A New York Times article (Sept 7, 2011) describes the labor productivity increase for a small manufacturer with labor costs holding at $ 337 per hour from 2005 to 2010 but the number of employees dropping from 20 to 40 while revenues rose from 1.5 to 2 million.  The mix of employees at the firm changed with fewer people on the shop floor and more in the office, and capital equipment to improve efficiencies increased over time.  But significant increases in productivity in using the machines maintained competitiveness at the cabinet making plant.  Is steady increases in productivity the best approach to maintaining competitiveness ? Are the shifts from labor to capital while maintaining higher skilled labor the expected trends in this industry ? Is the focus on maintaining a long term workforce that is ready to provide improved productivity the key asset of this firm ?