Productivity increased in many industries in 1983 Essay

Productivity, as measured by output per employee hour, increased in
1983 in more than three-quarters of the industries for which the Bureau
of Labor Statistics regularly publishes data. Productivity gains were
unusually large in many industries and were in contrast to 1982 when
productivity declined in almost half of the industries measured. The
widespread gains in 1983 are consistent with the increase in the nonfarm
business sector of the economy, which grew 3.5 percent.



Table 1 shows productivity trends in industries measured by the
Bureau and includes new measures introduced for additional industries:
refrigeration and heating equipment, internal combustion engines,
machine tool accessories, and wood kitchen cabinets.1

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Changes by industry



Manufacturing. The steel industry, one of the more important
industries included, had a record productivity increase of 27.7 percent,
compared with a record productivity decline of 18.8 percent in 1982.
Steel output was up 14.7 percent in 1983, as demand increased,
especially from the motor vehicle and appliance markets, and employee
hours declined 10.2 percent as the industry continued its consolidations
and plant closings. The motor vehicles industry, another important
industry covered, had a large productivity gain of 14.2 percent which
was based on a steep increase in output of 30.6 percent, while employee
hours were up 14.3 percent. Demand for motor vehicles increased
significantly as compared with 1982 when demand was lower and output
declined 8.0 percent.


Another manufacturing industry with a large productivity gain was
household appliances. Productivity grew 17.6 percent in this key
industry, as output was up a sharp 27.4 percent and hours increased 8.4
percent. Demand for household appliances was aided by increased sales
of homes, more favorable consumer credit, and an increase in personal
disposable income in 1983.



Other manufacturing industries with unusually large productivity
gains included: synthetic fibers (21.5 percent), gray iron foundries
(17.4 percent), hydraulic cement (15.9 percent), copper rolling and
drawing (14.9 percent), brick and structural clay tile (12.4 percent),
primary aluminum (12.1 percent), electric lamps (11.9 percent), aluminum
rolling and drawing (11.1 percent), and paints (10.5 percent). All of
these industries, except two, had output gains of more than 10 percent
in 1983.



Conversely, a small number of manufacturing industries had
productivity declines in 1983. Noteworthy was machine tools in which
productivity dropped a steep 29.9 percent as output fell 43.5 percent.



Mining. All of the mining industries recorded large gains in
productivity in 1983. Iron mining (usable ore) posted the largest
gain–41.2 percent–of all the measures. Output was up.7.7 percent in
this industry while hours fell off sharply. Coal mining had a
productivity increase of 13.9 percent, as output fell 6.4 percent and
hours dropped 17.7 percent. Copper mining (recoverable metal) had a
productivity gain of 10.8 percent, as output fell 9.5 percent and hours
declined even more. In nonmetallic minerals, productivity was up 7.9
percent, as output grew due to the increased construction activity in
1983.



Transportation and utilities. Productivity was up in most
transportation and utility industries. In railroads (revenue traffic),
productivity advanced sharply by 23.0 percent. Output grew 6.8 percent,
as commodity shipments increased in 1983 and hours continued to decline
by 13.1 percent. Air transportation had a large productivity gain of
9.9 percent, as output grew 8.5 percent and hours declined slightly.
Productivity grew 2.2 percent in petroleium pipelines as hours fell more
than output. However, productivity dropped 6.6 percent in bus carriers,
with output dropping 11.7 percent and hours falling 5.5 percent.



In telephone communications, productivity was up 12.7 percent, as
output grew 1.7 percent and hours declined 9.8 percent. Electric
utilities posted a gain in productivity of 1.7 percent–the first
increase in this industry since 1977. On the other hand, gas utilities
had a large productivity decline of 8.1 percent, as output dropped 10.5
percent in 1983.


Trade and services. Productivity changes were varied among the
trade and service industries. Productivity was up 4.9 percent for new
car dealers, as output grew 8.5 percent, aided by a sharp increase in
new car sales. Productivity grew 3.0 percent in gasoline service
stations, as output increased 2.4 percent and hours were down 0.6
percent. Eating and drinking places had a productivity gain of 2.4
percent based on a significant gain in output of 5.9 percent. Although
the overall apparel store industry had a productivity gain of 1.1
percent in 1983, one of the component industries, shoe stores, had a
decline in productivity of 1.3 percent. Small productivity gains were
posted by the hotel and motel industry (0.7 percent) and the retail food
store industry (0.2 percent). Conversely, productivity declines
occurred in drug stores ( -0.8 percent) and laundry and cleaning
services ( -0.6 percent).



Trends, 1978-83



Except for metal forming machine tools and bus carriers, all the
industries measured have recorded average annual gains in productivity
over the long term (1947-83 for many of the industries). Over the more
recent period (1978-83), however, about 40 percent of the industries
recorded declining rates of productivity. In addition, almost three
quarters of the industries had lower rates of productivity change during
1978-83 than in the preceding long-term period (1947-78 for many
industries). The slowdown in productivity in the more current period
matches the trend in the nonfarm business sector of the economy, where
productivity grew at the low rate of 0.5 percent per year from 1978 to
1983, compared with a 2.3-percent rate from 1947 to 1978.



Gains. The tires and tubes industry had the highest rate (6.8
percent per year) of productivity gain of all the industries measured
during the 1978-83 period. Although output declined 3.6 percent per
year in this industry, employee hours fell even more, dropping at a rate
of 9.7 percent in the period. The introduction of new, more automatic
equipment for tiremaking as well as the closing of a number of old and
inefficient plants during the period, allowed the industry to increase
productivity significantly despite the drop in output. The telephone
communications industry had the second highest rate of gain at 6.2
percent. Output was up 5.7 percent while hours fell off slightly during
the period. Continuing adoption of electronic switching equipment,
fiber optic cables, automatic testing equipment, and increasing
computerization have aided productivity growth in this industry. Other
industries with high rates of growth from 1978 to 1983 include: primary
copper, lead, and zinc and women’s ready-to-wear clothing stores
(both 6.1 percent); fluid milk (6.0 percent); household cooking
equipment (5.9 percent); railroad transportation (5.5 percent); and coal
mining (5.4 percent).



Declines. Among the many industries with declining productivity
rates, the machine tool industries have recorded the largest drops over
the 1978-83 period. Metal cutting machine tools declined at a rate of
7.2 percent, as output averaged a 13.9-percent decline and hours fell at
a rate of 7.2 percent. Productivity in the metal forming machine tool
industry fell at a 6.4-percent rate based on an average decline of 15.7
percent in output and a 9.9-percent drop in hours. These industries
were significantly affected by the economic slowdowns and by increasing
imports during the 1978-83 period. Output fell off sharply, leading to
steep declines in productivity, because machine tool manufacturers tend
to retain highly skilled workers during cyclical downturns. In
addition, because demand for machine tools tends to lag in economic
recoveries, these industries did very poorly in 1983.



The next largest productivity falloff from 1978 to 1983 was in the
ball and roller bearings industry–4.7 percent. Output fell at a
9.9-percent rate as the economic slowdowns cut sharply into industry
demand and hours declined at a rate of 5.5 percent. The gas utilities
industry also had a large productivity decline of 4.2 percent per year
over this period. Although the number of customers in this industry
increased, output actually declined at a 2.7-percent rate, due in part
of conservation and introduction of more energy efficient equipment,
while employee hours increased at a 1.5-percent rate. Other industries
with declining rates from 1978 to 1983 included petroleum refining (
-3.m percent), bus carriers ( -3.0 percent), and petroleum pipelines (
-2.9 percent).

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