Focus on Productivity: Part I

By Andrew Paparozzi
In August 12, 2008

With much of the attention during the economic slowdown focusing on maintaining and growing sales, is productivity still important? The simple answer: Yes. As the squeeze on margins continues, it’s more important than ever. Not just for print, but for the economy in general.

The latest data from the Bureau of Labor Statistics show that the output per labor hour in the nonfarm business sector for the second quarter was 2.8% above a year ago. Although less the 3.3% year-over-year gain in the first quarter, it is substantially better than the 1.4% gain for all of 2007. A reduction in hours is behind the improvement. In other words: producing more with less labor input.

Year-over-year productivity gains in the manufacturing sector for the past four quarters have averaged 3.5%, with durable and nondurable goods averaging gains of 4.7% and 2.4%, respectively. What about print? Unfortunately, BLS industry data lags quite a bit—the latest available is for 2006. However, based on BLS employment data, NAPL estimates that labor production hours in the commercial printing industry were down 5.4% in June from a year ago. This follows a decline of 1.3% during the previous 12 months and a gain of 4.2% for the prior 12-month period. Printers are reducing labor input. Nonetheless, according to the NAPL Printing Business Panel, only 31.8% of Panel members are seeing a gain in their factory productivity. For the rest, productivity is either lower (24.6%), or about the same (43.6%). According to these data, we need to sharpen our focus on productivity.

Joseph Vincenzino

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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