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Technological Change and its Labor Impact in Five Industries Apparel/Footwear/Motor vehicles Railroads/Retail trade U.S. Department of Labor Bureau of Labor Statistics 1977 Bulletin 1961 L ib r ary of C o n g r ess C a ta lo g in g in P u b lic a tio n D a ta U n ited S t a t e s . Bureau o f Labor S t a t i s t i c s . T e c h n o l o g i c a l change and i t s la b o r im pact in f i v e in d u s tr ie s . ( B u l l e t i n - Bureau o f L abor S t a t i s t i c s ; 1961) "T h ird o f a s e r i e s w hich w i l l update and expand BLS B u l l e t i n ll+7 ^-j T e c h n o l o g i c a l tr e n d s in m ajor A m erican i n d u s t r i e s , p u b lis h e d in 1 9 6 6 ." Bibliography: p. S 'l p t . o f D ocs, n o . : L 2 . 3 :1 9 6 1 1. M achinery in in d u s t r y —U n ited S t a t e s — Case s t u d i e s 2 . T e c h n o l o g i c a l in n o v a t io n s - -U n it e d S t a t e s -- C a s e s tu d ie s . I. U n ited S t a t e s . Bureau o f L abor S t a t i s t i c s . T e c h n o l o g i c a l tr e n d s in m a jor Am erican i n d u s t r i e s . II. T itle . III. S e r ie s : U n ite d S t a t e s . Bureau o f L abor S t a t i s t i c s . B u l l e t i n ; 1961. ed 6331.2.U5U5]+ 1977 3 3 8 ’ .0973 77-891+07 Technological Change and its Labor Impact in Five Industries Apparel/Footwear/ Motor vehicles Railroads/Retail trade U.S. Department of Labor Ray Marshall, Secretary Bureau of Labor Statistics Julius Shiskin, Commissioner 1977 Bulletin 1961 For sale b y the Superintendent of Documents, U.S. Government Printing Office Washington, D .C . 20402 Stock N o. 029-001-02037-6 P re fa c e This bulletin appraises some of the major technological changes emerging among selected Amer ican industries and discusses the impact of these changes on productivity and occupations over the next 5 to 10 years. It contains separate reports on the following five industries: Apparel (SIC 23), footwear (SIC 314), motor vehicles (SIC 371), railroads (SIC 401), and retail trade (SIC’s 52-59). This publication is the third of a series which updates and expands BLS Bulletin 1474, Techno logical Trends in Major American Industries, published in 1966, as a part of the Bureau’s continu ing research program on productivity and technological developments. The two preceding bulletins in this series were BLS Bulletin 1817, Technological Change and Manpower Trends in Six Indus tries (textile mill products, lumber and wood products, tires and tubes, aluminum, banking, and health services) and BLS Bulletin 1856, Technological Change and Manpower Trends in Five Industries (pulp and paper, hydraulic cement, steel, aircraft and missiles, and wholesale trade). The bulletin was prepared in the Office of Productivity and Technology under the direction of John J. Macut, Chief, Division o f Technological Studies. Individual industry reports were written by staff members of the Division under the supervision of Rose N. Zeisel and Richard W. Riche. The authors were: Apparel, David H. Miller; footwear, Rose N. Zeisel; motor vehicles, Robert V. Critchlow; railroads, Morton Levine; and retail trade, Mary Vickery. The Bureau wishes to thank the following companies for providing the photographs used in this study: Bobbin Publications, Inc.; Brown Shoe Company, Inc.; Hitchcock Publishing Co.; R. G. Tourneau, Inc.; and International Business Machines Corporation. Material in this publication other than photographs is in the public domain and may be repro duced without the permission of the Federal Government. Please credit the Bureau of Labor Statistics and cite the name and number of the publication. iii C o n ten ts Page Chapters: 1. 2. 3. 4. 5. A p p a r e l ............................................................................................................................................................................1 Footwear ..................................................................................................................................................................... 11 Motor vehicles and equipment .................................................................................................................................23 Railroads ..................................................................................................................................................................... 34 Retail trade .................................................................................................................................................................45 Tables: 1. 2. 3. 4. 5. 6. 7. 8. 9. Major technology changes in the apparel industry ...................................................................................................2 Indicators of change in the apparel industry, 1960-74 ...............................................................................................5 Major technology changes in the footwear i n d u s tr y ................................................................................................. 12 Value added in the shoe (except rubber) industry: Ratios of “highest quartile” to “lowest quartile” plants and to average plant, 1967 17 Major technology changes in the motor vehicle and equipment i n d u s t r y ............................................................ 24 Indicators of change in the motor vehicle and equipment industry, 1960-75 29 Major technology changes in the railroad industry .................................................................................................35 Class I railroad employment, by major occupational group, 1960 and 1975 .................................................... 41 Major technology changes in retail trade .................................................................................s ........................46 Charts: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Output and production-worker hours in the apparel industry, 1960-75 6 Employment in the apparel industry, 1960-75, and projection, 1973-85 7 Projected changes in employment in the apparel industry, by occupational group, 1970-85 9 Output per employee-hour, output, and employee hours in the footwear industry, 1960-75 ........................ 16 Employment in the footwear industry, 1960-75, and projection, 1973-85 19 Projected changes in employment in the footwear industry, by occupational group, 1970-85 21 Output per employee-hour, output, and employee hours in the motor vehicle and equipment industry, 1960-75 .............................................................................' ...................................................................................27 Employment in the motor vehicle and equipment industry, 1960-75, and projection, 1973-85 .................... 30 Projected changes in employment in the motor vehicle and equipment industry, by occupational group, 1970-85 ............................................................................................................................................................... 32 Output per employee-hour, output, and employee hours, Class I railroads, 1960-75 40 Employment in Class I railroads, 1960-75 .............................................................................................................. 42 Output and aggregate hours of all persons in retail trade, 1960-75 ..................................................................... 51 Employment in retail trade, 1960-75, and projection, 1973-85 52 Projected changes in employment in retail trade, by occupational group, 1970-85 53 General re fere n ces............................................................................................................................................................................. 56 v In tro d u c to ry N o te The following discussions of technological change in five industries are accompanied by projec tions of levels and rates of change of employment through 1985. These projections were developed by the Bureau of Labor Statistics as part of a comprehensive set of projections for the economy as a whole. The projections are not forecasts but rather estimates of what the economy might be like under certain assumptions about unemployment, labor productivity, and government taxes and spending. Summarized below are the important elements of the underlying set of projections used in this study: 1. The labor force is projected to grow at a rate of 1.6 percent a year from 1973 to 1985, compared with 1.9 percent a year from 1960 to 1973. 2. Labor productivity in the private economy (1963 dollars) is assumed to grow at a rate of 2.5 percent annually from 1973 to 1985, compared with a rate of 3.0 percent from 1960 to 1973. 3. Real gross national product (in 1963 dollars) is projected to increase at an average rate of 3.6 percent during the 1973-85 period, compared with a rate of 4.2 percent in the 1960-73 period. 4. The unemployment rate is assumed to decline to 4.7 percent in 1980 and to 4 percent by 1985, compared with 4.9 percent in 1973. 5. Efforts to solve major domestic problems, such as pollution, may consume more produc tive resources but will not have more than a marginal effect on long-term growth. For further information about these and alternative assumptions and projections, see the Monthly Labor Review, March 1976, pp. 3-21, and November 1976, pp. 3-22. vi C h a p te r 1. lasers, computers, and ultrasonics, and the more widespread application of improved management methods. Although capital expenditures have been rising, improvements in ap parel technology are not expected to result in displacement of workers nor involve extensive skill changes. Mechaniza tion in the apparel industry will continue to be hindered by nonstandardized production and the large number of small firms with generally little capital available for moderniza tion. Summary The production of apparel items involves a series of labor-intensive steps as cloth is transported through cutting, sewing, and other production operations. The technology involved is not complex — the sewing machine is the basic item of production equipment. Productivity gains are ex pected from advances in cutting and sewing technology, the more extensive use of computers, and improved workflow. Technologies involving large capital outlays, such as laser cutting and die cutting, will continue to be adopted primar ily by large firms. Techniques to improve the utilization of labor will be of primary importance. The introduction of automatic devices on sewing machines, for example, in creases productivity and reduces training time for machine operators. Expenditures for new plant and equipment in current dollars (data from Bureau of the Census) totaled $390.5 million in 1974, over four times the $83.5 million outlay in 1960. (In real terms, however, the increase was less because prices of plant and equipment rose over this period.) In spite of continuing increases in capital expenditures, the industry is expected to remain highly labor intensive. Because of limitations of available data, a productivity index for apparel (SIC 23) is not published by the Bureau of Labor Statistics. Trends in output and employment, however, suggest improvement in productivity during the past decade. Apparel employment is expected to rise, with a work force of 1.5 million persons projected by the BLS for 1985. (For assumptions underlying projections, see introductory note.) Shifts in the location of apparel plants from the North to the South, and more recently to the West, have taken place as apparel firms have sought lower wage costs and other benefits. The industry is a large employer of minority workers and the largest employer of women among all manufacturing industries, both as a percent of the work force and in absolute numbers. Mechanization Although innovations are being introduced, as indicated in table 1, the apparel industry is expected to remain among the least mechanized of all manufacturing industries. The production process involves a series of discrete, laborintensive operations related to the design, assembly, sewing, and pressing of completed apparel items. Extensive applica tion of automatic, laborsaving technology to production operations thus continues to be difficult and in some cases uneconomical. A factor in the historically low level of mechanization is the nature of the apparel production pro cess, which involves short, nonstandard production runs to accommodate seasonal lines and frequent style changes. An other factor hindering the introduction of mechanized equipment is the lack of institutions of higher learning to train apparel engineers, such as those which exist in Ger many and elsewhere in Europe. The extent of mechanization in the industry depends largely on the type of item produced. The production of standardized, less fashion-oriented types of clothing, such as shirts and pants, involves extensive mechanization be cause long production runs make it economically feasible; production facilities for women’s sportswear, where style changes are frequent, are less mechanized because produc tion runs are shorter. New technology has had an impact on skill requirements for some positions. In sewing operations, for example, auto matic contour seamers, profile stitching machines, and numerically controlled sewing machines increase output per worker and enable less skilled workers to perform duties of more highly skilled operators. The advantages of the new machinery are that it reduces training time (thereby reduc ing expenses) and enables management to draw from a larger labor pool. Technology in the 1970’s Technological changes underway in the apparel industry involve refinements to traditional cutting and sewing ma chinery, the limited application of new technologies such as A p p are l 1 Table 1. Major technology changes in the apparel industry T e c h n o lo g y A u to m a tic p r o f ile and c o n to u r D e s c r ip tio n s e a m e rs , s t it c h in g m a c h in e s , n u m e r ic a lly c o n tr o lle d E q u ip m e n t c lo th w h ic h th ro u g h L a b o r im p lic a t io n s tra n s p o rts s e w in g o p e ra L im ite d e ra to rs , w id e s p r e a d u s e is e x p e c t e d w i t h t h e a n t ic ip a te d g r o w in g w o rk tio n s a u t o m a t ic a lly . D if fu s io n J o b d u t i e s o f s e w in g m a c h i n e o p a m a jo r fo rc e , segm ent have been of M a t e r i a l is g u i d e d t h r o u g h s e w in g m a c h in e s o p e ra tio n s a u t o m a t ic a lly e ra to rs te n d som e m o re S k ill fo r in and one tr a in in g o p e ra to rs have s e w in g w it h in s ta n c e s th a n th e m o d ifie d . , op a b le to m a c h in e . to th e (P r o g r a m m a b le la r g e r p la n ts . use o f P R O M S Read O n ly M e m o r y U n it s ) — m in i- m e m o r y g r e a tly in c re a s e M o re u n its w h ic h e q u ip m e n t fle x i b ilit y . r e q u ir e m e n ts been lo w e re d . M e c h a n ic s , h o w e v e r , m a y n e e d r e t r a in in g to c a rry out m o re com p le x m a in te n a n c e . L a s e r c u t t in g C o m p u t e r g u i d e d la s e r c u t t i n g s y s te m s cut f a b r ic at h ig h sp e ed s w it h d u c in g h ig h a c c u r a c y , r e m a t e r ia l lo s s e s a n d in s u rin g u n i f o r m i t y . Im p a c t on c u tte rs o c c u p a t io n s to t e n tia l e x is ts t o a c h ie v e u n i t la b o r in g b e m in im a l b e c a u s e d i f ro o m t in g d e v ic e s d ir e c ts d e v ic e s o p e ra tio n s p ro d u c t e q u ip m e n t th ro u g h w it h q u a lity th e ir im p ro v e d and h ig h e r c u t t in g sp eed s. U l t r a s o n i c s e w in g H ig h to b e lim ite d . P o fre q u e n c y a f r ic t io n a l la y e r s c lo th . The s im u la t e s th re a d sound are tw e e n in In jo b s on c o s ts w i l l lim it e d s u its . d e g re e H ig h in c a p it a l l i m i t i t s u s e t o t h e la r g e s t fir m s . sew h e ld by m en. a s s o c ia te d b u t som e c u t t in g , v e ry m o st c u t and a re a m e n 's speed — u n c e r ta in , s a v in g s la s e r a re to is t h e m a c o n tra s t to c u tte rs o c c u p a t io n s la b o r h ig h o c c u p a t io n s , ro o m Im p a c t of a c c u ra c y Used c u t t in g a n t ic ip a te d . m a t e r ia l As Used to a a p p a re l lim it e d p la n ts . d e g re e H ig h in c a p it a l la r g e r cost w ill l im it d iff u s io n . s a v in g s a re an im p o r ta n t b e n e fit. ( u lt r a s o n ic s ) c re a te ex e x p e c te d jo r a d v a n ta g e . c o n tro l but p e c te d b u t im p ro v e d N u m e ric a l a s s o c ia t e d fu s io n s a v in g s — b e c a u s e N u m e r ic a lly c o n tr o lle d c u ttin g and u n c e r ta in , of w aves used to bond be S e w in g m a c h in e m o d ifie d but o p e ra to r im p a c t d u tie s not w id e s p re a d . p la s tic th e r m o p la s tic bond a c ts as U s e lim it e d s y n th e tic t o m a t e r i a l s w i t h a h ig h c o n t e n t u n le s s a t h e r m o b o n d in g la y e r is u s e d . L im i t e d g r o w t h is e x p e c t e d . and s t it c h in g , t h o u g h no is u s e d . S i m i l a r t o f u s in g , e x c e p t t h a t n o a d h e s iv e is r e q u ir e d . E le c tr o n ic c o m p u te rs C o m p u te rs a re b e in g m a n a g e m e n t fo r and by fo r e c a s tin g , p ro c e s s in v e n to ry , m e n t. c es s used s a le s a n a ly s i s and In th e y w o r k flo w th e are c o n ju n c tio n m anage p ro d u c tio n b e in g w it h p ro used in n u m e r ic a l C o m p u te r-r e la te d d a ta p r o c e s s in g a n a ly s t , new and bor p ro g ra m m e r o c c u p a t io n s d iffu s io n of s a v in g s m ent and p o s it io n s o ffic e f u n c tio n s , p re p a ra tio n . a p p lic a t io n s w ith in am ong a s s o c ia t e d c o m p u te rs . p r im a r ily c o n tr o l e q u ip m e n t a n d m a r k e r of m a n a g e r , s y s te m s d a ta lim it e d in w ith U n it la m anage M o re w id e s p r e a d e x p e c te d . In use o f c o m p u te rs 1974, in s t a lla t io n s w e r e 297 c o m p u te r re p o rte d . T h e use o f c o m p u t e r s in p a t t e r n g r a d i n g a n d m a rk e r p re p a ra tio n is e x p e c t e d to c o n tin u e t o g r o w r a p id ly . p r o c e s s in g c o m p u te r p r o d u c tio n o p e ra tio n s . puter-guided laser system to prepare patterns for made-tomeasure suits (cutting is then done by conventional meth ods) sharply reduced the time between order and delivery. Numerically controlled cutting systems also are in limited use, with more widespread application expected. These systems are fast and accurate, and have the capability to achieve savings in material. The extent to which laser and numerically controlled cutting systems reduce unit labor requirements for markers and cutters is uncertain. Water jet cutting, a technology proven for leather cutting in the foot wear industry, is now being applied to cloth cutting. Improved die cutting methods are another major innova tion achieving improved accuracy and other advantages in cutting operations. Large-scale cutting is needed, however, to offset the high capital costs of the processes and there fore diffusion is limited to larger plants. New pattern grading equipment which has the capability to produce copies of a master pattern in a number of differ- Advances in cutting technology Innovative approaches to fabric cutting such as the use of lasers, numerical control, water jet cutting, refined die cutting methods, and new pattern grading equipment are being introduced on a limited basis in larger firms. The occupations of marker and cutter will be most affected by further diffusion of these innovations. Computer-guided laser fabric cutting systems are being used to a limited degree for men’s suits. The high capital costs of laser systems prevent all but the largest firms from using them. The preciseness of the cut reduces material loss and insures uniformity. Although laser cutting systems pres ently cut only one layer of cloth at a time, advantages include improved cutting speed and accuracy, less fabric wastage, and reduced inventory requirements. One com pany using laser cutting for men’s ready-to-wear suits re duced cutting time significantly. Another firm using a com 2 Apparel worker operating a cutting machine 3 by photoelectric sensors, cams, templates, and PROM units. Skill requirements are changed since operators no longer perform these functions manually. These systems are rela tively new and are in limited use in some of the larger apparel plants. More widespread introduction is expected. Sewing without thread, or sonic sewing, is an innovation being introduced on a limited basis in the United States. Instead of a needle and thread, the sonic sewing device has a wheel or “horn” which vibrates the fabrics to be sewn at such high speeds that they fuse together. The cloth being sewn must have a high percentage of synthetic content or have a fusable bonding layer. The process is similar to the older methods of fusing or bonding except that sonic sew ing requires no adhesive. A shared advantage of the new and older methods of fusing is the absence of a thread inven tory. The fusing and bonding process is used widely on parts of garments, generally on linings, labels, and short seams. One of its greatest potentials is in quilting where it can make decorative stitching. ent sizes is increasing productivity. New pattern marking systems which use photographs of a miniaturized pattern to preplan the marking of full-size patterns also are being used increasingly. Computerized pattern marking and grading are being used experimentally by some plants. Improvements in pattern marking and grading maximize cloth utilization and minimize preparation time and cost. Advances in sewing technology In sewing operations, gains in productivity are being achieved by work handling aids, machine attachments, parts stackers, and increased machine speeds. Since sewing ma chine operators may spend only 20 percent of their time actually sewing, machines that reduce the time required to position, adjust, and stack fabric can yield time savings.1 Thread cutters (trimmers), parts stackers, needle posi tioners, and button feeders contribute to worker productiv ity gains. While individual savings are small, their cumula tive effect may be substantial. The installation of automated button sewing systems featuring sequential indexing and automatic button feeding increases output and reduces unit labor requirements. In one plant visited by the BLS, for example, prior to the introduction of an automated button sewing system, an operator sewing buttons on shirts could do 2,300 pieces per day. On the new system, the operator is able to tend two machines, increasing output to 4,000 pieces per day. The linking of sewing machines and numerically con trolled equipment to perform a series of programmed oper ations has increased output, improved quality, and lowered unit labor costs in some plants. When the numerically con trolled sewing machine is programmed to sew a specific operation, the control guidance function of the operator is removed, resulting in job simplification and greater quality consistency. The operator becomes more of a loader and positioner. While the machine is going through its pro grammed cycle, the operator can operate additional ma chines or tend to other operations. Training time for new operators is less on a numerically controlled sewing ma chine. In an example of the productivity potential of new sew ing machine technology, a tape-controlled machine being used for inside sewing of shirt collars reportedly can turn out the same output as the former method with 64 percent fewer workers. Moreover, operator training time is less than half that required on the former system. Numerical control is expected to see increased use, though principally in the larger plants. The more widespread use of mini-memory units called PROMS (Programmable Read Only Memory Units) is expected to increase the diffusion of automated sewing equipment. Job duties also are being modified by the introduction of machine-controlled sewing machines such as the automa tic contour seamer and the profile stitching machine. These units are guided through sewing operations automatically Computers Computers are being used on a limited though increasing scale in the apparel industry; in 1974, 297 computer instal lations were reported.2 Declines in computer purchase and rental costs have increased the feasibility of computer usage. Generally located in the larger plants, computers are used most widely for accounting purposes, though they are being applied increasingly to sales analysis and forecasting, process inventory, and workflow management. In the pro duction process, computers are being used more extensively in pattern grading and marking, and as part of numerical systems for machine guidance directing cutting tools and sewing heads. Computers also have made their entry in the area of work-in-process control on the manufacturing floor. Centralized production and assembly By centralizing production and assembly and introduc ing new equipment, larger companies are achieving econo mies of scale. One shirt plant in Georgia visited by the BLS, for example, performs cutting operations for five plants and assembly of shirt fronts for three plants. Also an increasing practice is the shipment of cut parts to low-wage plants in foreign countries where they are assembled and shipped back to the United States for marketing. Improved management methods In recent years, increased emphasis has been placed on raising productivity through improved management tech niques. Work flow studies for determining plant layout and time and motion studies to optimize the arrangement of machines and operators are being applied more widely in 4 apparel plants. Improved quality control methods are re ducing material and product losses and improved scheduling techniques are making possible more efficient utilization of labor. The electronic computer also is being used by man agement in a few plants to carry out inventory management and sales forecasting and analysis more effectively. The separation of work processes into a number of sim ple operations performed separately by operators (the sec tion system) increases worker productivity and utilizes less highly skilled labor. The single-hand tailor system, where most sewing operations are performed by a single highly skilled individual, is used for a few men’s garments and for some of the more expensive women’s garments. Table 2. 1n d i c a t o r A v e ra g e a n n u a l ra te o f c h a n g e 1 1 9 6 0 -7 4 1 9 6 0 -6 7 1 9 6 7 -7 4 P a y r o ll p e r u n it o f - 0 .9 - 0 .6 - 1 .1 1 4 .2 8 .8 C a p it a l e x p e n d it u r e s p e r p r o d u c tio n w o r k e r . . . 1 2 .5 1 L i n e a r le a s t s q u a r e s t r e n d s m e t h o d . SO URCE: B u re a u o f th e C e nsus. in 1960 to $390.5 million in 1974, an average annual in crease of 13.3 percent. (In real terms, however, the increase was less because prices of plant and equipment rose over this period.) More than 50 percent of total spending for new plant and equipment during 1960-74 took place during the last 5 years of the period (1970 through 1974). In spite of substantial increases in capital expenditures, the industry remains one of the most labor intensive of all manufactur ing industries. Payroll costs accounted for 51 percent of industry value added in 1974 (Census data) compared to 42 percent for all manufacturing. Capital expenditures per pro duction worker in the apparel industry increased at an aver age annual rate of 12.5 percent from 1960 to 1974. (See table 2). Output and Productivity Outlook Output Output in the apparel industry rose at an average annual rate of 2.2 percent (Federal Reserve Board data) from 1960 to 1975. (The FRB index has limitations and therefore should be considered only as a rough indicator of output movement.) This rate was lower than the 2.6-percent aver age annual rate for 1950 to 1960. The rate of growth in output was greater in the early 1960’s, averaging 3.4 per cent for 1960-67 in contrast to an average annual rate of increase of 1.5 percent for 1967 to 1975. During 1967-71, output increased at an annual rate of 0.8 percent as the economy slowed in the late 1960’s and imports of cotton, wool, and manmade fiber apparel items rose by 139 per cent. From 1971 to 1973, apparel production averaged a 5.8-percent annual increase as consumer spending on ap parel increased and imports leveled off. Between 1973 and 1975, however, output declined by 4.2 percent. Employment and Occupational Trends Employment The apparel industry is one of the Nation’s largest manu facturing industries, employing over 1.2 million workers in 1975 (BLS data), or about 7 percent of the manufacturing work force. The industry is characterized by a large number of small plants, with approximately one-half of the indus try’s 24,134 establishments (Census data) employing fewer than 20 employees. The trend is toward fewer, but larger, plants. Average employment in 1972 was 56 employees per establishment, in contrast to 40 employees per establish ment in 1958. Total employment in the apparel industry increased only slightly from 1960 to 1975—at an average annual rate of 0.5 percent (see chart 2). The average annual rate of growth from 1960 to 1967 was 2.2 percent, compared to a decline of 1.0 percent from 1967 to 1975. The peak year for total employment was 1969, when the industry work force totaled 1,409,000 workers. By 1975, however, employment had declined to 1,235,000 workers, the lowest level since 1961. Following the steep cyclical decline of 1974-75, employ ment turned up sharply in 1976, and the long-term outlook is for continued increases. The 0.6-percent annual rate of growth projected by BLS for 1973-85 is about the same as the industry’s rate of employment growth during 1960-75, but is considerably below the 1.9-percent rate projected for the total private nonfarm economy. (See introductory note for assumptions related to projections.) Productivity Because of limitations of available data, reliable mea sures of productivity for the industry are not available. Pro ductivity measures are difficult to compute because of the lack of product standardization in the industry. However, some improvement in output per production-worker-hour is suggested by comparing trends in data on output from the Federal Reserve Board and production worker hours from the Bureau of the Census. (See chart 1.) Between 1960 and 1974, output increased at an average annual rate of 2.5 percent, substantially higher than the 0.6-percent average annual increase in production worker hours. Investment Capital expenditures Expenditures for plant and equipment in current dollars (data from Bureau of the Census) rose from $83.5 million Indicators of change in the apparel industry, 1960-74 5 Chart 1 Output and production-worker hours in the apparei industry, 1960-751 Index, 1967=100 160 Ratio scale 80 1960 1965 1970 1975 ^1974 data are the latest available for production-worker hours. Source: Output, Board of Governors of the Federal Reserve System; production-worker hours, Bureau of the Census. 6 Chart 2 Employment in the apparel industry, 1960-75, and projection, 1973-85 Employees(thousands) 1,600 1,500 Average annual percent change 1,100 1,000 1 Production workers All employees 1960-75 ............................ 0.5 1960-67....................... 2.2 1967-75....................... -1.0 Projected: 1973-85....................... 0.6 Production workers 1960-75............................. . 0.3 1960-67....................... . 2.1 1967-75....................... -1.4 0 1960 1965 1970 1975 Least squares trend method for historical data; compound interest method for projection. Source: Bureau of Labor Statistics. 7 1980 1985 tinue. The apparel industry has a higher than average pro portion of production workers, 86 percent compared to 71 percent for manufacturing as a whole in 1975. According to BLS projections for the apparel industry, employment increases are expected over the period 1970-85 in most occupational groups: Professional, techni cal, and kindred workers; managers, officials, and propri etors; sales workers; clerical and kindred workers; craft and kindred workers; and operatives. (See chart 3.) However, fewer service workers (janitors, cleaners, guards, attendants, etc.) and laborers will be employed in 1985. The introduction of new apparel technology is not ex pected to bring about major displacement of workers, al though unit labor savings in sewing and other production operations are expected as additional manual functions are eliminated. In some occupations, new technology will bring about increased employment. Within the professional, tech nical, and kindred group, for example, employment of com puter programmers, systems analysts, and other computer specialists is projected to increase by 19 percent between 1970 and 1985, as computer systems are diffused more widely. In the craft and kindred worker category, new and more complex technology will be a factor in the projected gain of 18 percent in the number of mechanics, repair workers, and installers. New technology is not expected to have a major impact on the level of employment of sewers and stitchers, who make up about 50 percent of the total apparel industry work force and constitute more than two-thirds of the op eratives category. However, the increase in employment of sewers and stitchers during 1970-85 is projected to be less than the increase in total employment. The extent to which technology will bring about a decline in the relative impor tance of this key occupational group is uncertain. One read ily apparent impact of new technology on sewing and stitching occupations is the decline in relative importance of manual skills as automatic equipment increasingly per forms production tasks. Apparel plants traditionally have located in the metro politan areas in the North because of their proximity to markets. Since World War II, however, there has been a movement away from the Northern cities to the urban and rural South, and more recently to the Southwest. The es tablishment and relocation of plants in the South and West have been a result primarily of the industry continuing to seek a lower wage structure and other benefits. Although apparel plants are widely dispersed throughout the country, about 80 percent of the industry work force is concen trated in 15 States. New York and Pennsylvania rank first and second in apparel industry employment; other leading States include California, North Carolina, New Jersey, Georgia, Texas, Tennessee, Massachusetts, South Carolina, Alabama, Mississippi, Virginia, Missouri, and Illinois.3 Earnings of apparel workers are among the lowest in all manufacturing industries. In 1975, the apparel production worker earned an average of $3.19 per hour or $111.97 per week, compared to an average of $4.81 per hour or $189.51 per week for all manufacturing. Most production workers are paid on a piece-rate system in which total earnings depend upon speed and skill. The industry exper iences high turnover rates. In 1975, the separation rate (monthly average) for the apparel industry was 6.1 per 100 employees, substantially above the separation rate of 4.2 per 100 employees in all manufacturing. According to a recent national survey of several hundred apparel plants, 77 percent claimed to be unable to meet expansion objectives for lack of labor. Within the apparel industry, employment trends varied during 1960-75. The greatest gains were in men’s and boys’ furnishings and miscellaneous fabricated textile products— employment in both industry components rose by 17 per cent. The greatest decline was in the industry component with the lowest total employment—hats, caps, and milli nery—where employment fell sharply, by 55 percent. Women accounted for 81 percent of the apparel industry work force in 1975, up from 78 percent in 1960. The ap parel industry has a higher proportion of women in the work force than any other manufacturing industry. In all manufacturing, women averaged only 29 percent of the work force in 1975. Women are employed primarily as nontrqpsport operatives (mainly sewers and stitchers), occupy ing nearly 90 percent of these jobs (1970 Census data), and to a lesser degree in clerical positions, staffing slightly over 70 percent of these positions. Women staff fewer than 20 percent of the management, administrative, and sales occu pations in the industry and less than 50 percent of the professional, technical, and craft worker positions. Adjustment of workers to technological change Although technological change is not expected to bring about widespread displacement or downgrading of apparel workers, some labor-management agreements now in effect in the industry provide for advance notice, planning of la bor requirements, and related measures to facilitate adjust ments should they be needed. A review by the BLS of 48 major collective bargaining agreements covering 1,000 workers or more in the apparel industry located eight agree ments covering 149,700 workers that contained provisions requiring advance notice of technological change. For ex ample, one agreement covering approximately 60,000 workers contained the following clause: Occupations Technological and other changes will continue to alter the structure of occupations in apparel plants. The propor tion of production workers to the total work force fell during 1960-75 (BLS data); this trend is expected to con “ The Administrative Board shall adopt rules and regu lations in connection with the introduction of new ma8 Chart 3 Projected changes in employment in the apparel industry, by occupational group, 1970-85 Occupational group Percent of industry employment in 1970 Professional,technical and kindred workers 2.0 Managers,officials, and proprietors 4.2 Sales workers 2.0 Clerical and kindred workers 8.0 Craft and kindred workers 7.0 Operatives -40 -30 73.7 Service workers 1.2 Laborers 1.9 Source: Bureau of Labor Statistics. 9 -20 Percentage change -10 0 10 20 30 Although union contract provisions would not apply to apparel industry workers who are not affiliated with a union, extensive planning, advance notice to employees, use of attrition to lower employment, and training programs to provide new job skills would facilitate orderly adjustments to technological changes in nonunion plants. Additional training for mechanics and maintenance workers may be required as new production technology incorporating complex electronic, pneumatic, and hydraulic control systems is introduced more widely. The degree of unionization varies with the type of ap parel item produced and region of the country. Unioniza tion tends to be very strong in the men’s coats and suits and expensive women’s wear sectors of the industry, and weak in work clothing, less expensive women’s wear, and men’s wear other than coats and suits. Union membership is high est in metropolitan areas, particularly in the northeastern States. The two major unions in the industry are the Interna tional Ladies’ Garment Workers’ Union (ALF-CIO), and the Amalgamated Clothing and Textile Workers Union (AFLCIO). Smaller unions include the United Garment Workers of America (AFL-CIO) and the United Hatter’s, Cap, and Millinery Workers International (AFL-CIO). 1Apparel Research Foundation, Inc., The Journal o f the Apparel Research Foundation, Inc., Vol. 3, No. 2, p. 2. 1875 (Bureau of Labor Statistics, 1976), p. 607. chinery in the industry in order that workers shall not suffer any undue hardships.” Another agreement, covering more than 100,000 workers stated: “ If, however, in the event that the introduction of any such new machinery, changes in manufacturing tech niques and technological improvement would not, in the opinion of either party, be consistent with the mainte nance of the aforesaid basic conditions, then the Associ ation and the Amalgamated Clothing Workers of Amer ica shall each appoint a committee which jointly shall study and seek to resolve the problems attendant upon such change.” 3Occupational Outlook Handbook, 1976-77 Edition, Bulletin 2 Ed Burnett, “Computers in Use: Analyzed by Standard Indus trial Classification: 1974 Compared with 1968 - Part 2,” Com puters and People, June 1975, p. 28. SELECTED REFERENCES “Advances in Cutting Technology-Automatic Cutting,” The Jour nal o f the Apparel Research Foundation, Inc., Vol. 3, No. 4, 1969. Management System Speeds Fashion Production,” Apparel Manu facturer, June 1973, pp. 23-26. “Alternate Methods of Seaming: Ultrasonics,” The Journal o f the Apparel Research Foundation, Inc., Vol. 3, No. 2,1969. The American Apparel Manufacturers Association, Inc., 1972. Priestland, Carl. Focus-Economic Profile o f the Apparel Industry. “The User-Developer Conference on Textiles and Apparel,” Bob bin, September 1973, pp. 122-47. “Apparel Labor Markets Shrinking, Shifting,” Southern Garment Manufacturer, May 1974, pp. 36-40. Toal, William D. “The Southeast’s Cutting Up and Needles Trades,” Monthly Review, Federal Reserve Bank of Atlanta, November 1973, pp. 170-77. “Computer Ties Forecasts to Production Control,” Apparel Manu facturer, June 1973, pp. 21-22. U.S. Department of Labor, Bureau of Labor Statistics. Industry Wage Survey: Women’s and Misses’ Dresses, August 1971. Bulle tin 1783, 1973. “Hughes Eyeing Apparel Firms for Laser Cutting System,” Women’s Wear Daily, Mar. 18, 1974, p. 20. 10 C h a p te r 2. F o o tw e a r Summary graphic relocation to more rural areas in the South and West. This study, however, does not cover these subjects but concentrates primarily on technological changes and their labor implications. Technological changes have been very moderate in the footwear industry in the last 20 years. It is still essentially a piecework, cut-and-assembly industry and the changes in skill and labor requirements over this period have been min imal. The outlook for modernization is somewhat more favorable as new technologies are developed, including flow molding, new lasting machinery, and computer-controlled cutting and stitching. However, their use is limited and the rate of diffusion will probably continue to be quite slow. Output of shoes and slippers (except rubber) declined at an average rate of 2.2 percent annually from 1960 to 1975. In 1975, output was the lowest in the post-World War II period. Imports have made significant inroads in industry markets; they constituted 44 percent of apparent consump tion1 in 1975 (in quantity), compared with 13 percent in 1966. In 1976, imports again rose very sharply, and there is no indication of a significant reversal of this trend. Productivity growth was relatively slow in the 1960-75 period (0.4 percent annually) and was associated with a sharp decline in output and a somewhat steeper drop in employee hours. Among the 58 industries for which BLS data are available, the footwear industry experienced the lowest productivity gain. Moreover, its productivity is not expected to increase substantially in the second half of the decade. Outlays for machinery, whether purchased or rented, have been relatively low. Combined outlays for rental and purchase of plant and equipment per production worker in 1971 were only one-fourth as large as the average for all manufacturing. Rental outlays, however, are high in this industry compared to other industries, often exceeding cap ital expenditures. The outlook is perhaps more promising, but the structure of the industry, e.g. many small firms, and unfavorable economic conditions, including high imports, continue to act as deterrents to investment. Employment is at the lowest point in at least 35 years. From 1967 to 1975, the rate of decline averaged 4.3 per cent annually and was associated with sharp decreases in output. Employment recovered noticeably in 1976 as the economy improved, but the long-term outlook is for con tinued slow decline. Structural changes are occurring in the industry. The vertical integration of larger companies (principally by ac quisition of retail outlets) is altering investment and mar keting patterns. Another change taking place is the geo Technology in the 1970’s Shoemaking is still in large measure a piecework indus try-technology has not changed significantly in the last 20 years. Perhaps the most important change is the increased use of synthetic materials. Most technological changes have consisted of the merging or elimination of a number of single small operations, rather than the introduction of automated machinery. Depending on the type of shoe made, from 50 to 100 operations may still be required. Although a few technologies of the last decade, such as injection molding and computer-controlled cutting and stitching, have altered traditional methods in some lines of production, their use is very limited and their effect on labor requirements has been minimal. (See table 3.) There are significant obstacles to the introduction of automatic machinery. One of the most important is that the industry as a whole is not using a uniform last-grading system that would allow the introduction of standardized equipment. Another factor is that many of the new tech nologies are not economically feasible with the short-run production patterns common in the shoe industry because of the high capital outlays required. It is, moreover, diffi cult to design automatic equipment which can be adapted quickly to the frequent style changes. Even the materials handling problems have not been successfully worked out in the smaller plants. The use of leather which is not uni form is itself a limiting factor in the use of highly mechan ized or automated equipment. Nonleather materials Strong productivity growth, in the long run, may depend on the use of synthetic materials. Because they are more uniform, nonleather materials may be cut several layers at a time, for example. But perhaps of greater importance is the fact that synthetic materials with thermoplastic properties are necessary for many of the new, more productive tech nologies. Flow molding and injection molding, discussed be low, are two such examples. 11 Table 3. M ajor technology changes in the fo otw ear industry D e s c r ip tio n T e c h n o lo g y L a s e r c u t t in g C o m p u te r -c o n tr o lle d p a tte rn c u t t in g ; fa s te r th a n D if fu s io n L a b o r im p lic a t io n s la s e r f o r c o n s id e r a b ly U n it la b o r r e q u ir e m e n ts fo r p a t m o ld s R educes d e s ig n s la b o r in t h e r m o p l a s t i c u p p e r s r e s e m u p p e rs b y b lin g s t it c h in g s t it c h in g , p in k in g , e tc . P e rm its p e r r a p id N u m e r ic a lly c o n tr o lle d s y s te m ; p e r m its changes, b u t c a lly s e v e ra l sup s e w in g re q u ire m e n ts fo r p e r c e n t, e lim in a tin g and o th e r b u t r e q u ir e s s k ille d o p e r a tio n s , te c h n ic ia n s to In tro d u c e d used fo r v in y l a b o u t 5 y e a rs a g o , n o w less shoes. th a n 10 G ro w th p e rc e n t depends of on m a t e r i a l a n d l a b o r s a v in g s . w ith G re a tly re d u c e s u n it la b o r of o n ly used p r im a r ily e c o n o m i m a k e rs . Now fin d in g lo n g c a tio n s . s ty le s k i l l e d s e w in g o p e r a t o r s . A v a ila b le c o m m e r c ia lly y e a rs , r a p id is o n l y fe a s ib le 20 p r e p a re m o ld s . f a s h io n c h a n g e s . C o m p u t e r - t a p e s t it c h in g p lu s s ta n tia lly . A u to m a tic a lly fo r a tio n s , a p p r o x i m a t e l y s ix t o s e v e n c o m p a n ie s p l ie r s ; n o t e x p e c t e d t o in c r e a s e s u b c o n v e n t io n a l m e th o d s . F lo w m o ld in g Used b y shoe te rn c u tte rs g re a tly re d u c e d . p ro 1 to 2 by boot o th e r a p p li d u c t io n ru n s . N e w la s t in g m a c h in e r y S t r in g l a s t in g r e q u i r e s s e w in g a s t r in g a r o u n d is p u l l e d to th e u p p e r w h ic h shape a ro u n d th e S t r in g la s t in g s k ille d l a s t in g o p e r a t o r . G e n e r a l l y re d u c e s la s t . A l s o i m p r o v e m e n t s in f l a t la s t in g u n it e lim in a t e s la b o r need fo r n e e d s f o r la s t A bout 7 p e rc e n t sho es a re s t r in g of n o n ru b b e r la s te d . N e w e s t fla t l a s t in g v e r y w i d e l y u s e d . in g . m a c h in e r y r e d u c e n u m b e r o f o p e ra tio n s . In je c t io n m o ld in g A u to m a tic a lly p la s t ic m o ld s b o tto m s R e q u ire s th e rm o to e ith e r lit tle e lim in a te s or no m any hand s k ill; o p e r a tio n s in In tr o d u c e d p lie d to in th e about 7 1 9 6 0 's , now p e rc e n t of ru b b e r shoes; w o r k e r s , in c lu d in g e d g e t r im m e r s , fe c te d by s o le m o ld e d u n it b o tto m s . m ost s y n th e tic o r le a th e r u p p e rs . p la n ts r e q u ir in g s k ille d a tta c h e rs , s h a n k e rs , e tc . O n e o p e ra to r m a y g r o w th r a p id m ay d iffu s io n ap non be of a f p re r e p la c e s ix f o r c o n v e n t i o n a l c e m e n t s o le s . U n it b o tto m s M o ld e d u n it b o tto m s E lim in a te s p u r chased b y shoe fa c to ry . e ra to rs h ig h ly r e q u ir e d in s k ille d op D if f u s io n v e ry r a p id . c o n v e n t io n a l b o t to m in g . Although synthetics are very common for other parts of the shoe, less than two-fifths of the shoes manufactured use synthetics for the upper part. These are almost entirely vinyls or urethanes and most are in the lower priced lines. The more expensive poromeric materials, which reportedly breathe and absorb moisture, have been successful primarily in specialty shoes. Currently, new synthetic materials are being tested which may be used successfully for better shoes. Also, considerable work has been done in trying to develop a reconstituted leather which would have some of the advantages of synthetics. more efficient material utilization. However, because mate rial savings are difficult to measure and labor savings are small, manufacturers find it difficult to justify the invest ment. Another relatively new technique is the computercontrolled laser cutter for pattern cutting. But it is used by only 6 or 7 of the largest shoe companies, and by several specialized pattern-making plants that supply the industry. It is four or five times faster than the older conventional process, but will continue to be limited because of the ex pense. New cutting procedures New sewing methods Cutting of shoe uppers and linings, the first major ma chine operation, continues to be a highly skilled occupation for men and women. Some cutters are the highest paid workers in the plant, although labor costs for cutting ac count for only 5 to 8 percent of total labor costs. In gen eral, the cutting process for linings and materials, both lea ther and synthetic, remains basically unchanged in almost all plants. One new technology, a computer-programmed water jet process for cutting manmade shoe material for insole and outsole shapes, is just becoming available commercially. Although it is not significantly faster than a skilled cutter using a die, the water jet process offers the potential for The fitting room, which may encompass as much as 40 percent of the factory’s labor requirements, is most likely to see many technological changes in the next decade.2 Fitting, or preparing the uppers, requires assembling and sewing or otherwise attaching sections of the uppers to gether, and perhaps sewing a design on top. The changes which are being most widely adopted are modifications to the sewing machine which require fewer manual skills and less handling and therefore less time per operation. Since fancy stitchers are often the largest occupational group in the shoe plant, this could lead to significant reductions in unit labor costs. 12 Automatic tape-controlled stitching machine forms a design on the shoe upper Some of the technological advances on the newer ma chines include mechanized thread cutting and automatic needle positioning. According to an industry specialist, this type of machine can increase output per worker-hour by about 40 percent over machines requiring manual opera tions. However, maintenance costs may be increased. Cur rently, only a small proportion of the industry has adopted these changes. New lasting methods Lasting operations, which may account for about 25 per cent of the labor requirements of the shoe factory,6 shape the shoe on a form—called a last—made to size and style specifications. This step in shoe manufacture involves five basic operations and some preparatory operations which can be combined in alternative ways and on various ma chines. Lasting is undergoing many changes but progress varies considerably depending on the shoe style and mate rial. In general, the lasting method requires many steps in cluding tacking and cementing to fasten the shaped material to the insole. Thermolasting, the most common method, molds and fastens a synthetic or leather upper by using electronically activated cement, eliminating the jobs of tacking and precementing. Although thermolasting has been very widely accepted, some older plants still have not adopted it. An important advance of the last 5 years is the one-station process of pull-tpe lasting which combines the separate operations of pulling-over and toe lasting. This combination of operations saves time, reduces labor, and lowers the required skill level. In some cases, the pulling and lasting operation can now be done on two machines in place of six. Flow molding. Since sewing is a relatively expensive process in shoe manufacture, a new method called flow molding, which closely resembles stitching but can only be used with thermoplastic materials, may be one of the more important developments in shoe manufacture.3 In this process, a high-frequency radio wave system is used to emboss a pat tern of stitches or designs or other detail onto a thermoplas tic upper from a mold generally made from an identical leather component. It can also attach different pieces of thermoplastic to form a particular design. In the conven tional system, highly skilled operators would perform stitching, printing, or perforating jobs to complete the same design. Flow molding may save as much as 20 percent of the labor conventionally used in preparing the upper parts of some shoes, but requires skilled technicians to prepare the mold and to make the original pattern. Consequently, this process may be most economical for long runs which con ventionally would require considerable sewing, perforating, or other decorative work. Also, the vinyls currently in use have not been fully satisfactory for the flow molding pro cess. The development of new and better materials could result in the greater use of this process. Available commer cially for about 5 years, flow molding is currently used in less than 10 percent4 of vinyl shoes made. Whether this process becomes more important will depend on the price and availability of thermoplastic materials, the availability of skilled technicians, and the cost of substituting flow molding for conventional methods. Another change in lasting methods in the past decade is the application of string lasting to vinyl-upper footwear. A string is sewn around the upper part of the shoe and when the shoe is ready for lasting (shaping), the string is pulled tight around the last. In contrast, thermolasting requires a highly skilled operator who can shape the upper properly and cement it carefully without damaging the material. Cur rently, about 7 percent of nonrubber shoes are made with string lasting.7 Although the string method can be used with leather, it requires special equipment and is not in general use. Many of the problems involved are being solved, however, and the use of string lasting for leather shoes may increase. In welted construction, the lasting operation may in clude as many as nine steps, requiring several skilled and semiskilled operators. About 15 percent of nonrubber shoes and almost 50 percent of men’s shoes are made in this way.8 In this process, relatively little technological change has occurred, although modifications to existing machinery have been developed. New machines have recently become available which combine many operations; their use makes possible three-machine lasting with savings in operators’ la bor. Many operators in welted construction are toe and side lasters and pullover machine operators.9 Computer stitching. A relatively new development in the fitting room is computer stitching. Computer stitching is faster and may be more accurate for decorative stitching than traditional methods but it is not economically feasible, except for long runs. This numerical control system utilizes a computer tape to control stitching and thereby reduces the required employee-hours and skill level of the operator. For example, cowboy boot designs sewn with conventional methods may take a highly skilled operator about 10 min utes; with computer-tape stitching, a relatively unskilled op erator would require only 2-3 minutes.5 Since this system is not economical for many operations, newer systems to re duce the cost of automated stitching are being adapted to shoe manufacture. It is expected, for example, that they will make feasible the automatic join-and-sew operations such as closing of seams and conventional bar tacking oper ations. Last grading The more rapid adoption of a standard system of grading shoe lasts—geometrically rather than arithmetically—could significantly increase productivity. It is based on the con 14 recent years for some styles of shoes by the purchase of molded unit bottoms by the shoe factories. The purchased units are cemented to the uppers, thus eliminating the more skilled, exacting operations of bottoming and the associated labor which would be required in the shoe factory. While some of the larger companies make their own molded bot toms, most companies purchase them from specialty shops. The diffusion of this practice has been very rapid and is being used for men’s and women’s shoes, whether high- or low-heeled, leather or synthetic. cept of changing all last (shoe form) dimensions proportion ately by the same percentage factor with each size change. The arithmetic grading system, in general use since 1887, is based on adding fixed increments to length, width, and girth for each size change. Unlike the arithmetic grading system, geometric grading does not require manual labor for adjusting and positioning in shoemaking operations. While geometric lasts are being adopted by the larger com panies, in general the changeover to geometric grading has been very gradual because of the costs associated with re placing old lasts. A research program recently funded by the industry and the Federal Government is investigating several aspects of standardization. One of its objectives is to educate the industry to the advantages of standardization. Output and Productivity Outlook Output Bottoming processes Output of shoes and slippers (except rubber) declined at an average annual rate of 2.2 percent from 1960 to 1975. In 1975, after 7 consecutive years of decline, the annual output was the lowest in the post-World War II period.11 Production rose very slowly from 1960 to 1967 (average increase of 0.1 percent annually), but dropped sharply (av erage of 4.2 percent annually) from 1967 to 1975 (chart 4). The sharp decline since the mid-1960’s, when output hit peak levels, was largely a function of the reduced output of women’s shoes. Production of women’s shoes fell over 40 percent from 1966 to 1975, while men’s shoe production declined about 18 percent over these years. The contraction in footwear production is largely asso ciated with lower price, higher style imports which started to increase in the mid-1960’s. Low labor cost in exporting countries has been the key factor. In the period 1966-75, the quantity of imported shoes more than tripled, to 319 million pairs, while domestic shoe production fell 36 per cent. In 1975, imports constituted 44 percent of apparent consumption (quantity) compared with 13 percent in 1966. In terms of value, imports made up 27 percent of consump tion in 1975 compared with 5 percenj: in 1966.12 Imports again rose very sharply in 1976 and it is ex pected that they will continue to be a serious problem to the domestic industry. Hourly compensation in the domes tic industry continues to be higher than in most exporting countries. At the same time, while productivity levels may be higher in the United States, productivity growth has been negligible since the early 1960’s. There is no indica tion of a significant reversal of this trend. The injection molding process of attaching the bottom to the shoe substantially reduces the labor required for con ventional shoe production, but is used for only about 7 percent of nonrubber shoes.10 The conventional method of cementing the shoe bottom onto the upper is a difficult, highly skilled operation which may involve a dozen steps. In this newer bottoming operation, the injection molding machine automatically molds a shoe bottom from thermo plastic or polyurethane material to the upper part of the shoe. Little or no hand skill is required in this operation, which replaces several cutting, trimming, and finishing jobs. One operator may replace as many as six operators in the conventional cement-sole operation. In spite of these apparent advantages, injection molding has not been readily adopted. The high cost of molds is a limiting factor. Another major reason is the success of “unit bottoms,” discussed below. The unit bottoms which are purchased by the plant provide the advantages of injection molding without the high capital investment and mold de velopment costs. For shoes which include a welt around the sole, rela tively little change has occurred in the highly skilled bot toming process currently in use. The welt is a strip of leath er or other material which is sewn to the insole rib—only one of many processes necessary for preparing and bottom ing a Goodyear-welt shoe. The process of sole-attaching is done on a lockstitch machine which fastens the sole to the welt. Some of the newer machines combine operations but no important technological changes have occurred, with the one exception of cement toe lasting in place of wire. In general, the plants which produce higher priced men’s shoes use many highly skilled workers for bottoming, some of whom, like the inseamers, are among the higher paid work ers in the plant. Productivity Productivity showed relatively little growth in the 15year period 1960-75. Among the 58 industries for which BLS data are available, the footwear industry experienced the lowest productivity gain.13 Output per employee-hour increased only 0.4 percent annually during 1960-75, com pared with 2.1 percent in the decade of the 1950’s. The low productivity growth is associated with the very sharp de- Molded unit bottoms The process of bottoming, i.e. attaching the bottom to the upper part of the shoe, has been greatly simplified in 15 Chart 4 Output per employee-hour, output, and employee hours In the footwear Industry, 1960-75 Index, 1967=100 120 Ratio scale 60 B S B S K S 1960 1965 1970 Note: 1975 data are preliminary. Source: Bureau of Labor Statistics. 16 1975 cline in production, as discussed above, and a somewhat steeper drop in employee hours over the period. As can be seen on chart 4, the rate of productivity gain has been relatively stable but small since 1960. In 1975, however, productivity showed an unusually high increase of 7.4 percent as output declined relatively little (1.5 percent) and employee-hours fell very steeply (8.2 percent). In anticipation of a severe and long-lasting recession, employees were laid off during late 1974 and early 1975. Although demand picked up sharply later in 1975, workers were recalled only slowly. A similar pattern of production and hours had occurred in 1970, the only other year since 1950 in which the productivity gain was high. The very slow growth in footwear productivity is asso ciated, in large part, with methods of production which have not changed significantly in recent years. Moreover, continued emphasis on fashion changes, even for men’s shoes, necessitates short-run production schedules in which productivity is relatively lower. The following tabulation shows the difference in productivity between “hi-style” and volume production in one manufacturing plant visited: Type of shoe Table 4. Value added in the shoe (except rubber) industry: Ratios of»"highest quartile" to "lowest quartile" plants1 and to average plant, 1967 W elts................................. .................... 4 - 5 Cements: Novelties...................... .................... 6 - 8 F la ttie s ........................ ....................1 2 - 1 5 Injection molded: Stringlast............................................ - 2 .5 H ig h e s t q u a r t ile t o 1 .5 1 E s ta b lis h m e n t s w e re p ro d u c tio n -w o r k e r -h o u r . ra n k e d D a ta by cover th e r a tio n o n ru b b e r of v a lu e shoes added o n ly per and do n o t i n c l u d e s lip p e r s . SO URCE: B ased on u n p u b lis h e d C ensus d a ta p re p a re d fo r th e N a tio n a l C e n te r f o r P r o d u c t iv ity a n d Q u a lit y o f W o r k in g L ife . a measure of potential growth or simply for greater under standing of productivity differences. In a study of 1967 Census data14, shoe plants were ranked by value added per production-worker-hour, which permits a rough indication of the range of distribution of productivity. In this indus try, average value added per production-worker-hour in the highest quartile was 2Vi times larger than in the lowest quar tile, and P/2 times larger than the average. (See table 4.) This may reflect differences in product mix, size, manage ment, labor utilization, capital outlays, and other factors. Unfortunately more detailed data are not available. Volume Investment 8-10 An industry’s capital outlay for equipment is generally considered an indicator of technological change. This is not the case in footwear, however, because the practice of leas ing machinery is so extensive.15 Most firms still lease some machinery, and some firms lease all their machinery. Al though the smaller companies tend to lease more because of the high cost to them of capital (or the problems of avail ability), even the largest companies may lease as much as 25 percent of their machinery. Census data for 1973 indicate that about half the outlay by footwear companies for plant and equipment was for rental payments. In manufacturing as a whole, rental payments accounted for only 16 percent of total outlays in 1973. Taken together, outlays for plant and equipment, whe ther purchased or rented, have been relatively low in this industry. Expenditures for new plant and equipment moved up, after several years of decline, to $44 million in 1973. But this was slightly below the peak outlay in 1968. Rental payments also increased in the last several years to $44 million, but that too was no higher than the 1968 pay ments. These are current-dollar figures which reflect costs unad justed for changes in the prices of machinery or changes in rental costs. Although prices of shoe machinery, specifi cally, are not available, prices of special and general purpose machinery rose very substantially over the 1968-73 period. It is, therefore, reasonable to assume that the capital expen ditures which were similar in 1968 and 1973 actually repre 9-12 15 - 20 40 Productivity is not likely to increase substantially in this decade. As shown earlier, current technological changes are only slowly affecting unit labor requirements, and expected capital expenditures are not likely to change this signifi cantly in the next several years. The industry’s problems are currently compounded by the uncertain economic outlook coupled with strong imports. Nevertheless, some changes are occurring which may strengthen the industry. One of these is the increase in vertical integration by the larger firms, principally by the acquisition of retail outlets. While greater concentration of production has not occurred in the industry, the larger companies are becoming stronger and more effective in dealing with marketing problems and perhaps with capital investment. Best plant practice Although the average productivity of an industry is the common measure, the range of distribution of productivity among establishments in an industry with a high degree of specialization such as the shoe industry can be significant as w o r k e r -h o u r H ig h e s t q u a r t ile t o Output per production worker (pairs per 8 hours) Hi-style V a lu e a d d e d p e r p r o d u c t io n - R a tio 17 time, jobs held by women—top stitching, fitting, and in spection—have been relatively stable. As a result, the num ber of women employees declined only 6 percent from 1960 to 1975 compared with the sharp drop of 36 percent for men. By 1975, women constituted 65 percent of foot wear workers, the proportion having moved up steadily from 56 percent in 1960. sented a considerable decline in real dollar value in 1973. The assumption can also be made that a decline occurred in the real value of rental outlays between 1968 and 1973 although data are not available on rental costs. Another measure of capital investment is its relationship to labor. Per production worker, the outlays for rented and purchased equipment in the shoe industry are very low rela tive to other industries. As employment dropped in the 1960’s, outlays per production worker rose quite rapidly, to almost $500 in 1971. Nevertheless, that was only about one-fourth of the average outlay per production worker made by manufacturing industries that year (Census data). Research and development funds are also very limited. Except for a few manufacturers, the industry relies on ma chine manufacturers and general suppliers for equipment development. Low profit rates and the structure of the in dustry, e.g. many small firms, have been serious deterrents to investment for research or development. There is no expectation, at this time, of significantly higher investments by the industry. Most shoe companies and machine manufacturers are reluctant to make substan tially larger capital outlays when production is declining, without anticipation of a substantial change in direction. Occupations About 6 percent of the footwear workers are skilled, compared with 20 percent in all manufacturing, but about 75 percent are semiskilled, compared with fewer than half in manufacturing. The large number of semiskilled workers reflects the nature of the work—the numerous hand or ma chine operations involved in assembly and finishing. Many of these semiskilled jobs, typically performed by women, are simple and repetitious and require relatively little train ing. Most of these are in the stitching, fitting, and inspec tion operations. The skilled jobs are more often performed by men and include cutting, lasting, and bottoming. How ever, a few highly skilled jobs are held primarily by women in stitching and fitting operations.16 Since technological changes are evolving slowly, they are influencing skill and labor requirements only moderately. Nevertheless, a few innovative processes with a relatively rapid rate of diffusion, such as injection molding, are alter ing occupational patterns in some shoe plants. The major thrust of new technology in this industry is to simplify the jobs, or “ de-skill” them, in an effort to in crease productivity and reduce unit labor cost. For exam ple, new molding techniques that simulate stitched uppers eliminate the need for skilled stitching operators. Similarly, in the computer-tape stitching innovation, an unskilled op erator can do the job in one-fifth the time required for a skilled stitcher working conventionally. The use of synthe tics rather than leather is another example of job simplication. Cutting uppers from hides is a slow and difficult job, requiring skill and experience, while vinyl can be cut 8-10 sheets at a time with considerably less skill. Nevertheless, while skill levels are being reduced in many operations, the level of responsibility required for the operation of a few complex machines may be greater. To a lesser extent, certain occupations are being entirely eliminated by new technologies. For example, an injectionmolded sole, unlike the conventional cement sole made in an average plant, does not require operations by the edge trimmer, the heel attacher, the sole attacher, the shanker, and others. As mentioned earlier, one operator may replace as many as six on the conventional cement-sole operation. The effect of new technologies on labor requirements depends on the rate of diffusion, which, as discussed above, is relatively slow in this industry. Consequently, these changes are only moderately altering the occupational dis tribution in the industry. The BLS projections of footwear Employment and Occupational Trends Employment About 163,000 workers were employed in the footwear industry in 1975, the lowest number since 1939 (earliest comparable data; BLS). Following a relatively stable period in the 1950’s and early 1960’s, employment declined sharp ly. From 1960 to 1967, employment fell an average of 0.5 percent annually, but from 1967 to 1975 the rate of de cline was considerably faster, 4.3 percent annually. (See chart 5.) This accelerated rate of decline is associated with the very sharp decrease in output which started in the late 1960’s and deepened during periods of recession. Overall, from 1960 to 1975, employment in footwear manufactur ing fell an average of 2.2 percent annually. Although em ployment recovered noticeably in 1976 as the economy improved, the long-term outlook is for continued slow de cline, as shown in chart 5. Production workers accounted for about 87 percent of all employees in the industry in 1975, and their share of the total has not changed significantly since 1960. This propor tion is very high compared with other industries. In all manufacturing, production workers account for about 75 percent of all employees. Women historically have held a large proportion of jobs in the footwear industry and in the last decade their relative position has been further strengthened by technological changes. Changes in manufacture associated with cutting, lasting, and bottoming—and especially the shift to leather substitutes—have tended to reduce unit labor requirements for jobs that were traditionally held by men. At the same 18 Chart 5 Employment in the footwear Industry, 1960-75, and projection, 1973-85 Employees(thousands) 250 Average annual percent change 150 125 0 | ’' 1960 All employees 1960-75..................... —2.2 1960-67............. -0 .5 1967-75........... -4 .3 Projected: 1973-85..................... -1 .3 Production workers 1960-75..................... -2.5 1960-67........... -0.7 1967-75.............. .-4 .4 1965 1970 1975 Least squares trend method for historical data; compound interest method for projection. Source: Bureau of Labor Statistics. 19 1980 1985 employment by occupation17 in 1985 (chart 6) show very little change in the distribution between 1970 and 1985. White-collar workers (professional, technical, and kindred workers; managers, officials, and proprietors; and sales and clerical workers) are expected to increase their share of total employment from 14.1 percent in 1970 to 15.1 per cent in 1985. The blue-collar group of craft workers, oper atives, and laborers may drop only 1 percent of their share to 83 percent of the total. The remaining group, the service workers, will continue to constitute about 2 percent of all workers in this industry. The distribution in 1970 and in 1985 is not expected to differ significantly because every occupational group, ac cording to this projection, is reflecting the total industry employment decline over this period, as shown in chart 6. The number of operatives, the largest occupational group in the industry, is expected to decline 27 percent from 1970 to 1985. Within this category, sewers, stitchers, and ma chine operatives are the largest groups. BLS of eleven major collective bargaining agreements in effect in 1975 covering 1,000 workers or more revealed only two, accouting for 5,100 workers, which required ad vance notice of change in machinery or methods. Two con tracts required advance notice for layoff or plant shutdown. One major contract reads: “When machinery substitutes for hand work, the em ployees of the particular operations affected shall receive the preference to operate the machinery. The union shall be notified of such contemplated changes at least five days in advance.” Since about three-fourths of the production workers are on incentive wage systems based on individual piecework, contract provisions dealing with rate structures on new or revised job schedules are very important. Some contract provisions contain wage guarantees tied to previous earnings for a determined period pending establishment of new rates. These may then be “ grieved” and brought to arbitra tion. For one of the larger companies, the provision reads: “ Where new or changed operations, conditions, change in method, machinery or materials are intro duced into the factory, the existing applicable class wage shall continue in effect, but the company shall have the right to adjust the piece rate. If after a reasonable learn ing period, the operators thereon fail to reach the estab lished level of earnings on the job, the company and union, at the request of either party, shall make a joint investigation to determine the cause of such failure, since under the foregoing circumstances, a maintenance level of earnings can normally be expected.” Adjustment of workers to technological change Programs to protect the worker from the adverse effects of changes in machinery and methods may be incorporated into union contracts or they may be informal arrangements between labor and management. Adjustments to new tech nologies may relate to the workers’ involvement through advance notice or knowledge of workload changes, with possibilities of retraining or transfer based on seniority rights. Where severance is a possibility, seniority may be particularly important. Aid in adjustment to layoff may include various types of income maintenance such as sup plementary unemployment benefits or severance pay. In general, these provisions are more prevalent and more de tailed in formal contracts. In the shoe industry, less than one-half of the industry’s production workers are in establishments covered by labormanagement contracts compared with an average of 60-65 percent in all manufacturing. They are generally 2-year con tracts, rather than the 3-year contract common in other industries. The major unions are the United Shoe Workers of America and the Boot and Shoe Workers Union, both AFL-CIO affiliates. In the shoe industry, contract provisions to assist work ers in their adjustment are based primarily on rights of seniority. However, these provisions are often limited, for example, either to the job or to the department. Only a few contracts mention technology changes, as such, and many have no arrangements for grievance. An examination by the The matter may then be negotiated and if necessary sub mitted to arbitration. That type of wage assistance to workers in their adjust ment to machine or method changes is not standard, how ever. Many com panies do n o t include provisions in their contract for an interim wage rate or arbitration on the final wage rate. Layoffs and plant closings have been and continue to be a severe problem in the shoe industry, and major contracts reflect this concern in provisions for worksharing and sever ance pay. Severance pay provisions are included in seven of the eleven major union contracts mentioned earlier. As for worksharing, a contract provision of one of the largest shoe companies reads as follows: “ Layoffs shall not be made nor any employee sent home on the basis of seniority. No waiting time shall begin and no operator shall be sent home as long as there is any work ahead of any operator on the particular job. Either all or no employees shall be sent home or paid their average hourly earnings in the event there is a stop page in the flow of work to their operation.” 2 0 Chart 6 Projected changes in employment in the footwear industry1, by occupational group, 1970-85 Occupational group Percent of industry employment in 1970 Professional,technical and kindred workers 1,3 Managers, officials, and proprietors 2.9 Sales workers 1.6 Clerical and kindred workers 8.2 Craft and kindred workers 13.8 Operatives 68.7 Service workers 1.5 Laborers 1.8 Percentage change -40 -30 -20 -10 0 includes footwear cut stock and findings (SIC 313) and footwear except rubber (SIC 314). Source: Bureau of Labor Statistics. 2 1 10 20 30 FOOTNOTES 1Apparent consumption represents new domestic supply. It is production minus exports plus imports. and slippers. Rubber shoes are defined as shoes with soles vulcanized to fabric uppers. In 1974, production of this type of shoe totaled almost 150 million pairs, compared to 450 million pairs o f non rubber shoes and slippers. 2 Unpublished data based on BLS field visits. 3 Ibid. 12 Current Industrial Reports, p. 4. 4 Ibid. 13 Productivity Indexes, p. 7. 5Ibid. 14 Data exclude rubber shoes and slippers. Unpublished Census data prepared for the National Center for Productivity and Quality o f Working Life. Although value-added data are not used for pro ductivity measurement, they are nevertheless useful for a rough indi cation of the range o f distribution o f productivity in an industry with a high degree of specialization. 6 Ibid. 7Ibid. 8 Current Industrial Reports, Shoes and Slippers by Type o f Construction and Price Line, 1975, (Bureau of the Census, August 1976) , p. 5. 15 For historical background, see study by Battelle Memorial In stitute listed under Selected References. 9Industry Wage Survey, Footwear, March 1971, Bulletin 1792 (Bureau of Labor Statistics, 1973). 16Industry Wage Survey, p. 14. 1 0 Current Industrial Reports, p. 4. 1 ‘ For the index of output, see Productivity Indexes for Selected Industries, 1976 Edition, Bulletin 1938 (Bureau of Labor Statistics, 1977) . This index is based on Census data of shoe production by type and weighted by employee-hours. It covers nonrubber shoes 1 7In addition to SIC 314, footwear except rubber, the BLS oc cupational data include SIC 313, boot and shoe cut stock and find ings. In 1973, employment in SIC 313 totaled 8,500 compared with 169,800 in SIC 314. SELECTED REFERENCES American Footwear Industries Association. Footwear Manual 1976. 1976. McCarthy, James E. Trade Adjustment Assistance: A Case Study o f the Shoe Industry in Massachusetts. Research Report 58. Boston, Federal Reserve Bank o f Boston, June 1975. Battelle Memorial Institute. Opportunities for Increasing Markets and Employment in the Shoe Industry, Vol. 1. Published by U.S. Department of Commerce, 1966. U.S. Department of Commerce, Bureau of the Census. Current In dustrial Reports, Shoes and Slippers, Summary 1975. Series M31A (75), November 1976. “Footwear’s Desperate Drive for Productivity,” Business Week, June 10, 1973, pp. 68-70. __________ ___________ . Current Industrial Reports, Shoes and Slippers by Type o f Construction and Price Line, 1975. Series MA-31A (75)-1, August 1976. International Labour Organization. Report o f the United States Delegation to the Tripartite Technical Meeting for the Leather and Footwear Industries. Geneva, Switzerland, ILO, October U.S. Department of Labor, Bureau of Labor Statistics. Industry Wage Survey, Footwear, March 1971. Bulletin 1792, 1973. 1969. Jacks, Stanley M. Productivity Issues in the Domestic Shoe Indus try. Prepared for the National Center for Productivity and Qual ity of Working Life, August 27, 1971. U.S. Government. Report o f the Task Force on Nonrubber Foot wear. June 1970. 2 2 C h a p te r 3. M o to r V e h icles and E q uip m en t Summary result in higher long-term employment levels for computer specialists, assemblers, and others who work with new tech nology. Semiskilled workers will continue to constitute the largest occupational category. These workers are engaged in production operations which generally are the most labor intensive and have potential for further technological change. New equipment and manufacturing methods are ex pected to continue to be introduced in the motor vehicle and equipment industry. Specific innovations which may be applied more widely include electronic computers, im proved equipment for automatic assembly, use of plastic and powdered metal materials, numerical control, and im proved transfer lines. New technology in some instances is expected to improve quality and achieve productivity gains. A total of $2.1 billion was spent by the motor vehicle industry for new plant and equipment in 1975, and an estimated $2.4 billion was spent in 1976. These amounts are about three times as much as the 1960 expenditure of $790 million, although the increase would be less in real terms due to increases in plant and equipment prices over the period. The average annual rate of increase in spending was lower during 1967-75 than during the 1960-67 period. Capital expenditures are expected to increase considerably over the next several years in order to produce cars that can meet Federal Government standards for safety, exhaust pol lution levels, and fuel economy. Output per employee-hour in the motor vehicle and equipment industry (BLS data) increased at an annual rate of 3.2 percent between 1960 and 1975. The productivity growth rate in the motor vehicle industry was 3.6 percent annually during 1960-67, slightly above the 3.2-percent average annual rate achieved during 1967-75. Growth in output per employee-hour was particularly strong during 1971 and 1972 as output rose sharply from the 1970 strike-year level in response to very strong demand for cars and trucks. Further productivity growth occurred in 1975 when employment fell more rapidly than output. Produc tivity gains in assembly, machining, and other production operations are expected as new technology is introduced. Industry employment rose from 724,000 in 1960 to a peak of 955,300 in 1973, then dropped during the eco nomic downturn of late 1974-75 to 774,100 in 1975.1 As sales and production improved in 1976, employment rose to 850,600. BLS projections indicate that employment may decline to 808,000 by 1985. Technological and other changes will continue to alter the structure of occupations in this industry. Demand for managers, sales workers, and semiskilled operatives will in crease while declines are expected in the other major occu pational groups. Although new technology will reduce unit labor requirements in some operations, industry growth will Technology in the 1970’s Technological changes in the motor vehicle and equip ment industry are underway in major phases of production, with productivity gains and laborsavings anticipated. These changes include more extensive use of electronic com puters, improved equipment for automatic assembly and inspection, more widespread use of plastics and other light weight materials, more widespread application of numerical control, and improvements in transfer lines. (See table 5.) Modifications of automobile engines also are underway to meet stricter emission standards and to raise fuel econ omy. Electronic computers Computers are a key technology in the automobile in dustry, initially applied to business operations such as pay roll and bookkeeping records and subsequently extended to an increasing number of research and production opera tions. According to International Data Corporation, more than 400 computers are in use in the industry, with fur ther growth in computer use expected. Examples of com puter applications gaining prominence, and their labor im plications, are presented below. Auto styling and design. Mathematical information repre senting automobile body surfaces can be stored in a com puter memory system. A designer, working with a graphic display terminal, can use this information to design auto body parts. The computer translates the design into mathe matical coordinates that can operate automatic drafting ma chines and numerically controlled (N/C) machine tools. En gineering, drafting work, and tool production operations can be more closely integrated, thereby speeding up the work flow. Computer use in design may affect labor re quirements in the industry in several ways. First, the com plex programming required may increase the need for com23 Table 5 . M ajor technology changes in the m otor vehicle and equipm ent industry D e s c r ip tio n T e c h n o lo g y E le c tr o n ic c o m p u te rs The L a b o r im p lic a t io n s u se o f g r a p h ic d is p la y t e r m in a ls c a n w o r k flo w b e tw e e n t o o lin g , a n d p r o d u c tio n . T im e r e q u ir e m e n ts a re fo r lo w e r e d . c a tio n s in c re a s e t io n E m p lo y m e n t in te g r a te a n d sp e ed d e s ig n , R&D N u m e ro u s q u a lity p r o d u c tiv ity of s y s te m s and to rs . a p p li d ra fte rs in o c c u p a t io n s a n a ly s ts , p e r ip h e r a l w o rk c o n tro l in c r e a s e s p u te r -r e la te d com such as p ro g ra m m e rs , e q u ip m e n t D e c lin e s and D if fu s io n o p e ra e x p e c te d keypunch fo r M o re th a n 400 c o m p u te r s a re e s ti m a te d to be g ro w th e x p e c te d c o m p u te rs in use. C o n tin u e d th e num ber of in and ty p e s of a p p lic a t io n s . o p e ra to rs . in in s p e c p e r s o n n e l. C o m p u t e r c o n tro l of b ly o p e r a tio n s m a c h in in g p r o d u c tio n and m ay ra te s assem in c re a s e and re d u c e la b o r r e q u ir e m e n t s . M a c h in e a s s e m b ly (a u to m a te d o p e ra tio n s a s s e m b ly l in e s ) A u to m a te d t io n s a s s e m b ly ra n g e fro m b o lts t o w e ld in g g e th e r. A u to m a tic a re m ix e d w it h m anual upon and r e q u ir e m e n ts a s s e m b ly in c r e a s e d need in o p e ra tio n s , fo r m a c h in e m a in te n a n c e p e r s o n n e l. a s s e m b ly fre q u e n tly la b o r s e m is k ille d c a r b o d ie s t o s t a t io n s d e p e n d in g Reduced a p p lic a t ig h te n in g M a c h in e a s s e m b ly c o n s id e r a b le has e x p e r ie n c e d d e v e lo p m e n t o ver th e p a s t d e c a d e , a n d is e x p e c t e d t o c o n t i n u e t o g r o w in u s e . in te r s t a t io n s , th e n a tu re of th e jo b . N e w m a t e r ia ls P la s t ic m a t e r ia ls o ffe r ta g e s o v e r s te e l a n d m a t e r ia ls and, in o fte n , advan w e ig h t fe w e r s a v in g s P a rts c a n b e f a b r i c a te d f r o m m e ta l p o w d e r in to c o m p le x shapes m a c h in in g and s e m is k ille d and m a c h in e Use of p l a s t ic s and a lu m in u m w ill c o n tin u e to g ro w . to o l o p e ra to rs . w it h M o r e w id e s p r e a d use o f a l u m i s t e e ls s p e c ia l in w o rk e rs o p e ra tio n s . num and r e d u c tio n s h e e t-m e ta l p r o c e s s in g o p e ra tio n s . fe w e r Som e c a s t m e ta l a ls o 1 is a n tic ip a te d . N u m e ric a l c o n tr o l D e c l i n e in t h e n u m b e r o f m a c h i n e N u m e r i c a l c o n t r o l in to o l o p e ra to rs p re s e n t. A p p lic a t io n s e x p e c te d to t r o l d e v ic e s a n d c o d e d t a p e i n b ly som e g ro w fu tu re , e m p h a s is on s t r u c t io n s m a in te n a n c e p e r s o n n e l. A u to m a tic o p e ra tio n c h in e b y e le c tr o n ic c o n to o ls can of m a re d u c e m a c h in needed, and in c r e a s e in p o s s i m a c h in e new in g t i m e a n d l a b o r c o s ts . in s o lid -s t a t e t r o lle r s and lim ite d w ith use a t p ro g r a m m a b le d ir e c t con c o m p u te r con tr o l. I m p r o v e d t r a n s f e r l in e s T ra n s fe r by th e R e d u c t io n in in c r e a s e d c h in e o p e ra to rs of to rs . lin e p r o d u c t i v i t y f le x ib ilit y have been in tr o d u c t io n p u rp o s e m a c h in e s , and m u lti in te r in and in c r e a s e in t h e n u m b e r an th e m a c h in e th e num ber and of m a E q u ip m e n t in s p e c tra n s fe r lim ite d tra n s fe r c h a n g e a b le m a c h in e m o d u le s , s to ra g e b a n k s f o r p a rts a t in te r v a ls to o l d e s ig n e d m a c h in e use, a n d lin e s to in c re a s e f le x ib ility s h o u ld a re is in i n c r e a s e as m o d ifie d or re p l a c e d in t h e f u t u r e . lin e , o f a u to m a t ic o p e ra tio n s . puter programmers. The need for drafters however, should decline. Such computer-aided design is expected to increase in the years ahead. evolution of computer technology. Computers are being used to keep track of parts and production materials and to forecast potential shortages that could disrupt production. Computer control can aid in attaining uniformity and qual ity control in machining. It also can aid in work scheduling and production line balancing to increase productivity by directing the proper materials to the worker at his place on the assembly line. Computers can be applied to a group of such operations, tying them together in such a manner as to provide computerized control over an entire manufacturing or assembly process. The computer system also can make available large quantities of current data to management to aid decisionmaking. The major auto manufacturing firms are using most of these applications but there are no data on the extent of their use. Several machine tool manufacturers market computer ized control systems for machine operations. One system links a small computer directly (no tapes are used) to four Engineering research and product development. Using com puters, engineers can analyze large quantities of data—some times from computer simulation of real situations—to solve design or production problems in remarkably short periods of time. An auto parts manufacturer, for example, saved 9 months to 1 year of development time by using its com puter capacities to perform preliminary design calculations on a new long-life piston ring.2 Computer application to research and development operations is not yet common place, but it is a frequently used tool that will probably become commonplace in the future. Computer control. The application of computers to the control of production operations is a major step in the 24 matic operations performed on transfer lines also is increas ing, especially time-consuming gaging and inspection opera tions, which allows a reduction in labor requirements and an improvement in quality control. The new transfer lines are mechanically more complex, requiring more highly skilled maintenance crews. The development of solid-state programmable machine controllers also contributes to transfer line flexibility. These controllers operate faster and more reliably than the older magnetic-relay controllers they are replacing. It is their programmability that makes them important. Chang ing the application of a conventional magnetic-relay con troller involves changing the physical wiring in the con troller, and each such change can take an hour or more to make. The programmable controller needs only to be repro grammed, which can be accomplished in minutes, rather than hours. Furthermore, it is possible that the use of pro grammable controllers will lead to more widespread use of computer control. machine tool controllers. The system requires only one op erator to load stock and oversee the operation of the sys tem, and it can perform the work of ten conventional ma chines and operations.3 Another system uses a small multi purpose computer, memory drum, and a teletypewriter input/output unit to operate simultaneously a combination (up to 16 units) of N/C machines, special purpose ma chines, and transfer machines. One operator can control the entire system.4 Numerical control Numerical control is a process of operating machine tools through a series of electronic control devices and coded tape instructions. It is a process that is particularly suitable for the manufacture of metal parts in small volume because it eliminates the many expensive fixtures, jigs, and templates otherwise necessary. As such, numerical control techniques are in limited, but increasing, use for the fabrica tion of the tools and dies needed to operate the industry’s many high-volume production machines. Extensive use is being made of numerical control in fabricating sheet-metal parts—a development which ranks among the major applica tions of numerical control techniques in the United States. Increased use of numerical control techniques should, as has occurred in other industries, reduce the need for ma chine tool operators. Applications of numerical control and direct computer control (discussed elsewhere in this chapter) can be ex pected to grow. This is one of several methods the auto industry can use to improve the flexibility and utilization of its basic production machines. Machine assembly Machine assembly (where it can be used) reduces the high labor content of assembly operations, which may in turn lower manufacturing costs. In addition, stricter safety standards and increased emphasis on product performance and quality can often be better met by machine assembly than by manual methods. The potential impact of automatic assembly operations on labor requirements is considerable because assembly op erations are the most labor intensive in the manufacture of autos. There are many simple, repetitive, and monotonous assembly operations that are candidates for machine assem bly. Similarly, machine assembly can be applied to some operations that are physically difficult and fatiguing. Job skills for assemblers tend to shift toward machine monitor ing and materials handling. The demand and skill require ments for machine maintenance personnel could increase considerably; these can be met by retraining machinists who might otherwise be displaced by the new process. The diversity and productivity potential of automatic assembly machines are illustrated by the following example obtained by BLS staff during plant visits; One manufac turer uses both an automatic and a manual line to assemble and test torque converters used in automatic transmissions. When the automatic line is in full operation, a crew of 8 people per shift is expected to produce as much as is pres ently done by a crew of 13 people on the manual line. One part of the automatic line already in operation inserts blades into slots in the body of the torque converter—a process in which two people per shift (one attendant and one parts loader) on the automatic line can do as much work as four people per shift inserting blades by hand. Several major automakers utilize industrial robots to per form many of the welding operations required on a pas senger car body, including those that are the most difficult Transfer lines Transfer lines—highly mechanized production lines—are becom ing more flexib le. Traditionally, transfer lines have been custom built to do one job. Any significant change in the job to be done has generally necessitated a significant change in the construction of the transfer line itself—an expensive and time-consuming process. Flexibility is being increased by the use of “building block” , or “modular” , transfer lines, constructed from ma chinery and equipment consisting of interchangeable, stan dardized units. These lines can accommodate changes in parts design or retooling for new car models with delays and retooling costs minimized. The inclusion of storage banks for parts at intervals along a transfer line provides a further increase in flexi bility. These storage banks allow a line to continue in oper ation even if a station in the line stops. Although not a new concept, the use of storage banks has yet to be fully imple mented. Computer simulation is being used by at least one manufacturer to predict optimum locations and sizes for storage banks within the transfer lines. The number of auto 25 assemblage of sheet-metal parts, reducing assembly time. Plastics (especially fiber-reinforced composites using glass or other filaments) are expected to grow considerably in use because of the increased emphasis on lowering vehicle weight to improve fuel economy. Aluminum and special steels also will be used more widely for a growing number of auto components to reduce weight. The fabrication of metal parts from metal powder is more widely used in the automotive field than in any other industry, and may become even more important due to recent improvements in materials and manufacturing pro cesses. Powder metallurgy parts can be made in complex shapes, of high strength, and to such close tolerances that many secondary machining operations and inspection pro cedures can be reduced or eliminated, thereby reducing labor requirements. for employees to accomplish. The robots are programmed to make a particular type of weld on a specific body style. The first robot in the line is supplied computer data on the sequence of body styles forthcoming on the assembly line. The first robot also contains a master program for control ling the succeeding robots on the welding line. Each robot reportedly can do work equal to 1% welders, thereby reduc ing the number of welders needed. This is, however, some what counterbalanced by the need for a larger and more highly trained maintenance crew. Although there may be little or no labor savings, the quality of the weld is more consistent than is possible with manual welding. New materials and processes The use of plastic materials has grown considerably as improvements in both the plastic materials and the plastic working technology have become available. Advantages of plastics over steel (in those cases where plastics meet rigid ity and strength requirements) include lower weight and generally lower tooling costs. Increased use of plastics may reduce labor requirements because plastic parts often re quire fewer finishing operations than comparable metal parts and large, one-piece molded plastic panels (such as dash panels or front-end body panels) can often replace an Output and Productivity Outlook Output Industry output increased at an average annual rate of 4.8 percent between 1960 and 1975. (See chart 7.) The growth rate was higher during the 1960-67 period—averag- Welding automobile body on automatic welding machine 2 6 Chart 7 Output per employee-hour, output, and employee hours In the motor vehicle and equipment Industry, 1960-75 Index, 1967=100 Ratio scale 1960 1965 1970 Source: Bureau of Labor Statistics. 27 1975 ing 7.9 percent a year—than it was during the more recent 1967-75 period, when it averaged 3.2 percent a year. The lower growth rate of recent years reflects several negative economic factors: There was a moderate recession and a major industry strike in 1970, followed—from late 1973 to 1975—by an oil embargo, a period of high inflation, and a severe recession. What tends to be obscured in this growth rate figure is that output rose to record levels in 1971, 1972, and 1973. Auto sales began to rise again in late 1975, and continued strong during 1976. Historically, “regular” size passenger cars have been the mainstay of U.S. auto manufacturers. During the late 1960’s, however, smaller passenger cars—intermediates, compacts, and subcompacts, both domestic and foreign— became more important in the marketplace at the expense of regular size and large cars. According to Ward’s Automo tive Yearbook, intermediate and small cars accounted for almost 40 percent of new car registrations in 1966. By 1975 this figure had grown to 77 percent. The trend toward smaller cars will continue in response to the present Federal Government regulations for fuel economy (27.5 miles per gallon by 1985) set in the Energy Policy and Conservation Act of 1975. To meet such a fuel economy goal with current automotive technology will re quire a rather large shift to small cars. The popularity of such a shift among car buyers remains to be seen. During the energy crisis from late 1973 to early 1974 the demand for small, fuel-efficient cars was strong. But as fears of gaso line shortages declined, so did some of the enthusiasm for the smallest cars. The strongest sales for 1975-76, according to industry sources, were of the intermediate and larger autos, although sales of the smaller cars did not decline. As of late 1976, however, some dealers were offering discounts on some subcompact models in an effort to improve their sales. The most likely market structure over the next 5 to 10 years will be a general reduction in size in all categories. Passenger cars presently considered to be of “intermediate” size may well become the standard size. A demand for “full size” cars is expected to continue if production of such cars remains possible under the fuel economy regulations. Sev eral domestic manufacturers have expressed concern that the various Federal regulations on fuel economy, exhaust pollution, and safety standards could affect the size, perfor mance, and general desirability of future passenger cars. Demand for light trucks and vans (less than 14,000 pounds gross vehicle weight) has been strong since the late 1960’s as recreational vehicles gained in popularity. During 1973, demand for heavy trucks (which had increased stead ily after a 1970 slump) also grew sharply. Truck production peaked at a record level in 1973, then dropped slightly, but surged to a new record in the 1976 model year. Truck trailer production dropped sharply in 1975, in part because of heavy purchases in late 1974 as customers sought to avoid purchasing 1975 units that were required by law to have expensive anti-skid braking equipment. Productivity Output per employee-hour increased at an average an nual rate of 3.2 percent from 1960 to 1975. (See chart 7.) The increase averaged 3.6 percent annually during 1960-67, slightly higher than the 3.2-percent productivity growth rate achieved during 1967-75. Growth in output per employee-hour was particularly strong in 1971 and 1972 as output rose sharply from 1970 in response to a very strong demand for new cars and trucks. Productivity continued to grow in 1973 as manu facturers reported a third year of record new car and truck sales; however, by the fourth quarter of 1973, retail sales had begun to fall, causing a final-quarter decline in both output and productivity levels. The decline in productivity continued through 1974, during which there was a sharp drop in output and in employee hours, but a considerably smaller drop in the number of people employed. Appar ently the manufacturers chose to cut working hours (espe cially overtime) and keep their work force intact. The year 1975 was unusual for the industry in terms of output and productivity. Output continued to decline (for the second year in a row) due in part to the recession and in part to higher auto prices. Although output declined, pro ductivity increased substantially. In this instance, both em ployee hours and total employment declined at about the same rate—and both dropped considerably more than did output. Thus, the productivity increase resulted, for the year as a whole, from a large drop in the industry’s work force and a much smaller drop in output. In fact, output actually increased in two quarters during the year, while employee hours remained at low levels during all four quar ters. Investment Capital expenditures Expenditures for new plant and equipment, in current dollars, increased from $790 million in 1960 to $2.1 billion in 1975, an average of 7.4 percent per year. An estimated $2.4 billion was spent in 1976. Since current-dollar figures do not take into account price increases over the years, real capital outlays were less than these figures indicate. The rate of increase in capital expenditures was significantly higher between 1960 and 1967, when the industry was ex panding its productive capacity, than during the more re cent 1967-75 period. The average annual rates of growth were 16.0 percent in 1960-67 and 6.9 percent in 1967-75. As shown in table 6, the rate of increase in capital ex penditures per production worker was also greater during the first half of the 1960-75 period. Plant and equipment expenditures per production worker in 1974 reached a peak of $4,266, or triple the 1960 total of approximately $1,400 per production worker, and then declined to $3,460 per production worker in 1975. 28 automobile manufacturers starting with 1975 models is modification of the piston engine through application of catalytic converters—a device attached to the exhaust sys tem which uses platinum and palladium as catalytic agents to convert noxious auto exhaust emissions into water vapor and carbon dioxide. The “ stratified charge” engine, a conventional piston engine with an unconventional cylinder head, reportedly has the capability to meet most of the strict emission standards to be implemented after 1978 and may, according to some experts, become more widely used in the early 1980’s. While some improvements in fuel economy may result from refinements in engine design, reducing automobile weight is probably the best way to improve fuel economy. Building smaller cars and substituting lightweight materials (such as aluminum and plastic) are two of the more obvious ways to reduce weight. One manufacturer has already intro duced some new car models that are smaller and lighter than the corresponding models of previous years—and this trend will continue. Capital spending is expected to increase strongly over the next several years. A recent McGraw-Hill survey of capi tal spending plans5 indicates that planned expenditures for 1977 will jump to $4.15 billion, followed by an increase to $4.36 billion in 1978. One manufacturer plans to invest $15 billion by 1980 for new, redesigned, smaller passenger cars, while another manufacturer plans to spend almost $2 billion (worldwide) in 1977, and over $2 billion a year in 1978, 1979, and 1980.6 This high level of capital spending is necessary to design and produce car models that will meet Federal Government standards for safety requirements, exhaust pollution levels, and—most especially—fuel economy. While funds will be invested in all of the production phases, the emphasis will be on new tooling for updated car models. The increasing importance of capital relative to labor is reflected in a decline in the ratio of payroll to value added, from 0.451 in 1960 to 0.419 in 1972, an annual average rate of decline of 0.1 percent. (See table 6.) Funds for research and development Employment and Occupational Trends Expenditures for research and development (R&D) in the industry group of motor vehicles and other transporta tion equipment except aircraft7 increased from $884 mil lion in 1960 to a planned level of $2.4 billion in 1974, or at an average rate of 7.2 percent a year. Company R&D ex penditures were 2.3 percent of net sales in 1960, increasing to a planned level of 2.8 percent in 1974. R&D expendi tures are expected to rise to $3.1 billion by 1977.8 Research is underway to develop new automobile power plants that meet exhaust emission standards and provide improved fuel economy. Alternative types of power plants being considered range from modified conventional piston engines to alternative engine concepts including the rotary engine, diesel engine, and turbine, Stirling cycle, and electric engines. The approach found most feasible by most major Employment Employment in this industry rose from 724,100 in 1960 to a peak of 955,300 in 1973 and then dropped sharply as economic conditions turned downward and auto sales fell, to 774,100 in 1975 (chart 8). This pattern represents an average growth rate of only 1.6 percent a year between 1960 and 1975. During the first half of this period, 1960 to 1967, employment grew at an average annual rate of 3.6 percent. Between 1967 and 1975, however, employment declined by an average of 0.2 percent a year. As sales and production rose again in 1976, employment increased to 850,600. The long-term trend, however, is for a decline in employ ment. The BLS projections for 1973-85, as shown in chart 8, indicate a particularly sharp decline from 1973, when employment was at an all-time high. Employment in the motor vehicle and equipment indus try is concentrated in two industry sectors: Motor vehicles (SIC 3711), and parts and accessories (SIC 3714). The motor vehicles sector employed 41 percent of the indus try’s work force in 1960 and 42 percent in 1975. Employ ment in the parts and accessories component of the indus try accounted for 43 percent of the work force in 1960 and 45 percent in 1975. The ratio of production workers to total employment has remained fairly stable; production workers accounted for 78 percent of total employment in 1960 and 77 percent in 1975. The rate of employment growth for production workers during 1960-75 was 2 percent—about the same as the all-employee growth rate indicated earlier. As shown in chart 8, the rates of growth in employment of production Table 6. Indicators of change in the motor vehicle and equipment industry, 1960-75 A v e ra g e a n n u a l ra te o f c h a n g e 1 In d ic a to r 1960 75 1 9 6 0 -6 7 1 9 6 7 -7 5 C a p it a l e x p e n d itu r e s p e r p r o d u c t i o n w o r k e r ................. 5 .9 1 1 .8 7 .4 2-0 .1 - 0 .5 2- 0 .5 4 7 .2 6 .8 4 9 .1 P a y r o ll p e r u n i t o f v a lu e a d d e d ................................................... R e s e a rc h a n d d e v e lo p m e n t e x p e n d itu r e s 3 ........................... 1 L i n e a r le a s t s q u a r e s t r e n d s m e t h o d . 2 F in a l y e a r = 1 9 7 2 . 3 D a ta a re e q u ip m e n t fo r except m a n u fa c tu r in g fig u r e s v e h ic l e s a ir c r a ft, c o m p a n ie s a i r c r a f t c o m p a n ie s ) 1974 m o to r th a t in have and th e and a re a ll based o th e r on t r a n s p o r ta tio n t r a n s p o r ta tio n e x p e n d itu re s in d u s tr y of (e x c e p t re s e a rc h a n d d e v e lo p m e n t p ro g ra m s . a re bas ed o n c o r p o ra te s p e n d in g p l a n s a s r e p o r t e d by M c G r a w -H ill. 4 F in a l y e a r = 1 9 7 4 . SO URCE: A n a ly s is , B u re a u B u re a u of of th e Labor S t a t is tic s , B u re a u C e n s u s , N a t i o n a l S c ie n c e of E c o n o m ic F o u n d a tio n , a n d M c G r a w -H ill. 29 Chart 8 Employment in the motor vehicle and equipment industry, 1960-75, and projection, 1973-85 Employees (thousands) 1,000 950 900 850 800 All employees 750 Average annual percent change1 700 AH employees 1960-75............................ 1960-67...................... 1967-75...................... —0.2 Projected: 1973-85............. ........ -1 .3 650 Production workers 1960-75............................ 1960-67...................... 1967-75...................... —0.2 600 550 Production workers 500 450 0 1960 1965 1970 1975 Least squares trend method for historical data; compound interest method for projection. Source: Bureau of Labor Statistics. 30 1980 1985 The impact of advanced production machines on occu pational skills was discussed with officials from several auto manufacturers visited by BLS staff. In general, a shift to ward skilled workers is expected—especially in computerrelated occupations—with a decline in unskilled workers and semiskilled machine operators. Maintenance workers would be the occupation most greatly affected, with de mand for these workers rising in step with increases in the use of N/C machines, industrial robots, and other auto mated machines. Skilled machinists who are displaced by automated machines can be retrained to maintain the new equipment. workers during the shorter term 1960-67 and 1967-75 periods closely parallel trends for total employment. Occupations Technological and other changes are expected to alter the occupational structure of the motor vehicle industry by 1985. Employment is expected to increase in only three of the eight major occupational groups presented in chart 9—managers, officials, and proprietors; sales workers; and operatives. In the other major occupational groups employ ment is expected to decline. Increased use of computers in design, engineering, and production applications should bring about several changes among professional and technical workers and clerical workers. The number of computer specialists (primarily sys tems analysts and programmers) is expected to increase by 8 percent. Greater use of computer terminals should in crease the productivity of drafting technicians and engi neers, although the effect of this on employment is unclear. If the volume of work were to remain unchanged, employ ment might decline. But there is a strong possibility that computer techniques will be used more intensively to im prove vehicle design and weight optimization—new analyti cal work which could absorb people who might otherwise not be needed. An increase of 34 percent is expected for computer peripheral equipment operators. Keypunch oper ators are expected to decline by 58 percent as punchcard data entry is supplanted by more sophisticated forms of data entry. Operatives (semiskilled workers) will continue to be the largest occupational category in the motor vehicle industry, making up about 50 percent of the work force. Many of these workers are engaged in production operations that are relatively labor intensive and have potential for further automation. Semiskilled metal workers (drill press opera tors, lathe operators, welders, etc.) are expected to decline by 20 percent in response to more widespread use of nu merically controlled machines, industrial robots for welding and inspection operations, and more automatic transfer lines. Although some advances are anticipated in automatic (or machine) assembly operations, the job category of assem blers is expected to grow by 34 percent to employ almost 168,000 people by 1985—by far the largest single occupa tion in the industry. The general increase in automated pro duction and inspection operations should serve to limit any increase in the number of inspectors needed. Training for many of the semiskilled jobs is relatively brief, consisting primarily of on-the-job instruction for periods of several days to several weeks. Hence, shifting semiskilled workers from one position to another generally should not cause great dislocations. Adjustment of workers to technological change The impact of technology on jobs is probably not as critical in the auto industry as it is in many other industries. A substantial proportion of blue-collar jobs are in semi skilled occupations, and operators displaced from one job can be retrained for other jobs more easily than in indus tries with high skill level requirements. Also, there are areas in auto production (such as final assembly) that are fairly labor intensive, and will continue to be so in the foreseeable future. Approximately two-thirds of the industry’s employees are covered by collective bargaining contracts. All of the contracts contain general provisions pertaining to seniority, layoffs, grievances, retirement, and supplementary unem ployment benefits that could be applied to job losses result ing from technological change. Additionally, contracts with two manufacturers contain specific statements con cerning technological change. In both cases, the contracts have provisions that require advance notice to the union of planned technological changes, create training programs for qualified employees within the bargaining unit, and allow problems not otherwise resolved to be submitted through the regular grievance procedures. The recession of 1974 and 1975 caused considerable tur moil in the auto industry. Employment dropped substan tially and some plants were shut down sufficiently long for a number of laid-off employees to exhaust their unemploy ment benefits. By the time new labor contracts were due to be negotiated in late 1976, production and employment had returned to healthy levels—but the recession probably left its imprint on the contract negotiations. In a 4-week strike at one manufacturer, the United Auto Workers won a shorter work year. Employees will receive a total of 13 additional days off over the 3-year contract period, which will serve to create new jobs over the short run and preserve job security in the future. The other manufacturers have since agreed to this pattern. 31 Chart 9 Projected changes in employment in the motor vehicle and equipment industry, by occupational group, 1970-85 Occupational group Percent of industry employment in 1970 Professional .technical, and kindred workers 7.8 Managers, officials, and proprietors 3.1 Sales workers 0.7 Clerical and kindred workers 10.3 Craft and kindred workers 20.8 Operatives 49.8 Service workers 3.0 Laborers 4.4 -40 -30 I Source: Bureau of Labor Statistics. Percentage change -20 -10 0 32 10 20 30 FOOTNOTES 1These data exclude employees in a number of industries which produce components for the motor vehicle industry. According to estimates of the Motor Vehicle Manufacturers Association, more than 517,000 workers are engaged in producing motor vehicle com ponents and thus are classified in industries other than SIC 371, motor vehicles and equipment. 5Preliminary Plans for Capital Spending in 19 77-78, McGraw- Hill Fall Survey, Fall 1976. ‘ “Capital Spending to Set Record in ’77,” Automotive Indus tries, October 1, 1976, pp. 14-15. ’ Motor vehicles and other transportation equipment except air craft consists of SIC’s 371, 373, 374, 375, and 379. Separate data for the motor vehicle industry, SIC 371, were not available until 1972. The importance of motor vehicles within this industry group is illustrated by the fact that the motor vehicle segment accounted for over 98 percent of the industry group’s R&D funds in 1972 and 1973. 2 “Computer Speeds Design Production of Piston Rings,” Auto motive Industries, November 15,1968, pp. 79-85. 3“N/C and C/C, New Keys to Productivity,"Autom otive Indus tries, October 15, 1972, pp. 33-36. 4 “Computer Controlled Machining,” Automotive Industries, July 15, 1970, pp. 51-52. 8 R&D expenditures for 1960, National Science Foundation; planned R&D expenditures for 1974 and 1977, McGraw-Hill. SELECTED REFERENCES “Computer Controlled Machining,” Automotive Industries, July 15, 1970, pp. 51-52. “ Lordstown Plant: GM’s New Mark of Excellence?,” Iron Age, March 11, 1971, pp. 39-40. “Computer Speeds Design Production of Piston Rings,” Automotive Industries, November 15, 1968, pp. 79-85. “Machine Assembly . . . Industry’s Last Change for Increasing Pro ductivity,” Automotive Industries, April 1, 1972, pp. 35-41. “ Detroit’s Frantic Hunt for a Cleaner Engine,” Business Week, December 9, 1972, pp. 60-70. “Materials: New Marriages in Design,” Automotive Industries, December 15, 1973, pp. 37-47. “Gage-Assemble-Test Warms Up Again.” Automotive Industries, Oc tober 15, 1976, pp. 24-27. “N/C and C/C-New Keys to Productivity,” Automotive Industries, October 15, 1972, pp. 33-36. “ How Computers Unify Manufacturing,” Automotive Industries, June 1, 1974, pp. 31-36. “Powder Metallurgy: Phase II,” Automotive Industries, July 1, 1972, pp. 25-28. 33 C h a p te r 4. R a ilro a d s Summary off or decrease only slightly because of expected traffic increases, the undertaking of deferred maintenance made possible by recent Federal legislation, and other nontechnological factors. The introduction of more powerful locomotives, rolling stock of greater capacity and specialization, advances in the unit train, and the widespread use of computers are among the technological advances that have led to continuing re ductions in labor requirements among Class I line haul rail roads (SIC 401), which account for over 90 percent of total railroad employment.1 In addition, improvements in track and roadbed construction methods have resulted in laborsavings in maintenance; new and improved maintenance equipment has deemphasized the importance of muscle power and hand tools in favor of single-purpose and sophis ticated combination machines. Moreover, piggybacking, which involves the loading of a highway trailer or a con tainer onto a flat car by the use of a ramp or mechanical loader, makes possible transshipment of a container through several transportation modes, thus bypassing labor-intensive reloading operations. During the 1960-75 period, capital expenditures in new plant and equipment increased at an average annual rate of 5.3 percent, ranging from a low of $820 million in 1961 to a high of approximately $2.5 billion in 1975. (This increase would be less in real terms due to increases in plant and equipment prices over this period.) These figures represent all outlays for new equipment whether rented or leased. Productivity as measured by output per employee-hour has increased rapidly in the railroad industry in the last 20 years, placing it among the industries with the highest aver age increases in productivity. In the 1947-60 period, output per employee-hour increased at an average annual rate of 4.3 percent; over the 1960-75 period the rate of increase rose to 4.9 percent. In 1975, however, output per em ployee-hour declined by 3.4 percent, reflecting the reces sion-induced decline in freight traffic. Expectations for out put and employment for the next decade suggest that im provements hi productivity will continue. Employment has shown substantial declines since 1960; between 1960 and 1975, total employment declined at an average annual rate of 2.7 percent, from 821,200 to 514,600. This decline reflected the effects of technological changes and other major factors such as the sharp declines in passenger service and “less than carload” freight traffic, deferred maintenance of track and roadways, and contract ing out to equipment suppliers work formerly done by railroad employees. During the next decade, industry ex perts anticipate that employment in the industry will level Technology in the 1970’s The technological and other changes that have taken place in the railroad industry in recent years point toward continued growth in productivity. Among these changes are motive power developments which include increases in trac tive power (effective pulling force delivered to the draw bar) of locomotives and six-axle drive units to lessen the amount of inertia to be overcome by the locomotive units. Another category of change relates to freight cars. Improve ments in materials and design have made possible substan tial increases in capacity and reductions in car weight rela tive to capacity. Other technological changes, as shown in table 7, include relocation and improvement of shop facili ties, piggyback traffic and unit trains, automatic classifica tion yards, new applications of computers including nation wide control of freight car movements, signaling and com munication improvements, detection devices, microwave communication (a radio frequency), automatic car identifi cation, and notable maintenance-of-way improvements in cluding the mechanized laying of welded rails. Motive power developments Increases in tractive power have led to a reduction in the number of locomotives in use compared with the 1950’s. Over a 10-year period, the number of locomotives declined from 30,248 in 1957 to 27,687 in 1967; however, in 1973, the number increased to 27,800, and by year-end 1975, there were 28,000 locomotives in service.2 About 99 per cent of the locomotives in 1967 were diesels, compared with 90 percent in 1957, and 25 percent of these were “ second generation” which had been introduced since 1961. These second-generation diesels require considerably fewer unit employee-hours for annual maintenance and in spection than earlier diesels. The increased horsepower range for second-generation diesels (2,500 to 4,000 com pared with 1,200 to 1,500 for earlier diesels) has led to greater tractive power and a consequent rise of about 12 percent in gross ton-miles hauled per engine over the 1957-67 period. 34 Table 7 . M ajor technology changes in the railroad industry D e s c r ip tio n T e c h n o lo g y M o re M o t iv e p o w e r d e v e lo p m e n ts p o w e rfu l s ta te u n its ; e le c t r o n ic s tric a l s y s te m s ; D iffu s io n L a b o r im p lic a t io n s s o lid - im p ro v e e le c h ig h e r t r a c t iv e U n it e m p lo y e e -h o u r fo r m a in te n a n c e g e n e r a tio n d ie s e ls p o w e r p e r u n i t ; g r e a t e r o v e r a ll a b ly r e lia b ility t h e f i r s t s e r ie s . re d u c e s m a in te le s s t h a n r e q u ir e m e n ts o f second- a re c o n s id e r V ir tu a lly d ie s e ls ; a l l C la s s I lo c o m o t iv e s a re a b o u t t w o -th ir d s o n d g e n e r a tio n b y w e re sec 1975. t h o s e f o r d ie s e ls o f nance. S p e c ia l F r e ig h t c a r im p r o v e m e n ts ca rs d e v e lo p e d c o m m o d ity b e a rin g s ; g ro u p s , h ig h e r red u c ed D e c lin e in lo a d e r , tru c k e r, and m a in te n a n c e e m p lo y m e n t . c a p a c it y w it h D e s ig n im p ro v e m e n ts and on e x p e c te d to c o n tin u in g e m p h a s is e x p e n s iv e , s p e c ia l- p u r p o s e th a n lo a d in g m a in te n a n c e w it h S h ip p e r s ' m a t e r ia l re d u c e P r iv a te f le e t o w n e r s h ip in c re a s e r a tio o f c a r w e ig h t to c a p a c it y . and fo r b e tte r p re s s u re fo r ca rs , c a rs . ra th e r c a p a c i t y , m a y s l o w i n c r e a s e in a v e ra g e c a r c a p a c it y . re q u ir e m e n ts . F a c ility r e lo c a t io n and im R e p a ir s ta t io n in c lu d in g p ro v e m e n ts m e n t, spot c o n s o lid a t io n , Reduced shop g e n e ra l la b o r e r a n d s t a t io n a r y f ir e c o n s o lid a t io n w o rk e r. e x p e c te d d e v e lo p a c c o m p a n ie d tio n , r e s u lt in g in d i e s e l iz a - c ie n c y . Car and and in te r io r c a rs out of r e q u ir e m e n ts fo r g re a te r e f f i w a s h in g m e c h a n iz e d . la b o r C o n c e p t in w i d e s p r e a d u s e . F u r t h e r and use o f s p o t sh o p s fo r b o th lo c o m o t iv e s a n d c a rs . lo c o m o t iv e c le a n in g P r o p o r tio n s e r v ic e fo r of r e p a ir re d u c e d . T r a in s c o m p r is e d P ig g y b a c k a n d u n i t t r a in s o f tr a ile r s o r W o rk p r e v io u s ly d o n e b y w o rk e rs d is e w a r d e r s a n d t r u c k in g fir m s . on lo a d e d on e x p e d it e d f la t c a r s m ove s c h e d u le s . s h ifte d to r a ilr o a d c o n ta in e r s o f g e n e ra l m e r c h a n fr e ig h t fo r C o n tin u e d 1 Va - 2 g ro w th m illio n of p ig g y b a c k , c a r l o a d i n g s in 1975. G r e a te r use o f u n i t t r a in s lik e ly . U n it t r a i n s c a r r y a s in g le b u l k c o m m o d ity n a ls . b e tw e e n They a re tw o te r m i a v ita l lin k in p r o d u c tio n p ro ce sses a n d th e ir m ovem ent is o n a s tr ic t tim e s c h e d u le . A u to m a tic c la s s ific a tio n y a rd s L a rg e y a rd s s o rte d and n a tio n . in w h ic h s w it c h e d D ig ita l c a rs a re by d e s ti and c o m p u te r s used t o a n a lo g Reduced e m p lo y m e n t fo r b lu e - c o l l a r w o r k e r s u p e r v is o r s a n d y a r d M o re th a n w e ll as som e e q u ip p e d S m a ll y a r d s e q u ip p e d w it h a u tu re s " . fe a tu re s n o w In c r e a s e d car m a jo r c la s s ific a tio n In c r e a s in g n u m b e r s o f m a j o r c l a s s i f i c a t i o n y a r d s , as c re w s . c o n tro l car s p e e d s a n d t o a id in s w i t c h i n g . to m a tic 60 y a r d s in o p e r a t io n . s m a ll w it h ones, b e in g “ a u t o m a t ic fe a f e a s i b le . u tiliz a tio n , cu s t o m e r s e r v i c e , a n d la b o r s a v i n g s r e s u lt. B o th C o m p u te rs d ig ita l and a n a lo g com p u t e r s in u s e . C o m p u t e r s h a v e p r o v id e d in fo r m a tio n p ro c e s s in g and s w it c h in g th a t g iv e s m anagem ent fr e ig h t car c o n tr o l. d a ta in b e tte r in fo rm a tio n A ls o , a re c a p a c it y and c o m p u te riz e d used b y fo r e c a s tin g m anagem ent t r a ff ic D e c lin e in e m p l o y m e n t f o r c l e r k s , m e s s e n g e rs , a n d te le p h o n e s w it c h b o a rd new o p e ra to rs . In tr o d u c t io n o c c u p a t io n s p u te r p ro g ra m m e r, e ra to r, ro o m such m e th o d s s u p e r v is o r , as keypunch a n a ly s t , of com op W id e s p r e a d use of a n a lo g com p u t e r s . P r a c t i c a l l y , a l l C la s s I r o a d s u s in g d i g i t a l c o m p u t e r s . T h e r e w e r e about 250 c e n tra l p r o c e s s in g u n its in t h e i n d u s t r y in m i d - 1 9 7 5 . ta p e c o m m u n ic a tio n e n g in e e r , a n d e le c t r o n ic e n g in e e r . tre n d s a n d a n a ly z in g t h e m a r k e t . C e n tr a liz e d t r a ff ic c o n tro l C e n tr a l c o n tr o l o f tr a in m ove m e n t o v e r s tre tc h e s o f t r a c k o f (C T C ) 50 - 100 m il e s or m o re . Reduced e m p lo y m e n t o f w o rk e rs f o r lo c o m o tiv e m a in te n a n c e . At le a s t o n e - f if t h o p e ra te d under o f a ll m a i n CTC. tra c k F u rth e r d if w il l in c re a s e . R is fu s io n lik e ly . A m o d e l o f t h e t r a c k is o p e r a t e d by one w o rk e r b u tto n s tr a in s w ith of or m o v in g th e ir tra c k who s w it c h e s in keep a c c o rd a n c e p r io r it ie s . is pushes to C a p a c ity expanded and la b o r s a v in g s r e s u l t . M is c e lla n e o u s s i g n a l in g c o m m u n ic a t io n and These d e v e lo p m e n ts e q u ip m e n t m o te enhance u tiliz a tio n , s a fe ty , and p ro d e c re a s e m a i n t e n a n c e c o s ts . (a ) D e te c to rs D e t e c t o r s — m e c h a n ic a l fra -re d p o rt d e v ic e s — lo c a t e d a n g e ro u s e q u ip m e n t w ay. a lo n g S e v e ra l or in Reduced and re a g e n ts . c o n d itio n s th e ty p e s r ig h t e m p l o y m e n t f o r s t a t io n Use of in of of e a r ly . d e v e lo p e d f o r d iff e r e n t p u rp o s e s . 3 5 d e te c to rs in g t r a i n s p e e d in c r e a s e s i m p o r t a n c e d e te c tin g d a n g e ro u s c o n d it io n s Table 7 . M ajor technology changes in the railroad industry—C ontinued D e s c r ip tio n T e c h n o lo g y H ig h -c a p a c ity ( b ) M ic r o w a v e w ave r a d io c u r r e n tly r a ilr o a d s to L a b o r im p lic a tio n s c a r r ie r b e in g used by s u p p le m e n t or D e c lin e in e m p lo y m e n t D iffu s io n of lin e c a r id e n R e f l e c t i n g la b e l s p i c k e d up by t r a n s m it t e r , d e c o d e d , a n d s e n t t if ic a tio n ( A C I) to c e n tra l m ent o p e r a tio n s . lo c a t io n and 5 0 ,0 0 0 R a p id v e lo p m e n t ro u te g ro w th of to ta l m ile s t ie d ex to de in fo rm a tio n s y s te m . s u p p la n t w ir e m e s s a g e c a r r ie r s . (c ) A u to m a t ic A b o u t p e c te d . and g ro u n d w o rk e rs . D e c lin e in e m p lo y m e n t of c le r k s B y 1 9 8 0 , u n iv e r s a l u s e e x p e c t e d . a n d o f f ic e p e r s o n n e l. E q u ip p ro g re s s e a s il y r e c o r d e d . M a in te n a n c e of w ay in n o v a tio n s (M W ) S in g le and c h in e s a id m u ltip u r p o s e in tra c k p la c e m e n t, a n d in g . c re te 39' of r a il s e c tio n s t ie s a r e in m a c h in e s t ie b a lla s t s u r f a c C o n tin u o u s p la c e s m a la y in g , th a t and re con D e c lin e in e m p l o y m e n t o f s e c t i o n w o r k e r s , b r id g e p e n te rs , and b r id g e b u ild in g c a r and b u ild in g p a in t e r s , a n d e x t r a g a n g o r s e c tio n W id e s p r e a d m a c h in e s ; use of use o f s in g le -p u r p o s e c o m b in a t io n m a c h i n e s a n d c o n c r e t e t ie s e x p a n d i n g ; c o n tin u o u s r a il u sed e x t e n s iv e ly . w o rk e rs . use. O ff -t r a c k c o m b in e d w ith u se r a d io in c re a s e la b o r u t il i z a t io n . by T ra c k d e fe c ts e le c tr o n ic a lly cars. M /W s c h e d u lin g a id e d b y c o m p u te rs m um d e te c te d e q u ip p e d to o b ta in e q u ip m e n t and m a x i la b o r use. In n o v a tio n s in passenger v ic e s e r A ir c o n d it io n e d , d r iv e n r id o r fo o d c a rs in e le c t r ic a lly N o rth e a s t C o r E x p e r im e n t. s e r v ic e on A u to m a t som e t r a in s . D e c lin e in g car cooks, d le rs . in e m p lo y m e n t c o n d u c to rs , w a it e r s , a n d of c h e fs s le e p and baggage h a n S u c c e s s fu l use r id o r c o n c e p t o th e r of m ay a re a s s u c h in g to n , D . C ., N o rth e a s t be C o r e x te n d e d to as b e t w e e n W a s h and M ia m i, F lo r id a . C o m p u te riz e d tic k e tin g . Six-axle drive units first became available in the early 1960’s. They have the advantage of increasing the ability to utilize high horsepower and are particularly desirable for railroads operating over steep grades. By 1966, the six-axle drive accounted for more than one-half of all units deliv ered. Significant improvements in freight cars also have been taking place. There has been a shift away from generalpurpose toward special-purpose cars and an increase in the average capacity. The average new car purchased in 1968, for example, had a capacity of 80 tons compared to an average of only 52 tons for those being retired. In 1975, the average new car had a capacity of 89 tons compared to an average of 62 tons for cars retired. There has also been a reduction in car weight relative to capacity due to material and design changes. New materials such as steel alloys and aluminum have helped increase the amount of freight that can be hauled by a given amount of locomotive power, increasing tons hauled per crew member. Also, the greater strength and easy cleaning of the new materials reduce maintenance requirements. Changes in journal (axle) lubrication procedures and in troduction of roller bearings have led to a great reduction in the number of car setouts—cars set off on sidings for later repair. The development of journal pads eliminated the need for the use of loose waste and provided better reten tion of oil or grease. The Association of American Railroads estimated that in 1975 about half the car fleet was equipped with roller bearings, contributing to a decline in the number of car setouts per million car miles. In the 20-year period between 1955 and 1974, setouts per million car miles fell from 4.13 to 0.74. This significant improve ment brought about greater car utilization and a decrease in employee-hour requirements for crew workers who are re sponsible for maintenance of cars. Relocation and improvement The repair of rolling stock, both locomotives and cars, has been shifted from scattered locations to central “spot shops” where production-line techniques are utilized. The central facility is subdivided into various work stations where specialized equipment is available for any type of repair or inspection required. Thus, the time spent carrying tools to the equipment to be repaired has been eliminated. When locomotive or car parts are disassembled, there is coordination of the repair of parts to avoid holding equip ment needing repair because some minor part is lacking. More strategic positioning of equipment in spot shops also has been taking place. Hydraulic jacks, electric hoists, hose reels, acetylene, oil, and revolving bins for parts have been located in more strategic locations. More efficient boilers are being used for heating, and automatic “ car wash” tech niques have cut cleaning time by as much as one-half. Large vacuum units are being used for cleaning car interiors. Piggyback traffic and unit trains Piggyback traffic, or trailer-on-flat-car (TOFC) services, and more recently container-on-flat car (COFC) services represent significant transportation developments. Piggy backing involves the loading of a highway trailer onto a flat car by the use of a ramp or a mechanical loader. COFC 36 ject to quick turnaround. In both unit and piggyback trains, laborsavings among yard crews have resulted from the re duction in loading, unloading, and switching operations. service is not as widespread since a mechanical loader is always necessary; however, the elimination of wheels on containers provides a space saving which makes COFC ser vice relatively more attractive for shipment between rail, air, and sea transportation. Goods need to be handled only one time—at the shipper’s dock—in either TOFC or COFC traffic. Thus they can arrive at the consignee’s dock with out being subjected to reloading—a major cause of break age, delay, and pilferage. Standard container sizes have been established by the American Standards Association. These will allow easier interchange between railroads and other modes of transport. Piggyback loadings almost tripled between 1960 and 1973, from 554,115 to 1,543,374.3 After declining sharply in 1970 and 1971, TOFC rose in 1972 and increased to 1,535,374 loadings in 1973, the highest year on record. TOFC loadings in 1973 were up 15 percent over 1972 and 14 percent above the previous record set in 1969. The 1974 loadings also exceeded 1.5 million. But in 1975, piggyback loadings were hit hard by the recession and fell to 1.2 mil lion. According to one estimate, TOFC may account for 10 to 15 percent of all rail freight by 1980, compared with 5.6 percent of total carloadings in 1973.4 Like TOFC, the unit train is a high-priority train which hauls a single commodity. It decreases the cost per ton carried, compared to previous methods used. These savings result because unit trains bypass switchyards and are sub Automatic classification yards Major laborsaving technological changes have taken place in classification yards. An early innovation was the change from flat yards to hump yards. This introduced a slight incline into the switch yard so that the engine only needs to reach the top of the hump at a relatively slow speed and gravity provides the necessary momentum to keep the car going into the desired classification track. Another change has been the installation of mechanical retarders along the track which also has resulted in laborsavings. They are oper ated by electro-pneumatic or hydraulic power and “squeeze” the wheels of cars passing through them, causing them to be slowed to the desired speed. These retarders were formerly operated manually but are now controlled by computers. There also has been a change in the location of the switching operation from the yard to a console oper ator in the tower. The console operator in the tower can now simply operate switches on the console instead of hav ing a worker in the yard throw the switch for each car or group of cars. A piggyback loader preparing to place a trailer onto a flatcar 37 Computers Microwave Computers, introduced in the railroad industry in 1955, have had a major impact on railroad operations. By mid1975, about 250 central processing units were in use in the industry.5 Computers are being used by nearly all Class I railroads to assist in locating and switching cars, scheduling trains, and making motive power assignments to trains. They are also used in analyzing market trends to aid in investment and planning and for inventory control and scheduling of equipment use and road maintenance. Their advanced applications include simulation of operating areas such as classification yards. Simulation permits information to be obtained on the potential effects of changes in operat ing procedures and physical configuration without the ex penditure of time and money otherwise necessary for trying new procedures or constructing new facilities. Microwave, a radio frequency that begins at 952 mega cycles per second for railroads, is being increasingly adopted by the railroads. It provides the band width needed for the rising volume of messages and data. Microwave transmission obviates pole line installation. Also, because of reduced line maintenance and need for fewer telegraph poles, fewer line and ground workers are needed. Increased transmission reliability, lower maintenance costs, and greater flexibility of operation also lead to savings. Two key uses of railroad microwave are VHF radio and facsimile transmission (as of waybills). Waybills contain in formation needed for centralized control of operations. Several roads are now using facsimile transmission and it is expected to become one of the principal uses of railroad microwave. There is increasingly greater use of VHF radio in yard and road operations and in maintenance-of-way work, as well as in dispatching from wayside to train. Indus try estimates of route miles of private railroad microwave indicate a figure of 50,000 route miles in 1975, compared with less than 200 miles in 1952 and roughly 22,000 miles in 1966.6 Signaling and communication improvements Railroad operations are being affected by progress in signaling and communication technology. For example, centralized traffic control (CTC) activates signals and switches over long stretches of track by remote control. Train movement is controlled and monitored by a single operator at a central unit. CTC expedites rail traffic over the fewest possible miles of track, without using written train orders. It provides better utilization of track and has thus increased the ability of the railroads to handle an in creased traffic volume with a reduction in locomotive main tenance. At least one-fifth of all main track operated is under CTC and the number of track miles is likely to grow steadily because of the increasing use of computer program ming of train operations to include dispatching and schedul ing. Automatic car identification Automatic car identification (ACI) is a system which identifies cars carrying specially printed labels through the use of wayside scanners. A standard ACI system was adopted for industrywide use starting in the spring of 1969. At the present time over 90 percent of the cars are labeled and about 500 ACI scanners are in operation. While demon strating the possibilities of increased car utilization and a reduction in labor requirements used in sorting and switch ing cars, ACI is still being evaluated within the industry. Detection devices Maintenance-of-way changes Hotbox detectors, which measure temperature changes of journals and/or roller bearings on passing railroad cars, are coming into increasingly widespread use. Mounted alongside the track, they scan the journal box or the hubs of the car wheels and relay the journal temperature of each wheel to central locations where the information is re corded on tape. If an overheated journal box is indicated, a recorder monitor informs the train engineer. The number of hotbox detectors in use is rising as are other detector de vices such as “presence” detectors—which are placed where debris may be found on the track—clearance or high-wide load detectors, and high-water and smoke detectors. The use of detective devices contributes to the safe operation of trains, greater utilization of existing equipment, and reduc tion in maintenance and repair time. It has resulted in a decrease in employment of station agents who formerly checked the train visually. Maintenance work done on railroad track, terminals, and associated plant structures is called “maintenance of way.” Muscle power and hand tools served this purpose for a num ber of years after World War II. These are gradually being replaced by single-purpose machines which can perform such operations as unscrewing bolts, pulling and driving spikes, packing ballast, and hoisting into place such heavy materials as ties and rails. With the introduction of sophisticated combination ma chines that can raise and align the track, and level and tamp the ballast in the roadbed in a single operation, mainte nance-of-way methods took another step forward. Other machines also have been developed which can perform op erations such as removing old ties and inserting new ones. The net effect of these changes has been to reduce mainte nance labor requirements. 38 heightened demand for coal as a fuel for generating electric ity. Coal is already the largest single commodity group car ried by the railroads, accounting for about one-fourth of the total tonnage in 1974.8 However, pending Federal legis lation would permit pipelines to carry coal slurry from the mine to the ultimate user (electrical generating plant). The economies of pipeline operations are not fully proven. Nevertheless, passage of the planned legislation could offset greatly the increase in railroad output originating from the transportation of coal. The growing use of continuous rail also is contributing to lower maintenance labor requirements. Continuous rail eliminates joints at the rail-end and thus saves the labor which once cut off, lifted, and relayed short pieces of con ventional rail. Concrete ties are currently being tested for widespread use. These ties generally have longer useful lives than wooden ones although they are more expensive. Adop tion of concrete ties would result in lower labor require ments for track maintenance. Other developments which have acted to reduce maintenance labor requirements in clude improved paints and paint application methods and the use of prestressed concrete for bridge construction. Use of two-way radio has also proven beneficial by permitting the work force to maximize work time before clearing the track ahead of an oncoming train. Prefabrication of track panels and retarder units reduces the time and labor required for track repair. New snow removal attachments for some maintenance-of-way equip ment and specialized portable snow removal equipment are supplanting manual snow removal. Productivity For the past 25 years, output per all-employee-hour in the railroad industry has increased rapidly, placing it among the industries with the highest average increase in produc tivity. Many factors contributed to this increase, including the new technology mentioned earlier, the decline in laborintensive passenger services, and increased capital expendi tures. During the 1947-60 period, the average change in productivity was 4.3 percent per year. During the 1960-75 period, productivity rose at an even faster rate, 4.9 percent on an average annual basis. (See chart 10.) As already men tioned, output is expected to rise through 1985. Industry experts expect industry employment to level off or de crease only slightly during the same period. Should the out put and employment expectations be met, productivity in the railroad industry is likely to continue to grow through the mid-1980’s. Output and Productivity Outlook Output Output in the railroad industry (a BLS measure based on revenue traffic units) rose at an average annual rate of 2.1 percent during the 1960-75 period. Most of this increase occurred between 1960 and 1967 when output rose at an average annual rate of 3.7 percent. During the remainder of the period, 1967-75, output increased at an average annual rate of 1.1 percent. Industry experts indicate that output should increase through 1985. One point of interest in regard to industry output is the advantage the railroads hold over the other modes of trans portation in the amount of fuel required to move freight and passengers. A study supported by the National Science Foundation indicates that the railroads are less energy in tensive than any other freight mode except pipelines, and that they have almost a four-to-one advantage over trucks. In the transporting of passengers, the railroads hold a big advantage over airplanes and automobiles in energy use, but they are more energy intensive than buses. In view of the recent sharp rises in fuel costs, the lower fuel requirements should have a favorable effect on output. This may give the Nation’s railroads a competitive advantage over over-the-road trucks, enabling the railroads to seek out lightweight, high unit-value cargo and to enlarge their piggy back operations. For example, in 1973, when fuel costs rose and shortages were high, railroad output grew by al most 10 percent over 1972. Fuel is among the more impor tant inputs, and the amount required to move a gross tonmile has declined steadily. For example, between 1948 and 1966, this measure dropped by 80 percent, due mainly to the transition from steam to diesel engines.7 Additional growth in output also is likely because of the Investment Capital expenditures Capital investment in new plant and equipment averaged $1.4 billion a year over the 1947-75 period; these expendi tures ranged from a low of $820 million in 1961 to a high of $2.5 billion in 1975. Expenditures in the 1947-57 period averaged $1.5 billion, then dropped to an average of $1.1 billion in the 1957-61 period. During the 1960-75 period, however, expenditures rose to reach an average of $1.7 bil lion.9 The average annual rate of increase of expenditures during this period was 5.3 percent. When the increases in general machinery and equipment prices over this period are considered, the real capital expenditures are consider ably lower. The goal for capital expenditures stated by the industry is about $3.3 billion per ye'ar between 1970 and 1980.10 The difference between industry goals and current experience implies that maintaining or improving the rail roads will be a major challenge. Funds for research and development The need for greater efficiency in the face of rigorous intermodal competition has led to increased emphasis on 39 Chart 10 Output per employee-hour, output, and employee hours, Class I railroads, 1960-75 1960 1965 1970 Note: 1975 data are preliminary. Source: Bureau of Labor Statistics. 40 1975 ample, the sharp decline in passenger traffic has led to de creases in such occupations as rail passenger conductors, train attendants, and rail passenger brake and flag workers. A growing proportion of the freight car fleet is not owned by the railroads (14.0 percent in 1960, 16.6 percent in 1966, and 19.4 percent in 1975).14 This has contributed to a drop in labor requiremefits for railroad maintenance em ployees, even though some cars owned by companies other than railroads are maintained by railroad employees. Simi larly, “piggybacking” has shifted work previously done by railroad workers to freight forwarders and regular trucking firms. The leasing of equipment that is related to technolog ical changes in the railroad industry—communication and computer systems, for example—generates employment in other industries which manufacture and service such equip ment. During the next decade, industry experts expect employ ment in this industry to level off or decrease only slightly. Some of the factors underlying this view of future employ ment include the expected increase in railroad traffic, the termination of the past decline of the very labor-intensive passenger operations, the near-complete decline of the very labor-intensive “less than-carload” service, and the expected substantial increase in long-needed maintenance work as a result of funds made available by the Railroad Revitaliza tion and Regulatory Reform Act of 1976. research and development (R&D) expenditures in the rail road and in its supply industries. R&D in the industry is a continuous process which has led to numerous changes in equipment, methods, and materials. An example of current resources devoted to railroad re search is the 10-year national program of track-train dy namics designed to improve rail systems. This program in cludes the study of the characteristics of track, cars, and locomotives and of the human factors involved in rail oper ations. A cooperative effort of the railroads themselves, to gether with the Association of American Railroads (AAR), the Federal Railroad Administration (FRA), manufacturers of supply equipment to the industry, and the Canadian Government, the program is currently funded at a rate of about $2 million a year.11 At the FRA, R&D projects underway in 1974 totaled slightly over $51 million.12 The FRA budget for fiscal year 1974 totaled $44 million, of which $30 million was bud geted for research. Research efforts at the AAR emphasize solutions to gen eral problems of the industry as opposed to the testing of products. The AAR research and test budget for 1976 was above $4 million, five times the 1971 level of $800,000.13 Total research outlays for 1976, including all industry and government programs, amounted to over $10 million. Employment and Occupational Trends Occupations Employment The impact on occupations of technological changes, the decline in passenger service, the shift of employment to outside firms which supply equipment to the industry, and other changes in the industry may be observed from an analysis of each of the seven summary reporting occupa tional categories, as defined by the Interstate Commerce Commission (ICC). Six of these categories registered de clines in employment between 1960 and 1975 and one category increased slightly, as shown in table 8.15 It is difficult to isolate the impact of technological change on occupations from the other changes taking place in the industry. In general, those occupations requiring Total employment in the industry declined steadily be tween 1960 and 1975, from 821,200 to 514,600, at an average annual rate of 2.7 percent, as shown in chart 11. From 1960 to 1967, the average annual rate of decline was 3.3 percent; during the 1967-75 period the rate of decline slowed to 2.3 percent. The number of production workers declined steadily between 1960 and 1975, from 742,800 to 453,400, at an average annual rate of 2.9 percent. Changes in employment reflect changes in product mix and technology and the shift of employment to outside firms which supply equipment to the industry. For ex Table 8. Class I railroad employment, by major occupational group, 1960 and 1975 1960 IC C r e p o r tin g t it le 1975 A v e ra g e an n u al p e rc e n t change ( m a jo r o c c u p a t io n a l g r o u p ) Num ber P e rc e n t Num ber P e rc e n t 1 9 6 0 -7 5 7 8 0 ,4 9 4 1 0 0 .0 4 8 7 ,7 8 9 1 0 0 .0 - 3 .1 E x e c u t iv e s , o f fic ia ls , a n d s t a f f T r a n s p o r ta tio n 1 6 ,7 0 4 3 .4 0 .7 1 0 2 ,6 4 5 2 1 .0 -3 .0 1 1 8 ,5 1 6 1 5 .2 8 1 ,5 0 7 1 6 .7 -2 .4 1 8 4 ,0 0 6 2 3 .6 1 0 4 ,5 7 8 2 1 .4 - 3 .7 8 9 ,8 7 3 1 1 .5 2 7 ,0 9 2 5 .6 -7 .7 (y a r d m a s te r s , s w itc h T r a n s p o r t a t i o n ( t r a i n a n d e n g i n e ) .................................................................................................................. SO URCE: 1 .9 2 0 .7 (o th e r th a n t r a in , e n g i n e , a n d y a r d ) .................................................................................................................................................... T ra n s p o r ta tio n 1 5 ,0 4 3 1 6 1 ,4 5 2 1 2 ,0 8 2 1 .5 8 ,6 9 8 1 .8 -2 .2 1 9 9 ,5 2 2 2 5 .6 1 4 6 ,5 6 5 3 0 .0 - 2 .1 In t e r s t a t e C o m m e r c e C o m m is s io n a n d A s s o c ia t io n o f A m e r ic a n R a ilr o a d s . 41 Chart 11 Employment hi Class I railroads, 1960-75 Employees(thousands) 1,000 900 400 300 Average annual percent change^ 200 AH employees 1960-75....... ...................... -2.7 1960-67........................ -3 .3 1967-75........................ -2 .3 Production workers 1960-75.............................. -2 .9 1960-67......................... -3 .5 1967-75........................ -2 .5 100 1960 i 61 62 63 64 65 66 6? Least squares trend method. Source: Based on data from Interstate Commerce Commission. 42 68 69 70 71 72 73 74 75 tained in labor-management contract provisions. These in clude advance notice of change, guarantees of job security, transfer and retraining rights and benefits, limitations on subcontracting, income maintenance plans, and unemploy ment and retirement benefits. In the 1960’s, provisions dealing with technological change became prevalent in collective bargaining agree ments, following widespread job losses arising from chang ing technology. The provisions generally were patterned after the provisions of the “Washington Job Protection Agreement” signed by the railroad brotherhoods and 141 rail lines in May 1936, which was intended to ease the im pact on employees of the wave of inter-railroad coordina tions then taking place in the industry. The agreement, which is still in effect in amended form, requires advance notice of a merger and provides for moving expenses and reimbursement for losses in home sales by relocated em ployees, an allowance which maintains the former wage rates of downgraded employees for several years, and a sev erance allowance for separated workers. An example of contracts incorporating such provisions was a 1965 national contract, negotiated for nonoperating, nonshopcraft employees, which included job guarantees, limitations on job subcontracts, and income protection. The agreement of April 27, 1973, between the National Carrier’s Conference and the Railroad Yardmasters of America provides that if one of the carriers proposes “ .. . a major technological change, the organization may, in rela tion thereto, serve and propose proposals for changes in rates of pay on an individual position basis based upon increased duties and/or responsibilities by reason of such . . . major technological change” (defined as involving five employees or more). Similar wage reopening provisions in the event of a major technological change were negotiated with the American Railway Supervisors Association, the Hotel and Restaurant Employees Union, the Brotherhood of Railroad Signalmen, and the Brotherhoods of Mainte nance of Way Employees and Railway Airline and Steam ship Clerks. (The agreements with the latter two unions defined “ a major technological change” as one involving 25 employees or more.) There are about 332,800 nonoperating railroad em ployees, organized into 19 separate organizations. The unions covering operating personnel—approximately 132,600 workers—were reduced from five to two by a 1969 merger. The two unions are the United Transportation Union and the Brotherhood of Locomotive Engineers. little formal education, training, or experience to enter such as helper or laborer have been adversely affected by tech nological and nontechnological changes. Many skilled occu pations also have been adversely affected by technological change. For example, the decline in the employment of machinists and skilled trade helpers is closely associated with the decreased employee-hour requirements for main tenance of the newer locomotives. However, employment in these two occupations was also affected by nontechno logical changes. The declines of employment in the occupa tional categories shwon in table 8 are thus attributable to technological change and other changes taking place in the railroad industry. During the next decade, industry experts expect employ ment in the various occupational categories to level off or decline only slightly. Some of the reasons underlying this view concern changes in the nontechnology factors that contributed to the past decline, for example, deferred main tenance. Funds made available through the Revitalization and Regulatory Reform Act of 1976 for long-deferred maintenance are expected to reverse the employment trend for both skilled and unskilled maintenance workers. An other factor is the expectation that AMTRAK will stimu late growth in passenger traffic. Most of the jobs created by new technologies are related to the use of computers. These jobs, found in the few rail road companies leading in computer applications, were pre viously unheard of in the industry. Thus, for example, among division officers and assistants (a traditional ICC re porting category) are such titles as supervisor of computer centers and supervisor of data collection; among profes sional and subprofessional assistants are assistant computer engineer and assistant manager of applied research; and among supervisory or chief clerks is manager, electronic data processing center. Likewise, new job titles in the clerks and clerical specialists category include automation analyst, IBM operator, and tape librarian. Also, IBM clerk, assistant computer programmer, lead computer programmer, and console operator are new job titles found in the occupa tional category “ mechanical device operator (office).” Adjustment of workers to technological change Some adjustment techniques to lessen the impact of technological change on nonoperating employees are con 4 3 FOOTNOTES ‘ Class I railroads have been defined by the Interstate Com merce Commission as companies reporting average revenues of $5 million or more for 3 years consecutively. Effective January 1, 1976, the base was raised to $10 million. 9 Data for 1960-69 in Survey o f Current Business, Jan uary 1970, pp. 25-29. For 1970-75, see Survey o f Current Business, national income issue for July of each year. Data for earlier years from Securities and Exchange Commission. 2Association of American Railroads, Yearbook o f Railroad Facts, 1976 Edition (Washington, D.C., AAR), p. 50. I “Association of American Railroads, American Railroad Indus try: A Prospectus, America’s Sound Transportation Review Organi zation (Washington, D.C., AAR, June 1970). 3 Yearbook, p. 27. II The Signalman’s Journal, November 1973, p. 259. 4 Yearbook, pp. 25, 27. 12Modern Railroads, January 1974, pp. 52-55. 5Association of American Railroads. 13 Association of American Railroads. 6Railroad Technology and Manpower in the 1970’s, Bulletin 1717 (Bureau of Labor Statistics, 1972), pp. 31-32. 14 Yearbook, p. 51. 7Railroad Technology and Manpower, p. 82. 15 Wage Statistics o f Class I Railroads in the Unites States, cal endar years 1960 and 1975 (Interstate Commerce Commission). 8Freight Commodity Statistics, Year Ended December 31, 1974 (Interstate Commerce Commission). SELECTED REFERENCES Brand, Horst, “ Problems of Measuring Railroad Productivity,” Monthly Labor Review, October 1974, pp. 26-32. ton Job Protection Agreement and Major ICC Protective Condi tions,” October 25, 1972. Cottrel, Fred. Technological Change and Labor in the Railroad In dustry. Lexington, Mass., D.C. Heath and Co., 1970. U.S. Department of Labor, Bureau of Labor Statistics. Productivity Indexes for Selected Industries, 1976 Edition. Bulletin 1938, 1977. Library of Congress, Congressional Research Service. “ Protection of Employees Affected by Railroad Consolidations: The Washing __________ ____________ Productivity in the Railroad Industry. Report 377, March 1970. 44 C h a p te r 5. Summary For retail trade as a whole,1 productivity growth (out put per hour of all persons) and change in the occupational distribution of employment will probably be accelerated by the diffusion of various technological advances. Differences will persist in occupational requirements among subdivis ions of the industry as the rate of introduction of innova tions continues to vary. As vendors expand their practice of marking identifying information on more lines of merchandise, thus eliminating store-marking tasks, the movement of a wider variety of stock to the selling area is being expedited in most general merchandise and apparel stores, and the workload of stock clerks is being decreased. By collecting more data at the point of sale in numerous variety and department stores, electronic data processing systems (replacing traditional cash registers) help generate more accurate records for prompt management of inventory, selling space, and staff ing patterns and also facilitate a rapid customer credit check by sales clerks. Store terminals linked to suppliers’ computers are speeding up reordering, shortening delivery lags, and reducing inventory and stock room labor require ments in a significant proportion of chain grocery and drug merchandising. In food marketing, product coding and a computer-assisted front-end (automated checkouts) im prove checker ringing speed. Microfilming improves the availability of information to managers at all locations and levels in chain store sales and to counter customers purchas ing such stock as automotive repair parts in multi-line de partment stores or paint at hardware suppliers. A new cen tral distribution system which uses catalog merchandising, telephone ordering, and home delivery from a warehouse is supplementing grocery and drug retail stores in a few locali ties. Customer self-service may spread further as additional prepackaging evolves. Increases in output are expected to contribute to the growth of gross national product at a slightly lower rate through 1985 than in the past decade, according to BLS projections. Productivity will benefit from economies of scale occurring with growth and specialization of product retailing which make possible larger orders of single items. Conversely, productivity may be depressed by a continuing increase in the number of different products offered. Once innovations are introduced, it is likely that compe tition will speed their diffusion and accentuate shifts in the 45 R etail T ra d e occupational distribution of employment. Increased volume may require more hours of work of sales clerks, cashiers, stock handlers, and stock clerks. The use and maintenance of more sophisticated information systems will possibly re duce the overall hours of work of managers and buyers depending, in part, upon the degree of centralization in decisionmaking in multi-store organizations. It is likely that relatively fewer operatives and craft workers will be needed in retail stores whose arrangements with vendors shift some workload to wholesalers or manufacturers.2 Technology in the 1970’s Enhancing the effectiveness of marketing techniques through the adoption of advances in computer capabilities should contribute to an improvement in productivity. Also, other major innovations listed in table 9 are expected to add to productivity gains through their laborsavings. For example, unique identification for all grocery and drug pro ducts is possible with newly developed codes. Both lines of products are usually packaged with machine readable iden tification imprinted on the label of each container by the producer of the label. When an automated checkout reads the coded label in a supermarket, the work of the checkout clerk is lessened. Increasingly, stock clerk tasks are being reduced as more goods are delivered by the vendor with some merchandise identification. A terminal which serves as a sales register and a recorder for the detailed price tag information is linked to an in-store central controller . In multi-unit gen eral merchandise stores, the in-store central controller is also linked to a regional data center. Such a point-of-sale system may increase output by supplying accurate and timely data for improving merchandise mix and cutting in ventory shortages. The system may also replace manual pro cessing of accounting and personnel records. Generally, its use reduces the workload of managers, buyers, and clerks. The use of bank credit card authorization systems is spreading in apparel speciality shops and department stores. Since such systems may improve the availability of credit to the customer, they tend to increase sales. This innovation is expected eventually to involve national public policy as electronic funds transfer (EFT) creates interstate legal prob lems in transferring money.3 Microfilming is improving data availability both in individual stores and at multiple wide spread chain locations as well as at the customer counter of automotive accessory suppliers and hardware stores. Table 9 . M ajor technology changes in retail trade Vendor s o u rc e -m a rk e d c h a n d is e id e n tific a tio n m e r One tic k e ts a n d e l e c t r o n i c c a s h r e g is t e r s d e s ig n of o n - lin e The p o in t- e n try tim e of o f -s a le t e r m in a ls r e a d s m a g n e t s to c k ro o m ic a lly and of and r e c o n c ilia tio n encoded m e r c h a n d is e v e n d o r m a rk e d t ic k e ts by con t a c t a n d a s e c o n d d e s ig n r e a d s c o lo r - c o d e d o p tic a l tic k e ts s c a n n e r. r e q u ir e an e n te re d to a u t o m a t ic o n - lin e to p ro c e s s and o ffic e and c le r k s f o r p r e -s a le d a t a c a s h ie r s fo r p o s t-s a le d a t a t im e of book P o in t - o f- s a le m a rk e d te r m in a ls t ic k e ts a re and vendor r e s t r ic t e d p r i m a r i l y t o la r g e d e p a r t m e n t , a p p a r e l , a n d d is c o u n t s to re s . k e e p e rs a re re d u c e d . an d e s ig n s d a ta re c o rd w it h B o th tic k e tm a k e r D if fu s io n L a b o r im p lic a t io n s D e s c r ip tio n T e c h n o lo g y hand- a c o m p u te r t r a n s a c t io n a l a n d in v e n to r y d a ta o n m a g n e tic ta p e and A d d it io n a l c o m p u te r fu n c t o c o m p u t e s a le s e x p e n s e . S to re c h a rg e a u d it e d tio n s by r e g is te r a c c o u n t c r e d i t is an w h ic h s a le s p e r s o n q u ic k ly in fo r m s bank c a rd la b o r c le r k s and s a le s p e r s o n s th e la te d r e q u ir e m e n ts w o r k lo a d of p e r s o n n e l, and re C o m p u te riz e d of is l i m i t e d f o r s to re c h a rg e a c c o u n ts to u s in g e l e c t r o n i c adds c o m p u te r-re p a r t ic u la r ly p ro g ra m m e rs . and bank c o m p u te r. is a n s w e re d th e by to th e a u t h o r iz a t io n cash re g a c c o u n ts d a ta to on shops c r e d it a c c o u n t. A p u r c h a s in g s ta tu s o f cus g re a t m a n y re ta il f o o d s to re s a r e lin k e d w it h s u p p lie r s ' at c o m p u te rs . c o m p u te r iz e d r e t a il o u t le t s c o n n e c t e d t e le p h o n e c a rd t o m e r 's th e T e r m in a ls s to re s c r e d it is te r s a n d f o r b a n k c h e c k a n d c r e d i t bank c o m m u n ic a te s w it h m a jo r u n it to and c o m p u te r iz a tio n duces c re d it check a u t h o r iz a t io n s a le s p e r s o n by th e and c u s to m e r fo r A dvanced cash d ir e c tly on s ta tu s ; c r e d it e le c tr o n ic a c c u m u la t e v e n d o r 's p o rts . In S to re s a c c o u n t in g d a ta 1974, fo r one h a v in g g e n e r a lly s u m m a ry in e v e ry re 300 c o m p u t e r re d u c e d e liv e r y t im e r e t a il u n its w a s c o m p u t e r iz e d , c o m la g s . p a r e d t o o n e in e v e r y 4 0 0 in 1 9 6 8 . 1 D a ta e n te re d s a le a n d s t o r e d c o m p u te r a t p o in t o f in s t o r e 's m i n i a re tra n s fe rre d n ig h tly to d a ta c e n te rs f o r a u to m a tic p r o c e s s in g chases, a u d it , s io n s , and of s a le s in v e n to ry S u m m a ry re p o rts fo r m a tio n fo r p u r c o m m is needs. p r o v id e in m a n a g e r ia l d e c i s i o n m a k i n g o n s u c h m a t t e r s as s to re h o u rs and s ta ffin g p a t te r n s . M ic r o f ilm in g M ic r o f ilm te rn a l s y s te m s m a in ta in re c o rd s in fo rm a tio n and to m u ltip le t io n s f o r d is p la y v ie w e rs ; C e n tr a l r e t a il d i s t r i b u t i o n U n it in d is tr ib u te on m ic r o film lis t s of s a le s re d u c e d as c u s t o m e r s u tiliz e m ic r o film e d in fo rm a tio n fo r are re q u ire m e n ts a re lo c a m ic r o film la b o r p e rs o n s in c re a s e d s e l f - s e r v ic e , A d d i t io n a l t im e f o r t e c h n ic ia n s is n e c u s e d a t s a le s c o u n t e r s t o s h o w e s s a ry a v a ila b ility s y s te m s , in c lu d in g h a r d w a r e . of ite m s and d ru g s c a ta lo g a re G r o c e r ie s fro m a fro m w a re h o u s e s m e m b e rs phones w ho s to c k e d . m a in ta in c u s to m e r b le o rd e rs are by w o rk to te le th e of s e l f - s e r v ic e , in c re a s e d s to c k in g p r ic e m a r k in g d is ite m s c ip a lly at lis ts a r e a v a i l a b l e p r i n c a ta lo g s to re s a n d a u to m o t iv e r e p a ir p a r ts d e p a r tm e n t s . m ic r o film u n it la b o r r e q u ir e m e n t s to s y s t e m 's o rd e r c o n n e c te d W ith o u t s e le c te d d e liv e r e d to to M a n y m u lt i- s t o r e c o m p a n ie s u se t h e s y s t e m s ; a ls o assem w h ile th e s h e lv e s and is e l i m i n a t e d . T h e s y s t e m is l i m i t e d a t t h i s t i m e t o a s m a ll num ber C a lifo r n ia , ic o ; of A r iz o n a , o p e ra tio n s and New m a y h a v e p o te n tia l g ro w th h i g h - r is e a p a rtm e n ts in M ex fo r in o t h e r a r e a s . t r ib u t o r 's c o m p u te r . S u p e r m a r k e t a u t o m a t io n U n iv e r s a l P r o d u c t C o d e ( U P C ) D e p e n d in g p r o v id e s c le r k s t io n a to s u p e rm a rk e t c o u n te r, th ro u g h s c a n n e r, f la s h e s fo r in c lu d e 65 ‘ Based o n f ir m of Ed C o rp o r a tio n th e a s tu d y o f 1 .3 jo in tly by th e B u rn e tt, m illio n p e r io d ic a l c o n s u lta n t. e le c tr o n ic d a ta p r o c e s s in g in v e n to r y p e rc e n t o u tle ts In w as A ls o in c r e a s e r in g in g s p e e d a n d la b o r C h e c k o u t e q u i p m e n t u s in g s c a n n e r s not a re p o rts fro n t-e n d a ll 1 0 - t o ie rs a n d b a g g e r s . 4 to g ro c e ry d u c tio n pends e le c a o p e ra to r a p o s s ib l e o v e r re q u ire m e n ts in m a rk e ts an p e r m its in in fo r cash o p e ra tio n in e a r l y in to such 50 de e le c tr o n ic p e rfo rm a n c e advances s u p e r s to re s im p r o v in g th ro u g h as 8 0 - p e r c e n t c o v e r age o f g ro c e ry th e of in 1 9 7 6 . T h e ir in t r o a d d itio n a l on ch e cko u t ite m s b y c o d in g a n d d e v e l o p m e n t o f s c a le s c a p a b l e s im u lt a n e o u s ly w e ig h in g and m a rk in g c o n tr o l. of need 1 5 -p e r c e n t r e d u c tio n u n it m eat and p ro d u c e w ith a c o d e s y m b o l.3 con in m a rk e d U P C b y th e 1 9 7 5 y e a r-e n d . b u s in e s s e s in S I C ’ s 5 2 - 5 9 a d d it io n , In te r n a tio n a l w ill a m o u n t to m a rk e t in and 1 9 7 5 -8 4 18 con 2 " T h e S u p e r m a r k e t S c a n n e r t h a t F a ile d ” , th e D a ta to M a rc h 3 Ib id . p e rc e n t o f c o m p a re d Business Week, 2 2 , 1 9 7 6 , page 5 2 B . 4"1974 7 The 1 9 7 3 , page 5 1 . p e r c e n t in 1 9 7 4 . ite m s . s u rv e y 3 0 -p e rc e n t p o lic y , s to c k p r ic e c h a n g e s o n s a v in g s m a rk e te d w e re m ay Advan Computers and People p r o je c t s t h a t r e t a il t r a d e t r o n ic fo r t r a n s m it s p r ic in g p ro d u c ts g ro c e ry code, s to re or p r ic e s a n d m a g a z in e a c e n tra l c o m p r o c e s s in g . tig h te r A lm o s t th e on m ay in d iv id u a l o p tic a l a s c re e n and to p u te r sum er d u c te d on c u s to m e r, ta g e s by m a rk checkout an re a d s p ric e s in fo rm a tio n and id e n tific a e a c h p r o d u c t; a n e le c tr o n ic th e u n iq u e 46 Y e a r o f E le c tr o n ic s ," Progressive Grocer, D ecem ber ple, the salesperson may contact the bank’s computer di rectly for credit approval. This procedure eliminates the practice of having supervisory sales personnel authorize the acceptance of customer checks and shifts the task from the retail store to the bank. Merchandise identification and point-of-sale terminals Increasingly, the manufacturer or the wholesaler is deliv ering merchandise to retail department, discount, and ap parel stores marked with an identifying punch ticket includ ing such information as the seller’s number, style number, color, and size. The store then adds its department number and retail price. When the vendor supplies a merchandise identification ticket, the clerical effort for the retail store is lessened, the time required to get merchandise to the selling floor is reduced, and the accuracy of merchandise identifi cation tends to be increased. General merchandise stores emphasize the importance of collection of detailed price tag information when introduc ing an electronic data processing system at the point of sale; supermarkets introducing automated checkout stands are more concerned with speed. The supermarket mechanism consists of a laser beam installed behind a window which scans a stamp-sized bar code on each item and signals a mini-computer to locate the item’s price in its memory for display on the checkout clerk’s console. Many department stores use price tags which may be read both by people and by optical character recognition (OCR) equipment. One type of point-of-sale terminals reads magnetically encoded tickets while a second type reads color-bar coded merchan dise cards. Both types require linkage to a computer of fairly substantial capacity for storage and processing of data. The electronic cash register prints instantly a completed sales check as well as enters data on the system’s journal tape for transactional and inventory information. Conse quently, labor requirements per unit of sale are decreased and accuracy of data entry is generally improved. Fewer hours of clerical and bookkeeping effort are necessary to maintain routine sales and inventory records. Also as more timely, detailed, and accurate information becomes avail able for inventory and selling space management, more in ventory may be displayed and less stored, with resulting reduced unit labor requirements for material handling. Linkage with supplier's computer Terminals are being located at major retail outlets such as main offices of chain apparel and grocery stores and department store branches which provide access by tele phone to the vendor’s computer. The procedure is usually planned by vendors and is expected to expand to include small independent outlets. When the order is typed and accepted by the vendor’s computer, the retailer has a paper record of the transaction and also a tape to be used in the store’s own computer for control purposes. This automated system is expected to reduce the time lag in deliveries and to permit smaller inventories, thus reducing stock handling and possibly warehouse and stockroom supervisory duties and clerical work in the accounting department. Computer-generated reports When an electronic data processing terminal replaces a cash register in a retail store, manual entry of records by clerks is substantially lessened. Labor requirements per unit of sales of stock clerks and bookkeepers typically are re duced and the workload of computer programming and maintenance personnel is expanded. Data entered at point of sale for each item are usually stored in the store’s mini-computer until night and then transferred to data centers for further processing. Book keeping and accounting labor requirements are reduced by automated posting and summarizing of such data as sales and taxes, payroll, inventory changes, and customer credit card purchases. Sales data are transmitted from a regional to the headquarters data processing station where national unit sales information is compiled. Computer-generated summaries permit a statistical approach to decisionmaking at different managerial levels. Some reports have many uses. For example, records of transactions by number, dollars, and time of day may be useful for determining both store hours and staffing patterns. A department store industry study shows that computer-generated reports contributed substantially to a sizable rise in annual stock turnover be tween 1967 and 1974.4 As more precise information becomes available on the comparative dollar return of different items per square foot of selling space, general merchandise retailers are expected to restrict somewhat the variety of merchandise stocked. Consequently, a greater market share of specialized equip ment such as stereos and citizen band radios will probably shift from general merchandise stores to speciality shops Computer credit approval Improved credit approval systems speed up customer ser vice while still protecting store assets. A check of a custom er’s credit with a department store frequently is accom plished at the point of sale through the use of an electronic sales register. The salesperson enters the charge account number into the register and the store’s mini-computer re ports the customer’s credit status. This method replaces a data search and reply by one and sometimes two credit department clerks. Also, clearance from the computer to extend store credit is usually less time consuming for the salesperson. When a bank credit card or a personal check on a local bank is presented by an apparel store customer, for exam 47 The customer pays a small delivery fee and receives a monthly billing and a money-back guarantee on the mer chandise. A central distribution system requires a sizable capital investment, an integrated physical distribution net work, and intensive computerization, and offers the inhouse buyers service and convenience not afforded by tradi tional retailers such as supermarkets. Central warehouse dis tribution eliminates labor requirements for item pricing and display and adds the tasks of assembly of orders by stock clerks and delivery by drivers and route sales workers. In the near term, the expansion of a central distribution sys tem is not expected to affect retail food distribution signifi cantly. However, over time, as the proportion of the elderly in the population increases and their residency in urban areas becomes more concentrated, more consumers may prefer this type of marketing. whose numbers and need of trained sales and service per sonnel will probably expand. The computer supplies data for improved merchandise selection in some chains by reporting back to each store an automated rejection of reorders of its excessively slow mov ing goods; consequently some of the items reordered by a typical store may be cancelled because of their poor sales performance in the particular store despite satisfactory av erage turnover for the chain. As additional detailed infor mation is computerized, the decisionmaking process tends to be more routinized and the relative number of managers and buyers may be reduced. More support workers, such as administrators, typists, and secretaries, may be needed, as well as accountants. Microfilming In chain store merchandising, large quantities of records must be stored; these records are needed frequently at loca tions remote from the computer. Hard-copy recordkeeping is being extensively replaced by microfilm systems for class ifying, storing, retrieving, copying, and distributing infor mation. The updated data base is recorded on microfilm and displayed for use when needed. In addition to internal recordkeeping, microfilm lists are being maintained at the sales counter on the availability of items in mail order cata logs and in automotive repair parts inventory. Also, a mi crofiche reader is being used by a nationwide chain of paint stores to assist customers in paint selection by showing a deck of color fiches which displays rooms with specifica tions for color-coordinated painted walls and furnishings. Compared to conventional printed pages for reference on available stock, microfilm is easier to update, saves space, is less likely to be removed or misfiled, is more resis tant to wear and tear, and is more economical to distribute. When information systems use a microfilm format, the unit labor requirements for recordkeeping are reduced because much less clerical labor is required for updating and reissu ing files. Also, when production information is made di rectly available to prospective buyers, self-service may re place or reduce the time required of sales employees. Supermarket automation At an electronic supermarket checkout counter, an auto matic reader using a laser light source reads a bar code imprinted by the producer of the label for the container of the purchased items; the sales data are transmitted by wire to a centrally located computer capable of identifying and pricing each item from a master file. The tabulation is re turned instantly to the supermarket where the customer receives a printout of the purchases and their prices and the computer updates the store’s file of inventory data. Savings from electronic checkouts originally anticipated by retail food stores included decreased unit labor require ments for checking, price marking and remarking, record ing, checker training, and front-end administration.6 Be cause of resistance by consumer groups to planned elimina tion of item pricing, most stores are continuing price mark ing so that jobs for this task have not been eliminated. The grocery industry set up a public policy subcommittee which recommended, in March 1976, a continuance in stores using automated checkouts of individual price marking, as prac ticed in conventional supermarkets. The committee also recommended discussion with consumer and labor repre sentatives regarding continued experimentation with alter native methods of price information and other aspects of the Universal Product Code (UPC) system. Other possible benefits are reduction of pricing errors, tighter inventory controls, more accurate comunications from store to ware house and manufacturer, and improved in-store evaluation of shelf-allocation changes and pricing policy. One super market with an electronic checkout reported a remarkably high increase in productivity when 95 percent of 175 pro ducts were scanned.7 Fully computerized checkstands, in cluding a terminal, scanner, and controller and a communi cations unit to transmit automatically compiled orders to the warehouse, were in operation in 50 supermarkets in early 1976.8 Gains in productivity should result from fur ther technological advance in product coding and com- New central retail distribution system Introduced into the Southwest and the Far West in 1970, and still restricted to a few warehouses in these areas, central retail distribution is a new method of merchandising products to system members who order by telephone from their homes for home delivery. The distributor operates from a warehouse equipped with semiautomatic facilities, often located on industrial land. A quarterly catalog cover ing over 3,000 items, principally groceries and drugs, is cir culated to permanent members who give their orders di rectly to the distributor’s computer.5 A quick delivery is made within a specified number of hours, typically four. 48 puter-assisted front-ends. Also, the number of hours of em ployment of sales clerks, cashiers, stock handlers, and stock clerks is expected to rise in the last half of the 1970’s. A greater volume of merchandise is expected to be marketed to satisfy the growth in consumer demand stemming from an increase in the number of families and an expected rise in the annual number of births. household appliance store sales will probably undergo a slight relative decline. SIC Percent of total sales 1975 52-59 Output and Productivity Outlook 5411 5311 5812,5813 Output 5912 5712 5621,5631 Output, measured by the net value added to national product originating in retail trade (in constant dollars), grew at an annual average rate of 3.5 percent from 1960 through 1975. The yearly rate reached 4.5 percent in 1960-67 and dropped off to 2.8 percent for 1967-75. The following tabulation, based on projections of the U.S. Department of Commerce, shows that in 1975 grocery stores were the leading subdivision in retail dollar sales; department stores were the second highest. These two sub industries accounted for 32 percent of total dollar sales and are expected to continue to represent about this proportion through 1985. Sales of department stores and eating and drinking places are expected to gain somewhat in relative importance while grocery, drug, furniture, apparel, and Incl us try subdi vision 5331 5611 5722 All retail trade . . . . 100.0 G roceries...................... . Department stores . . . . . Eating and drinking places ........................ Drug stores.................... Furniture sto re s........... Women’s apparel accessory stores . . . . Variety stores................ Men’s and boys’ apparel sto res........... Household appliance stores ........................ All other ...................... . Projected 1985 100.0 21.3 10.4 19.7 11.8 8.3 3.1 1.9 9.6 2.8 1.6 1.8 1.6 1.6 1.4 1.0 .8 .9 49.7 .8 49.9 Productivity Because of limitations in available data, the BLS has not developed productivity measures for the industry. However, Coded label being read at an automated grocery checkout 49 1963 to 1:1.7 in 1974. The increase in the proportion of part-time workers contributed significantly to the decline in the length of the average workweek during the 1963-74 period. Women accounted for 47 percent of all employees in the retail trade work force in 1975 compared to an average of 39 percent in all industries. Sixty-eight percent of the em ployees in general merchandising were women; the propor tion in drug stores was 61 percent and in food stores 37 percent. The importance of different subindustries as a source of employment shifted between 1960 and 1970 and the trend, according to BLS projections, is expected to continue through 1985. Of the 33-percent rise in the number of employees projected for 1970-85, more than one-third is expected to occur in eating and drinking places, about onefifth in general merchandise stores, one-sixth in food stores, and one-tenth in automotive dealers and service stations. through an examination of the relationship between output and aggregate hours, some indication of productivity move ments may be obtained. (See chart 12.) With the exception of 1961, 1974, and 1975, output rose every year through out the 1960-75 period; hours rose in 10 of the 15 years. The annual rate of increase in output exceeded the rate of growth in hours over the period. Unit labor requirements should continue to be lessened by a sustained emphasis on self-service, not only in the sale of foods and soft goods, but also hardware, electronics, appliances, and furniture. When the customer makes unas sisted selections of purchases, store productivity increases through the release of employee-hours for other chores, for example, stocking shelves and counters in food and variety stores or tagging and arranging stock in hardware, appli ance, and furniture stores. According to a private study, most executives of department stores, chains, and discount stores expect that the self-service proportion of all depart ment store volume will be substantially higher by the mid1980’s compared to the mid-1970’s; in addition, most of the retailers surveyed consider that warehouse outlets (a type of self-service marketing) will multiply their share of the furniture market by the mid-1980’s. Productivity prob ably will tend to be decreased by managerial decisions to expand merchandise mix to satisfy customer preferences and by consumer requirements (as incomes rise) for style and service in respect to the products they buy. However, the increasing number of speciality shops may add econo mies of scale and benefit productivity. SIC , ,. . . Percent o f total subdmsum 1960 52-59 58 53 54 55 Employment and Occupational Trends 59 Employment 56 Retail trade engaged a total of 15.2 million persons in 1975, of whom 88 percent were employees, 10 percent proprietors, and the remainder unpaid family workers. Compared to 1960, the number of persons working in retail trade was up 40 percent; the number of supervisory work ers increased by 87 percent and nonsupervisory workers by 49 percent. The proportion of self-employed dropped from more than 1 in 5 of total industry employment in 1960 to less than 1 in 8 in 1975. For the 1960-75 period, employ ment of all persons grew annually at a 2.7-percent rate and of wage and salary workers at a 3.3-percent rate. Prelimi nary figures for 1976 indicate a rise in total employment to 15.5 million and in wage and salary workers to 13.4 mil lion. Employment of all persons is expected to reach 18.1 million in 1985, with employees accounting for 86 percent of the total. (See chart 13.) Aggregate hours of employ ment in retail trade grew at the more modest rate of 1.4 percent annually during the 1960-75 period. The ratio of part-time retail employees (who usually are assigned a regu lar weekly shift of less than 40 hours) to full-time workers (who typically work a 40-hour week) rose from 1:2.7 in . , Industry 57 52 1970 Projected 1985 All retail trade . . . . . 100.0 100.0 100.0 Eating and drinking places ...................... . General merchandise stores ...................... . Food and dairy stores ...................... . Automotive dealers and service stations.................... . Miscellaneous retail stores ...................... . Apparel and accessory stores ...................... . Furniture and home furnishings stores . . . Building materials and farm equipment . . . . 19.8 21.7 25.5 15.9 20.7 21.1 17.6 15.8 15.9 15.2 14.5 13.5 12.9 11.8 10.9 7.0 6.2 5.4 5.1 4.5 3.9 6.5 4.8 3.8 Occupations Although the number of job opportunities in retail trade will expand for all major occupational groups through 1985, according to BLS projections, the proportionate in creases will differ. The maximum relative gain is expected to occur for the professional and technical groups (57.8 percent) while the minimum is expected for operatives (8.7 percent). (See chart 14.) Because of the differences in the size of these occupational groups, the absolute increases vary significantly from the percentages. For example, the professional and technical group shows the maximum per centage gain but this represents relatively few jobs. The occupational group projected as needing the largest addi tional number of workers is the service workers caregory, 50 Chart 12 Index, 1972=100 120 Ratio scale 110 100 90 100 80 70 : V ........... ; ■v . :■ 1970 Source: Bureau of U b o r Statistics. 51 1975 Chart 13 Employment in retail trade, 1960-75, and projection, 1973-85 Employees(millions) 20.0 18.0 16.0 Total persons engaged 14.0 12.0 Wage and salary workers 10.0 8.0 Average annual percent change Total persons engaged 1960-75.............................. 2.7 1960-67 ........................ 2.0 1967-75........................ 2.8 Projected: 1973-85........................ 1.6 Wage and salary workers 1960-75..................................3.3 1960-67........................... 2.9 1967-75,...........;.............. 3.2 Projected: 1973-85...,....................... 1.5 6.0 4.0 2.0 0 1960 <1 1965 1970 1975 ^ Least squares trend method for historical data; compound interest method for projection. Source: Bureau of Labor Statistics. 52 1980 1985 Chart 14 Projected changes in employment in retail trade, by occupational group, 1970-85 O c c u p a tio n a l g ro u p P ro fe s s io n a l,te c h n ic a l and k in d re d w o rk e rs P e rce n t o f in d u s tr y e m p lo y m e n t in 1 9 7 0 1 7 .3 Sales w o rk e rs 23 .1 C le ric a l an d k in d re d w o rk e rs 1 5 .7 C ra ft an d k in d re d w o rk e rs 8 .5 O p e ra tiv e s 9 .6 L a b o re rs 10 2.0 M anagers, o ffic ia ls , a n d p r o p r ie to r s S e rv ic e w o rk e rs Percentage change 1 8 .6 5 .2 S o u rc e : B u re a u o f L a b o r S ta tis tic s . 53 20 30 40 50 60 tively large proportion of part-time employees in this indus try leads to a high turnover rate. Measures by management and labor to meet the require ments of advancing technology include on-the-job retrain ing and comprehensive programs for job security. Neither wholesale nor retail trade is highly unionized; in 1970 less than 25 percent of all workers were organized. Employees in retail trade are represented by the Retail Clerks Interna tional Association (AFL-CIO), the Retail,- Wholesale and Department Store Union (Independent), the Amalgamated Meat Cutters and Butcher Workmen of North America, (AFL-CIO), the Amalgamated Clothing Workers of America (AFL-CIO), and the International Brotherhood of Team sters, Chaffeurs, Warehousemen and Helpers of America (Independent). When technological changes occur, provisions in collec tive bargaining agreements concerning seniority rights, re tirement, insurance, and training usually apply. In addition, by mid-1974 nearly one-fourth of the agreements covering 1,000 workers or more and representing slightly more than one-fourth of the covered workers included provisions for advance notice of technological change. A 1976 agreement covering about 25,000 workers represented by a Retail Clerks local introduced a guarantee against layoffs resulting from technological change. Employees on the payroll when the contract became effective were guaranteed employment in the event of the installation of laborsaving equipment such as electronic checkouts.10 Employment of checkers, baggers, and stock clerks may be reduced, since “ keying” prices is eliminated, and stock clerks may not be required to mark a price on each item. A contract between a second supermarket chain and its retail employees’ union sets up arrangements for discussion between the employer and the union of any contemplated introduction of major technological change affecting the work of the bargaining unit. Also, the union is provided in advance with a list of names of all employees regularly assigned to a store on the effective date of a substitution of an electronic checkout system for an existing system. None of these employees may be removed from the payroll as a result of the system’s installation.111 followed by clerical and kindred workers; managers, offi cials and proprietors; and sales workers. In the professional and technical job categories, twofifths of the anticipated openings are expected to be for writers, artists, and entertainers (occupations related to marketing), one-fifth for pharmacists, and one-seventh for accountants. Additional computer specialists, principally programmers and system analysts, also are expected to be needed. Of the increased number of managers, officials, and proprietors, more than three-fifths probably will be restau rant, cafe, and bar managers and one-fifth sales managers. Sales clerks are projected to account for three-fourths of the increase in sales workers whereas cashiers seem likely to represent more than one-third of the rise in the number of clerical workers. In addition, bookkeepers, secretaries, typ ists, stock clerks, and store keepers will be needed. Twofifths of the additional craft workers are expected to be auto mechanics and one-fourth of the operatives to be semi skilled packaging and inspection workers. The increased number of service workers will probably be employed al most exclusively in food service; the added laborers are expected to be largely stock handlers. A loss is projected in the number of jobs for delivery and route sales workers and truck drivers as a result of the growing practices of charges for home delivery and cus tomer pick-up of furniture from warehouse stores. Selfservice at gasoline stations is lessening requirements for gas station attendants, and alteration of garments at home by customers is eliminating work by seamstresses at women’s apparel shops. Preticketing by wholesalers decreases the workload at the retail level for keypunch operators, and computer printouts tend to reduce stenographic require ments. Adjustment of workers to technological change Displacement of workers in retail trade because of tech nological change may be avoided to a considerable extent through normal attrition of the work force, since the rela FOOTNOTES 1 Retail trade sales establishments are classified according to the and product processing. Items may be sold to commercial pur commodities affording their primary source of receipts, as follows: chasers. However, the primary objective of all retail trade activities Building materials, garden supplies, and mobile homes (SIC 52); gen is the sale of goods to the general public for personal or household eral merchandise such as sold, for example, in department and vari consumption. ety stores (SIC 53); food (SIC 54); automobiles and their servicing (SIC 55); apparel and accessories (SIC 56); furniture, home furnish 2 Retailers with multi-store operations who perform many func ings, and equipment (SIC 57); prepared food to be consumed im tions of wholesale trade are frequently implementing technological mediately as at eating and drinking places, exclusive of hotel-oper advances originating in wholesaling. See “Wholesale Trade” in Tech ated restaurants and counters (SIC 58); and miscellaneous such as nological Change and Manpower Trends in Five Industries, Bulletin sold in drug, liquor, sporting goods, and book stores (SIC 59). This 1856 (Bureau of Labor Statistics, 1975), pp. 48-57. study treats retail trade as an entity and groups SIC’s 52 through 59. 3 “ Bankers See EFT Among Changes Bringing Them to New Retailers buy inventory from wholesalers and manufacturers and Marketing Era,” Advertising Age, March 29, 1976, p. 103. may perform such vertically integrated operations as warehousing 54 4 Jay Scher, Department and Speciality Store and MerchandisingCurrent-dollar retail sales grouped by type of store as published annually in a BEA-Census series are converted to constant dollars Results o f 1974 (New York, National Retail Merchants Association, with appropriate deflators from the BLS Consumer Price Index. Deflated sales are then aggregated, using as weights the 1958 gross margin estimates (operating expenses plus profits) for each type of trade outlet. Problems related to product mix and deflators limit the acceptability of this output measure. 1975) p. 38-39. 5William J. Nichols, “ Central Distribution Facilities Challange Traditional Retailers,” Journal o f Retailing, Volume 49, Number 1, Spring 1973, p. 45-50. 6 Thomas Wilson, “ Automated Front End Briefing,” exhibit from slide presentation made through the U.S. Department of Com merce, Domestic and International Business Administration (Wash ington, McKinsey and Company, 1974). 10 Contract between five Retail Clerks locals in Michigan and workers at A & P, Kroger, and United Super Market Association includes an employment guarantee applying to employees on the payroll on May 5, 1974. 7“Universal Product Coding Paves the Way,” Automation, November 1973, p. 12. 1 ‘ Giant Food Inc., which operates over 100 supermarkets in Maryland, Virginia, and the District of Columbia, reports that simi lar guarantees are included in all contracts between the company and the unions representing all its retail employees (with the excep tion of store managers). 8 “The Supermarket Scanner That Failed,” Business Week, March 22, 1976, p. 52B. 9 The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), compiles data on the real product of retail trade. SELECTED REFERENCES Bloom, Gordon F., Productivity in the Food Industry. Cambridge, MIT Press, 1972. ---------------- .Vital Links in the Distribution Cycle, New York, Chain Store Publishing, 1971. Bogart, Leo. “The Future of Retailing,” Harvard Business Review, November-December 1973, pp. 16 ff. Paulson, R. Lee. The Computer Challenge in Retailing. New York, Chain Store Publishing, 1973. Edgerton, John W. “Retailing: New Opportunities of Managerial C a r e e r s American Vocational Journal, February 1971, pp. 63-64. “ RCIA Alone Can Cushion the Impact of Automation,” Retail Clerk Advocate, April 1973, pp. 2-9. Schwartzman, David. “The Growth of Sales per Man-Hour in Retail Trade, 1929-1963” in Production and Productivity in the Service Industries, Victor R. Fuchs, ed. New York, National Bureau of Economic Research, 1969, pp. 201-35. McNair, Malcolm P. “Change and Challenge in the Department Store Industry,” Readings in Modern Retailing. New York, National Retail Merchants Associations, 1969, pp. 1-14. “Store Managers Get More Power in Merchandising,” Discount Stores News, April 22, 1974, pp. 1-3. Nichols, William G. “Central Distribution Facilities Challenge Tradi tional Retailers,” Journal o f Retailing, Volume 49, Number 1, Spring 1973, pp. 45-50. ’’Supermarket Automation,” Automation, November 1973, p. 12. Padberg, Daniel I. Today’s Food Broker. New York, Chain Store Publishing, 1971. “When Food and Soft Goods Talk Different Codes,” Business Week, March 30, 1974, pp. 64-66. 55 G eneral References Board of Governors of the Federal Reserve System. Industrial Pro duction, 1976 edition (publication pending). _____ , Bureau o f the Census. Annual Survey o f Manufactures, Bowman, C. T., and Morlan, T. H. “ Revised Projections o f the U.S. Economy to 1980 and 1985,” Monthly Labor Review, March 1976, pp. 9-21. -------- , -------- 1972 Census o f Manufactures, General Summary, November 1975. 1974. Carey, Max L. “Revised Occupational Projections to 1985 , Monthly Labor Review, November 1976, pp. 10-22. U.S. Department of Labor, Bureau of Labor Statistics. Productivity Indexes for Selected Industries, 1976 Edition. Bulletin 1938, 1977. Kutscher, Ronald E. “Revised BLS Projections to 1980 and 1985: An Over-view,” Monthly Labor Review, March 1976, pp. 3-8. --------------- -------------------Characteristics o f Major Collective Bar gaining Agreements, July 1, 1974. Bulletin 1888, 1975. Mooney, T. J., and Tschetter, J. H. “Revised Industry Projections to 1985,” Monthly Labor Review, November 1976, pp. 3-9. ---------------- -------------------Employment and Earnings, States, 1909-74. Bulletin 1312-10, 1976. National Science Foundation. Funds for Research and Develop ment. Annual. _____ , _____ Occupational Outlook Handbook, 1976-77 Edition. Bulletin 1875, 1976. U.S. Department of Commerce, Domestic and International Busi ness Administration. U.S. Industrial Outlook, 1976. -------- ,______ Tomorrow’s Manpower Needs, Vol. IV, 1977 Edi tion (publication pending). 56 United Keep up to date with: MAJOR COLLECTIVE BARGAINING AGREEMENTS The Bureau of Labor Statistics has published a series of 16 bulletins dealing with key issues in collective bargaining. The bulletins are based on analysis of about 1800 major agreements and show how negotiators in different industries handle specific problems. The studies are complete with illustrative clauses identified by the company and union signatories, and detailed tabulations on the prevalence of clauses. ORDER FORM Title (Check Publication Desired) — _ _ _ _ _ _ — _ _ _ _ _ _ _ _ Ma/or Collective Bargaining Agreements: Grievance Procedures Severance Pay and Layoff Benefit Plans Supplemental Unemployment Benefit Plans and Wage-Employment Guarantees Deferred Wage Increase and Escalator Clauses Management Rights and Union-Management Cooperation Arbitration Procedures Training and Retraining Provisions...................................... Subcontracting Paid Vacation and Holiday Provisions.................................. Plant Movement. Transfer, and Relocation Allowances Seniority in Promotion and Transfer Provisions.................. Administration of Negotiated Pension, Health, and Insurance Plans.................................................................. Layoff. Recall, and Worksharing Procedures Administration of Seniority.................................................... 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