American manufacturers employing sophisticated computer systems that provide low-cost production are likely to lose their competitive advantage as national and overseas competitors catch up with the technology, according to the chief economist of an economic research organization.
Gail Fosler of The Conference Board, an economic research organization told the Economic Club of Detroit yesterday that "the combination of computer-driven technology and lower-wage workers in emerging markets will close the absolute cost advantage that high-tech industrial countries now enjoy."
"Low-cost production will become a natural consequence of doing business," she added.
Revealing findings from research that soon will be released by The Conference Board, Fosler said that the manufacturers in the United States that used computers most intensively averaged labor productivity gains of 5.7 percent a year between 1990 and 1996. Manufacturing sectors that were not employing high-tech production systems gained only 2.6 percent during the same period.
While cautioning that some of the gains by computer users were generated by the computer-producing sector itself, the economist stressed that "computer use conveys a distinct productivity advantage to those sectors that have found ways to adopt [it] successfully."
Fosler added that, while it was generally assumed that computers were ubiquitous, they aren't. Citing a 1993 survey, the latest available information, according to the Board, she said that only 59 percent of U.S. manufacturing plants use computer-aided design (CAD), the most common technology used in manufacturing. Only 47 percent used machines numerically controlled by computers, and less than 15 percent use flexible manufacturing systems.
"Despite growth rates that are ten times faster than other forms of capital, there has simply not been enough time for computers to become a large part of the capital stock," Fosler noted.
As computers proliferate throughout the manufacturing sector, she added, companies now in the forefront of computer usage will lose their competitive advantage.
"As computers technology becomes more common, both in the U.S. and around the globe," Fosler said, "the relative advantage it will convey will diminish."