Research on progressive cost reduction, aka learning curves or experience
curves, has overlooked a classic study. Stern (1933) examines causes
of rapid labor productivity gains in the manufacture of tires. This
is especially interesting because in the early 1900s the tire industry
had the greatest productivity growth rate of any US industry (among official
US government industry categories). Thus it is a stellar
case in which to study progressive cost reduction curves. Stern shows
how the industry's productivity gains relate to increasing use of new,
more sophisticated equipment, stating the specific productivity gains that
resulted from each piece of equipment. Alas details are not available
on the efforts of firms to better organize their productive activities,
and enhance how they used existing machines, in ways that did not require
new machinery. Thus readers may come away with the impression that
the most important productivity gains stem from purchase of more efficient
machinery, whereas really the human efforts to continually reengineer processes
of production, purchasing, shipping, and management may have been even
more important. In any case, Stern's study is an important one and
deserves attention from researchers on progressive cost reduction.
The study is published as a non-copyrighted US government document and is made available here as a very large (8.2MB) pdf file.
You'll have to forgive my pencil markings in some of the margins.
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