We document the evolution of productivity in a steel mini mill with fixed
capital, producing an unchanged product with Leontief technology
working 24/7. Despite—almost—unchanged production conditions,
output doubled within the sample period (12 years). We decompose the
gains into downtime reductions, more rounds of production per time,
and more output per run. After attributing productivity gains to investment
and an incentive plan, we are left with a large unexplained component.
Learning by experimentation, or tweaking, seems to be behind
the continual and gradual process of productivity growth. The findings
suggest that capacity is not well defined, even in batch-oriented manufacturing.
"Small Steps for Workers, a Giant Leap for Productivity."
American Economic Journal: Applied Economics,
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Search; Learning; Information and Knowledge; Communication; Belief
Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
Human Capital; Skills; Occupational Choice; Labor Productivity
Organization of Production
Metals and Metal Products; Cement; Glass; Ceramics