Productivity drivers in machine and metal product manufacturing

Abstract

This study looks at the causes of labour productivity improvement in the Finnish machine and metal product manufacturing industry. Labour productivity, as measured in this paper, is closely associated with profitability. The analysis comprises 28 selected cases and is based on data collected using a questionnaire and interviews. We apply statistical analysis methods to filter out the most important explicatory factors. The purpose of the case descriptions is to illuminate the diverse management actions and problems behind these factors. Product development efforts, supplier relations and efficiency of production processes seem to be the most important causes for improvement. Productivity usually improves during growth periods but uncontrolled rapid growth creates many problems to small- and medium-sized firms. Developing system suppliers are in an especially challenging position. During the study period, companies faced significant yearly fluctuations in volume, and therefore resource flexibility is imperative to maintain productivity.

Keywords:

• Performance evaluation
• Labour productivity
• Metal and engineering industries
• Profitability

Acknowledgments

Jouko Karjalainen is senior lecturer at the Department of Industrial Engineering and Management in Helsinki University of Technology. Previously he has worked as acting professor, project manager and researcher at the same university, and as a controller in a medium-sized Finnish company. Jouko Karjalainen gained MSc and PhD in Industrial Management from Helsinki University of Technology in 1985 and 1997 respectively. His research interests lie in management accounting with the current focus on the management of inter-firm value creation.

Ilkka Miettinen graduated from Helsinki University of Technology with a Master's degree in Industrial Engineering and Management in 2003. Since then, he has worked as a researcher and a postgraduate student in TAI Research Centre of HUT. His research interests lie in the study of industrial and facility services with a focus on inter-company relationships and different co-operational models in the network of customers, service providers and service managers.

Tomi Mikkola graduated from Helsinki University of Technology with a Master's degree in Mechanical Engineering in 2003. He is currently working as a production manager.