and marketing departments is not ofcourse unimportant in explaining the aggregate gapin productivity; but in the manufacture of simple-ascompared with complex―products, the roles of pro-duction economies on the shopfloor, and the effi-ciency of operators, are likely to be of greater im-

portance and more apparent to the external observer.Another reason for choosing simple products is

that it reduces the problems of quality variations, andmakes easier the measurement of productivity in

physical terms (rather than value in national curren-cies converted at some rate of exchange).We might have focused more r~~.rro~vly still look-

ing, not at matched simple products, but at matchedmanufacturing processes in the two countries, suchas the turning of meta) on automatic I~thes9 orperhaps even more r~~rrowly, by looking at turningsout of suitably-alloyed steel bars within a limiteddiameter-range; or yet further, we might have

specified the precise type of machine. But there aredisadvantages in going too far down that path. Themore closely we define the process in terms of

machines and materials, the more will its efficiencybe pre-determined by technical factors; and the lesslikely we are to discover differences in output ratesand in manning requirements. Efficiency very oftenlies in choosing the right machines and the rightmaterials to make a particular product. Our decisionto base the sample on matched products (rather thanon matched processes) thus left open the possibilitythat we might examine the efficiency of different pro-cesses and of different machinery in the manufactureof the same product.

In this way, the range of relevant comparisons hasbeen widened. On the other hand, by confining thesample to products matched as far as possible in thetwo countries, we have implicitly narrowed the rangeof relevant experience, for the following reason.

While it is obviously important for the entrepreneur tochoose the right machines, the right materials andthe right personnel, it is often more important tochoose the right product for manufacture. The bestmix of products to be manufactured in one country isobviously not necessarily the best for another; in theextreme case, there may not be any matched pro-ducts at all in two countries; or, if there are anymatched products, they may not be typical of eachcountry’s production as a whole. For example, if theGerman workforce is indeed so much more greatlyendowed with vocational skills than Britain, as indi-cated by the statistics quoted above, we wouldexpect a greater specialisation in Germany on skill-intensive products; and simple, run-of-the-r~ill pro-ducts may hardly be made there at all. One mighttherefore expect difficulties in finding products thatare both ’simple’ and ’matched’ in the two countries;in any event, a degree of mis-matching is probablyinevitable in any inquiry of this sort.By the same argument, any general tendencies in

the nature of observed mis-matches may cast

important light on the underlying skill-endowments.For example, a comparison by Parkinson at the end

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

50

of the 1970s of 8-9 firms each in Britain and Ger-

many, all of which manufactured machine tools, con-firmed that German machines tended to be more

specialised to meet individual customers’ needs;while British machines tended to be of a more stan-dard type.(’) Customers were happy to pay higherprices for German machines because they met theirparticular needs with subsequent expenditureon in-house tooling, and because of their greatertechnical proficiency, and so on. The to im-prove the technical quality of products in advancedindustrial countries has become increasingly neces-sary, as Parkinson put it, because, ’suppliers fromdeveloping countries have entered the market, sup-plying relatively standard products with lower

manufacturing costs’. One reason put forward as towhy British machines l~gged in product developmentwas that British purchasers of machine tools (in con-trast to German purchases) lacked ’the technicalsophistication to evaluate ideas for new machinetools, ~nd contribute to their development’.

Differences in the general level of technical exper-tise, whether manifest at the supplier or purchaserend, may therefore influence differences in the

specification of the products typically produced ineach country.

The choice of products and firmsThe present inquiry was based on the metal-workingtrades because of their very clear reliance on both

machinery and ski)!s; we were also influenced by theparallel surveys in these trades. The choice offirms was confined initially to Southern England andthe Berlin area to minimise interviewers’ travel timeand costs; in order to find matched products in thepartner country, firms further afield were sub-

sequently approached. ~n Germany, again tominimise travel costs, Stuttgart was taken as a se-cond centre for the latter purpose.

Classified trade directories for Berlin provided theinitial basis for tie selection of most of the products tobe examined. Because of Berlin’s somewhat specialcircumstances-the greater distance to the maincentres of the country’s population and ’ndusiry―thefull range of Germany’s manufactures is of coursenot to be found there. Berlin is also exceptional inhaving a higher proportion of immigrants, and thelabour force is somewhat less skilled on averagethan in the rest of Germany. l~cvorthcless, a fairrange of products is manufactured there in sryiall-and medium-sized firms, and the difference in

average skill levels between it and Britain is ade-

quately great for the purposes of this inquiry. Wematched the following products: screws and nuts,small coil and leaf springs, cutting drills (i.e. drill bitsof various sorts), hydraulic valves, and motor parts(the products are not described more precisely hereto avoid breach of confidentiality). Most firms pro-duced other products besides those selected forcomparison; some produced so wide a range, and insuch small batches, that it better to regard themas general jobbing engineers. Other firms visitedcould not be satisfactorily matched within the limits ofthe present inquiry; as they were all in metat-working,they nevertheless contributed to the general lesson.The quality of servicing demanded and supplied in

the two countries is a matter of concern to users ofadvanced machinery in both countries. In the later

stages of the inquiry we therefore visited a dozensupp9iors of machine tools;<2> these had inevitablyacquired much experience in the course of after-sales service of the state of technical expertise oftheir customers. Some were domestic manufac-

turers, others were distributors of foreign machinesor agents, and some fuifi6Ged both functions.

In total, 45 firms were visited, of which three quar-ters were manufacturers and a quarter were machinetool suppliers and service agents; table 1 shows thedistribution of the firms amongst main productgroups. (3) Table 2 shows the distribution of the sizesof the manufacturing firms in our sample in each

country compared with national totals of these tradesas derived from Censuses of Production. Tradedirectories (which formed the starting point of oursample) tend to be more comprehensive on largerfirms, and it is not surprising thai our samples in bothcountries are over-represented by larger firms;nevertheless, we achieved a fair spread of sizes inboth countries. The German sample contained rathermore small firms than the British sample.We approached the firms by letter followed by a

telephone call. This was done in a series of rounds,alternating between the two countries, to achievesamples as closely matched in product specificationas possible; many firms that appeared from the tradedirectories to be making the same product werefound, on closer questioning (on dimensions, etc.),not to be comparable. Approximately half of those

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

(2)We visited nine suppliers in Britain and four suppliers in Berlin; inaddition, 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 Eastcoast, taking advantage of a journey organised for another pur-pose. One each of these firms fell into the first three product groupsin table 1. This sample is, of course, too small to permit generalisa-tions about the US, but, taken together with the visits to similarproducers in Germany, it reinforces our conclusions on the prob-lems faced by British manufacturers in competition with advancedindustrial countries. The views of these US firms will be footnotedwhere relevant.

51

Table 1, of firms by ofproduct

(a) Metal-working firms with products that may be matched in Germany inany extension to this inquiry.(b) Allows for one firm that had a department for screws and a departmentfor springs.(c) A further five suppliers in West Germany responded in writing.

approached who were in comparable trades agreedto our visiting them. The proportion was similar inboth countries, and was similar for manufacturersand distributors. There was no obvious characteristic

distinguishing those who were ’too busy’ to see us;but we suspect that those co-operating were of

above-average efficiency. This seemed clearer in

Britain where many participants stronginterest in being told what in due course would belearnt from our German visits.The majority of our visits were conducted by two of

us. The more helpful were those where one inter-viewer came from each country; about half our visits

Table 2. Distribution (a) of sizes of manum

facturing plants in the and in the

population with over 20 employees)

Sources: UK: Census of Production 1980: Summary Tables (HMSO, 1983),table 6. W. Germany: Produzierendes Gerwerbe: Betriebe, Beschaftigteund Umsatz im Bergbau und im Verarbeitenden Gewerbe nachBeschiftigten-grossen Klassen, 1979, Reihe 4.1.2. (Statistisches Bun-desamt, Wiesbaden, 1980), table 1.

(a) Percentage distribution: totals may not sum to 100 per cent because ofrounding.(b) Excluding machine tool suppliers.(c) SIC 31 and 32.(d) Sypronummer 30 and 32.

to manufacturing firms were of this kind, For the sakeof economy, other visits involved only one of us.Each interview lasted approximately two hours.

Usually we interviewed the plant manager (in smallerfirms he would be the managing director), and laterquestioned on the shop-floor, according to circum-stances, the foreman, quality controller, mainten-ance personnel and setter.<1>

Products and productivityThe specifications of products made by six pairs offirms were sufficiently similar to warrant a simplecomparison of labour productivity; the products were:screws, springs, two varieties of hydrualic valves andtwo varieties of drill bits. The calculations were basedon actual (not ’standard’) outputs of machines perunit of time, that is, including downtime for tool-set-ting and changing, material feeding, etc.; dependingon how the production process was laid out, and onhow records were kept, we sometimes took only animportant single part of the production sequence, inothers a series of operations, and in yet others thetotal number of completed products. The outputswere related to the numbers directly employed.

in all six comparisons the German firms showedhigher labour productivity, varying from a mere 0per cent to as much as a 130 per cent advantage.The average differential was 63 per cent (a samplingerror of 9 percentage points attaches to this esti-mate). This is close to the figures derived from theCensuses of Production (which, as mentioned, yielddifferentials of about 50 per cent for all manufacturingand about 80 per cent for metal-working trades). Wecould discern no relation between the individual pro-ductivity differential and any obvious characteristicsof the products (such as their complexity); we attri-bute the variation in differentials partly to the inherentvariability of efficiencies within each country, andpartly to imperfections in our measurements.

Several aspects deserve comment. First, in em-

barking on an inquiry with the present design wewere quite prepared to find that only a small part ofthe total productivity differential between the twocountries would be evident at the shop-floor level,especially when looking at simple products; as men-tioned, much of the aggregate difference betweenthe countries might be evident only in complex pro-ducts where, for example, better production designwould lead to several operations being carried outsimultaneously, or better marketing would lead tolonger runs of standardised varieties. White these

(1)The questionnaire was developed in the course of the first fewinterviews, and acted as a broad guide to the main topics coveredsubsequently. A copy of the questionnaire, together with a

summary of some illustrative interviews, are available on applica-tion to NIESR.

52

and similar factors undoubtedly have their part topiay, it nevertheless seems remarkable that differ-ences in productivity of such shouldemerge at the level of shop-floor productivity in theserelatively simple products.One must not however forget the importance of

international competitive pressures. If producers inadvanced countries of such simple products are tostay in business at the higher wage levels that haveevolved there, they can only do so if their productivityin those products is correspondingly high. We werefrequently told both in Britain and Germany of

pressures from producers in developing countrieswho were now producing standard varieties, andable to supply bulk quantities at low prices; estab-lished producers in advanced countries were forcedeither to leave the trade, or to shift towards

specialised products requiring greater skills, In bothcountries some firms were well advanced in modify-ing their product range, and others were straggling.Too often amongst British firms we found an air ofcomplacency, and even of despondency; one direc-tor suggested his business was unlikely to last morethan fifteen y~~r~ ‘by which time I will have retired’. Atanother firm--an old-established family firm-theowner seemed unaware of the existence of appro-priate new technology (computer numerically con-trolled machine tools). ‘~~e are not interested in

productivity here’, he said; faster and more ~p-tc~mdate machines, ’present no special advantage andthere is usually more to go wrong’. Moreover, henoted, ’the faster the machines work, the sooner thejob is completed and the more setting that will berequired’. While not wishing to over-generalise fromsuch remarks, it has to be said that we did not comeacross similar views in Germany.A second aspect to be noted in relation to our

simplified measures of productivity is that they arebased on direct labour only; but it must be added-onthe basis of earlier studies-that indirect labour has

general been found lower in other countries thanhere;(’) our simplified measures are therefore

unlikely to be misleading in any serious way.Thirdly, when examining the products made in the

two countries to see whether they adequately’matched’, we discerned a tendency for the Germanproducts to be technical more advanced and of ahigher quality. For example, in matching screws, wewere obliged to take a rather special type that wasproduced in both countries; the more standard types

that are still made in Britain-and which we had

selected no longer produced in Ger-many because of competition from the Far East. Ametal pressing that we received from Germany couldnot be matched by the British company that we

approached because of its complexity (they hoped tobe able to produce this type in the future). In match-ing the hydraulic valve taken from the main part of theBritish range, we noticed that the German rangea broader and more set ofproducts.(2)

Finally, it needs to be emphasised that for theproducts compared above the sizes of batches werebroadly similar in the two countries. Whilst we heardmuch of greater standardisation and longer runs inGermany (e.g., ’A German carmaker would designone spring for which its British competitors wouldneed four kinds’), for the particular products com-pared here this was not the case. This is not to saythat standardisation is unimportant in general: on thecontrary, what we were told on our visits was fully inaccord with what has often been said in Britain onthese matters-the need to eliminate ’dual working’to metric and imperial standards; the need for carefuldesign from the outset to incorporate standard units;and the benefits that in consequence ensue from

longer runs.<?> However, the present comparisonsseem to show that, even when batches of compar-able size are made in the two there is still afundamental difference in productivity.

The of machineryObservations on our sample of firms indicated thatdifferences in machinery between the two countriesneed to be considered under several heads: (i) thenumber of machines per employee (or, looked atreciprocal, manning levels per r~a~~hir~~~g (ii) theuse of ancillary feeding devices; (iii) normal outputrates or ruining of machines; age ofmachines, taken as an indicator of how modern theyare; (v) the use of advanced technology in machinerybought recently; (vi) use of imported machinery; (vii)rate of breakdown, and causes of breakdowns. Forthe sake of succintness, we shall give first undereach head any general inferences that we drew,followed by a number of illustrations to add concrete-ness. The limited size of our sample needs to be keptin mind as one reason why a clear tendency-oneway or the other-might not have been discernedunder all heads.

(1)See the NEDO report on Toolmaking and the paper by Sorgeand 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 ProcessPlant EDC, The Challenge from Abroad (1982), and the Iron andSteel Sector Working Party, A Hard Look at Steel (1982). To keepour 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 thescrews made there were similarly designed for local specialistapplication.(3)See Sir F. Warner, Standards and Specification in the Engineer-ing Industries (NEDO, London, 1977); and the sequel Progress onthe Warner Report (NEDO, 1980), which indicates that progresshas been unsatisfactory.

53

Manning levels

In conformity with industry-wide statistics on the riseof output per employee in Britain in the threeyears, together with a decline in total employment,our British sample gave the impression that manninglevels on the shop-floor had generally been reducedin recent years; but there was much ~~ri~bili~t~, withsome operations carrying on much as before andothers showing drastic reductions in manning. Forexample, in one plant an operator had previouslylooked after two automatic multi-spindle andthis had recently been increased to 3-4 lathes; gainsof this type were often related to better feedingdevices (larger hoppers or coil holders). This processof demanning appeared to be continuing.There was considerable variability in the combina-

tion of operators, setters and setter-operatorsemployed to run a group of machines in the kind ofsemi-automated manufacturing processes that wesaw. To some extent this reflected requirementposed by cumulative minor differences in machinetype, tooling, toierances and product ~ir~i~hf and itmade it difficult to draw any clear general conclusionon differences between the two countries on man-

ning. Where similar machines with similar tools wereused, our impression of no difference onaverage in direct, normal manning between the twocountries. in earlier studies, lower manning levels inGermany have been observed&dquo; (1)

Feeding devices

Nevertheless, it was still true that British rather thanGerman plants provided examples where indirectlabour, or labour for feeding of materials to the

machine, to be unnecessary employed. Inthe production of a small motor part, individual com-ponents were being hand-fed to the machine, thoughthe batches were large enough to warrant an

automatic feeding device; we were told that plans tomechanise this process were in hand. in anotherBritish the hand.polishing of castings wasto be mechanised, so that the component wasbrought to the polishing mops on a turntable insteadof by hand; in the corresponding German plant thatchange had already taken place. In the production ofscrews, the British factory used wire coils of a quarterton, while the German factory changing to coil-holders taking three times that weight. The largercoil-holders were seen also in other German plants.

They reduced not the frequency of coil changes,but enabled a ’ghost shift’ to be operated in somecases; in others, the machines were allowed to runbeyond the end of the normal shift, with only minimalsupervision, until the raw material feed was

exhausted.

Running speedsNormal running speeds of machines were generallynot very different in the two countries, but occa-some differences were observed in favour ofGermany. A cold-heading machine used in the pro-duction of screws ran about 20 per cent faster in

Germany than the corresponding machine in Britain,and the German spring-coiling machine was about50 per cent faster. In a related case involving theblanking and forming of a pressed metal electricalcomponent from strip, the German power press ranat the same speed as the one in England, but toolinghad been ’doubled up’ in Germany to yield twice therate of output. Machine setting generally seemed tomuch the same time in both countries.

of machinery

The typical of machinery employed varied ac-cording to product, but for similar products in oursample much the same age of machinery was foundin both countries. For example, in the production ofscrews more than half the machines in both countrieswere over ten years old, while in the production ofsprings more than half in both countries were underthat age. It will be remembered that earlier postalsurveys of the metal-working industries suggestedthat machines in Britain were significantly youngerthan in Germany; our present finding may be said toagree to the not unimportant extent-therewas no indication that British industry is deficientbecause its machinery is of an older vintage than thatin Germany.Two possible reasons may be mentioned-though

they are more than speculations-as to whywe did not find British machines in our to beyounger: (a) we were comparing a selection ofmatched products, and it is possible that these werenot typical of production as a whole in respect of theof machinery; (b) the majority of our Germanfirms were situated in Berlin where there are specialtax incentives to purchase new machinery (afterthree years usage in some of it makes its wayto other parts of West Germany without losing thosetax benefits); firms in Berlin may therefore havenewer machines than in the rest of Germany. How-ever, the of firms that we interviewed in theStuttgart area was too small to enable us to detectany age difference with Berlin.

(1)The NEDO toolmaking comparisons (op.cit., p. 12) suggest that20 toolmaking machines would typically be manned by 12 skilledmen in Germany and by 15 in the UK, corresponding to a 20 percent advantage for Germany. See also the example of cigarettemanufacture 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.

54

Numerical control

In any event, as said, British plants had at least asmany recently bought machines as German plants:but were they as advanced technically? Judging bythe use of numerically controlled (NC) machine tools,the answer seems conclusively to be No.(’) In the

plants that we visited which were manufacturing twoof drill bits, (2) we found no NC machinery inBritain, but they were being used in the correspond-ing German plants. Two British plants thought thisof machinery could be economically justifiedonly on two shifts; since they were on single shifts,they had not to buy. In a number of Germanplants that we visited they were content to run themon single shifts. Another British plant was about topurchase such a machine, having put off a decisionfor many to see how others got on; even now, arelatively simple type had bought because theydid not wish to go in at the ’deep end’. We formed theimpression that there was more technical skill amongthe decision in the German plants, and theywere to work on a lower risk premium, that is,they could see a pay back over a longer period.British often not to appreciate the fullpotential of the new technology.

Taking our sample as a whole: of the sixteen Ger-man firms visited, fifteen were using NC machines;while of the sixteen British firms visited, only sevenhad done so. This is the more surprising in that ourGerman sample of firms consisted, on the whole, ofslightly smaller firms than the British sample (table2). It shows-very much more clearly than antici-pated-that, though British machinery is at least asnew as German, it is much less technical sophisti-cated. We were particularly impressed by the wayeven very small German plants-with only a dozenemployees working in hardly more than a convertedgarage-would include an NC machine in their

complement.

Our comparison of matched plants may well yield amore accurate picture of the relative state of appliedtechnology in the two countries than yielded by theearlier general postal surveys which, of course,cover the varied mix of products produced in eachcountry. Nevertheless, it must not be assumed thatthe proportions of plants with NC machinery shownby our small sample apply nationally in either coun-try; as explained, we are fairly sure there was a

tendency for the better plants in both countries to

agree to an interview, and the national proportionsare likely to be lower. Nevertheless the proportion offirms approached who agreed to be interviewed wasmuch the same in both countries, and the areto some extent likely to be similar. (3)

Imported machineryWe took note of the country of manufacture of NCmachines, and asked generally about the use ofimported machinery,. International specialisation inthe production of machinery-based on the

possibility of longer runs and consequently lowercosts and lower prices-has progressed rapidly, andeven countries that are large exporters of machineryfind it necessary today to import machinery ofother types. Nevertheless, as we were told,purchasers of machinery everywhere prefer to buylocally whenever possible, because of repairsand the availability of spares. (4)

Most of the NC machines that we saw in Germanywere made there (although often incorporating con-trols made in Japan) and the remainder were Swiss,Austrian or Japanese; in Britain, the majority of in-stalled NC machines were Japanese and the re-mainder were British, Swiss and Itali~r~.

With regard to machinery imports in general, oursampled firms confirmed what is now fairly well

known about the relative strengths of the variouscountries which produce machinery. If anything, wefound that the trends delineated in the Finniston

report in 1980 on the engineering industries hadbecome clearer still.(5) In Britain, thirteen of the six-teen firms visited used predominantly importedmachines; the other three firms, which used pre-dominantly British machinery, were using old-estab-lished types of machines, though some had been

(1)We have throughout used the term ’NC’ to cover bothnumerically controlled machines operated by punched tape, andthe latest generation of computer numerically controlled machines(CNC). The majority of the machines we saw were the more recentCNC machines.(2)The NC machines were used directly in the production of thethree products mentioned, and not simply in making tools for thegeneral machinery used in their plants.

(3)Some other reasons may be footnoted as to why our samplemight show much higher proportions of NC machines than to beexpected on the basis of previous surveys. First, our survey wascarried out at a later date, and incorporated the recent increase insales of NC machinery (one of the German engineers we spoke tothought the rise had been very rapid in Germany in the past twoyears). Secondly, our sampled products are perhaps of a kindmore suited to NC machinery. Thirdly, earlier statistics generallyrefer to the percentage of machines that are NC, rather than to thepercentage of plants which own an NC machine (inevitably a muchhigher figure). A comparative survey specifically directed to theuse of NC machinery in Britain and Germany was carried out in1981 by A. Thwaites (University of Newcastle) and Professor J.Ewers (Berlin Technical University); we are grateful to them fortelling us of their advance results indicating a significantly higherusage of NC machinery in Germany. On the basis of our limitedsample we would not wish to go beyond a qualitative conclusion ofthat type; though, as made clear in the text above, our particularsample 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 intothe Engineering Profession (Chairman, Sir Montague Finniston),HMSO, 1980 (Cmnd 7794). Between 1965 and 1982 the Britishshare of world exports almost halved to 7 per cent, while that ofGermany fell less sharply from 31 to 26 per cent.

55

reconditioned and uprated.<i> Many firms expressedan innate preference for British machines, but oftenhad little option except to buy abroad: where

apparently suitable British machines were available,they were often technologically back~vard9 performedless well (e.g. accurate, more liable to go wrong)and, we were told, were uncompetitively priced fortheir quality compared with foreign makes. Therewere of course exceptions (recent British CNCmachines were mentioned) but that was the general,and unfortunately familiar, message. (2)

All the German firms visited used predominantlyGerman machinery, but among their standardmachines were also to be found some of Swiss,Austrian, French, Swedish and Italian manufacture.On being questioned, they said that they did notpurchase British machinery either because therenothing suitable available, or because they hadpreviously encountered difficulties.

For example, one firm experienced difficulties inobtaining spare parts for a standard British drillinglathe which was only three years old. Another firmhad experienced so many difficulties in obtainingspares for well-known makes of British machinesthat it decided it would be cheaper to sell them;delays were so severe that those machines weresometimes idle for months. (3)One of the lessons we draw from all this is that

attempts made, or supported, by the British govern-ment to limit imports of machinery are likely to injurethe competitiveness of the British metal-working in-dustry. It is true that British machinery producers gainsome respite from these measures-but the in-

terests of the many users of machines would besacrificed to the interests of the few producers. (4)

Machine breakdowns

Breakdowns of machinery were reported to us asbeing a more serious problem in our British than inour German sample of firms; breakdowns in Britainwere particularly serious in advanced machinery. Inboth countries firms often faced teething problemsfollowing the introduction of new machinery, but theproblems continued to fester in Britain. For example,a British manufacturer of hydraulic valves had facedcontinuous problems of breakdowns with its NC

machinery since installation; one machine hadworked for only a quarter of the time since it had beeninstalled. At another British firm making cutting tools,long-standing problems had occurred as a result ofdust and heat affecting the microelectronic circuitry.In a further example, eleven machine shifts had beenlost by a British screw manufacturer on two importantpieces of equipment because the breakdowns couldnot be attended to by local personnel, but had to bereferred back to the machine manufacturers. Break-downs are of course an ever-present risk; but thepoint of these examples is that in Germany we weretold only of ’teething problems’with new machineryand never of continuous or long-standing problems.The pr&reg;bler~ &reg;f breakdowns in British industry hasbeen a subject of serious concern in other studies(referred to below; p. 57, footnote ~1 ), and is closelyrelated to the skills of the production and mainte-nance workforce, to which we now turn.

The off manpower

The greater extent of vocational training in Germanyis well known, and in general terms needs noemphasis in the present study; as explained, ourinterest here was to understand in practice at whatlevels differences in training affect productivity, andparticularly how benefits to be derived from the °r~ewtechnology’ are affected. Within our sample as awhole, about a half of those working on the shop floorin Germany had an apprenticeship-type qualificationcompared with a quarter in Britain. This was com-bined with larger pay differentials in Germany be-tween skilled and semi-skilled workers. !n addition,the pay of German skilled workers tended to berelated to their experience according to an acceptedscale, while British skilled workers were more oftenall paid at the same rate.(,5)

It will be convenient to summarise what we learntabout the technical qu~lity &reg;f manpower from ourinterviews at four levels: (I) foremen and above;

(1)The postal survey found only 15 per cent of installed machinery to beimported, whereas our interview survey based on machines in usesuggested a very much higher proportion. Part of the reason must bebecause we were not concerned with machines standing idle, but onlywith those in use; our sample of products also involved fairly largebatchwork, with the attendant need to make use of modern automatedmachinery which, as explained, tends more often to be imported. importstatistics indicate that imports in 1981-3 have risen to account for some40 per cent of all home purchases (Business Statistics Office, BusinessMonitor, PQ 3321).(2)The demise of the British machine tool industry has been the subjectof 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 standardsrepairs might have been effected sooner using German-made parts.The three American companies visited were adamant about repairdifficulties in other than American machine tools. The American screwfactory would not buy British or any foreign make because of anticipatedproblems in obtaining spare parts; the spring manufacturer drew atten-tion to the poor productivity of a British coiling machine; the third firm hadexperienced problems with the electrics on the only British machinethey owned. On the other hand, we were told of (but were unable to visit)a competing screw producer who used old British machines, and foundthem highly acceptable&mdash;but these machines are no longer produced(they were sturdy simple machines originally produced in the First WorldWar to make armaments; the company closed about a decade ago).(4)Since 1982 the Japanese have ’voluntarily’ agreed to ’restrain’ theirsales to Britain of advanced machinery&mdash;CNC lathes and machiningcentres; 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. ’TheWest Germans achieved more effective earnings differentials for keyemployees and hence better man motivation’. op. cit. p. viii.

56

(ii) maintenance; (iii) other skilled members of theworkforce; and (iv) unskilled labour.

Foreman and supervisory skillsThe clearest differences were at the foreman level. !nfourteen of the sixteen British firms we visited the

production foremen (as distinct from maintenanceforemen) had acquired their position purely as aresult of experience on the shop-floor, without formalqualifications; in only two had they served anapprenticeship. In contrast, German production fore-men in all sixteen firms had passed examinations ascraftsmen; thirteen had also acquired the higher cer-tificate of Meister (master craftsman), and the re-maining three had undergone additional trainingtowards that qualification but had not yet theirtests.The course leading to the Meister qualification is

intended to enable the foreman to carry out not onlyroutine setting and maintenance of machines, butalso to be proficient in staff supervision and workorganisation; in addition, it should equip him to carryout machine repairs though, if the repair is a heavyone, he may call in engineering assistance.Above the Meister-level a German firm usually

employs suitably qualified technicians, and produc-tion managers who are typically graduate engineers.All the senior staff that we saw in the German fac-tories were qualified engineers (except in one

instance, where he was a qualified technician); in

Britain, as Lawrence and others have noted pre-viously, such positions are usually held by those witha or financial background, or by persons whohad learnt on the job.(’) This was true of most of theBritish firms we visited.

This difference in technological qualification hasbecome ever more important because, as we weretold at several interviews, non-engineers are lessreceptive to technological innovation; their lack oftechnical understanding to delays in installingtechnologically complex equipment because theyare afraid to ’chance their arm’. For example, aBritish maintenance foreman told us he could not

persuade his management to buy electronic equip-ment which would reduce their heavy repair costs,because-so he thought-they did not understandthe technical potential of the equipment; the

management were primarily salesmen and weresuspicious that the equipment manufacturers were’trying to pull a fast one’. (2)The role of the Meister in organising production, in

conjunction with the engineer where necessary, was

coherently expressed by a plant manager in Stuttgartas follows. ’Three-quarters of all improvements inproductivity are achieved through ensuring an ade-quate documentation of exact machine-settings; en-suring that all parts are available and are of the rightdimensions; that all drawings and measuring devicesare available; that all involved know how to do theirjobs; that the product-design is appropriate; that themanufacturing and operation sheets are well pre-pared before work begins, and that no correctionswill be necessary as production proceeds. This clearwork method has to take place within a clean factory,with clean machines and in an atmosphere of orderand discipline. These are the responsibilities of theMeister and engineer; if unforeseen interruptionstake place, these men are sufficientty well trained toknow how to analyse the problem and act

accordingly.’All this may seem unexceptionable. But in a British

factory things are different. ln view of the limitedtechnical training of foremen, there is a greater divi-sion of responsibilities-with maintenance men, pro-duction controllers, quality controllers, all workingmore or less in parallel to the foreman. Those directlyinvolved in production typically have little more thaninformal training on the job, and those with formaltechnical training are in service functions available tothe whole plant, such as maintenance, installation ortoo)making. This organisational pattern is consistentwith the relative scarcity of trained persons in Britain,and should not merely be explained in terms off

general ’cultural’ preferences. The lower technicalcompetence of those directly responsible for produc-tion has consequences for productivity, as we iearnt.

Maintenance

Breakdowns of machinery, especially of modern

machinery, seemed from our interviews to be a muchmore serious problem in Britain. ’When the machineswere running’, we were told by one German com-pany which had plants in both countries, ’output wasthe same; but when a machine broke down in Britain,there was nobody to repair it’. That no doubt was anexaggeration, but it gives the disnlal flavour of whatwas confiirmed in other interviews. We were told by aservice engineer in Britain that machines here wereIabysmally abused’; maintenance procedures wereinadequately followed; machines were not cleaned ofswarf; they were used for purposes for which theywere not built (for example, cutting hardened ona machine intended for soft metal); when they breakdown there is frequently no in-house ability to carryout a repair, or even to diagnose the fault. The abilityto use diagnostic on NC machinery variedgreatly. One NC machine tool manufacturer hadanalysed their repair problems, and found that 70 per

(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.) inrelation to decisions associated with the introduction of CNC tools.

57

cent should have been dealt with by users them-selves if they had employed properly skilled fitters.<~ >

In addition, breakdown in the UK took three or fourtimes longer to repair than in Germany, said oneGerman machine supplier, ’because of delayscaused by British rules on demarcation, teatime,hometime and the dirt of the r~~chi~~s’. Unneces-

sary delays of this kind were also mentioned byseveral British firms.Breakdowns were not mentioned as a significant

problem on our German visits; nor were there anyproblems in relation to routine maintenance (the roleof the operator in maintenance is considered b~l&reg;~).We also did not observe in Germany the relatedproblem of poorly-maintained mechanical feedingdevices that we had seen in Britain.

Other skilled personnelThere was considerable variation in the proportion ofskilled workers among the firms in our sample. Thedifference varied according to the type of product: forexample, in jobbing engineering, where there weremany ’one offs’ or very small batches, both countrieshad similar and high proportions of skilled persons;where there were larger batches of precision work,such as in the production of drill bits, the Germanshad a much higher skilled proportion.

In interpreting the contrast in the proportions whoare skilled, it has to be remembered that in Germanythe term ’skilled’ (Fachmann) has the connotation of’formally qualified’ whereas in England it more oftenmeans long-experienced’. Our figures relate, as faras was practicable, in both countries to those whohave completed an apprenticeship; but in neither

country is the distinction entirely rigid in practice .(2) Aperson doing a job which requires an extendedperiod of on-the-job training may be described asskilled in Britain, even if he has not completed anapprenticeship. This is rare in Germany, where hewill be described more often as semi-skilled. The real

difference in skill levels is likely to be greater than thatindicated by the above figures, despite our precau-tions to ensure comparability.Aggregate statistics based on population surveys

indicate higher proportions of skilled persons in Ger-many (about two thirds of all employees) than foundhere. The main reason is probably that we did notcover draughtsmen, salesmen and others away fromdirect production-and these will more often be

quatified (another reason perhaps is that our

sampled products on the whole may have involvedproduction in larger batches than in manufacturingas a whole, with consequent greater scope for

unskilled repetitive work).Would it be easy to remedy our deficiencies by

adult retraining? Comparative experience on in-

troductory courses for NC machines illustrates thedifficulties to be expected as a result of past lowerlevels of training in this country. (3) The use of NCmachines is of course relatively new in both countriesand, with the constant developments of new faciiitieson these machines, suppliers find it useful to providecourses on special features of their machines relat-ing to programming, electrical and mechanical main-tenance, and general operation. These courses arerun by instructors with similar levels of qualification inboth countries (usually HNDs or HNCs in Britain,qualified technicians in Germany). In Germany thesetter, chargehand or Meister usually attends, ail ofwhom hold a craftsman’s certificate as a minimum

qualification.In Britain, we were told, the courses offered are

very basic but the average person attending was notvery receptive to them. For example, a ’programmerneeds some understanding of trigonometry; somefirms would send their &dquo;technical man&dquo;, but he wouldbe without s~~th~r~atic~.9 skills’. As a result there wasoften a fear of ’interfering’ with the machine by thosewho had attended the course, and an inability torecognise faults; this made it more difficult for an

appropriate engineer to be sent when a repair wasnecessary. ’The upshot of this’, we were told by oneBritish manufacturer of NC machines, ’is that almosthalf the machines sold in Britain are not used as theymight be, because their full capacity is not

understood’.In Germany problems of this kind were hardly

mentioned; with negligible exceptions participantswere capable of following the courses. Thisdifference in technical competence manifested itselfagain in requests for after-sales service. Dependingon the in-house skills available, users in Germanywere able to undertake repairs themselves, or were

(1)In a similar vein the British ’Think Tank’ had noted in 1975:’despite the fact that British manufacturers employ 50-70 per centmore plant maintenance personnel than their Continental competi-tors, on identical equipment mechanical breakdowns result in theloss of about twice as many production hours in the UnitedKingdom as on the Continent’. More recently ACARD has notedwith concern that the introduction of advanced manufacturingtechnology was hindered by a shortage of maintenance personnelwith the requisite diagnostic skills: ’the complexity of most newmanufacturing technologies and related products called for a levelof expertise which they had not previously needed’ (ACARD, NewOpportunities in Manufacturing: The Management of Technology,1983, p. 41). The problems of training multi-skilled maintenancemen in the context of British demarcation lines amongst traditionalcraft-skills are considered in a report by Peter Senker et al. for theEngineering Industry Training Board, Maintenance Skills in theEngineering Industry: The Influence of Technological Change(EITB, 1981, especially Chapter 7).(2)It proved difficult in the course of our interviews to press thesedistinctions further; but in any fuller inquiry we would proposesplitting the sample so that half are interviewed more closely onthis aspect.

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

58

capable of diagnosing faults when equipment brokedown; this enabled the appropriate engineer to besent at once to the firm. Teething problems werecaused by improper programming and improper tool-changing in both countries; in Germany thesedifficulties were usua~ly overcome within the war-ranty period, but in Britain there was a need for

suppliers to continue ’to hold hands’ with the clientafter that period.

Unskilled labour

It is clear from t he foregoing that in manufacturingplants producing comparable products, Germanyhas a greater proportion of skilled personnel; andthat their level of skills is probably of a more uniformlyhigh level. But as might be expected, in routine tasksmuch unskilled labour continues to be employed. It

appears that even those who are unskilled are ~~~-

pected to work to higher standards, perhaps partly asa result of the influence of the greater proportion ofqualified personnel on the factory floor.

This was illustrated by the way German machineoperators were responsible for cleaning ’their own’machines, often on Friday afternoons in a specialtwo-hour period at the end of the week’s work. Thispractice was virtually unheard of in Britain, The Ger-man view that this improved productivity in anumber of ways, all fairly obvious: (a) cleaning pre-vented a build-up of swarf-excessive swarf by itselfinduces breakdowns and toss of production (as men-tioned, build-up of swarf is commonplace at Britishplants); (b) the process of deaning leads to earlydiscovery of minor faults (the loose screw’), andhelps prevent breakdowns (on the old principle of ’astitch in time...’); (c) routine cleaning by the operator(rather than by the maintenance men after themachine has broken down) to a better under-standing of the machine by the operator, and to

earlier recognition of malfunctioning l’unusual noisewhen switched on’).Some firms experienced labour-rotations’

difficulties on introducing new machinery. In one

plant in our British sample it took thirteen years tosecure agreement to halve the manning on newequipment, installed in the early 1970s, to the levelsfor which the machinery was designed. Part of theremedy, at least, must lie in promoting a greaterunderstanding of technological matters amongstoperators, leading in turn to less fear of inability tomaster new machinery, and hence to a greaterdesire to master it.

Greater competence would also eliminate the im-competent tinkering by operators with their

machinery that we were told of in a number of plants;hoping to increase output bonuses, they made

mechanical adjustments-which resulted in more

frequent breakdowns.

The of raw materialsWe asked firms in both countries about the quality oftheir raw material supplies to team whether thesemight be a source of lower productivity (quite smallvariations in dimensions or hardness can cause ex-cessive wear in tools, leading to high reject rates andbreakdowns). Automated production requires muchcloser control of material specifications and

tolerances, since the human operator is not there toadjust for variations; all too often in British plants wehave seen recently automated machinery in whichan operator has been assigned to ’help’the automa-tic feed because, for example, ’today’s batch of steeldoes not seem to be of the right temper’. In askingabout the quality of material we were also interestedto know whether the deficiencies in skills and

machinery detected in our sampled productsaffected their supplies in a similar way.Two of the three English firms manufacturing

screws told us they had experienced ’delivery prob-lefiis’ in their supplies of special steels; a Germanfirm manufacturing springs said they had ceasedusing an English steel supplier because the supplieswere not in accordance with specifications. In the

purchase of non-ferrous castings, one firm had triedthree British foundries and found their quality unac-ceptable (they were now importing them); anotherfirm could not find a supplier to make a complexcasting to the required standard, and they were nowattempting to make their own-but with difficulties; athird firm experienced an astonishing scrap rate in itshome-made castings. In the case of this last product,the matched German plant admitted that castingswere often difficult and had high reject rates: but t~~c~German reject rate was only a tenth that in the Britishfirm. The German firm emphasised the importanceboth of craft skills and of modern equipment in ensur-ing low reject rates in castings. The manager of oneof the English firms buying castings made the samepoint. The quality controller in another English firmput the blame on his firm for buying ’cheap’ castings;by the time they had been sorted and ’bodged up’ tospecification he thought they had become very ex-pensive (presumably, again, a lack of ’ technicalunderstanding in the buying department; the Ger-mans provide a specific training course in industrialpurchasing-an occupation which has received onlyrudimentary recognition so far in this country).Of course, every firm makes mistakes from time to

time in buying as in other things, and it would be

wrong to exaggerate the above instances. Most ofthe British firms we visited thought that in general rawmaterials presented little problem. But is bound

59

to wonder: all too often firms continue to work with

long-standing suppliers, and until they try a crmpeti-tor they do not know ’what they have been missing’.The German firms that we visited often empha-the need for care in ’sourcing’ their materials;they willingly paid a premium to ensure a quality-standard suitable for their particular requirements.This kind of comment, based on a serious expertisein their particular field, was not heard in the UK.

implications and summaryTo those familiar with earlier studies of productivity inthe UK, especially the extensive series by the Anglo-American Council on Productivity in the early 1950s,the kind of inefficiencies mentioned here will notcome entirely as a surprise.(’) But it is worth noticingthat a generation later we find it necessary to com-

the performance of UK manufacturing no longerwith the United States-with its immense homemarket and other special circumstances-but with aEuropean country with a population comparable tothat of the UK, similar geographical and broadlysimilar natural resources, (2) and which now hasachieved a substantially higher level of manufactur-ing productivity.

Let us in this section that any further

inquiry-with a larger sample of firms in Britain andGermany and a more detailed questionnaire-wouldconfirm our findings more or as presentedabove. What then would follow for policy in relationto: modern machinery, training and education at

various levels, and further research? These are largequestions; only a few general remarks can be offeredhere.

Perhaps the most important overall implication ofthis study is that lack of technical expertise and train-ing, rather than a simple lack of modern machinery,is the stumbling block. We have that producersin the metal-working in this country havereconciled themselves to not being to buy suit-able British machinery. They require up-to-datemachinery, and buy it on the world market-despitedirficutties in dealing at long distance. The problem ofmachine tool producers in designing, produc-ing and servicing up-to-date machines can be seenas extended manifestations of the ski!!-defi-ciencies noted in the present study of simple pro-

ducts, though probably with a greater emphasis ondeficiencies of higher-level skills; but the UK

machine tool industry has not been at the centre ofthe present study, and represents only a small frac-tion of the metal-working industries. 9fi the real prob-lem in the latter is a lack of expertise and skills, doubtis cast on the wisdom of providing special subsidiesto purchasers of machines, even of advanced

technology; the money might be better spent onsending more personnel on training courses

(perhaps also abroad). Doubt is of course also caston the wisdom of excluding (or ’restraining’) importsof advanced modern machinery.

Although there was a relative lack of NC

machinery in the British plants in our sample, in ourjudgement the greater part of the productivity gapcame from other sources: a lack of feeding devices,frequent machine breakdowns, poor maintenanceprocedures, inadequate control of the quality of rawmaterials, and similar deficiencies in basic produc-tion techniques. It would be a mistake on this

perspective for public policy to emphasise ’hightechnology’ at the expense of improving more basicproduction techniques. A similar view emerged froma recent examination of the production of a morecomplex product-home laundry machines-in theUK; it pointed to the ’dangers of perceiving the needfor technical change too exclusively as a matter ofintroducing information technology’(the author notedthe potential of techniques, fairly well established inother branches, such as the use of pre-painted steelto reduce final finishing costs, and of plasticsmoulded parts to replace complex metal assem-bli~~).~3~ Ensuring the effective use of basic produc-tion techniques is the role of the production engineer:our impression was that training in productionengineering techniques (as distinct from what is

usually covered in mechanical and electrical

engineering courses) needs to be given considerablymore emphasis in all engineering courses. This pointsis no doubt implicit in the Finniston report, but doesnot feature in its recommendations.The formation of an Engineering Council, and

greater utilisation of professiona) engineers, were thecentral recommendations of the Finniston Report.Whether those recommendations per se can have

any substantial effect or not (and we have ourdoubts), the present study supports the formore engineering ski!!s at the top levels of a firm&horbar;tobe concerned with product design, marketingstrategy and engineering standards; it will, however,be clear that our report points to overwhelming defi-ciencies at lower levels.

(1)Forty-seven sets of visits in the UK and US were carried outunder the auspices of the Council; the reports most relevant to thepresent 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 ofBritish manufacturing. Without going into the detailed economicmechanism whereby changes in comparative advantage affectthe whole structure of industry, it will perhaps be agreed that thereis no reason why productivity in manufacturing should be adver-sely affected by the discovery of oil (on the contrary, the elimina-tion of marginal manufacturers should raise productivity).

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

60

Looking at government policies directed towards’that part of the skill spectrum, does the Youth Train-ing Scheme (YTS) perhaps provide a remedy? Thelack so far of any ~~~r~in~ble standards to be workedto under that scheme must limit its value in raising thetechnological capability of the workforce. It would beunrealistic to expect too much in the early years ofwhat inevitably must be an extended and very heavyprogramme. When YTS is combined, as it will be in

the next few years, with the benefits of an increased

technological element in schooling (through the

Technical and Vocational Education i~iti~t9~~), it maywell serve to raise the proficiency of the unskilledsection of the labour force to an adequate i~~~l; butmuch more will be necessary if at least some propor-tion of the workforce is to be raised to the higher skill ll

standards implicit in the German vocational scheme.The major gap that we saw related to the

technological capabilities of those of foreman or

chargehand status, where the German level of com-petence was far ahead. The foreman in Britain is

typically appointed for his managerial or human

skills; the German foreman is primarily a technicallyqualified person who in addition has acquired furtherexperience and the requisite managerial qualifica-tions. The soundness of that combination much

impressed members of a NEDO working party con-cerned with toolmaking when they compared Britishand German toolmaking plants;(1) because of thehigher level of technical skiils necessary in that trade,this may not seem surprising. But is it necessary inthe ordinary run of production in metal-working andother trades? The lesson of the present study is thatto organise production efficiently, and to producegoods that are preferred for their quality, a technicallyqualified foreman was highly desirable. We formedthe view that there was a need for a strong policyinitiative in this country in relation to the appropriatetraining, qualifications and incentives for foremen. Astart is being made in that direction by one section ofour engineering industry (gauge and tool manufac-turing) based on the German model ; (2) we believethat this approach needs ultimately to be widened tocover the whole of productive employment.

Just as worrying is the trend in general craft train-ing in this country. As we saw, the broad net of crafttraining in Germany has provided a for therapid mastery of modem ’high technology’ skills. In

this country, craft and technician trainees in the

engineering industries-under the supervision of theEngineering industries Training Board-have fallenfrom 28,000 in the first year of training in1967 to 9,000 in 1983; more worrying, in a re-assess-ment of the Board’s training priorities pubtished in1984, the view was accepted that it should no longer’seek to augment the industry’s intake of craft ortechnician trainees’ .(3) This seems very puzzting toanyone taking a view of the future of Britishmanufacturing. No doubt a number of pressingreasons can be advanced for such a view; for exam-ple, that there are no jobs immediately available forthose who have completed their training, or that thefinancial arrangements for trainees are unsatisfac-tory, or that the present syllabus for craftsman train-ing is focused too little on newer skills and needs tobe reformed. Such matters need fuller considerationthan possible within the scope of this but wefeel to say, on the basis of what we havelearnt from this study, that the gap at intermediateskill levels between Britain and Germany is veryserious, and it seems likely to grow on presentpolicies.on matters of research: we have become

convinced that the health of much of British manufac-

turing industry remains precarious. Much is at stake.Expensive as interview studies of the present kindare, we found that the comparative perspective pro-vided by this pilot study aroused much interestwherever we discussed our findings. Economistswho research in general labour as asingle homogeneous commodity, and capitallikewise&horbar;wiit not be able to assist in resolving thepresent very serious problems of British manufactur-ing industry; engineers alone we fear are sometimestoo close to the excitement of advanced technolo-

gical developments to see the economic importanceof more mundane matters of basic productive effi-ciency. We hope therefore that those who control thepurse strings of research will see fit to encouragemore comparative empirical research of the kind

reported here.In Summary: Our concern in this paper has been withthe determinants of productivity in two advancedindustrial countries. Is it machinery or workforceskills that are more important? On the basis of inter-views with management and factory floor employeesat 45 matched firms in Britain and West Germany(mainly manufacturing metal products), theof skills at all levels seemed apparent. Bri-tish machinery was by no means older than thatfound in German but more often than in

(1)NEDO, Toolmaking (op. cit.), p.viii: ’The fundamental reason forthis better performance (by the Germans) is the way ... theyachieve greater co-ordination, better use of equipment and tighterdetailed control with relatively smaller overheads. The role playedby the Meisters in West Germany is a key part of this approach andmerits very careful study by British companies’.(2)A scheme is under discussion at the time of writing for jointcertification by the Engineering Industries Training Board (EITB)and the City and Guilds of London Institute following a 2-3 yearscheme of education and training.

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

61

Germany it lacked ancillary feeding devices, prospermaintenance, and advanced numerical controldevices. Breakdowns were more frequent, and tooklonger to put right.

For lack of suitable home-produced specialisedmachinery, a greater proportion of recently installedmachinery was imported in Britain than in Germany.Especially on technologically advanced machinery,this led more often in Britain to delays on repairfollowing breakdowns because of difficulties in deal-ing with suppliers at long distance. There is no easyway of overcoming these problems,- to reduce im-ports of such machinery by persuading foreign pro-ducers not to sell here can only reduce the efficiencyof the metal-working industry. Where British firmswere less advanced machinery, or were instal-iing advanced machinery with undue delay, the prob-lem usually iay in ~ lack of technically qualifiedmanagement.The fault for poor maintenance, poor production

control, and poor diagnosis of faults, has its origins intechnical skills at the level of foremen and operators.The German unskilled operator took greater care ofhis machinery than in Britain, by cleaning away swarfand the like; these kinds of basic skills could be learntwith advantage on YTS courses.The greatest contrast we found was between the

technical qualifications of foremen: in Germanyalmost all those we saw had taken advanced courses

beyond that of craftsman level, whereas in Englandonly a minority of foremen had attained even a crafts-man’s qualification. We were impressed-as was anearlier NEDO team concerned with toolmaking-withthe great advantages to productive efficiency of com-

bining in one person technical and managerial skills.A broad policy initiative in that direction seems

necessary.

AcknowledgementsWe are, above all, grateful to the many firms whichco-operated in this survey; without their help thepresent article could not have been written. We alsoreceived much helpful advice from the Institution ofProduction Engineers, especially Mr R. S. Pratt; fromMr T. Brady at the Science Policy Research Unit atSussex University and from the Technical ChangeCentre, the Technical Policy Unit at Aston University,the Centre for Urban and Regional DevelopmentStudies at Newcastle, the Manpower Services Com-mission, NEDO, the Department of Employment andthe London Business School. In Germany webenefited from discussion with Professor H. J. Ewersof the Technical University, Berlin; and with Dr. A.Sorge of the International institute of Management inBerlin. The research was supported by a grant fromthe ESRC Panel on the Economics of industry andPublic Enterprise and by a supplementary travelgrant from the Manpower Services Commission; thework forms part of the research programme of theCentre in Comparative ind~stri~.9 Structure and Effi-ciency (under S. J. Prais), sponsored by the ESRC atthe National Institute. We are grateful to S. J. Praisfor help in planning the inquiry and for suggestions onthe final form of the report; we are also grateful tocolleagues at the Institute for helpful commentsthroughout the inquiry and on an earlier draft of thisreport.