PRODUCTION CONFERENCE

SESSION II

PRODUCTIVITY AND NATURAL RESOURCES

by Graham Hutton, O.B.E.

Mr. Graham Hutton

The author of{ this Paper is economist, barrister, author, broadcaster, anda director of private and public companies. He worked in cotton mills andthe City of London for jive years after leaving Christ's Hospital in 1920.

He won a scholarship to the London School of Economics, 1925/29,followed by a Research Fellowship and an appointment on the research staffof the L.S.E., 1929/33. From 1933/38, Mr. Hutton was Assistant Editorof " The Economist", and this was followed by a period of over five years inthe United States (Chicago). The greater part of this period was spent onGovernment service for the Foreign Office and the Ministry of: Information,during the Second World War, and in 1945 Mr. Hutton was awarded theO.B.E. for this work.

Since 1945 Mr. Hutton has been practising in London as an economicconsultant for many firms and associations, including the British ProductivityCouncil. He' is a specialist in productivity and international economic affairs.

r P H E theme of this Exhibition and Conference isA " Production for Plenty". The theme of my

talk is the bearing of productivity upon those nationalresources by which we can hope to attain plentyfor our people. So it is incumbent on me to beginby defining the terms " productivity " and " naturalresources ".

By productivity I mean the fruitfulness of anyeconomic activity: in other words, its productiveefficiency, or the degree of economy in factors ofproduction in order to turn out a given amountof finished goods, or the turning out of more finishedproducts in the same time from the same ingredientsof production while maintaining quality. Produc-tivity is not—as it is often used in popularconversation—a single, simple concept. There is aseparate productivity—that is, a separate fruitfulness,or efficiency—for every ingredient in the process ofproducing anything. Thus, to the productionengineer, the cost accountant, or the expert inindustrial or managerial efficiency, there will bedegrees of productivity of such separate ingredientsas the use of raw materials, of fuel and power, ofhuman effort of all kinds (on the floor or in theoffice), of machines, of cubic space, of transport andhandling, of distributive services, of sales andadvertising forces, and of total financial capitalemployed in the business—and this will be so whetherthat business is manufacturing, farming, transporting,distributing goods and services to consumers, andwhether that business is privately or publicly owned.

There can obviously be a productivity of all theseingredients in our armed services, with their heavydependence on costly and quickly obsolescent arma-ments and installations; or in our civil service, withits heavy dependence on such ingredients as human

effort, fuel and power, cubic space, transport, andso on; or in our State monopolies or public boardsrendering services to both producers and consumers,and in local government undertakings.

It is a great mistake to talk of productivity asthough the term were only applicable to one in-gredient of all production of goods and serviceswhich make up a country's national output andnational income (which are the same thing)—thatone ingredient being manpower. It is an equallygreat mistake to talk of productivity as though itwere only applicable to manufacturing industry—which in our country is over 99% private enterprise,and is responsible for 99% of our total exports bywhich we live. Manufacturing industry providesabout 42% of our national output; the nationalisedindustries and services provide about 12^%; buildingand contracting about 7£%; the distributive trades,professions, commerce, finance, etc., about 20%;government, defence, welfare services, etc., about12^%; and agriculture about 6%. So improve-ments in productive efficiency—that is, improvementsin the economical use of the ingredients entering ournational output—will increase that output accordingas they are spread throughout our economic activityas a nation. The wider improved productivity isspread, the greater the national output available fordistribution, whether that distribution (for policyreasons) gives more to defence, to investment in theproductive equipment of private enterprises, to lend-ing abroad, to consumption here at home, or tobuilding up public capital in art galleries, hospitals,schools, houses, government offices, ports, harbours,railways, coal mines, the B.B.G., and so on. Ifmanufacturing industry raises its productivity by5% per annum while the rest of our economy makes

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no progress, the national income as a whole wouldonly rise by something like 2%, other things beingequal.

Our Natural ResourcesNow, as to "natural resources". We are 51

million souls penned into small islands lying off thebiggest land-mass on the globe. We are the Japaneseof the West: highly industrialised, heavily dependenton foreign trade, trying to raise as much food andfeeding stuffs as we can from an intensive andhighly-mechanised agriculture, possessing few rawmaterials, and, therefore, maintaining our standardsof life by serving others with fetching and carrying,financing and insuring, making and delivering goodsand services of all kinds to all parts of the world.

Few people realise that our dependence on thisserving of foreigners has increased since the war.Foreign trade, and our invisible exports of services,now account for nearly 50% more of our nationalincome than they did. The reasons are that wehave lost our most paying overseas investments, wehave become debtors on international account insteadof creditors (mainly to our relatives in the Common-wealth and sterling area), we have to maintain costlydefence and other forces abroad, we have to findthe wherewithal out of our annual production toexport capital in order to develop the underdevelopedresources of the sterling area, and, finally, we haveto import relatively more costly raw materials ofindustry and food and feeding stuffs as comparedwith their pre-war prices. Our exports have hadto change their composition to match new demands—many more vehicles, heavy and light engineeringproducts, office machines and equipment, yarns andtextiles made from synthetic fibres, and electricalapparatus and components, and relatively fewerexports of textiles made from natural fibres, pottery,and so on. We have a theoretical sufficiency ofone basic requirement of industry : coal. But thecost of our coal—to say nothing of its availablequantity and its quality—has risen to three timesits pre-war price. The world price of petroleumand its products has only risen 50% since beforethe War, though oils have to be imported, thus facingus with heavier bills the more we import. It istoo soon to gauge what atomic energy may yet offerus: but we do know that the. raw materials for itmust still be imported at high cost. With theexceptions of china clay, and a little wool, leatherand low-grade iron ores, we have to export to buyall other materials for our industries.

Importance of Human EffortBy far the most important of our own resources

is our human effort. It is of widely varying qualities,spread throughout more than 22 million persons ofboth sexes out of our total population of 51 million.It is a high proportion to have as a workingpopulation in civil employment (the defence forcesare not included in the 22 million I quoted). Weaveraged 1£ million unemployed for 20 years betweenthe Wars. Since the last War ended, and apart from

the demobilisation period, we have never had 400,000unemployed for 3 months; and those unemployedfor more than 8 weeks at a stretch have not amountedto one half of 1% of those at work; indeed, formost of the time-—as at present—the jobs vacanthave greatly outnumbered those unemployed. Wehave taken into paid work hundreds of thousandsof married women, and still need more. So greathas been our demand upon our human effort thatone of industry's post-war problems has been therapid turnover of labour: workers joining andleaving firms in the same industry or locality veryrapidly, employers bidding against each other forlabour or hoarding it in temporary slack periodslest they never get hold of it again, with a con-sequent raising of labour costs. Moreover, as aby-product of this insistent demand for human effort(and as always happens in and after wartime) therewards for skilled labour have not risen relativelyas much as those for unskilled or juvenile labour;skills have been diluted; and the inflation of ourmoney and our heavier tax system have combinedto penalise skills and the taking of administrativeresponsibilities. You hear as many complaints to-day from the skilled man, the foreman or supervisoras you do from the high executive about the reductionor abolition of " differentials " in real incomes.

With the ins and outs of these things I knowthat you are familiar, so I will pass to consider thequality of our human effort. The comparativeskills, brains and productive efficiency of our humanbeings compared with those of other nations are vitalto us; for with other countries' products our exportscompete, and we need their products as our vitalimports. The size of a country, its natural resources,its home market, or its access to raw materials are,in themselves, never absolutes; they are alwaysrelative matters, relative to what that country'speople can do by manipulating or utilising them withexternal factors.

" Skill " and " Will "I get tired of hearing about the vast internal

market of America, as though every Americanmanufacturer—of whom there are relatively as manyseparate and competing ones as there are here—manufactured and sold for that entire Americanmarket. I get equally tired of hearing about ourcrowded population, our lack of raw materials andfoodstuffs, our dependence on shipping, or on com-petitive exporting—as though the Swiss, the Dutch,the Danes, the Belgians were not in an even worsecase than we. The medium-sized or small Americanmanufacturers—that is, the bulk of them, providinghalf the output of American manufacturing—dotheir business in fierce competition and within alimited region, fetching raw materials often as faras we do, and distributing them over distances asgreat as ours. The Swiss, Dutch and Danes aremore dependent on imports of raw materials thanwe; and their standards of life depend more thanours on exports. The standard of life which anynation will make for itself—whether it is big or

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small, rich or poor in indigenous natural resources—depends on the combination of its people's skillswith their wills: a remarkable thing, perhaps, foran economist to say. But what objective reason isthere to explain the rise of the Flemish, Dutch,German and English people as clothworkers, shippersand bankers? What natural resources did theVenetians ever possess, stuck on wooden piles ina lagoon? On the other hand, the natural resourcesof China and Russia are vast, as their populationsare vast; yet their standards of life hitherto havebeen woefully low. And we need only listen to theaims, aspirations and insistent demands of the bulkof the human race to-day—in Asia and Africa—tosee that our theme here, " Production for Plenty",is itself an aim or aspiration a very long way fromrealisation; that its realisation will require even moreconvulsive social and economic changes in the futurethan any we have hitherto had to witness; and thateven for our own country its realisation is likely tobe a hope long deferred.

I need not, I think, apologise for casting this colddouche upon natural human desires, for nothing ismore cruel and irresponsible than the raising of falsehopes for the sake of slogans, catchwords or publicity.The way to " Production for Plenty" lies where ithas always lain, where the Americans and we our-selves and other leading industrial nations have longtrodden i t : namely, through thickets of technicalproblems. These thickets conceal such problems as:the lightening of human labour through machines,which are productive capital; the saving of thatcapital out of current consumption by somebody orother—in totalitarian countries, by the entire nationcompulsorily; and the long training of technical skills,both in theoretical and applied technology and inproduction, administration, human relations, organi-sation, etc.; the proper rate of maintenance, amortisa-tion, obsolescence, replacement, and (above all) ofnet increase of a country's capital equipment; theindefinable, and largely inexplicable, urge or will ofa nation to go out and venture, to build restlessly,to develop, exploit and undertake—which is enter-prise, whether privately or publicly organised; thewill of a people to work, in order to raise themselvesby their own bootstraps. Let me conclude this open-ing half of my talk, as an economist, by reminding usall that if we neglect the non-economic factors, thehuman, psychological and social factors, in our effortsto realise " Production for Plenty ", we shall condemnour country to a life sentence of harder labour thanit need work. Our greatest natural resource is ourpeople and their spirit, their attitudes; and theseattitudes, which are all-important, are not decidedby economic considerations alone.

The Greatest ProblemHaving placed productivity and natural resources

in their settings, how should we relate them to eachother? That is not difficult. Our material naturalresources are few, as I said. But our man-maderesources are many. We have inherited a vast arrayof capital equipment installed from the savings of our

forebears, as well as a vast amount of social capital(not directly productive) like houses, schools,hospitals, roads, railroads, communications, ports andharbours, et cetera. We must relate our people'sskills to these man-made capital resources. Thecombination of the two is really all we possess.

I say unhesitatingly that our greatest problem to-day, as a nation set on realising " Production forPlenty ", is ensuring a better relation between humanwork of all kinds, and the performance of our non-human slaves which lighten human work—ourmachines, or capital equipment. Our future as apower in the world., our own people's standardof life0 and the standards of life and futuredevelopment of peoples still dependent on usor associated with us, alike depend on ourimproving the relationship between human andmachine work. Our call on natural resources out-side this country depends on our own skills incombining our human work with the work whichmachines are capable of doing for us. Unless werightly relate the human and the non-human workin this country, we shall not be able to maintain,replace, and expand our productive equipment fastenough to keep pace with our competitors in worldtrading; to bear our new and steadily increasingburdens of defence, pensions, education, and socialservices; to re-house our people faster than oldhouses lapse into slums; to develop the under-developed resources of the Commonwealth andsterling area; and, finally, to raise our own people'sstandards of consumption of goods, services andleisure.

In other words, unless we overhaul—prettyradically—our old familiar attitudes to work (thework of human beings in all grades and the work ofmachines), and to savings and investment in general(whoever does them), and to the priorities which thevarious kind's of investment are given, we shall findourselves driven remorselessly into a position inwhich our human workers, our people, will have tobear heavier, instead of lighter, burdens, or else droptheir consumption of goods, services and leisure.

I say this because few people realise that we havemade a wonderful recovery from the War, and aremaintaining remarkably high standards of consump-tion for three-quarters of our people, on scarcelyany more productive equipment per employedworker than we had before the War. On thewhole our productive equipment, in the 99% ofmanufacturing industry which makes 99% of all ourexports, is still ageing; despite a revolutionarytransfer of goods traffic on to our highways, our roadsystem needs, as a minimum programme, £100million a year for five or 10 years to come to bringit into line with our needs as a vulnerable littleworld-trading island, whereas it has not had one-thirdof that annual rate of capital sunk in it since warbroke out 15 years ago; the demands of ourbasic nationalised industrial services plus our housingand public building- alone have taken three timesthe new capital available for manufacturing industrysince war ended; the fine achievements of fullemployment, fuller and fuller pay-packets, longer and

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paid holidays, longer education and training, betterworking amenities and conditions, universal Stateand increasing private retirement pensions, and whatfor short we can call the expanded " State Welfare "services, all combine to demand of manufacturingindustry not only a steadily rising output of con-sumable goods for our own people, but to add thissteadily rising home demand to demands imposed onit by defence, by our vital need of exports, by allour State or public capital programmes, and—at theend of the queue—by industry itself for overdueequipment.

"The Ten Per Cent. Crises"This is a formidable list of problems. Yet every

one of them has faced us since the War ended; andevery one of them would have been solved by amere overall 10% increase in our national output(or national income) from the same ingredients. Ihave always called our recurrent economic crises" the 10% crises ". An extra 10% of output fromthe same ingredients would either have avoided them,or overcome them. Clearly, such an increase inoverall efficiency of national production needs tocome from much more than manufacturing industry,as I explained earlier. Yet, as I also said, manu-facturing industry accounts for over 40% of ournational output; it is responsible for 99% of ourexports; and, finally, 99% of it is in private hands,which means that—within a more rigid frameworkof regulations imposed on it than before the war—its own brains, skills, will-power and initiative canimprove its efficiency.

So, while I am talking mainly of manufacturingindustry, I do not want anyone here—or outside thisplace—to imagine that this problem of raisingproductivity to get " Production for Plenty " is simplyand solely an industrial problem. It is not. It isa problem for all the other branches of our nationaleconomy which, together, account for half ournational output of goods and services.

Production PolicyI must say something of production policy, here

and elsewhere. A policy of " production for plenty "implies raising consumers' standards. That meansmore output. More output—in the firm or in thenation—means more ingredients (which means morecosts), or greater efficiency in using the sameingredients, or a wise combination of both, if pricesare to be lowered and markets widened. Obviously,facing our paramount problem of capital shortagesand conflicting demands for capital, we can mostrapidly and easily increase output by betterorganisation. That means a wide and deep-goingexamination of productive processes. It meansbetter organisation of both human and machineworking, of the planning and the various flows ofingredients, of designs and models and ranges ofend-products, of methods to economise and avoidwaste of all ingredients, of methods to teach betterworking and to secure easier work for the humanbeings (from the board room to the shop floor) and

fuller co-operation in the firm, and of such seeminglyremote factors as the firm's relation with its con-sumers, or the public in general, or with local andnational bodies training every skill or talent neededby the firm.

In my book on productivity I sketched aprogramme for raising our productivity between nowand 1970—that's only 15 years, as long as nowseparates us from the outbreak of the last War. Imade a short-run plan up to 1956, and a longer-runplan from 1956 to 1970. It is mainly about theshort-run plan that I now speak; for I have alreadyindicated that our problems of capital shortage,capital creation, etc., in the right priorities, cannotbe solved—they can only be lessened—within theshorter run of the next two or three years. Now,in this shorter run, substantial increases in produc-tivity can be achieved, of the order required—thatis, to achieve an overall rise of 10%, in output withlittle (if any) net expansion of new equipment—merely by these improvements in the organisation ofproduction. But such improvements in its organi-sation depend upon many factors; and nearly all ofthem boil down to improvements in human skillsand in the application of those skills in the productiveand distributive process.

I am not talking of skills in the narrow sense,but of such skills as those of the board-room, thedrawing-office, the accountants' department, theclerical staff, the designing and planning sections,the sales and advertising branches, the supplies orstock departments, the transport section, the main-tenance engineers' division, the personnel and welfaredepartments, as well as the big sector of the firmwhich embraces the works manager, the supervisors,charge-hands, and the various workpeople with theirvarying grades of operative skill.

The Responsibility of ManagementThe improvement of these skills and (above all)

the improvement in the application of all of themin the process of production and distribution, areclearly the responsibility of management. They areequally clearly matters of human will-power, humanunderstanding of human beings, imagination plustechnical " know-how "; matters of energy, initiative,venturesomeness, " drive", team-spirit, co-operativeendeavour, zeal, enthusiasm, and (if you will allowme the word) of excitement. They are at bottompsychological matters: matters of mood, attitude,thought, and emotion. And note this: though theyfall within the field of responsibility of management,they cannot be tackled successfully by managementwithout parallel improvements on the part oforganised labour, and, indeed, of government, publicauthorities, and our public opinion. Indeed, as Isaid, with the best will in the world on the part ofboth management and trades unions there will stillremain a framework of limits set for the firm—evenas a happy family—by rules, regulations, practices,and Dublic behaviour. But within that inescapablesocial framework, managements and trades unionstogether can certainly increase productivity, in shortorder, by substantial amounts, and merely by

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improvements in the organisation of, and in attitudesto, the work of human beings and of machines. Theevidence for this confident statement is already tooweighty in our own country to ignore. Productionunits under the same ownership and turning out thesame things have been compared; and, in the unittrying-out improvements in organisation, increasesin productivity have been shown within three years,ranging from 15% or 20% to as much as 50%.The workpeople's earnings—and the profits—haverisen remarkably; more rapid writing-off of equip-ment, and replacement of it, has been made possible;machine-hours worked, as a percentage of possiblemachine-hours, have obviously risen proportionately;human work has been lightened; and increasedoutput has obviated the need to lay off workpeople,who instead have been redeployed in the unit. Norhave these results been achieved only in unitsproducing things for which there was an inelastic,or an unsatisfiable, consumers' demand. Nor havethey occurred as a result of big new capital installa-tions. I need only mention such unlike productsas chemicals, synthetic fibres, yarns made both ofnatural and the newer synthetic fibres, foodstuffs,cement, bricks, motor vehicles, furniture, confec-tionery, bicycles, footwear, and iron and steel.

In certain lines of our production, our best firmscan show results broadly equivalent to Americanresults in overall efficiency, and in the main withbetter industrial relations in their units than obtainedin America. The trouble in our country is that ourbest units form a smaller percentage—a narrowerlayer at the top—than in America. This is theunanimous testimony of the Productivity Teamswhich visited American industries and of independentobservers. If the attitudes, organisation and methodsof our best units were generalised, so that our averagelevel of productive techniques were raised, we shouldbe a long way on the road to that necessary rise of10% in national output.

Raising the AverageOur short-run task, therefore, must be to raise

the average of our productive performance. HereI ought to add that this task—either in theory orin practice—does not depend upon the size orfinancial resources of firms. As an economic con-sultant I can bear witness to the same magnitudeof success achieved in some of the majority of Britishunits, employing total staffs ranging from a coupleof hundred to a thousand and more. The samesuccesses have been recorded in units not disposingof big financial resources; and in some cases theywere not even liquid. The improvements of organi-sation I mentioned demand brains, diplomacy, hardmental work, good planning, imagination, initiative,a desire to learn and apply learning, and so on.But they do not immediately demand heavyexpenditure.

Changing the AttitudeI ought to say something now about attitudes.

Let me start with the attitudes of management,

where productive responsibility lies. I think therehave been widespread improvements since the War,and that these are spreading. But managements inBritain are too security-minded. By that I meanthat—like organised labour, like all of us as a nation—our managements always keep an eye on secureand steady production, turnover, capital programmes,and so on, rather than on undertaking real risks innew ways. (I am talking of the average, remember;not of the best!) It isn't strange; for our people asa whole are almost over-conscious, all the time, ofretirement, pensions, social security, State welfareservices, steady and familiar ways of living and ofworking, on which they can count from year to yearand for all their lives. Other peoples are not somuch like this : our chief competitors—Americans,Germans, Japanese, for instance. It manifests itself,therefore, also in our industrial managements, in ourtrade associations—with their protective instincts—in our farming community, in our newly nationalisedbasic industries and services, and in our trade unions,with their naturally highly developed emphasis onsecurity and protection. Naturally, too, we find thatmanagements and trade unions—both public andprivate managements, and the trade unions servingboth—generally see eye-to-eye on the need to protecthigh-cost operations, and not so much on the needto encourage and stimulate competitive efficiency, orto stimulate improvements which would result inlowering costs and lowering prices on behalf ofconsumers.

I am not saying that all the measures taken bythese corporate bodies in our country to stabiliseeconomic progress are wrong. All I am saying isthat the mood and attitude of protection for thehighest-cost unit in any line of production is tooprevalent, on both sides of industry, agriculture andprivate enterprise, to make " Production for Plenty "arrive as quickly as it might. Everybody's incomes,everybody's turnover and profits, cannot possibly beguaranteed to rise perpetually and swiftly, least ofall in an ageing nation; and if our managements andtrade associations, our farmers and trades unions andpublic boards, unanimously proceed on the as-sumption that everybody's work, incomes, turnover,sales, profits, pensions, etc., can and ought to be soguaranteed—by any or all devices—then we certainlyshall not get " Production for Plenty" at lowerprices, and bean all the economic burdens I havelisted, very quickly; least of all in a world whereinwe must trade competitively.

We are in a dilemma here. It is paradoxical thatin the export trade we have successfully faced sofar—and will have to face much more from nowonwards—open competition; yet among our indus-tries, occupations, and separate productive units athome here we try to build-in more and more securityand protective devices. Many of these devices arealready proving handicaps to us in that open com-petition for world trade, by which alone we livewell. They raise the general level of our costs, andthey certainly penalise the best units in favour ofthe least efficient.

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Protection or Encouragement?That seems an odd recipe for " Production for

Plenty ". I can only pose the question for all of usto ponder : Is it not time we examined the com-parative merits of protection for high-cost producersas against encouragements for producers who can(and will, and do) lower alike their costs and theirprices? The country with the highest material" production for plenty " has only achieved successso far by laying emphasis more on the lowering ofcosts and prices, and less on the maintenance ofhigh costs in the interests of security for firms orinvestors; though I beg you to notice that even thewondrously productive industries of America haveto bear the farmers on their backs by means ofsubsidies, overwhelmingly paid by the workers inAmerican cities. Nevertheless, it is still true to saythat American industry and its workers could noteven pay these subsidies to farmers, were it notfor the prodigiously higher level of Americanindustrial productivity. On our side of the water,our national preoccupation with retirement pensions,top-hat schemes, and security of everything foreverybody, right down the line, leads to a damagingdegree of immobility and rigidity—in the movementalike of high executives and of skilled labour, ofskilled technicians and of civil servants and publicfunctionaries. Yet we—of all nations—need to bethe quickest to change, alter, adapt, vary, andmodify—all the time.

It is worth posing this question, whatever ourpolitics or occupations, at a stage in our economicprogress when we hear complaints that young peopleprefer sticking in secure jobs, or prefer publicadministration to the more exciting vicissitudes ofa career in industry or commerce, or (when they doqualify with good marks in University or technicalcourses) prefer to teach, to research, or to take postsin the public administrative services rather than inprivate or public productive enterprise. Manufac-turing industry, farming, or finance and commerceand the distributive trades, are trying hard to getthe best brains and skills—especially those of theyoung people. But I think they have given theimpression that they are dominated by the " safetyfirst", protective, instincts of an older generationwho are so security-minded that opportunities, newideas and methods, initiative, venturesomeness andexperiments will not be allowed to come the wayof younger employees until these younger folk aretoo old.

I have myself noted—and commend to yourattention—the difference made in a firm or factory,here and abroad, when the employees see a highpercentage of the top-flight directorate as full-timeworking executives, always on the job, always readyto adopt and adapt. Allied to this factor is thatkind of security-mindedness which manifests itselfas an unwillingness to devolve responsibility ordelegate authority. That unwillingness is, I think,widespread enough for all of us to recognise thesymptoms: the plaintive cry " I haven't time tothink, or to read more than appears on one sheetof paper! " That cry is an admission of

administrative defects, either in the man or in theorganisation of which he is a leading part. It isalso, 1 think, to some extent a confession of fearlest younger or abler men might get his job. Suchsecurity is costly to all of us.

The Only WayThis brings me to my conclusion. It is a truism,

but ought always to be repeated, that raising pro-ductivity is the only way to realise the hopes anddemands of both managements and organised labour..First, to management I would say this: you have inthis land to-day more facilities for the immediateimprovement of productive efficiency than you oryour forebears ever had. True, you face the vexedproblems of real rewards and incentives for thenigher skills and responsibilities. But all of us inthe nation, Socialists or Conservatives, are beginningto re-think our attitudes to the State and. its rolein our midst, to our crushing tax-system, to theindividual's right (and even his duty) to better himselfand his fellow materially, by improving his economicworth and performance. But beyond these problemsof incentives for individuals or groups—which arepart of the framework imposed both on managementsand trades unions—there lies a wide field in whichgood management can make itself better, and poormanagement make itself good. This improvementcan be achieved most rapidly with the aid of newspecialists in the arts and sciences of management.In this assembly I need hardly name the productionengineers and their valuable—indeed, crucial—work;the work study specialists; the expanding and multi-plying industrial consultants; the experts in cost andworks accountancy, budgetary control, industrialpsychology, industrial administration, personnelmanagement, industrial welfare, industrial design,packaging, handling, machine maintenance, trans-port, and many other specialised functions whichcan now be either trained or hired. Some big firmsare even beginning to hire independent economiststo give them an outside expert's assessment of theirproduction programmes, capital programmes, foreignexchange and other longer-run commitments, in thelight of national and international economic trends.Advertising, sales promotion and market researchhave made notable forward strides since the War,not least in the objectivity and validity of theirresearch and advice. I need scarcely add here thefacilities and aid now organised and made availableby the British Productivity Council and the localproductivity committees all over the country.

It is not difficult to-day, if any management hasthe will, to overhaul its methods, get sound advice,infuse a new spirit into the firm, get on its toes, andbecome lively, resourceful and flexible. And the moremanagements do it—as in fact they are graduallydoing it—the more obvious will the effect becomein the market for their products, in our nationalproductive efficiency, and also in such seeminglyremote regions as the market for young talent, fortechnicians, and for all the specialists in the artsand sciences of modern management which I have

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After officially opening the Production Exhibition andConference, Sir Walter Monckton, Minister of Labour andNational Service, made a tour of the stands. This photo-graph, taken on the British Productivity Council's stand,shows (1. to r.) Sir Walter Monckton, Mrs. M. A.Montgomery (Managing Director, Andry MontgomeryLtd.); Sir Walter Puckey; Mr. W. F. S. Woodford; SirGodfrey Ince (Parliamentary Secretary, Ministry ofLabour and National Service); Mr. H. B. G. Montgomery;

and the Rt. Hon. Lord Sempill, A.F.C.

mentioned. Gradually the poorer managements willhave to wake up, as their fellows forge ahead.

Example by Trades UnionsBut management can only do it with organised

labour; so I would say a word to our trades unionsand their leaders. Our industrial relations in Britainare really good. Nowhere, I think, has the changein British industry been more obvious than in ourtrades unions. Here, too; the best are unparalleledin the world; but the best are having to raise theaverage, by example. The example is remarkable.Our leading trades unions to-day are training manyof their own people in the arts and sciences ofmanagement—not because they claim, or have everclaimed, management as any part of their responsi-bility, but because without a thorough groundingin these subjects they cannot fulfil their roles inmodern industrial life, on behalf of their members;and because without such expert knowledge theycannot assess what is (or is not) reasonable in thenecessarily changing demands of a go-ahead manage-ment upon their members.

In the old days, cost accounting, work study, andproduction engineering in their embryonic formswere the guarded secrets of management: theabracadabra of executives. To-day, trades unionsstand to gain much more for their members, and tohelp forward " Production for Plenty ", not by theold-fashioned methods of slogan, slamming, andstrikes, but by expert bargaining and argument acrossthe table with management's own experts. Thatmeans that trade union officials and experts shouldbe adequately rewarded. That is the moral of thebest and most highly rewarded American tradesunions. It is significant that the lesson is beinggradually applied in our trades unions, and elsewherein Europe.

Much the same is true of the changed unionattitudes to productive equipment. How often didthe Productivity Teams report that there was nosingle secret of American productivity records; thatit was simply the application of methods well-knownover here; and how often did they ask for morehorse-power per British trade unionist, moremechanical aids, more machine-capacity, more lighttools? Now our leading unions have been changingtheir attitudes, under skilled leadership, to all thesemechanical slaves, which alone can ensure Plentyfor mankind without mankind's dependence onbrawn rather than brain. We must remember thatour productive machines stand idle for far more ofthe time—the week or the year—than they do inAmerica; that consequently they are written-off farmore slowly, junked and replaced more slowly; thatnot even the best managements can be expected tojunk machines that are still good, and replace themwith better ones which cost six times as much asthe good old ones, unless these new ones are goingto be allowed to do their best work as near theirpractical capacity as possible. In these considerationslie British trades unionists' best hopes of loweringcosts and prices, and thus raising standards ofconsumption towards Plenty.

I would also say to both managements and tradesunionists that we must revise our old-fashionedattitudes to shift-working (of course, I mean inprocesses where it is not inevitable). The biggestsingle item of reorganisation of both human andmachine work is involved in the introduction oftwo- and three-shift work; but it is the best andquickest way of making our existing resources pay-offin rapidly rising productivity. It means thorough-going reorganisation, careful discussions with unions,immense labour in planning, and infinite attentionto all the human factors I have emphasised.

Forcing the PaceWe live in an era of quizzes and questionnaires.

Let me end with one. Of both management andorganised labour I would ask : Do you know, canyou cross-check, every detail of the operations inyour productive processes? Can both of you under-stand the objections to doing jobs better, andovercome them, so that unit-costs are lowered? Areboth of you doing all you can (with your respectivesubordinates) to make them cost-conscious, waste-conscious, conscious of the firm's, the team's, thenation's, need to keep quality up and costs down?Are all of you consciously set on turning out moreproducts, reducing their prices, widening markets inthat way, thus selling more again and—in short—forcing the pace on clients and customers rather thanwaiting on them? Are management and unions—are their respective officials—making themselves clearto each other, understanding each other's behaviouror arguments?

The poor performance of a costly, new, andhighly efficient piece of capital equipment may bedue to the kind of simple and stubborn misunder-standing with which most of us are familiar amongour own children ! In that case, quite a sizeable

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sum of money to put that kind of thing right wouldbe vital, worthwhile, and cheap. And I repeat: Isee no excuse in Britain to-day for not raisingproductivity by the extra 10% in two or threeyears, on the average, by the judicious use of allour new techniques, know-how and facilities. Itmeans the conscious infusion of a new spirit in Britishmanagements and British trade unionism : the spiritof exciting experiment, of co-operative venture, andof competitive striving.

A Sobering ThoughtYou may say this is rhetoric, exhortation, and

hopeless. Then our theme here is hopeless. Let meend with a sobering thought. We in this countryare still not producing for our consumers at homehere, per head, significantly more than we did beforethe War, 15 years back. All of the 10% to 20%increase in the consumption of goods and servicesby 'three-quarters of our people since 1938 hasoccurred at the cost of the- other quarter—namely,the better-off and the worse-off, the old, the sick,

the retired, and all those on National Assistance andpensions. We have only re-distributed, not expanded,the output available for our consumption as a people.Most of our extra production has had to go foradditional exports to repay debts, or for defences,or overseas development; and even now, as I showed,we cannot produce and install enough productivecapital equipment where we badly need it.

So we stand some way, in our own favouredcountry, from Production for Plenty. We have stillto turn out enough for our entire people—not three-quarters of them—to live better than they did 15years ago. How much more so, then, do we needto push ahead with our new techniques, pool ourexperts' skills, take up and apply new ideas andmethods, and leave nothing undone which can bedone to increase the efficiency, the economy, and,therefore, the fruitfulness of our equipment and ourpeople ! To sum up : there is no other way to getProduction for Plenty than by raising productivity;it means reorganising machines and men; and thatmeans changing our attitudes to the work done byboth. The quicker we do it, the better for all!

NEW BUILDING FUND APPEALSince the publication of the last list, donations have been received from the following subscribers. (The list

was compiled for press on 25th August, 1954.)

H. F. Adams, M.I.Prod.E.H. Adcock, A.M.I.Prod.E.J. Alldrick, Grad.I.Prod.E.J. S. Amin, Stud.I.Prod.E.W. J. Anderson, M.I.Prod.E.M. Ashworth, Grad.I.Prod.E.

F. A. Bailey, A.M.I.Prod.E.J. W. Barrey, Grad.I.Prod.E.R. A. Bartholomew, M.I.Prod.E.D. S. Beck, Grad.I.Prod.E.J. M. Bennett, Stud.I.Prod.E.T. R. Blewitt, Grad.I.Prod.E.H. A. Blomiley, Stud.I.Prod.E.A. Boula, A.M.I.Prod.E.K. C. Bowen, Stud.I.Prod.E.N. F. Bratt, A.M.I.Prod.E.F. H. Briggs, A.M.I.Prod.E.I. Brown, M.I.Prod.E.H. H. C. Brown, A.M.I.Prod.E.W. Bruce, Stud.I.Prod.E.A. W. S. Bryant, A.M.I.Prod.E.H. Bull, A.M.I.Prod.E.R. P. Bull. Grad.I.Prod.E.

D. M. Callow, A.M.I.Prod.E.T. H. Campbell, A.M.I.Prod.E.Carbodies, Limited.R. Carpenter, A.M.I.Prod.E.H. H. Chesters, Grad.I.Prod.E.W. A. Childerley, A.M.I.Prod.E.S. K. Chowdhury, Grad.I.Prod.E.B. E. G. Clarke, Stud.I.Prod.E.A. Clements, A.M.I.Prod.E.F. Clymer, A.M.I.Prod.E.J. Cockell, Grad.I.Prod.E.M. Coll, Grad.I.Prod.E.P. Colley, A.M.I.Prod.E.F. Cotton, M.I.Prod.E.

F. W. Cracknell, A.M.I.Prod.E.J. W. Crofts, A.M.I.Prod.E.

K. J. Darbey, A.M.I.Prod.E.D. G. Davies, Grad.I.Prod.E.S. J. Dawson, A.M.I.Prod.E.J. A. DeCourcey, Grad.I.Prod.E.H. W. Dilley, Stud.I.Prod.E.E. Dobson, A.M.I.Prod.E.L. D. Done, Grad.I.Prod.E.T. I. Dunn, Grad.I.Prod.E.K. J. B. Dunn, A.M.I.Prod.E.A. E. Dupree, A.M.I.Prod.E.C. R. Dyer, Stud.I.Prod.E.

W. Edwards-Smith, A.M.I.Prod.E.K. Elland, Grad.I.Prod.E.F. G. English, M.I.Prod.E.R. J. Evans, Grad.I.Prod.E.

D. K. Filby, Grad.I.Prod.E.D. G. Finikin, Grad.I.Prod.E.A. B. Fitzherbert, Stud.I.Prod.E.S. Friesner, Grad.I.Prod.E.

W. A. Gelder, Grad.I.Prod.E.A. Gordon, Grad.I.Prod.E.R. Gore, A.M.I.Prod.E.A. Griffiths, M.I.Prod.E.A. G. Gulliver, Grad.I.Prod.E.H. Gurvick, Grad.I.Prod.E.D. Gutteridge, Grad.I.Prod.E.

B. E. Hackley, A.M.I.Prod.E.G. E. H. Hall, A.M.I.Prod.E.E. W. Hancock, Hon. M.I.Prod.E.T. Hanson, Grad.I.Prod.E.N. S. Hardy, A.M.I.Prod.E.L. T. Harris, A.M.I.Prod.E.L. F. Hattersley, A.M.I.Prod.E.F. Henshaw, A.M.I.Prod.E.

D. H. Hills, A.M.I.Prod.E.F. W. Hill, A.M.I.Prod.E.W. Hird, A.M.I.Prod.E.N. Hodgson, Stud.I.Prod.E.J. G. Holmes, M.I.Prod.E.L. C. Holmes, M.I.Prod.E.A. D. Hopkinson, Stud.I.Prod.E.S. R. Howes, M.I.Prod.E.J. H. Hughes, M.I.Prod.E.C. M. Hunter, A.M.I.Prod.E.

A. Jacobs, A.M.I.Prod.E.A. Johnson, A.M.I.Prod.E.B. A. J. Jones, Grad.I.Prod.E.

F. J. Kelsey, A.M.I.Prod.E.I. J. C. Kent, Stud.I.Prod.E.W. H. Kimpton, A.M.I.Prod.E.G. E. C. Knight, Stud.I.Prod.E.

A. D. Lambert, Grad.I.Prod.E.J. R. Lardlow, A.M.I.Prod.E.C. R. Last, A.M.I.Prod.E.A. H. Laycock, A.M.I.Prod.E.T. W. Leech, A.M.I.Prod.E.F. E. Letchford, Grad.I.Prod.E.J. Levisohn, A.M.I.Prod.E.O. F. Lewis, M.I.Prod.E.Lockheed Hydraulic Brake Co., Ltd.J. H. Lovett, Grad.I.Prod.E.H. V. Lusteg, A.M.I.Prod.E.J. Lyon, A.M.I.Prod.E.

J. K. Mackintosh, A.M.I.Prod.E.W. Manson, M.I.Prod.E.G. A. Martin, A.M.I.Prod.E.E. W. Marvill, M.I.Prod.E.K. R. Matthews, Grad.I.Prod.E.T. McGlashon, A.M.I.Prod.E.K. E. Miles, Grad.I.Prod.E.

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