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October 1994, Vol. 117, No. 10
Productivity in hardwood dimension and flooring
Craig F. Saunders
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.
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1 The hardwood dimension and flooring industry is designated by the Office of management and Budget as SIC 2426 in the 1987 Standard Industrial Classification Manual. All average annual rates of change pertaining to the industry and mentioned in the text are in tables are based on the compound interest method of computation. The indexes for productivity are related variables updated and published annually in the BLS publication, Productivity Measures for Selected Industries and Government Services.
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