- By Anne-Marie Kent

On November 16, the New York Times reported that nationwide, industrial production had fallen 0.8 percent in October – the sharpest decline since September 2001. Such news raises questions: How can U.S. manufacturers increase production? Are some manufacturers more productive than others? What are the top performers' secrets? Further, what can community planners and policy makers do to attract these productive manufacturers – firms that are also good employers – to their communities?

UMass Boston economics professor David Terkla and co-authors Peter B. Doeringer and Christine Evans-Klock present answers to these and other questions in their new book, Start-Up Factories: High-Performance Management, Job Quality, and Regional Advantag, published in December by Oxford University Press. "For business owners, the book shows the successes you can have implementing high-performance management practices in your firm," says Terkla, who teaches economics and works with UMass Boston's Greater Boston Manufacturing Partnership. "For local officials and planners, the book describes the kinds of firms that tend to do very well, thriving and providing jobs. It also outlines some of the things government officials can do to make an area become attractive to these desirable firms."

Terkla and his co-authors sampled 48 new branch plants of large manufacturing companies in the United States that began operating between 1978 and 1990. These plants represent three industries that cover a wide range of technologies, products, and production processes. They are located in three different geographic regions that were chosen for their differences in labor markets and labor relations, in addition to average education levels of the workforce.

"We looked at the extent to which companies adopted what are called ‘high-performance management practices,'" says Terkla. These include intensive technical training on the job, the use of production teams with fluid job assignments, and the encouraging of workers to collaborate with supervisors to help in solving production and quality-control problems. The book confirms that the best-practice manufacturing companies are raising productivity and lowering unit costs by introducing these innovative high-performance management practices.

The authors suggest that these same practices that raise productivity appear to work best when they are combined with high-wage, relatively secure and otherwise good jobs, at least in their sample of start-ups. "Industry by industry, these high-performance start-ups generate good jobs at a faster rate than the average firm generates average jobs," says Terkla. Most offer their core workforces high job security through explicit employment guarantees, widespread use of buffer stocks of temporary workers, and relatively high rates of employment growth.

Terkla and his co-authors warn, however, that there's a catch. Many companies, they say, do not reap the full benefits of these high-performance practices because the practices are not accompanied by corresponding adjustments in other management strategies and because they are not combined with appropriate incentives for their employees to cooperate with change. Says Terkla, "Simply adopting high-performance manufacturing practices per se is not enough. This is important for business people to see, because there was a lot of lip service given to these. If they didn't really commit to it in an integrated sort of fashion, they didn't do as well."

High-performance management practices are most effective, says Terkla, when they are embedded in a large set of management strategies, ranging from taking workforce attitudes into account when choosing business locations to the sharing of managerial power and authority with employees.

The book also offers concrete proposals for how to accelerate productivity growth while raising earnings and job security. According to the book, U.S. firms' adopting high-performance management practices can in fact enhance productivity growth in U.S. manufacturing. "As new high-performance plants replace older, traditionally-managed plants, there should be corresponding increases in productivity, wages, and jobs for front-line manufacturing workers with no more than high school degrees," says Terkla.