Productivity increased in many industries in 1983 Essay

Productivity, as measured by output per employee hour, increased in1983 in more than three-quarters of the industries for which the Bureauof Labor Statistics regularly publishes data.

Productivity gains wereunusually large in many industries and were in contrast to 1982 whenproductivity declined in almost half of the industries measured. Thewidespread gains in 1983 are consistent with the increase in the nonfarmbusiness sector of the economy, which grew 3.5 percent. Table 1 shows productivity trends in industries measured by theBureau and includes new measures introduced for additional industries:refrigeration and heating equipment, internal combustion engines,machine tool accessories, and wood kitchen cabinets.1 Changes by industry Manufacturing. The steel industry, one of the more importantindustries included, had a record productivity increase of 27.7 percent,compared with a record productivity decline of 18.8 percent in 1982.

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Steel output was up 14.7 percent in 1983, as demand increased,especially from the motor vehicle and appliance markets, and employeehours declined 10.2 percent as the industry continued its consolidationsand plant closings. The motor vehicles industry, another importantindustry covered, had a large productivity gain of 14.2 percent whichwas based on a steep increase in output of 30.

6 percent, while employeehours were up 14.3 percent. Demand for motor vehicles increasedsignificantly as compared with 1982 when demand was lower and outputdeclined 8.0 percent. Another manufacturing industry with a large productivity gain washousehold appliances. Productivity grew 17.

6 percent in this keyindustry, as output was up a sharp 27.4 percent and hours increased 8.4percent. Demand for household appliances was aided by increased salesof homes, more favorable consumer credit, and an increase in personaldisposable income in 1983. Other manufacturing industries with unusually large productivitygains included: synthetic fibers (21.5 percent), gray iron foundries(17.4 percent), hydraulic cement (15.9 percent), copper rolling anddrawing (14.

9 percent), brick and structural clay tile (12.4 percent),primary aluminum (12.1 percent), electric lamps (11.9 percent), aluminumrolling and drawing (11.1 percent), and paints (10.5 percent). All ofthese industries, except two, had output gains of more than 10 percentin 1983. Conversely, a small number of manufacturing industries hadproductivity declines in 1983.

Noteworthy was machine tools in whichproductivity dropped a steep 29.9 percent as output fell 43.5 percent. Mining. All of the mining industries recorded large gains inproductivity in 1983. Iron mining (usable ore) posted the largestgain–41.2 percent–of all the measures. Output was up.

7.7 percent inthis industry while hours fell off sharply. Coal mining had aproductivity increase of 13.9 percent, as output fell 6.4 percent andhours dropped 17.7 percent. Copper mining (recoverable metal) had aproductivity gain of 10.

8 percent, as output fell 9.5 percent and hoursdeclined even more. In nonmetallic minerals, productivity was up 7.

9percent, as output grew due to the increased construction activity in1983. Transportation and utilities. Productivity was up in mosttransportation 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 declineby 13.

1 percent. Air transportation had a large productivity gain of9.9 percent, as output grew 8.

5 percent and hours declined slightly.Productivity grew 2.2 percent in petroleium pipelines as hours fell morethan 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, asoutput grew 1.

7 percent and hours declined 9.8 percent. Electricutilities posted a gain in productivity of 1.7 percent–the firstincrease in this industry since 1977. On the other hand, gas utilitieshad a large productivity decline of 8.1 percent, as output dropped 10.

5percent in 1983. Trade and services. Productivity changes were varied among thetrade and service industries. Productivity was up 4.9 percent for newcar dealers, as output grew 8.5 percent, aided by a sharp increase innew car sales. Productivity grew 3.0 percent in gasoline servicestations, as output increased 2.

4 percent and hours were down 0.6percent. Eating and drinking places had a productivity gain of 2.4percent based on a significant gain in output of 5.

9 percent. Althoughthe overall apparel store industry had a productivity gain of 1.1percent in 1983, one of the component industries, shoe stores, had adecline in productivity of 1.3 percent. Small productivity gains wereposted by the hotel and motel industry (0.7 percent) and the retail foodstore industry (0.2 percent). Conversely, productivity declinesoccurred in drug stores ( -0.

8 percent) and laundry and cleaningservices ( -0.6 percent). Trends, 1978-83 Except for metal forming machine tools and bus carriers, all theindustries measured have recorded average annual gains in productivityover the long term (1947-83 for many of the industries). Over the morerecent period (1978-83), however, about 40 percent of the industriesrecorded declining rates of productivity. In addition, almost threequarters of the industries had lower rates of productivity change during1978-83 than in the preceding long-term period (1947-78 for manyindustries). The slowdown in productivity in the more current periodmatches the trend in the nonfarm business sector of the economy, whereproductivity grew at the low rate of 0.

5 percent per year from 1978 to1983, compared with a 2.3-percent rate from 1947 to 1978. Gains. The tires and tubes industry had the highest rate (6.

8percent per year) of productivity gain of all the industries measuredduring the 1978-83 period. Although output declined 3.6 percent peryear in this industry, employee hours fell even more, dropping at a rateof 9.7 percent in the period. The introduction of new, more automaticequipment for tiremaking as well as the closing of a number of old andinefficient plants during the period, allowed the industry to increaseproductivity significantly despite the drop in output. The telephonecommunications industry had the second highest rate of gain at 6.2percent.

Output was up 5.7 percent while hours fell off slightly duringthe period. Continuing adoption of electronic switching equipment,fiber optic cables, automatic testing equipment, and increasingcomputerization have aided productivity growth in this industry. Otherindustries with high rates of growth from 1978 to 1983 include: primarycopper, lead, and zinc and women’s ready-to-wear clothing stores(both 6.

1 percent); fluid milk (6.0 percent); household cookingequipment (5.9 percent); railroad transportation (5.5 percent); and coalmining (5.

4 percent). Declines. Among the many industries with declining productivityrates, the machine tool industries have recorded the largest drops overthe 1978-83 period. Metal cutting machine tools declined at a rate of7.2 percent, as output averaged a 13.9-percent decline and hours fell ata rate of 7.2 percent. Productivity in the metal forming machine toolindustry fell at a 6.

4-percent rate based on an average decline of 15.7percent in output and a 9.9-percent drop in hours. These industrieswere significantly affected by the economic slowdowns and by increasingimports during the 1978-83 period.

Output fell off sharply, leading tosteep declines in productivity, because machine tool manufacturers tendto retain highly skilled workers during cyclical downturns. Inaddition, because demand for machine tools tends to lag in economicrecoveries, these industries did very poorly in 1983. The next largest productivity falloff from 1978 to 1983 was in theball and roller bearings industry–4.7 percent. Output fell at a9.

9-percent rate as the economic slowdowns cut sharply into industrydemand and hours declined at a rate of 5.5 percent. The gas utilitiesindustry also had a large productivity decline of 4.2 percent per yearover this period.

Although the number of customers in this industryincreased, output actually declined at a 2.7-percent rate, due in partof conservation and introduction of more energy efficient equipment,while employee hours increased at a 1.5-percent rate. Other industrieswith 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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