Productivity in making air conditioners, refrigeration equipment, and furnaces Essay

Output per employee hour in the manfacture of air conditioning,refrigeration, and warm-air heating equipment rose at an average annualrate of 1.

3 percent between 1967 and 1982, compared with 2.4 percent ayear for all of manufacturing. Output climbed 3.4 percent a year duringthe period, and employee hours, 2.1 percent. (See table 1.) Strongexpansion in the demand for the industry’s residential, commercial,and industrial products, and rapid diffusion of basic improvements inmetalworking technologies (such as numerical control and computernumerical control) were among factors underlying the rising productivitytrend.

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The improvement in the industry’s productivity occurred mostlyin the earlier part of the period reviewed. After 1973, output peremployee hour did not change, as shown by the following tabulation ofaverage annual rates of change: The industry’s productivity rate for the 1967-73 period was 50percent again as high as for manufacturing, but thereafter the trends inthe two rate diverged. Year-to-year swiings in the industry’s productivity werecomparatively moderate.

These swings ranged between a 9-percentincrease in 1972 and a 16-percent decrease in 1972. Year-to-yearincreases in productivity outnumbered decreases by 12 to 2 (no changewas recorded for 1973). In the years when productivity dropped, outputdipped less than employee hours. Tnus, in 1975 and 1980, productivitydeclined 16 percent and 7 percent while output dipped 34 percent and 16percent, and employee hours, 22 percent and 10 percent. In 1974,productivity rose as a 6-percent decline in output was outdistanced by a9-percent decline in employee hours. Output and demand The manufacture of air conditioning and refrigeration equipment andof warm-air furnaces involves the production of heat transfer apparatusfor residential, commercial, and industrial applications, as well as forhospitals, marine vessels, freight and passenger vehicles, and manyspecialized applications. Heat transfer equipment here includes unitaryair conditioners (units that operate on electric circuits of their own);room air conditioners; commercial regrigeration equipment (includingfrozen food display cases); as well as heat pumps and dehumidifiers.

The industry, in addition, manufactures compressors and condensers, notonly for its own final output, but also for home refrigerators(classified by the Bureau of the Census as a separate industry.) The industry’s output rose at an average annual rate of 3.4percent between 1967 and 1982. The rate for the earlier part of theperiod ran four times higher than that for all manufacturing, butdropped below the all-manufacturing rate during 1973-82: Among reasons underlying the industry’s output growth, andunderpinning it after 1973, have been exports.

As a proportion of valueof shipments, exports by the industry nearly doubled between the earlierand the later period studied here–from 8 percent to 14 percent(reaching 19 percent in 1982). For manufacturing as a whole, the exportshare in the value of shipments increased less markedly–from 6 percentin 1972 to 10 percent in 1980. The much slowed expansion in the industry’s output from 1973forward corresponds to trends in the output of its major product groups,which in turn parallel the trends in underlying demand from theindustry’ most imiportant markets.

thus, the production of heat transfer equipment other than unitaryor room air conditioners or warm-air furnaces increased at a rate nearly10 times higher over the 1967-73 period than during the 1973-82 span.The increase in the rate had resulted largely from strong demand formotor vehicle air conditioners (which account for more than one-half ofthe products in the group). Such demand was associated with an increasein motor vehicle output of close to 6 percent a year in 1967-73. Thesubsequent tapering of output growth mirrored a falling-off in theannual rate of motor vehicle output by -1.

0 percent for 1973-82. Likewise, output rates of growth of unitary air conditioners andcommercial refrigeration equipment slowed after 1973; for warm airfurnaces, the rate declined. This pattern was linked largely todevelopments in construction (which accounts for well over one-third ofthe demand for the industry’s products).

The average annual rateof change in the constant-dollar value of new residential housingconstruction, for example, declined from around 9 percent for 1967-73 to2 percent thereafter; that for commercial structures, from 15 percent to9 percent; and that for hospitals (public and private) turned from a5-percent annual gain to a 4-percent annual decrease. Only industrialconstruction evidenced a contrary trend, with a 10-percent annualdecline in the earlier period giving way to a 3.5-percent annual riseafter 1973. Leaving aside the medium-term swings, the industry’s outputhas been sustained over the longer run by rapidly growing use of centraland room air conditioning in homes, as well as more gradual increases inoffices and other commercial space, hospitals, and probably infactories. Increases in the size of homes and other structuresgenerated the shift in demand from room air conditioners to centralsystems and spurred the demand for warm-air furnaces, which functionthrough the same air circulation system as central air conditioners.

Inthe middle and late 1960’s, 28 percent of all new homes wereequipped with central air conditioners; that proportion rose to 43percent between 1970 and 1975, and to 66 percent by 1982. Squarefootage per new home, to which the size of heat transfer equipment islinked, increased 9 percent between the mid-1960’s and the early1980’s. The proportion of homes wired for room air conditionersmore than doubled between the mid-1960’s and the mid-1970’s,to 53 percent, but it did not rise much thereafter. Warm-air ductedheating systems in occupied housing units rose by about one-thirdbetween 1970 and 1975, but by only 7 percent between 1975 and 1980. Foroffices, shoppihng centers, and hospitals, pertinent data on airconditioning and forced warm-air systems are available only fore somerecent years. According to a survey conducted in the early 1970’s,91 percent of all commercial office buildings had central airconditioning, and 67 percent had forced-air heating systems. Forshopping centers, the comparable figures were close to 100 percent in1977; and for hospials and nursing homes, they read 97 percent and 56percent in 1975.

These data suggest that industry output is sustainednot only by the net increase in such structures, but from replacementand retrofitting with more energy-efficient equipment as well. In 1981,for example, more than half of total residential expenditures on airconditioning and heating systems were for replacement. Furthermore, the introduction of more energy-efficient heattransfer equipment since about 1975 has also bolstered output. For thesame wattage per hour of electric energy input, higher equipment outputcapacities, as measured in British Thermal Units (BTU’s), have beenachieved. Thus, in 1976, the Air Conditioning and RefrigerationInstitute listed 56 percent of new unitary air conditioners as havingenergy efficiency ratios of between 6.

5 and 7.4, and 18 percent withratios of 7.5 to 8.4 (that is, their BTU output averaged that many timesabove their power input). By 1981, the proportion of the lowerefficiency units had shrunk to 37 percent, while that of the higherefficiency equipment had expanded to 35 percent. New air conditionerswith efficiencies below 6.

4, which in 1976 had accounted for 20 lpercentof the industry’s total shipments, had declined to 5 percent by1981. Employment and hours Employment in the air conditioning, refrigeration, and warm-airheating equipment industry numbered 129,000 persons in mid-1984. Itrose 32 percent between 1967 and 1982, or at an average annual rate of2.2 percent. (Employee hours rose at about the same rate.) Employmentreached a peak of 130,000 persons in 1979, and subsequently retreated.This decline was attributable to a 21-percent contraction in productionworker jobs between 1979 and 1982, as compared with a 9-percent loss innonproduction worker jobs.

(Employment levels have improved, but haveevidently remained below the 1979 high.) Over the longer term, trends in employee hours displayed patternsof acceleration and retardation similar to those noted for productionand output trends. Employee hours in the industry rose during the first6 years of the review period at an average annual rate much greater thanfor all manufacturing. Subsequently the rate plummeted: Production workers accounted for 70 percent of toal employment,which was the same proportion in both 1967 and 1982–nonproductionworkers made up the balance. The number of women workers more thandoubled over the period, raising their proportion of total employmentfrom 14 percent to 21 percent.

Underlying this increase may have been ashift in the skill composition of the industry’s workers to moreassembly-type jobs. The rise in the industry’s average hourlyearnings also slowed relative to the manufacturing average. In 1967,the former was 104 percent of the latter, compared with 96 percent in1981. Overtime ran somewhat below the manufacturing average during thereview period, suggesting that firms in the industry were inclined tohire new production workers, rather than assign overtime when theworkload exceeded certain limits. Turnover rates nonetheless lagged;over the 1967-81 span, they averaged 89 percent of the manufacturingaverage for accessions, and 91 percent of that for separations.

Thus,it appears that employment stability was somewhat greater in theindustry than in manufacturing generally. The skill composition of the industry’s work force differsfrom that for manufacturing as a whole. (The air conditioning,refrigeration, and warm-air heating equipment industry represents 68percent of the employment of the industry group to which it belongs, andto which the data cited here pertain.) In 1980, craftworkers accountedfor 17 percent of total industry employment, compared with 19 percentfor all manufacturing.

Operatives, however, accounted for asignificantly larger proportion–48 percent, compared with 43 percent.The larger component of operatives stemmed from the proportionatelygreater number of assembly workers in the industry (23 percent) than inall manufacturing (8 percent). The proportion of metalworkingoperatives in the industry (16 percent) was more than twice as high asfor manufacturing generally. By contrast, the occupational distributionof white-collar workers was similar to that for manufacturing.Professional and technical workers made up 8 percent of theindustry’s workforce (9 percent for manufacturing); clericalworkers, 12 percent (11 percent); and managers and administrators, 5percent (6 percent). Investment in plant and equipment Like manufacturing establishments generally, the air conditioning,refrigeration, and warm-air heating equipment industry installed newproduction equipment at a fairly high rate over the 1967-81 period.(Also like other manufacturing establishmentS, the industry spent adeclining proportion of its total fixed investment outlays on newplant.) However, unlike other manufacturing establishments, firms inthe industry spent at a much higher rate during the earlier than thelatter part of the review period.

For all manufacturing, the reverseheld true: The industry’s high rate of capital spending in the early partof the period resulted from pressures on capacity, related to highoutput growth rates. With the abatement of output growth after 1973,fixed investment slowed. The proportion of total fixed investment spenton equipment is as follows: The comparatively high proportion of expenditures for equipment isreflected in the data on the modernization of the industry’smetalworking machinery, as reported by the American Machinist. (See thesection on technological change.) The rates shown, however, obscurelarge year-to-year fluctuations in the industry’s capital spending.This instability was far more marked for the industry than formanufacturing generally. For example, in 1975, the industry’splant and equipment expenditures plummeted 41 percent (in constantdollars), and in 1977, they soared 56 percent.

Manufacturing recorded a9-percent drop, and a 21-percent rise for the same 2 years. Fixed assets per employee in the industry were 79 percent of themanufacturing average in 1980, compared with 76 percent during 1972 and1974-76. The rise in the ratio partially reflected the cumulativeeffects of earlier equipment installations and new plant construction onthe value of the industry’s fixed assets.

More efficienttechnology Air conditioning and refrigeration equipment essentially consistsof a compressor driven by an electric motor, and two coils–thecondenser, in which the refrigerant is compressed to a liquid, and theevaporator, in which the refrigerant expands into the gaseous state,enabling it to absorb heat from the space being cooled. The heat istransferred from the environment with the aid of fins, mounted upon theevaporator coil. Warm-air furnaces built by the industry are mostlygas-fueled forced-air devices.

They include a combustion chamber and amotor-driven blower. The sheet metal housing that shields the equipmentis manufactured by the industry, but controls and motors normally arenot. Advances in the manufacture of air conditioners, refrigerationequipment, and warm-air furnaces have been linked chiefly totechnological progress in metalworking machinery, welding, methods ofstorage and transfer of parts, and assembly. The are also related toimprovements in product design.

The production of air conditioners, refrigeration equipment, andwarm-air furnaces basically involves the cutting and forming of metal,as well as welding, brazing, and soldering of components. Efforts toimprove efficiency usually focus upon these operations, and on plantlayout. Auxiliary operations, such as materials handling, painting,testing, and packaging have received increased attention in recentyears. The most recent American Machinist inventory of metal-workingequipment indicates that, in 1983, 30 percent of all metalcutting andmetalforming machine tools used in the industry were at most 10 yearsold. In 1968, the proportion was the same for metalcutting tools, butonly 25 percent for metalforming tools. The industry has steadilyimproved its metalworking equipment, by and large maintaining the sameproportion of new equipment during 1973-83 as during 1958-68. Thehigher end of the age distribution, however, shows an increase in theproportion of older metalworking equipment in the industry. The shareof metalcutting machine tools 20 years and older rose from 25 percent in1968 to 32 percent in 1983, and the share of metalforming tools, from 25percent to 37 percent.

However, the relative increase in older machinetools cannot be readily interpreted as a loss in efficiency, inasmuch as the American Machinist inventory does not take into account theretrofitting of older machines with up-to-date components and controldevices. The efficiency of the industry’s metalworking equipment hasbeen significantly enhanced by an 11-fold rise in the number ofnumerically controlled (NC) machine tools. In 1983, NC machine toolsaccounted for 13 percent and 17 percent of metalcutting and metalformingtools 9 years old or less. In 1968, when NC machine tools were not yetwidely diffused, the proportions were less than 1 percent. Thepercentage increase in the number of NC tools understates the increasein the output capabilities which the installation of such tools spells.According to the American Machinist, the number of machine tools in allmetalworking industries declined from 16 per 1,000 population in 1968 tofewer than 10 in 1983. “This represents in part the greaterproductivity of machine tools, in part the simplification of design ofmany products, so that less machining is required.

” This statementalso applies to the industry reviewed here: the number of machine toolsin the industry’s shops dropped by one-third between 1968 and 1983,while output (over the 1968-81 period) more than doubled. Thus, theoutput capability of metalworking equipment in the industry rose nearlythreefold over the study period, with that rise likely to be largelyattributable to NC-equipped machine tools. Examples of how improved metalworking technology has helped toraise output per hour may be drawn from the sheet metal operations inthe industry’s larger shops, and from the fabrication of some ofthe major components of its products.

In punching sheet metal,templates were conventionally affixed to the press so as to obtainrequired shapes. Templates have been increasingly replaced, however, bytaped instructions fed to the press, which greatly speeds output andensures greater precision of the finished shape. Setup time of the presshas been reduced to as litle as one-twentieth of the conventionaloperation. In a related operation, the press, after the sheet metalblank has been placed automatically, is programmed to select 1 of up to30 built-in punching tools from its turret, and to activate the toolselected. Bending of metal parts has likewise been increasinglyautomated, the bending apparatus being preset to several sequentialsettings (so as to graduate the bending process.) Setup time here hasdeclined to an estimated 10 percent of what it had been prior toautomation.

Despite their being automated, these metalworking processescontinue to require close monitoring by trained operators. The operatormay monitor two or more machines at the same time, or may be engaged insuch auxiliary tasks as placing and removing work pieces. Some of the more advanced shops in the industry feature suchmachine tools as high-capacity drills, which may drill all the holes inan air conditioning compressor vessel in one or two operations. (Theholes are for accomodating bolts.) Older drilling machines, stillwidely in use, have much lower capacity and speed. Automatic tool wearadjustment is normally also a feature of NC machine tools, but at timesthis feature is not desired or used. Replacement of a tool bit is thenleft to the discretion of the operator assigned to monitor the entiremachining process. In small-lot production, loading and unloading thework piece may be done manually.

Improved productivity in the fabrication of air conditioningequipment components during the review period is exemplified by the coilmanufacturing process. The coil (made of copper or aluminum) is theheart of the heat exchanger. The refrigerant is pumped through it (bythe compressor) to absorb heat from the surrounding space. The coiloriginates as tubing on a large roll. In the more advance shops, therolled tubing is automatically straightened, cut to length as specifiedin, and controlled by, a taped program, and automatically bent to theshape of a U (or hairpin). This operation has come to be performed byone person, where 10 years or so ago, four persons were required toshear the tube manually and insert it into a bending device. The U-shaped coil is inserted into a nest of aluminum fins.

Thefins aid in absorbing heat from the refrigerant. The fabrication offins is usually highly mechanized, precut aluminum blanks being punchedto form them, and to accomodate the coils. Numerically controlled punchpresses featuring up to 27 spindles are used in the larger shops.However, the number of blanks that may be punched at a time is limitedbecause punching tends to break rather than cut the metal, and breakingforms rims that cannot be tolerated. Where fins are produced inquantity, punch presses may not be numerically controlled, becauselonger setup times are usually justified by the longer runs.

Loading and unloading of the punch presses has usually beenmechanized in the larger plants, so that the fins emerge stacked asnests. The coils are then inserted manually. Manual insertion is stillpreferred because it prevents “binding.” The operator canreadily control the pressure he exerts in inserting the individualcoils, which is not (as yet) the case for mechanical insertion whereundue pressure may damage (“bind”) the coil. The coils arethen brazed together or soldered to form a continous loop.

Brazing orsoldering is still performed by means of hand-operated devices to ensureleakproof joints and the continuity of the loop, so as not to”blind-alley” them). The fabrication of reciprocating compressors provides otherexamples of the reduction in unit labor requirements which the industryseeks. Compressors, driven by electric motors (manufactured outside theindustry), function to increase the density of the refrigerant to theliquid state. Basically, the reciprocating compressor consists of apiston sitting on a rod connected to the motor; and a cyclinder, againstthe head of which the piston moves, compressing the refrigerant. Wherecompressor components are produced in quantity, multistation machineryarranged in circular (or “dial”) form has come to be used.Yet, loading and unloading of the workpiece, and transferring it betweengroups of dial machinery, is still widely done manually. Someestablishments began to install automatic transfer lines toward the endof the review period, affording automatic positioning of the workpiece,as well as automation of most other metalworking operations (such asmilling, drilling, reaming, and so forth). Transfer lines requireusually one-half or less of the labor per unit of the more conventionalequipment; so-called “uptime,” that is the time during whichthe machinery is fully operation, is estimated to be 20 percent higher.

However, for the installation o such machinery to be economical, volumeof compressors with 4-1/2 to 6 tons of ice equivalent must run well inexcess of 250,000 units annually, and of compressors with 2 to 4-1/2tons of ice equivalent must exceed 500,000 annually. Changes in product design have, in some instances been combinedwith technological advances. Thus, a cylindrically shaped airconditioning machine has been developed that permits several hundredfeet of continual coil (or tubing) to be wrapped around a mandrel in onemechanical process. This increases the heat transfer area, hence theefficiency of the machine. It also minimizes the jointing of coil ends(as described earlier), and thus, the leakage of refrigerant.

Finsconsist of many hundreds of tiny aluminum pieces glued to thetubing’s surface. Unit labor requirements in mounting such tubingare estimated at 20 to 30 percent of those for the manual insertion ofU-shaped coils into nests of fins and the fabrication of such fins. Product design and technological advance have also been combined inthe case of a thermostatic valve body for automotive air conditioning.After the valve body was redesigned, it could be fabricated by means ofa 43-spindle metalworking machine which combines automatic indexing,milling, drilling, counterboring, tapping, and other operations.Material costs were reduced, assembly facilitated, and quality improved.

The machine replaced as many as 11 standard machines run by 30 workers. A fundamental design change in air conditioning equipment andwarm-air furnaces during the review period made them moreenergy-efficient (see the section on output). The relevant designchanges usually involved finer tolerances, hence greater precisionmachining, especially of compressor components. Precision machining inturn has been facilitated by–and has spurred the adoption of–NCmetalworking machinery. Functional testing, furthermore, has beenupgraded by such electronic devices as automatic calibration stations,which can be programmed for many settings at a time, and which requirelittle attendance.

Assembly appears also to have been improved by thebetter “fit-up” of the more precisely machine components.Industry structure Industry concentration increased over the period reviewed; in 1977,the 8 largest companies accounted for 51 percent of the industry’svalue of shipments, compared with an estimated 45 percent in 1967. The20 largest companies accounted for 67 percent of the value of shipmentsin 1977, as against 62 percent in 1967. Moreover, the concentrationratio for 1967 was higher than for 1963.

These increases suggestunderlying growth over time in economies of scale, a factor that usuallyengenders productivity improvement. Employment, too, was concentrated in the larger establishments. In1977, 50 percent of the industry’s employees worked in 31 (or 4percent) of the 860 establishments classified in the industry. At thelower end of the employment size stratification, just over 10 percent ofall employees in the industry worked in 75 percent of allestablishments. It is noteworthy that the size distribution of capitalexpenditures closely followed the size distribution of employment–suchthat, for example, nearly one-half of all such expenditures were made byonly 4 percent of all establishments in the industry (that is, thosewith 1,000 or more employees.

) In line with the increase inconcentration ratios, the larger establishments raised their share ofthe industry’s total employment over time. Outlook Equipment. Continued productivity improvement is indicated for theindustry. As the American Machinist inventory of metalworking equipmentin the industry suggests, diffusion of NC machine tools is far fromcomplete. If past trends in diffusion persist, productivity gains arelikely to be generated. Moreover, the larger, more advanced shops planto install flexible manufacturing (FM) systems, which will makesmall-lot production of larger air conditioning, refrigeration, andheating equipment more efficient.

One establishment, which is installinga FM system to produce reciprocal compressors, expects direct laborrequirements to be reduced by more than 80 percent, as compared withconventional production methods. Another establishment, which produceslarge evaporators in lots of less than 100, also plans to fabricate themby FM methods. Such evaporators require up to 5,000 different metalshapes. In combination with NC machine tools, plant management expectsFM to save up to 50 percent in unit labor requirements, cut lead time bynearly one-half, and cope with declining lot size and more exactingtolerances more efficiently. Management also foresees significantsavings in materials and inventory costs. The cutting of steel, a large-scale operation in the bigger shops,should also become progressively more automated.

The cutting andpunching of steel is often still done by an operator using templates andjudging by sight how to minimize waste in laying them out. Templates and operator judgment have begun to be replaced by computer-instructedcutting machines, where the computer calculates the most economicaldistribution of cuts. Templates and operator judgment have begun to bereplaced by computer-instructed cutting machines, where the computercalculates the most economical distribution of cuts. The computermemory also records odd pieces of steel that might be used in futurework.

With template labor and layout estimation by an operatoreliminated, five times as much steel may be processed in the same periodas previously. Also, material savings of up to 60 percent are expected. In welding operations, robots are increasingly being used, but forcomplex surfaces, skilled welders who may be subject to certificationare still necessary.

The use of a certified welder is frequentlyrequired by a code authority, such as the American Society of MechanicalEngineers, or by a customer, such as the U.S. Navy. Plant managersgenerally expect more versatile robots, which sense the complexities ofthe surfaces to be joined, to become available. But the laborsaving potential of such robots hinges upon the extent to which coderequirements are modified. The efficiency of auxiliary operations in the industry is alsolikely to improve. Thus, while many plants feature partially automatedstorage of parts and components, work stations are still usuallysupplied by means of manually operated carts or small trucks.

(Heavierand bulkier parts may be moved by overhead crane, activated by radiocontrol.) Some plants in the industry which produce in quantity expectto install fully automated storage and delivery systems that conveyparts to work stations upon command. Management in one such plantexpects labor savings of 50 to 75 percent, compared with the partiallyautomated system, as well as the near elimination of damage frommultiple handling.

Employment. The occupational composition of the industry’semployment is not expected to change very much during the 1980’s,except for growth in the proportions of engineers, engineering andscience technicians, and computer specialists. Employment in theseoccupational categories has been projected by the Bureau of LaborStatistics to rise 27 percent between 1980 and 1990, compared with a15-percent increase for employment in the industry as a whole. Theproportion of craftworkers and operatives has been projected to remainunchanged. The projections signify increased reliance upon engineers andtechnicians in designing and monitoring more efficient productionprocesses.

The projections do not, however, indicate an acceleratingtrend toward either “deskilling” craftworkers or displacingoperatives. In 1990, craftworkers will constitute an estimated 16percent of total industry employment, and operatives, 48 percent–thesame as in 1980. The proportion of professional, technical, and relatedworkers in the industry is estimated to rise from 8 percent to justunder 9 percent.


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