Follow the Winding Productivity Trail to Earnings Growth

Productivity never really goes out of style. In a world of scarce earnings growth, companies that are purveyors of productivity can be especially important in helping investors blaze new trails to profitable pockets of the equity markets.

For the most part, companies want to improve their productivity. Reducing costs or sharpening performance typically requires investment, though the willingness and ability to pay for productivity gains fluctuate over time, depending on the health of a company or industry. The energy sector has been under acute pressure to improve productivity over the past year, because low oil prices have compressed profits drastically. Yet falling profits make it harder to fund efficiency moves.

可以以各种方式提高生产率。经常，这些涉及用物理资本代替劳动力以提高性能。经过automating processesor upgrading machinery, a manufacturer might increase production in the same facility from 100 units per day to 120 units per day at a negligible increase in cost.

发光二极管的照明是一个当前的示例。随着LED芯片的成本下降，LED灯泡和固定装置的采用加速，但它仍然仍然很低。虽然这些产品可能最初成本超过传统照明，但随着时间的推移总成本远低得多，因为它们消耗更少的能量，它们是环保产品。

这样的发展的影响on companies is complex, however. Some hardware suppliers may benefit from the new demand, whereas utilities could face lower electricity sales (see chart 1). At the same time, the ongoing shift to digital lighting opens up new potential applications. Generally, whereas innovation in an industry often occurs across multiple dimensions, those areas that are more differentiated tend to be more durable — and more interesting for investors — in our view at AllianceBernstein. We believe that finding the structural winners from this sort of innovation can lead investors to sources of superior returns.

The proliferation of sensors is another case in point. Sensors are increasingly being incorporated into products to capture information for detailed analysis. Efforts to meet increasingly stringent fuel economy and safety regulations are prompting carmakers to add sensors to vehicles, as well as other new components, such as electric motors, cameras, radar and incremental microprocessing capability. These will reduce average fuel consumption per mile (see chart 2) and support features such as automatic emergency braking, which can reduce accidents — and the associated costs — and should ultimately enable fullautonomous vehicle operation.

Smartphone proliferation is enabling shared mobility, in which people without cars can hail a ride from just about anywhere. As travel cost per mile improves, this could potentiallyredefine car ownership over time, as more people outsource capital-intensive ownership to others.

移动性和无线连接是生产力收益的强大代理。他们还可以帮助挤出不必要的成本并为创新者产生增量的市场机会。食客越来越多地在网上订购膳食，无论在哪里，帮助餐馆了解每个客户更好，还原等待时间。

New service models are sprouting up to cost-effectively help people with an array of everyday tasks, from meal preparation to bill paying. Retailers and transportation companies are using sensors, wireless connectivity and asset management software to extract higher utilization rates from their networks while also improving safety and customer service. We believe that we are still in the early innings of combining data capture, analysis and mobility to drive efficiency and improve customer experience.

在一个缓慢的经济体中，投资者对增长的信心很容易。然而，在公司中，改变总是在表面下展开。通过降低成本或增加服务产品，生产力提高帮助消费者，生产者或两者。能够确定有可能提高生产力的公司的投资者可以找到有吸引力的投资机会 - 即使在困难的市场条件下。

Frank Caruso, based in New York, is chief investment officer, and Chris Kotowicz, based in Chicago, is a senior research analyst; both atAB’s U.S. growth equities.

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