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Hogan Steel Archive: Productivity

The “Hogan Steel Archive,” representing a three-year collaborative effort of the Walsh Library’s Department of Archives and Special Collections and Fordham’s Industrial Economics Research Institute, commemorates and preserves the remarkable steel legacy

Productivity

Documents on productivity are contained in 51 files, which provide information on such subjects as the concept of productivity, its role in economic prosperity, its use to gauge economic performance, its measurement in the steel industry, its analysis in manufacturing plants, the influence of technology and bottlenecks, productivity accounting, international productivity comparisons, productivity in selected industries, productivity and unit labor costs, management productivity, capital requirements and productivity, Jones & Laughlin Steel Corporation and productivity, Father Hogan on productivity, and productivity trends in merchant blast furnaces, open-hearth furnaces, and minimills. In addition, the Archive’s book collection contains the following: Father Hogan’s first book, Productivity in the Blast-Furnace and Open-Hearth Segments of the Steel Industry; a related publication Productivity in the Light Flat-Rolled Segment of the Steel Industry by Thomas F. Walsh, S.J.; The 1970’s: Critical Years for Steel by Father Hogan; and the Anglo-American Council on Productivity’s Productivity Team Report: Iron and Steel.

Analysis: Productivity is an input-output relationship expressed as a ratio between the input factors in production and the resultant output or product. It is fundamentally the production obtained per unit of resources consumed in the productive process, and its improvement generally means that more has been obtained from a given input. Consequently, the concept of productivity is interwoven with the most basic of economic objectives, the optimum utilization of scarce resources.

To increase productivity means to take what we have and make more of it, more goods and services to raise living standards, so that the rate of productivity growth indicates just how well producers have used the various productive resources or inputs to satisfy the needs and wants of consumers. A gain in productivity, therefore, is a gain in real wealth.

There are three general types of input factors in any manufacturing operation, labor, materials, and machinery. They function together, with labor applying the machinery to the materials in order to shape some product, which makes it difficult to determine precisely what portion of the final output derives from each of the three interrelated inputs. A gain in productivity usually comes from many sources of improved resource utilization, including better trained and more efficient labor, improved working conditions, enhanced management, increased investments in new tools and technologies, more effective plant layouts and output flows, higher quality raw materials, and closer to optimal operating rates.

The general input category labor encompasses the total human effort, mental and physical, needed to sustain a particular manufacturing operation. In steel, as in most other industries, this input is difficult to measure, given the numerous job types and diverse skills of production and non-production workers in operating, maintenance, managerial, administrative, supervisory, professional, technical, and clerical positions. Nonetheless, steel productivity is commonly assessed using such readily available measures of labor input as the number of employees or hours worked, which treat all labor as though it were homogeneous.

In the steel industry, the second input category, materials, varies with a given steel plant’s degree of process integration and is comprised of all or some of the following: raw materials, including iron ore, coking coal, and limestone, as well as such processed inputs as beneficiated iron-bearing materials, direct-reduced iron (DRI), pig iron, coke, semifinished steel, scrap, alloys, refractories, electricity, oil, natural gas, and a number of other raw and intermediate inputs. Raw materials of varying quality are found in nature and can improve or penalize productivity. However, many such raw inputs now have been displaced by higher quality, processed inputs to which labor and capital already have been applied, further complicating productivity measurement.

Although the third input category, machinery, is also difficult to measure, advances in steel technology over the last century have combined with improved material and labor inputs to greatly increase the ability of steel producers and their employees to supply significantly more steel with much less labor. Existing blast furnaces have been able to produce significantly more iron; basic-oxygen, electric-arc, and ladle furnaces have accelerated steel melting and refining; continuous casting has eliminated a number of processing steps, boosted yields, and saved energy; and continuous rolling mills continue to improve product quality long after replacing slow, labor-intensive hand rolling. These and other advances in steel technology all have been enhanced considerably by the application of computers to everything from metallurgical analysis to output scheduling, equipment control, order tracking, and product testing, all of which has had a dramatic impact on steel productivity.

For all of the above reasons, it is important to recognize the limitations of steel productivity findings based on measuring only one interrelated input factor, while excluding the other two. Preferably, measures of all-factor productivity (AFP), however difficult or complex, should be more widely applied in determining just how effectively steel plants, companies, and industries are utilizing all of the resources they need to make steel.