Productivity, Machinery and Skills in the United States and Western Europe

In two very different industries-biscuit manufacturing and precision engineering-US leadership in labour productivity relative to Western European countries is found to depend heavily on greater opportunities for scale-economies of production. Inter-country differences in the age and sophistication of machinery contribute only very partially to relative productivity performance but the US does benefit from higher levels of physical capital per worker. In terms of human capital, American enterprises are well-served by access to a relatively large supply of technical graduates which helps to compensate for deficiencies at lower levels of vocational education and training. The comparisons suggest that the present development of a US-style mass higher education system in Britain could make a positive contribution to British productivity performance. However, the traditional 'American model' of production organisation based on a semi-skilled shopfloor workforce is not relevant to the current and future skill needs o f most British manufac turing employers.