CHANGE #1: THE MOVE FROM LABOR TO CAPITAL
Flour, sugar, milk etc, being the raw materials of production, were packaged in bags or, in the case of the milk, in 10 gallon cans. All the packaging was designed for the products to be carried by hand. Vast quantities of laborers would carry the raw materials from the delivery trucks to the storage areas, and then within the factory to the areas of production.
Production itself was also very labor intensive. Boiler attendants would stoke the coal or oil-fired boilers and ovens. Bakers would mix the ingredients and manually mold the biscuits, before carrying the baking tins to the ovens for baking. After baking, teams of packers would pack the biscuits before laborers would again collect the finished product and carry it to the finished goods store. Store men would then finally load the trucks by hand.
In today’s factory, raw materials are delivered in bulk. Tankers bring all the ingredients, and loading is all done mechanically. Similarly conveyors, chutes and automatic feeders have replaced much of the labor. The introduction of automatic packing lines, shrink wrappers, pallets, forklifts and computerized warehouses, have again greatly reduced the once great reliance on staff. Ovens are continuous, with product going in one end and coming out the other.
The first change therefore is a significant move from labor to capital.
CHANGE #2: LABOR MORE HIGHLY SKILLED
Besides being much fewer, today’s labor force is in general more highly skilled. The labor force operates and maintains the means of production. To do so requires much greater skill than lugging a flour sack around.
The second change then, is that a company’s labor force is much more skilled.
CHANGE #3: A COMPANY’S INVESTMENT IN STAFF IS MUCH GREATER
To achieve this higher level of skill, companies are spending a greater amount in specialized and/or ‘on the job’ training. The cost of this training can be significant. Even the cost of induction programs, work place safety and customer service programs is significant. The cost of training staff, and therefore the value of the employee, is therefore greater to the company. Another way to look at this is that the cost to replace the staff member is greater.
In the past, when a company required unskilled labor, they typically asked their existing staff if they knew somebody suitable. A company may have to run an advertisement in a local newspaper, but the time and cost of recruiting was relatively small. Today’s greater reliance on a small number of highly skilled employees coupled with modern unfair dismissal laws has meant that much more time and expense is incurred in the recruiting process.
The increased costs in recruitment and training mean that any organisation’s investment in their labor force is significant when it is carefully analysed.