Trends of productivity in metal stamping industries

Monthly Labor Review, May, 1986 by Horst Brand, Clyde Huffstutler

Trends of labor productivity in metal stamping industries

Labor productivity, or output per employee hour, in the metal stamping industry rose at an average annual rate of 1 percent over the two decades, 1963-83.1 Output rose at about the same rate, while employee hours remained on balance unchanged over the period. Between 1963 and 1973, productivity advanced more rapidly (1.2 percent a year) than over the following decade (0.7 percent). The earlier annual improvement was associated with fairly strong output and employment gains, while the subsequent advance resulted from a declining trend in output being exceeded by a declining trend in employment. The longer term productivity performance in terms of average annual rates of change was much lower than for all manufacturing.

The productivity trend for the 20-year period examined here was marked by much volatility. In almost half of the 20 years, productivity declined, although by small magnitudes. These declines were almost invariably associated with larger drops in output than in employee hours--a pattern frequently encountered in durables manufacturing industries during business slumps. In only 7 years of the period did productivity rise because output gains topped employee hour increases. All these years occurred during an expansionary phase of the business cycle (table 1).

Year-to-year fluctuations in productivity ranged from a fall of 4.0 percent (in 1964) to a rise of 8.6 percent (in 1971), with the more typical movements running between plus or minus 3 percent. However, underlying these movements were often large swings in output and employee hours. For example, the productivity increase of 4 percent in 1976 was linked with output and employee hour rises of 22 and 17 percent. Both of these variables had plummeted by 19 and 16 percent the preceding year--with productivity receding by only 3 percent.

Component industries

Data for metal stampings industry establishments were treated as one industry until 1972. The industry was then reclassified into three separate industries, for two of which separate measures for productivity and related variables are published and discussed here--automotive and nonautomotive metal stampings.2 The productivity trends for these two industries diverged considerably over the 1972-83 span, rising at an average annual rate of 1.8 percent for the former, and declining 0.7 percent a year for the latter. These movements reflect much stronger average annual growth for automotive metal stampings after 1977, and a much sharper decline for nonautomotive stampings.

The productivity improvement in the automotive metal stamping industry reflected a long-term decline in output of 1.5 percent annually, accompanied by a 3.2-percent-a-year drop in employee hours. The downward trend in nonautomotive metal stampings, on the other hand, resulted from moderately rising output (0.7 percent a year), and a somewhat higher employee hour rate (1.3 percent). The high productivity growth after 1977 for automotive metal stampings was associated with sharply declining output and even more pronounced decreases in employee hours. The productivity drop in nonautomotive metal stampings was also associated with falling output, but employee hours fell less.

Output and demand

The automotive metal stampings industry manufactures fenders, roofs, exhaust systems, brake shoes, trim, and other motor vehicle stamping components. These larger stampings are usually made in establishments operated by automobile companies. The industry also manufactures such products as brackets, valves, and other smaller items. These products are usually made by smaller, independent suppliers. Nonautomotive stampings consist of a vast array of job stampings often made in comparatively small batches; kitchen, household, and other utensils; pressed metal for such uses as storefronts, curtain walls, and refrigerators; and enclosures for electronic or electrical apparatus. Nonautomotive metal stampings are made mostly by smaller firms. (See below.)

Output of the combined metal stamping industries rose at an average annual rate of 0.9 percent over the 1963-83 span, but its rise during the first decade, 2.3 percent a year, was replaced by a drop during the second (-0.7 percent annually). This slowdown in the industries' output typified the output pattern of all durable manufactures over the period: for these, the annual rate of growth averaged 5 percent for 1963-73, but only 0.7 percent for 1973-83.

Demand for metal stampings stems mostly from other hard goods industries.3 Thus, while the number of domestically made motor vehicles rose 1.8 percent a year during the 1963-73 period, it dropped 3.4 percent annually thereafter --these trends being closely matched, first, by a 4.1-percent-a-year rise, then by a 1.4-percent-a-year fall in the output of automotive metal stampings. (The larger output rates of automotive metal stampings stem from the demand for replacement stampings in addition to original equipment stampings.)