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Productivity continued to increase in many industries during 1984.

Productivity continued to increase in many industries during 1984

Productivity, as measured by output per employee hour, grew in 1984 in about three quarters of the industries for which the Bureau of Labor Statistics regularly publishes data. Productivity increases were large in many industries. In a significant number, these gains followed major productivity growth in 1983. The expansion in industry productivity is consistent with the situation in the nonfarm business sector of the economy in which output per hour increased 1.6 percent between 1983 and 1984, after gaining 3.4 percent in 1982-83. Table 1 shows productivity trends in industries measured by the Bureau and includes new measures introduced for additional industries: barber and beauty shops; metal doors, sash and trim; metal stampings; and oilfield machinery.1

Changes in manufacturing

Among important manufacturing industries, productivity in the steel industry grew 13.0 percent in 1984. This large gain was in addition to the record productivity advance of 28.5 percent in 1983. Steel output increased more than 13 percent in 1984, due in part to continued demand from such key markets as motor vehicles, appliances, and construction. Employee hours rose only slightly and employment continued to decline, as the industry continued restructuring and the closing of inefficient facilities. The motor vehicles industry had an above average productivity gain of 4.6 percent, in addition to an unusually large gain in the previous year (13.1 percent). Output in this industry was up more than 21 percent in 1984, as demand for all types of motor vehicles expanded, while hours increased almost 16 percent.

Other important manufacturing industries with large gains included steel foundries with a productivity increase of more than 11 percent, while gray iron foundries attained an increase of more than 9 percent in 1984. Output in these industries rose in 1984 as demand from the automobile, construction, and railroad industries expanded. The tire industry posted an 11.3-percent productivity gain in 1984, following a 6.2-percent gain in 1983. Output grew by 14.3 percent in 1984 as demand was up for both original equipment and replacement tires, while hours rose only slightly. In petroleum refining, productivity moved up 10.9 percent in 1984, after gaining 3.0 percent in 1983. Refinery output increased for the first time since 1978, while hours declined, as small refineries contined to close. Other significant manufacturing industries with large productivity gains included malt beverages (10.5 percent), metal cans and primary aluminum (both 10.1 percent), and household cooking equipment (9.7 percent).

A few manufacturing industries registered productivity declines in 1984. These included pharmaceutical preparations (-5.2 percent), hardwood veneer and plywood (-4.8 percent), structural clay products (-3.9 percent), and folding paperboard boxes (-2.6 percent). Although output was up in all of these industries, except for pharmaceuticals where it fell slightly, employee hours rose even more, resulting in the productivity falloff.

Mining

All of the mining industries experienced productivity gains in 1984. Coal mining, the largest mining industry, posted a gain of 10.1 percent in 1984, on top of a 14.2-percent rise in 1983. Coal output was up 14.4 percent in 1984 in anticipation of a strike which did not occur, while hours rose 3.9 percent. Productivity in iron mining (usable ore) increased 25.3 percent, compared with a 41.1-percent gain the previous year. Output was up 36.9 percent in 1984 as demand increased from the steel industry, while hours rose 9.3 percent. Copper mining (recoverable metal) had a productivity gain of 17.6 percent, after a 12.7-percent increase in 1983. Output was up only 5.1 percent in 1984, because of low copper prices, while hours dropped 10.6 percent, as only the most efficient mines were operating. The nonmetallic minerals industry registered a productivity gain of 1.9 percent. Output grew 8.7 percent in this industry, owing to the expansion of construction activity, while hours were up 6.6 percent.

Transportation and utilities

Most transportation and utility industries also recorded 1984 productivity gains. In railroads (revenue traffic), productivity was up 7.5 percent following a 22.5-percent rise in 1983. Railroad output grew 9.2 percent in 1984 as shipments of coal, motor vehicles, construction materials, and chemicals were up significantly, while hours increased 1.5 percent. Productivity grew 3.3 percent in air transportation, compared with a 9.9-percent gain in the previous year. Air traffic increased significantly in 1984, resulting in a 7.9-percent gain in output. In petroleum pipelines, productivity grew 11.1 percent, as output rose and hours continued to fall. Electric utility productivity was up 3.5 percent, as output increased 5.3 percent, and hours were up 1.8 percent. The gas utilities industry registered its first productivity gain since 1979 (3.2 percent), with output increasing 2.5 percent, and hours dropping 0.7 percent.

Trade and services

Productivity changes were mixed among trade and service industries. The hotel and motel industry registered the highest gain, at 7.7 percent. Output was up 15.2 percent in this industry owing to the continuation of the business recovery, as well as a strong summer vacation period, while employee hours grew 7.0 percent. Apparel and accessory stores also registered a good productivity increase, up 6.0 percent. Output increased 9.6 percent in 1984, as favorable economic and credit conditions aided clothing sales, while hours rose 3.4 percent. In laundries and cleaning services, productivity grew 3.3 percent, based on a gain in output of 8.2 percent and an increase in hours of 4.8 percent. Productivity gains were recorded in drugstores (1.8 percent) and gasoline stations (0.4 percent). However, there were productivity declines in several of the service industries. The beauty and barber shop industry had a substantial 8.4-percent decline. Productivity also fell 2.1 percent in eating and drinking places. While output in the restaurant industry was up 3.8 percent in 1984, hours increased even more, resulting in the productivity falloff. Productivity dropped 1.0 percent in retail food stores. New car dealers had a small productivity decline of 0.1 percent. Output was up significantly at 10.8 percent. However, hours rose slightly more, resulting in the productivity decline.

Trends among industries

Almost all of the industries studied recorded average annual gains in productivity over the long term (1947-84 for many of the industries). A few industries experienced long-term declines, however. These included metal stampings, metal forming machine tools, farm machinery, and bus carriers.

Over the most recent 5-year period (1979-84), most of the industries registered a growth in productivity. Slightly more than one-fourth had productivity declines. In addition, almost two-thirds of the industries recorded lower rates of productivity growth from 1979-84 than in the preceding long-term period. The falloff in productivity growth in a majority of the industries is in line with the trend in the nonfarm business sector of the economy, where productivity grew at an annual rate of 1.0 percent from 1979 to 1984, compared with a 2.2-percent rate for 1947-79.

Gains, 1979-84. The highest rate of productivity increase over the 5-year period was recorded by the radio and television sets industry (14.5 percent per year). Productivity growth in this highly competitive industry was aided by widespread use of automatic production techniques and equipment and the closing of less efficient plants. Copper mining (recoverable metal) had the second highest rate of productivity gain, at 10.5 percent. However, this reflected both an output decline and a very sharp decline in hours. More advanced mining methods were introduced and less efficient mines were shut down in an effort to compete with low-priced foreign ore, resulting in the productivity gain. The wet corn milling industry had the third highest rate of gain at 9.7 percent. Here output rose, while employee hours fell. Demand continued strong for high fructose corn syrup, a key product of this industry, which is used as a sweetener, especially by soft drink manufacturers. The industry has made substantial capital investment in highly automated plants, allowing for output expansion at the same time as employment was being reduced. Other industries with high rates of gain from 1979 to 1984 include: women's clothing stores (9.4 percent), primary copper, lead and zinc (8.4 percent), railroad transportation (revenue traffic) (8.2 percent), tires (7.9 percent), coal mining (7.7 percent), family clothing stores (7.3 percent), and softwood veneer and plywood (7.2 percent).

Declines, 1979-84. Among the industries with declines, the wood office furniture industry had the greatest falloff in output per hour, dropping at a rate of 5.3 percent from 1979 to 1983. (The 1984 data are not as yet available.) Output decreased at a 4.1-percent rate, while employee hours grew at a 1.3-percent rate. This industry was severely affected by the two recessions which occurred within this period and suffered sharp drops in output and associated declines in productivity. The industry with the second largest falloff was gas utilities, registering an average annual decline of 5.1 percent from 1979 to 1984. Output fell at a rate of 3.8 percent owing to a drop in average use per customer, while the number of customers increased, leading to growth in employee hours at a rate of 1.4 percent. Among other industries with substantial declines were: Machine tool accessories (-4.3 percent, 1979-83), bus carriers (-4.0 percent), machine tools (-3.6 percent), metal stampings (-3.6 percent, 1979-83), ball and roller bearings (-3.5 percent), as well as internal combustion engines and hand and edge tools (both -3.3 percent, 1979-83).

1 For a detailed report on these industries, see Brian L. Friedman and Arthur S. Herman, "Productivity growth low in the oilfield machinery industry,' Monthly Labor Review, December 1985, pp. 34-38: Horst Brand and Ziaul Z. Ahmed, "Beauty and barber shops: the trend of labor productivity,' pp. 21-26), this issue; and Elmer S. Persigehl and John G. Olsen, "Productivity in the metal doors, sash, and trim industry,' pp. 27-31, this issue. An article on the metal stampings industry will appear in a forthcoming issue of the Review.

Table: 1. Indexes of output per employee hour in selected industries, 1979-84, and percent changes, 1983-84 and
COPYRIGHT 1986 U.S. Bureau of Labor Statistics
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Title Annotation:output per employee hour in steel, coal and iron mining, transportation, and utilities
Author:Herman, Arthur S.
Publication:Monthly Labor Review
Date:Mar 1, 1986
Words:1719
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