That's the spin I took away from today's Wall Street Journal, anyway. An article titled “Stalled Recovery Hits Productivity” implies that adding these two negatives could equal a positive. This line of thinking states that businesses have streamlined so much that they're working their existing workforces too hard—which could be good for the job market if demand picks up because they'll have to start hiring again.
Another recent report (from Bloomberg News) comes at the labor issue from the Information Technology (IT) side, reporting that General Electric is reversing its long-time practice of outsourcing IT. It quotes GE's CEO Jeffrey Immelt as saying his company will add more than 15,000 jobs—1,100 of which will be in its Detroit IT Center alone. The article quotes Fred Hochberg, president of the U.S. Export-Import Bank as saying “Having your research and design all co-located has enormous benefits. The manufacturing process informs the engineering process and then the engineering process informs the manufacturing process.”
If these articles are right, companies are rediscovering the value of hiring and cultivating talent. They're also getting smarter about how they're applying IT to make that talent more productive. In an interview I recently had with Peter Thorne, managing director of Cambashi, a consulting firm that works with IT vendors, IT will play a big part in blending productivity in manufacturing with productivity in logistics.
Thorne said a material handling engineer told him that systems engineering changed his life.
“He said he could finally manage the boundaries between mechanical, electrical, electronic and software engineering,” Thorne recalled. “Until he started using a systems engineering approach to the way they responded to a project need, each of the disciplines looked at a requirement and came up with some sort of design. After a week or month they got together and then sorted out the mess. Since he and his team adopted the systems engineering approach they have been able to manage that because it meant they could structure and link requirements to each of the technologies being used. They could come back and have a project meeting and be quite systematic about who was doing what, where there were problems and they could move functions between the electronics and the software if they needed to, or even into the mechanics.”
Here's an example from the plant floor. Think about how an ERP system makes plans. It sends instructions to the production unit on the plant floor, which then feeds data back to the ERP system which is maintaining a model of what's going on. According to Thorne, where that's a manual process, the people generating the plans from the ERP system think of the plant floor as a black hole.
With technology that's available today, production machines have embedded software, so it's being used not only to perform its primary tasks, but it's also used to respond to inquiries from the ERP system. People won't have to fill out data entry forms. The ERP system can find out from production machines what their current status is.
“That idea of feeding the beast in the black hole of production will go away because both sides will know what's going on,” Thorne believes.
The black hole will be enlightened by smart technology. But you'll still need intelligent people to deal with exceptions. IT and embedded software can't anticipate everything that might happen in a manufacturing or distribution environment.
I think that WSJ article is right. Companies will start hiring again. And just as GE is proving them right by hiring thousands of IT people, that good news will survive even if our current economic woes continue—as long as those human resources are cultivated and invested wisely.