Ways in which transportation improvements enhance production are investigated in this paper. The production of residential housing is used as a case in point. Several approaches to analysis are proposed. The one adopted emphasizes productivity improvements from technological change. After considering several ways that transportation services may relate to technological change, the authors provide an analysis of the diffusion of wallboard construction. Overall, the study concentrates on methodology and magnitudes. It provides a way of thinking about transportation and production relations, and indicates that service improvements may yield social savings of large magnitude.