| BUSINESSWEEK ONLINE : SEPTEMBER 27, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN COVER STORY
The Continent Is Really Cranking Out the Goods (int'l edition) Benjamin Disraeli might have had it in mind when he famously complained about ''lies, damned lies, and statistics.'' But making late and patchy productivity estimates by juggling output, employment, investment, and working-hours data is tough--and deciding what they mean is worse. If you believe the Paris-based Organization for Economic Cooperation & Development, which collates national data, productivity has grown faster in Europe than in the U.S. for years. Some economists even argue that European workers produce more per hour than their U.S. counterparts. Using exchange rates that iron out purchasing-power differences, Lombard Street Research Director Charles Dumas says Americans' output is worth $31.89 an hour, vs. $35.08 for Germans and $34.82 for the French. ''I was very surprised,'' he says. ''[But] U.S. employees work a lot more hours than Europeans, so their overall output is far higher.'' Turn to American data, though, and the reverse appears to be true. Economic consultants Standard & Poor's DRI and the U.S. Bureau of Labor Statistics, for instance, both figure productivity in Europe has lagged the U.S most years since 1992--and that U.S. hourly output is growing faster. Still, most number crunchers seem to agree that European productivity growth sped up in the 1990s. The upswing was especially strong in 1997 when, says DRI, productivity in France and Germany jumped by 6.8% and 6.7%, respectively. ''Those are remarkable increases for such rigid, high-cost economies,'' says Darren Rawcliffe, a DRI economist in London. TEAMWORK. European productivity has been boosted by restructuring and rationalization. Consider Finnish manufacturing between 1985 and 1995. Productivity zoomed ''as inefficient companies abandoned their market share to leaner, fitter operators,'' says OECD economist Dirk Pilat. Then there was the German steel industry shakeup in the mid-1990s. Survivors such as Thyssen-Krupp have raised productivity substantially. Its workers can today make a ton of steel in four hours, vs. six hours in 1995. But there's more than just downsizing. ''New manufacturing methods, such as team-working, are making a difference,'' says Gerd Oltermann, head of manufacturing at BAT Industries, the London-based tobacco multinational. So, too, are streamlined shop-floor organization and flatter management hierarchies. Whatever the cause, recent productivity increases show that European companies are in good shape. Growth may have been lackluster, but corporate earnings have surged 84% since 1994, almost as fast as in the U.S. Now, the big question is whether Europe can keep making U.S.-size gains. Since leaping at a 7% annual rate in the first quarter of 1998, European manufacturing productivity has slowed. In fact, European Central Bank data show it fell 0.4% early in 1999. Many economists figure that's just a blip. If so, further deregulation coupled with more mergers and a growing appetite for new technology will rekindle productivity growth. ''This is a temporary slowdown,'' says Elisabeth Waelbroeck-Rocha, a DRI economist in Brussels. ''Productivity will soon be speeding ahead again.'' Europeans hope she's right. By David Fairlamb in Frankfurt _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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 RELATED ITEMS Europe's Big Chance (int'l edition) EUROPEAN COVER IMAGE: Europe's Big Chance CHART: The Continent Picks Up TABLE: Europe Is Revving Up...But There Are Still Brakes The Continent Is Really Cranking Out the Goods (int'l edition) CHART: Bigger Productivity Muscle INTERACT E-Mail to Business Week Online | |||
