One of the most common errors in this respect is the one that regards the reduction of the labor cost as the paramount consideration.

Reduction in labor cost has been the war-cry.  The pay-roll has been talked about so much that it has seemed to become the whole thing.  A man who declares that the labor cost per piece is not the most important element is at once branded as an advocate of old-fashioned methods.

It is needless to give assurance that there is no intention to disregard the labor cost.  The net cost per piece is a very important element, but it should neither eclipse the question of profit per dollar invested, nor the risk of the capital tied up.

What is the gain if the means for reduction of the net labor cost reduces the profit more than the saving in labor?  If doing so results in an actual loss of profit, why is it done?

We can readily see that the overhopeful managers may disregard the risk of the money invested, but we cannot see why the relative importance, or rather unimportance, of the labor cost should be so disregarded.

The machine tools in a plant usually determine its character.  This character is not one that can be quickly changed, but every addition to the equipment does change it for better or worse.  Usually the installation of a new machine is hailed as a progressive move, just because the new machine works better than the old, but its effect may be very bad.  It may be changing the character of the plant adversely to the interests of all concerned.  Therefore, the controlling spirit should see to it that each move is made on a basis that is economically sound.

It is in these changes that the scheme of management has a chance to make a great difference in the earning power of the entire business.

If too large a proportion of the total available capital is tied up in the machine equipment, the business is handicapped.  There is a right amount which bears a certain relation to the total required to carry on the enterprise.

With a given amount of capital for machine equipment, the output of the plant will be seriously throttled if the net cost of labor per piece machined is allowed to become the controlling element.

The Workers Help Bring Success.

The inventor, the officers, and mayhap the foreman, taken all together, do not and cannot make a successful machine or business without this supplemental work or ideas that come from actual work of all workers.

This new kind of knowledge should not take away a man’s courage; on the contrary, it should give him a true sense of value of existing, “going” things.  With this knowledge he can confidently and earnestly push a machine that is the product of a good organization.  He will know the great value of much experience and practise of each of the many men in the organization.  He will neither kill the business by half-hearted indorsement, nor increase the hazard of investment by urging this or that modification.  Nor will he advocate this or that machine being added to a line that is already too great.