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Productivity gains continued in many industries during 1985.

Productivity gains continued in many industries during 1985

Productivity, as measured by output per employee hour, increased in 1985 in about two-thirds of the industries for which data are presently available. These gains continued the productivity growth recorded in 1983 and 1984 in the industries covered by the Bureau of Labor Statistics. However, the increases in 1985 were smaller than the 1984 gains in many industries. Table 1 shows productivity trends in the industries measured by the BLS and includes new measures introduced for additional industries: poultry dressing and processing; mining machinery; furniture, home furnishings, and equipment stores (including separate measures for furniture and home furnishings stores and appliance, radio, TV, and music stores); and liquor stores.1

Industry changes

Manufacturing. Among important manufacturing industries, the motor vehicles industry registered an above-average gain of 5.7 percent from 1984 to 1985. Demand for motor vehicles continued to be strong, and output was up 7.1 percent, while employee hours grew 1.3 percent. This increase was the fifth consecutive annual productivity gain in this industry.

Productivity also rose in the steel industry, growing 5.5 percent in 1985, following a 12.4-percent gain in the previous year. Steel industry productivity has risen for 3 consecutive years. The 1985 increase, however, reflected a decline in output of 3.0 percent and a larger drop in employee hours of 8.1 percent. Demand for steel was down sharply in 1985, especially from capital goods markets, and the industry continued shutting down less efficient plants and equipment.

Other important manufacturing industries with significant productivity gains in 1985 included construction machinery and equipment (10.4 percent), machine tools (9.5 percent), petroleum refining (8.4 percent), synthetic fibers (7.6 percent), and major household appliances (5.7 percent). The productivity gains in the construction machinery and equipment, machine tools, and synthetic fibers industries reflected output increases and employee hour decreases while in the petroleum refining industry, output recorded no growth and hours dropped sharply. The gain in productivity in the major household appliance industry can be attributed to a decline in output and an even larger falloff in hours.

A number of other large manufacturing industries posted gains in 1985. These included bottled and canned soft drinks (4.8 percent), sawmills and planing mills (2.8 percent), pharmaceutical preparations (2.7 percent), gray iron foundries (2.2 percent), motors and generators (1.7 percent), and paper, paperboard, and pulp mills (0.2 percent).

Despite the large number of manufacturing industries registering productivity increases, several posted productivity declines in 1985. Some of these industries were farm and garden machinery (-6.3 percent), steel foundries (-4.8 percent), primary aluminum (-4.2 percent), malt beverages (-1.6 percent), household furniture (-0.8 percent), and tires and inner tubes (-0.7 percent). Output fell in all of these industries except for malt beverages in 1985.

Mining. All of the mining industries except for crushed and broken stone recorded productivity gains in 1985. Coal mining experienced a gain of 2.0 percent, following a much larger gain of 11.2 percent in 1984. Coal mining output fell 1.1 percent in 1985 because of moderate weather and depletion of stockpiles built up because of an anticipated strike in 1984, and employee hours declined 3.1 percent. Productivity in the iron mining (usable ore) industry increased 7.8 percent in 1985, compared with a 22.9-percent gain in the previous year. Iron mining (usable ore) output was down 5.3 percent, as demand from the steel industry fell, and hours declined 12.2 percent, as a number of mining operations were shut down temporarily. In the copper mining (recoverable metal) industry, productivity spurted 21.9 percent. Copper mining (recoverable metal) output grew only 1.4 percent in 1985, reflecting a continued drop in the price of copper, while hours fell 16.8 percent, reflecting the closing of marginal mining operations. Nonmetallic mineral mining, except fuels, had a productivity gain of 2.3 percent. Output grew 3.7 percent in this industry as demand continued from the construction industry. In the crushed and broken stone industry, hours were up slightly more than output, resulting in a small productivity decline of 0.9 percent.

Transportation and utilities. Productivity changes were mixed among transportation and utility industries. In railroads (revenue traffic), productivity was up 6.2 percent, continuing the growth registered in the previous year. Railroad output fell 0.5 percent in 1985 as shipments of coal, grain, metallic ores, forest products, and other commodities were down. However, hours fell by 6.3 percent. Productivity in air transportation grew 3.3 percent, compared with a 3.9-percent gain in the previous year. Output in air transportation increased 8.6 percent in 1985 while the number of actual employees grew 5.1 percent. Petroleum pipelines productivity dropped 0.2 percent compared with a 10.8-percent gain in 1984. Output recorded no change in 1985 (as in petroleum refining), while hours increased slightly. In telephone communications, productivity was up 4.8 percent with output growing 2.5 percent and hours falling 2.2 percent. Productivity declined in both gas and electric utilities. In gas utilities, productivity fell 3.5 percent: output decreased 3.7 percent, due mainly to mild weather in 1985, while hours dropped 0.3 percent. In electric utilities, productivity registered a 0.2-percent decline as output grew 2.0 percent while hours were up 2.2 percent, due partly to growth in the number of residential customers.

Trade and services. Productivity changes also varied among the trade and service industries. Apparel and accessory stores had the largest gain in this group, increasing 5.7 percent, as all the component retail apparel industries recorded productivity gains. Output was up 4.0 percent and hours were down 1.6 percent in the apparel and accessory stores industry. The furniture, home furnishings, and equipment stores industry had the second largest gain at 2.9 percent. The components of this industry recorded opposite productivity changes: appliance, radio, TV, and music stores gained 9.9 percent, while furniture and home furnishings stores fell 1.9 percent. Gasoline service stations had a productivity gain of 2.6 percent. Output grew a low 0.2 percent, while hours continued their long-term decline, falling 2.2 percent. The remaining trade and service industries registered productivity declines. New car dealer productivity dropped 0.5 percent, although there was a significant output gain. Liquor store productivity declined 0.6 percent. In retail food stores, productivity fell 1.0 percent, due in part to the continuing trend toward more service-oriented operations such as delicatessens, in-store bakeries, and salad bars. Productivity dropped 2.2 percent in eating and drinking establishments, 4.1 percent in beauty and barber shops, 4.2 percent in drug stores, and 5.0 percent in both hotels, motels, and tourist courts and laundry and cleaning services.

Trends

Over the recent 5-year period (1980-85), a large majority of the industries registered growth in productivity. Only about 17 percent of the industries had declining rates over this period.

Among the industries with average annual increases during the 1980-85 period, the radio and television receiving sets industry had the highest rate of gain, 18.9 percent per year from 1980 to 1984. (Data for 1985 are not yet available.) Output in this industry grew at a rate of 9.1 percent per year while employee hours declined in every year, averaging -8.3 percent. Productivity growth in this industry was aided by the widespread use of automatic production techniques and equipment and the closing of less efficient plants. The copper mining (recoverable metal) industry recorded the second highest rate of productivity gain, 15.6 percent per year. This gain, however, reflected a drop in output of 4.0 percent and a decline in hours of 17.0 percent. This industry was hit hard by falling copper prices and the closing of many less efficient mines. The third highest rate of gain was registered by the primary copper, lead, and zinc industry, which grew at a rate of 11.6 percent from 1980 to 1985. This industry also was affected by low copper prices. It had a large drop in output and an even larger drop in hours. Other industries with significant gains in productivity during this period include wet corn milling (11.1 percent, 1980-84), railroad transportation (revenue traffic) (9.6 percent), hydraulic cement (9.5 percent), and iron mining (usable ore) (9.4 percent).

Among the industries with average annual declines in productivity, the gas utilities industry posted the largest drop, falling at a rate of 4.9 percent from 1980 to 1985. Output fell 4.1 percent in this industry due in part to a decrease in average use per customer. At the same time, the number of customers increased, resulting in growth in employee hours. The industry with the next largest decline in output per hour was rice milling, in which the rate fell 4.3 percent. Output declined at the high rate of 6.6 percent from 1980 to 1985, as exports contracted and hours were down at a 2.5-percent rate. Other industries with significant declines were wood office furniture (3.5 percent), oilfield machinery (3.3 percent, 1980-84), transformers (2.7 percent), and machine tool accessories (2.6 percent, 1980-84).

1 For a detailed report on these industries, see James D. York, "Retail liquor stores experience flat trend in productivity,' Monthly Labor Review, February 1987, pp. 25-29; and Z.Z. Ahmed and M. Sieling, "Two decades of productivity growth in poultry dressing and processing,' Monthly Labor Review, April 1987, pp. 34-39. Also, an article by Arthur S. Herman and J. Edwin Henneberger, "Productivity trends in the furniture and home furnishings industry,' and an article on mining machinery will appear in forthcoming issues of the Monthly Labor Review.

Table: Table 1. Productivity indexes for selected industries, 1980-85
COPYRIGHT 1987 U.S. Bureau of Labor Statistics
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Author:Herman, Arthur S.
Publication:Monthly Labor Review
Date:Apr 1, 1987
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