Mistakes and complacency on the part of management were largely responsible for the decline in American industrial productivity, Secretary of Commerce Malcolm Baldrige told a group of senior business executives, economists and labor leaders yesterday.
At the first meeting of the National Productivity Advisory Committee, a high-powered panel sworn in yesterday by President Reagan, Baldrige said that American executives grew careless when their industries dominated world markets in the 1960s and sacrificed innovation to short-term profits.
Now, he said, as the United States is faced with declining productivity and is being overtaken by competitors abroad, "We've got to get our managers back into entrepreneurial thinking and away from financial reports, more into research and development and less 'let's get the product out the door.' "
Labor Secretary Raymond Donovan told the group that "improving productivity growth is the nation's No. 1 priority," and the administration used the meeting to emphasize its commitment to industrial revitalization and business expansion.
Reagan, who created the committee in November, met with the 33 members--including the top executives of Exxon Corp., Xerox Corp., General Motors Corp., J. C. Penney Co. Inc. and other corporate giants--for about 15 minutes at the White House.
"We cannot have economic prosperity, sustained growth without inflation, unless we have better productivity growth," the president said in a brief pep talk.
To underscore the importance the administration attaches to the committee's year-long mandate to uncover new ways to improve productivity, Reagan delegated Vice President George Bush to join Baldrige, Donovan and Treasury Secretary Donald T. Regan at the meeting.
Gathered, appropriately, in the Treasury's marble-walled "Cash Room," the Cabinet officers and the committee members--all but one of them white males--represented an extraordinary assembly of political and economic power. The committee's chairman is former Treasury secretary William Simon, and members include executives such as Justin Dart, chairman of Dart Industries; Peter Grace, chairman of W.R. Grace & Co.; John H. Perkins, president of Continental Illinois National Bank; labor chiefs; and economists such as Martin Feldstein of the National Bureau of Economic Research. The only woman is Jayne Baker Spain, executive in residence at George Washington University.
One member is John T. Dunlop of Harvard, a former secretary of Labor, who, as Baldrige pointed out, was chairman of a similar group studying the same issue, to little effect, in the early 1970s.
"One advantage I think you have is that you are launching your efforts in a more favorable environment," Baldrige told the new committee. "That's because the president's economic recovery program is aimed at providing the foundation to increase U.S. productivity and competitiveness."
Productivity, which can be defined in a variety of ways, measures the ratio of output to capital and labor investment. In general, improved productivity brings both increased profits and competitive advantage, but in key U.S. industries such as steel and autos productivity has stopped growing.
"The situation is deteriorating rapidly," Donovan said. "We are no longer talking merely about a slowdown in productivity growth. We are now experiencing an extended period of absolute decline in our production efficiency."
Regan and Bush said that the business climate and the overall state of the national economy already have been stimulated by the administration's program--deregulation, tax incentives, controlled monetary growth--and that it now is up to business and labor to suggest additional steps.
Baldrige said "we can't push the entire blame" for declining productivity on labor. But he said that "the time has come for labor to discard outmoded work rules and approaches that belong to another era . . . labor's got to be ready for a return to wage rates linked to realistic increases in its work."
Donovan said that the nature of the work force will change dramatically in the coming decade as machines replace manual laborers, the growth of the work force decelerates, and blacks and Hispanics make up a growing percentage of those entering the job market for the first time.
Automation and the introduction of robot technology, as well as the decline of manufacturing as a component of the overall economy, will mean "far fewer places in the economy for unskilled workers," Donovan said.
He said that by 1990 "half the workers in any factory may well be engineers and technicians and other white collar specialists," which may require "retraining on a massive scale" to match the labor force with the job requirements.