In formulating an approach to these massive and critical problems we should use the best manpower, managerial, technical, and economic skills in our arsenal. Perhaps some of the following suggestions are already being considered or even acted upon. However, I shall set them down briefly for consideration.

1. Comprehensive study

Make a comprehensive study of one of our most distressed "underdeveloped countries." This would include a thorough economic study of the Leontieff Input-Output type to determine the size, distribution, and capabilities of all sectors of its economy and its "foreign trade" (exports and imports) with the rest of the United States. This will permit identifying qualitatively and quantitatively the real needs for manufacturing, agriculture, and services, private and public. Our experience in initiating the reconstruction of Europe after World War II, and aiding in the development programs of numerous oversea countries more recently should be drawn upon. On the basis of this kind of study, we would be able to size up the scope and magnitude of the task to be done in financial, personnel, and legislative terms. We would also be able to classify the parts of the job that must be done by the public (Government) sector and those which (in more developed areas of the United States) lend themselves to the private (non-Government) sectors.

2. Required developments in the private sector

For major developments needed in private sectors secure proposals from leading companies setting forth their proposed developments and adherence to standards of wages, etc., in return for major incentives offered by the Federal Government. For example, the Government might offer complete elimination of Federal income tax for a stated period of years on the proportion of the company's output generated in plants, retail stores, or other facilities located in the required locations. This tax privilege would be phased out over time in relation to objective criteria geared to the economic status of the underdeveloped areas. Whatever the specific form of the incentive, it should be of major financial significance and its terms should be related to fair and equitable measurement.

For needed products or services in the private sectors where no private companies stepped forward, the Government should make use of the corporation-that most effective device for securing accountability for results and decentralized decisionmaking. Centralized policy control would be exercised by the Government and performance measures would be related to the tasks of the Government corporation and its resources. There should be a number of separate "corporations" specifically organized, capitalized, and staffed with managerial personnel to do the job. Compensation and incentives of these corporate employees would be similar to those offered by private industry. With the development of the area, these companies would become attractive to private industry and should then be sold

by the Government at figures competitive with acquisitions of similar magnitude among private companies.

3. Required developments in public sectors

Some of the required developments in the public sector could be handled according to a time schedule by extension of existing governmental agencies' activities guided by specific objectives and standards of achievement developed during the study.

For other types of public sector activity, however, I suggest that Government corporations be used. The size of the corporation should be scaled to the nature of the function. Some of these would necessarily be large. Others could be fairly small. These corporations should be as close to the typical corporate model as possible, except that the only stockholder would be the Government, and the managements would be responsible for meeting preestablished performance

criteria.

Industry has learned to manage decentralized corporate divisions of large enterprises, and the corporation has proved a most responsive medium for securing informed, decentralized decisionmaking at the work levels while securing overall adherence to objectives and policies. Furthermore, these corporate units would provide a way of overcoming many possible political impasses between Federal, State, and local governmental units. There are large areas of people performance subject to corporate administrative "law." Using the corporate form would simply take advantage of well-established custom, because all governmental units are accustomed to dealing with corporate entities, and merely subjecting them to general rules of conduct. This "corporate" approach to area development and growth could bypass all kinds of possible controversy, and also give assurance of accountable self-contained economic units aimed at achieving specific targets set in the overall development program.

4. Organization for followthrough and control

One of the end products of the initial study, in addition to the specific objectives and programs, just discussed, would be a general set of objectives, plan of top organization, and spelling out of a reporting and control information system designed for two chief jobs (a) to measure progress against objectives and signal the need for modifica tions in action to meet changed conditions and (b) to measure the performance of the governmental agencies, private corporate, and Government financed and controlled corporate units dedicated to the overall objectives.

5. Expansion of benefits

Plans for undertaking added area development programs should be developed as early as the progress of the prototype development has enabled the managers (a) to make improvements based on their experience in the initial studies and program and (b) to generate trained men capable of carrying on parallel development programs in other underdeveloped areas.

1 Data from Business Statistics, 1961 edition, pp. 61-67. Survey of Current Business, July 1963, U.S. Department of Commerce, tables S-12 and S-13.

TABLE 2.—Changes in number of employees on nonagricultural payrolls1

I Data from Business Statistics, 1961 edition, pp. 61-67. Survey of Current Business, July 1963, U.S. Department of Commerce, tables S-12 and 8-13.

TABLE 3.-Population and employment,1 1947, 1955, 1962, and 1970 projected

1 Data from Business Statistics, 1961 edition, pp. 61-67. Survey of Current Business, July 1963, U.S. Department of Commerce, tables S-12 and S-13.

1 Based on ratios of table 5.

Harold Goldstein, Bureau of Labor Statistics, U.S. Department of Labor (based on U.S. Department of Commerce Bureau of Census projections).

TABLE 4.-Changes in population and employment,1 1947, 1955, 1962, and 1970

Data from Business Statistics, 1961 edition, pp. 61-67. Survey of Current Business, July 1963, U.S. Department of Commerce, tables 8-12 and S-13.

TABLE 5.-Ratios: Number of persons per indicated category, 1947, 1955, 1962 actual, and 1970 projected

[From Automation, June 1962]

THE STRATEGY OF AUTOMATION

(By Joseph Harrington, Jr., head, mechanical engineering, Arthur D. Little, Inc., Cambridge, Mass.)

Where are the opportunities for manufacturing automation? How do you bring them to light, justify them, and plan so as to obtain maximum benefits from them? And what are the larger implications of automation with respect to employment and job security? The author uses examples from several branches of industry to suggest answers to these questions

In industry, the automation of production is tending toward a grand consolidation of equipment. Within plants, step-by-step processes are steadily giving way to continuous flow processes. And transport vehicles are delivering raw material cargoes to these consuming industries in immediately usable forms. The general direction of evolution-namely, toward integration of all functions-seems quite clear. Parallel to these developments is the application of the computer to data processing. The computer first revolutionized accounting and then extended its influence to inventory control, market forecasting,

production strategy, and warehousing. It is difficult to believe that this device will not be the unifying mechanism behind all of the control functions in industry.

These two unifying tendencies-mechanized production and computer control-tend to unify themselves. The computer is already reaching into the factory to exercise control over individual machines; witness numerically controlled machine tools, an infant though prime example.

During the next few years this unification will be heavily discussed, for it is coming more rapidly than anyone ever expected. Of course, our plants are a long way from taking full advantage of complete automation and complete integration of control functions. Yet the interesting thing is that we have more know-how than we have applied.

THREE STEPS TO PROGRESS

Many industrialists who would like to be taking advantage of the benefits which the latest advances in automation can bestow face the same problem. Some of them ask: "How can I get from where I am to where I might be?" The answer to the strategy problem-whether it is military, political, or just plain business strategy-lies in perception, justification, and planning.

PERCEPTION

How can you evaluate the applicability of mechanization to your operations? First of all, you have to look at your business with new vision. You should strive to look for fundamentals-not the grit in the bearings nor the squeaky hinges that take the daily oil, but the basics. When I go into a plant, I try to identify beneath the superficial activities one of three basic flow patterns: Straight-through, agglomerative, and dispersive:

1. A straight-through flow pattern is common in materials processing industries. Take cotton, for example: All the product that comes in the front door goes out the back door, and generally it goes through in a straight line. The bale is opened and the material is run through the picker, then passed through the card, the breaker draw, the finisher draw, roving frames, spinning frames, and winders. Aside from the trash, and the short fibers that can be salvaged, everything that comes in as raw material goes out as part of the finished goods. 2. The second pattern is the agglomerative. Here, a lot of different things come in the door, for example: Finished products, raw prod ucts, and semifinished components. Each of these items is subprocessed, processed, subassembled, and assembled until some final product has been completed. Production in the radio and television industry is based on this type of materials flow. The manufacture of alarm clocks is another example of a process using an agglomerative flow pattern.

3. The third pattern is the dispersive, in which-from a single product that comes in the front door-many components are sent out the back door. Coal is roasted, from it is obtained coke, ammonia, coal gas (which yields flavoring and dyestuffs), and ultimately tar. The slaughterhouse is another example: Drive a pig in at one end of a slaughterhouse and look at all the things that come out the other end. Each process, of course, has its own unique operations.