Economics Of Whisker Removal
Deep inside an industrial plant in a gritty section of Boston sits one of the latest testaments to American manufacturing prowess. The hulking machine, bigger than a mobile home, is Gillette Corp.'s top-secret producer of a new three-bladed disposable razor, the MACH3.
It is the company's fastest machine ever - capable of clicking out 250 cartridges per minute. That's 15,000 an hour, 131 million a year. Only three people run the behemoth. And they're more observers than operators: They mainly watch for malfunctions, talking to each other by radio headset.
The machine symbolizes one reason US manufacturing is now generally ranked as the most competitive in the world - one of the overlooked success stories of the Golden Nineties.
For years, Americans watched as other countries - notably Japan - invested in new plant and equipment on the factory floor, boosting manufacturing output. Now, in the boom of the late 20th century, US companies are fitting assembly lines with new robots and other innovations, changing the way firms produce everything from razors to rucksacks.
True, overall productivity in the US - that is, the output per man hour - has risen only about 1 percent a year since the current economic boom began in 1991.
But manufacturing productivity has been far more impressive - rising 3.5 percent annually in the same period. Last year it was up 4.6 percent.
"Manufacturing generates considerably more productivity," says Gordon Richards, chief economist at the National Association of Manufacturers in Washington.
The results have rippled through the economy. They have helped make American firms more competitive globally and contributed to a period of stable interest rates: Greater productivity allows businesses to raise wages without increasing product prices and adding to inflation. Thus the Fed has felt less pressure to raise rates to slow a booming economy.
As Federal Reserve Chairman Alan Greenspan put it in congressional testimony last month: "Signs of a major technological transformation of the economy are all around us, and the benefits are evident not only in high-tech industries but also in production processes that have long been part of our industrial economy."
Gillette's new machine and all its clacking accouterments offer a window into the changing American economy. The company spent $750 million in developing and building the equipment needed to make the "revolutionary" MACH3 razor - 200 machines at the Boston plant, the same number at a Berlin facility that will start operation next October.
"Without the new assembly process, it would be too expensive to produce," says Michael Cowhig, senior vice president for manufacturing and technical operations for North America and Europe.
The three operators who supervise Gillette's six final assembly machines in Boston step in only if the devices jam.
For now, the operators are in the middle of a "learning curve." Still, they're already ahead of the 185 cartridges-a-minute rate for Gillette's earlier generation of disposable razors, the Sensor and SensorExcel. The goal for MACH3 machines is about 22 million components a day. Each T-shaped razor contains 11 components.
Robots do just about everything
The making of a shaver is almost a completely automated process. Robots pick up parts as they emerge from machines, ferry them to an automated warehouse, or directly to the final assembly machine. Assembly operators don't do any physical work themselves. Mr. Cowhig calls the process "quite impressive."
Many workers across the country who have lost their jobs over the years to increased automation aren't so impressed. But those who have survived the transformation on the factory floor often end up in higher-skilled, better-paying jobs.
Moreover, in today's tight labor market, the need for businesses to retain workers has brought a greater effort by managers to work with employees, says Charles McMillion a Washington consultant. This has led to even greater productivity gains.
For Gillette, it took five years to design and work out production details of the new assembly machine. Development of the new razor itself took into account the need for automation in manufacturing.
Output from the Boston and Berlin plants will be shipped to 175,000 stores in North America and Europe. The razors are appearing on store shelves now.
The machines that produce the shavers are as shrouded in secrecy as a guest on the old show "What's My Line." "We don't give plant tours," says Cowhig with some understatement.
Before the MACH3 was unveiled in mid-April, specially-built walls protected the assembly process in Boston from prying eyes. The walls have since come down. But there's good reason for the CIA-like secrecy. Gillette has made a big investment in the machinery. In the competitive world of whisker removal, industrial secrets a rival firm garners can prove damaging.
It's high-tech, but will it sell?
Of course, all the production plans for the MACH3 assume it will sell well, despite costing 35 percent more than earlier cartridges. Cowhig says the extra cost of the new blades, with their "diamond-like" carbon-coated edges, will be partially offset by providing as many as 20 percent more shaves.
"I expect it will do quite well," says Tony Vento, an analyst with St. Louis-based Edward Jones. "And we have a 'buy' on the stock."
In the past, output at the Boston plant rose about 7.5 percent a year. Gillette made 2 billion cartridges in 1992, 2.7 billion in 1996. But, because of rising productivity, the number of workers has stayed steady at nearly 1,800.
Workers' skills, however, have grown with the new technology. "The jobs are much more sophisticated and complex," says Cowhig, a 31-year Gillette veteran.
Operators of the assembly machines take some 240 hours of numbers-numbing training, studying metrics, pneumatics, statistical process control, and programmable logic control. Employees in South Boston get an average $700 a week in pay.
"The basic fundamental to high productivity is training your most important resource - people," says Cowhig.
Even with all the training and gee-whiz machinery, however, tomorrow's factory floors will be far more sophisticated than today's. In the enduring quest to boost productivity, the next automation wave will include so-called "reconfigurable machines."
At the University of Michigan engineering school, for instance, researchers are working on machines that will convert themselves into completely different devices as needed to meet shifting demand.
One system, for example, can make V-6 cylinder heads for automobile engines, and, in less than an hour, be converted to make V-8 heads. Can "smart" razor machines be far behind?
"Everything changes very quickly with global competition," says Yoram Koren, director of the new integrated manufacturing facility at the University of Michigan.