Productivity in Industry and Government, 1989

Article excerpt

Productivity, as measured by output per employee hour, increased in 1989 in about 60 percent of the industries for which data are currently available. By comparison, in 1988, more than 75 percent of these same industries posted gains in productivity. In 1989, most industries that experienced productivity increases also showed gains in output. Similarly, for those industries with negative or no productivity growth, most showed declines in output.

This article includes indexes from the Bureau of Labor Statistics industry and government productivity measurement program and extends labor productivity measures through the year 1989; industry multifactor productivity measures through 1988; and the Federal, State, and local government measures through fiscal year 1989. [1] Table 1 shows labor productivity average annual percent changes for the long term (beginning year to 1989) and for 1984-89, and percent changes for 1987-88 and 1988-89 for all of the industry productivity measures. It includes, for the first time, labor productivity measures for frozen fruits and vegetables, rubber and plastic hose and belting, and a multifactor productivity measure for the farm and garden equipment industry. [2] Indexes for most of the industry labor productivity measures for selected years between 1970 and 1989 are shown in table 47 of the Current Labor Statistics section of this publication.

Industry labor productivity

Manufacturing. Two important industries, steel and autos, recorded productivity declines in 1989. The productivity drop of 2.3 percent for the steel industry, reflecting a 5-percent increase in unused capacity, was the first since 1982. Likewise, the 0.4-percent decrease in productivity for motor vehicles and equipment came after nearly a decade of annual gains. Both industries were affected by output declines. Output fell 3.5 percent in the steel industry, as demand diminished from the machinery, automotive, and construction sectors, while the 0.8-percent output decrease in the motor vehicles and equipment industry was largely the result of a decline in the number of passenger cars produced.

Several other manufacturing industries exhibited sharp declines in productivity. Declines of more than 5 percent were recorded for copper rolling and drawing, lawn and garden equipment, and ball and roller bearings. Output also fell in these industries.

By contrast, many manufacturing industries recorded significant gains in productivity in 1989: metal cutting machine tools, 25.8 percent; semiconductors and related devices, 16.2 percent; farm machinery, 10.2 percent; and oilfield machinery, 9.4 percent. Technological improvements in the metal cutting machine tools industry, such as the use of carbide tooling and improved designs in rotary tables and cutting inserts, were factors in the productivity increase. Output exerted a strong influence, advancing by 30.5 percent, the result of increased exports and new orders in the prior year. Output in the three other industries was similarly driven by strong demand as orders from both 1988 and 1989 were filled.

Mining. Although all of the industries measured in the mining sector showed productivity and output increases in 1988, productivity declined in 1989--with the exception of coal. Productivity growth in that industry registered 4.6 percent in 1989, reflecting a 3.1-percent gain in output, as utilities relied on coal to meet increased consumer demand, and companies developed new equipment and expanded longwall mining techniques. Productivity fell in the iron mining (1.4 percent), copper mining (1.9 percent), and nonmetallic minerals industries (1.2 percent), but for varying reasons. Productivity in iron mining was hampered by the renovation of idle mines, while productivity and output in the nonmetallic minerals industry declined as a result of slowdowns in the construction sector. Producers in the copper mining industry, encouraged by record demand and prices for copper, opened older, less ore-rich mines, expending labor time on less productive operations to increase total output. …