Economists and pundits are having a field day analyzing the downturn in the economy, comparing it to past recessions, seeing how it fits with their pet theories and predicting if, when and how we’ll recover from it. We all marvel at the paradox presented by unemployment rising despite increases in prices, the GDP and the Dow, and postulate various theories on how that could be.
So far, my favorite hypothesis is by Erica Groshen with the Federal Reserve Bank in New York, who says that in recent recessions, structural changes — permanent shifts in the distribution of workers throughout the economy — have contributed significantly to sluggishness in the job market.
Groshen says recent recoveries are driven more by productivity increases than payroll gains. Output increases because workers are producing more and not by putting in longer hours — statistics show little change in average hours worked. Layoffs have become permanent rather than temporary because we change the way we do the work, and jobs are eliminated.
“In the more recent recessions, it seems that we have more employers using this as an opportunity to change what they are doing in a more basic way,” Groshen says. “They are closing inefficient facilities. They are culling their workforce. They are changing their production process.”
That means businesses became more efficient, which explains the economic growth. It also means workers have to find different jobs, a process that takes time. Those two factors combine for a jobless recovery.
Just ask those who remain how they get the work done. On Oct. 21 at Inframation in Las Vegas, Debra Hays of Duramax diesel engine builder Dmax Ltd. told how she and one additional technician now support a new predictive maintenance (PdM) program that so far has saved the 500-employee plant more than $23 million dollars.
In her example, a significant portion of that savings derived from reducing conveyor system downtime by changing from run-to-failure to infrared (IR) thermography on each and every one of 260 1-hp gearmotors. Quarterly surveillance and trend analysis efficiently identify incipient failures and prevent production line downtime valued at $100,000 per hour.
“The automotive manufacturing environment is faced with many challenges…as costs increase and sales decrease in this industry, downtime is no longer acceptable under any circumstance,” Hays says. “We use our IR camera to quickly identify potential problems and then use ultrasound, vibration and motor current analysis to diagnosis the problem and determine the severity.
“Trending isn’t fancy, but it works. Although these motors are 1 hp and considered throwaway, that doesn’t mean that it is not cost-effective to maintain them and their mechanical components with PdM technology. A two-hour predictive IR route can save hundreds of thousands of dollars with just one find.”
As part of General Motors’ heavy-truck supply chain, it’s no surprise that the plant has gone from 1,200 to 500 employees and from five to two predictive technicians. But it’s also gone from about 70% to 88% uptime.
That’s what I’d call a structural change.