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Productivity increased in many industries in 1983.

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

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).
COPYRIGHT 1985 U.S. Bureau of Labor Statistics
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Article Details
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Author:Herman, Arthur S.
Publication:Monthly Labor Review
Date:Mar 1, 1985
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