Academic journal article Monthly Labor Review

Productivity in Hardwood Dimension and Flooring

Academic journal article Monthly Labor Review

Productivity in Hardwood Dimension and Flooring

Article excerpt

Productivity in this industry grew less than 1 percent a year during the 1972-91 period; output stood still, and employee hours declined an average of almost 1 percent annually

Productivity growth in the hardwood dimension and flooring industry averaged 0.9 percent annually from 1972 to 1991.(1) Small firms dominate the industry. Production tends to be labor intensive, with new technology being slow to disperse throughout the industry. The industry also experienced many changes in the demand for its products as consumer preferences changed. As a result, manufacturing efficiency often became expendable, exchanged for greater flexibility in production, in order to produce the largest range of products. Output over the period realized zero net growth, and employee hours fell by 0.8 percent annually.

Productivity declined nine times, and output dropped eight times, during the 1972-91 period. The productivity trends can be divided into two subperiods: 1973-79 and 1979-90. As shown in table 1, during 1973-79, productivity (output per employee hour) fell 0.7 percent per year. The hardwood dimension and flooring industry felt the effects of the 1973-75 recession, with output, hours, and productivity all declining from 1973 to 1979. The second subperiod, 1979-90, was more positive, with industry output and productivity moving upward in response to growth in demand and some industry consolidation.

The productivity indexes developed for the hardwood dimension and flooring industry represent the change over time in the ratio of the weighted outputs of the industry's products to employee hours. The output indexes are developed using a deflated-value technique. Value-of-shipments data for the various product classes within the industry are converted to a constant-dollar basis using BLS producer price indexes. Indexes of constant-dollar values are combined with fixed-period employee hour weights to derive an industry output index. This index is adjusted for industry coverage and the net change in inventories. The result is an index of industry production. Annual output indexes are benchmarked to more comprehensive data available every 5 years in the Census of Manufactures. A more complete description of the methodology used to construct these measures is contained in the appendix.

Output

The hardwood dimension and flooring industry manufactures primarily hardwood dimension, either semifabricated or ready for assembly; hardwood flooring; wood frames for household furniture; and hardwood dimension lumber. Hardwood dimension is kiln-dried wood, cut and surfaced to a specific thickness, width, and length to meet the specifications of particular customers. It is used primarily for furniture. Hardwood dimension lumber is lumber cut by quarters (1/4 inch thick) and sold in various widths and lengths. Like hardwood dimension, it may be surfaced or sanded, but it is not cut and shaped to the specifications of the buyer. Hardwood flooring is made from lumber, kiln dried to a moisture content of 5 to 6 percent. Examples of the industry's products are oak flooring, parquetry, maple, and plank flooring, as well as parts for beds, chairs, cabinets, desks, tables, and other items of furniture.

Demand in the industry is usually affected by the general strength of the economy, but particularly the housing market, including expenditures on renovation and improvement. Seasonal changes affect demand only slightly, as flooring is installed indoors and furniture part production follows furniture production cycles.

Over the period of the study, there was zero net growth in output. From 1973 to 1979, output fell at an average annual rate of 1.6 percent. The industry recorded a major decline in output during this period, partially as a result of the 1973-75 recession. Output fell 17.2 percent from 1973 to 1974, as housing starts plunged 35.0 percent and sales of existing one-family homes fell about 3. …

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