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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

Im p a c t

on

c u tte rs

o c c u p a t io n s

in ­

to

e x p e c te d

b e m in im a l b e c a u s e d i f ­

in g

ro o m

t in g
c o n tro l

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

fre q u e n c y

a

c lo th .

The

th re a d

of

w aves

used

to

bond

f r ic t io n a l

la y e r s

s im u la t e s

sound

are

tw e e n

to

a

v e ry

m e n 's

lim it e d
s u its .

d e g re e

H ig h

in

c a p it a l

to b e lim ite d . P o ­

in

In

jo b s

on

speed —
sew ­

m o st c u t­

h e ld

by

m en.

and

a s s o c ia te d

u n c e r ta in ,

b u t som e

s a v in g s

la s e r

a re

a re

c u t t in g ,

l i m i t i t s u s e t o t h e la r g e s t

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

c o s ts w i l l
fir m s .

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

Used

c u t t in g

e x is ts t o a c h ie v e u n i t la b o r

jo r a d v a n ta g e .

d ir e c ts

ex­

p e c te d

b u t im p ro v e d

d e v ic e s

but

fu s io n

s a v in g s — b e c a u s e

N u m e ric a l

a s s o c ia t e d

t e n tia l

lo s s e s a n d

s u rin g u n i f o r m i t y .

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 ,

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— an average annual rate of
at
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

4.2

Sales workers

2.0

Clerical and kindred
workers

8.0

Craft and kindred
workers

-30

2.0

Managers,officials,
and proprietors

-40

7.0

Operatives

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 .

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

w ith

1 to 2

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 ­

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

of

n o n ru b b e r

la s te d .

s t r in g

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

ap­
non­

d iffu s io n

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 2V times larger than in the lowest quar­
i
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— numerous hand or ma­
the
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

-10

0

1.6

Clerical and kindred
workers

-20

2.9

Sales workers

-30

1,3

Managers, officials,
and proprietors

Percentage change
-40

8.2

Craft and kindred
workers

13.8

Operatives

68.7

Service workers

1.5

Laborers

1.8

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

E m p lo y m e n t

in te g r a te a n d sp e ed

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

d e s ig n ,

R&D

and

a p p li­

of

a n a ly s ts ,

d ra fte rs

in

o c c u p a t io n s

p e r ip h e r a l

to rs .

c o n tro l

p r o d u c tiv ity

s y s te m s

w o rk

N u m e ro u s

q u a lity

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

Som e

c a s t m e ta l

w e ig h t
fe w e r

r e d u c tio n

s h e e t-m e ta l

s a v in g s

in

w o rk e rs

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 .

p r o c e s s in g

o p e ra tio n 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

fe w e r

m a c h in in g

and

w it h

o p e ra tio n s .

M o r e w id e s p r e a d

use o f a l u m i ­

num

s t e e ls

and

s p e c ia l

a ls o

1

is

a n tic ip a te d .
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

N u m e ric a l c o n tr o l

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

m a c h in 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

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 .

in c r e a s e in t h e n u m b e r

an

th e

th e

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

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— solve
to
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— development which ranks among the major applica­
a
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— an oil embargo, a period of high inflation, and a
by
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’ Automo­
s
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— device attached to the exhaust sys­
a
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— far the largest single occupa­
by
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

3.1

Sales workers

-30

7.8

Managers, officials,
and proprietors

-40

Percentage change
-20
-10
0

0.7

Clerical and kindred
workers

10.3

Craft and kindred
workers

20.8

Operatives

49.8

Service workers

3.0

Laborers

I

4.4

Source: Bureau of Labor Statistics.




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

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 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

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,

c o n s o lid a t io n ,

Reduced

shop

spot

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

60

m a jo r

y a r d s in o p e r a t io n .

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 .

w e ll

c o n tro l car

as

som e

s p e e d s a n d t o a id in s w i t c h i n g .

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 ­

s m a ll

ones,

b e in g

tu re s " .

to m a tic

fe a tu re s n o w

In c r e a s e d

car

w it h

“ 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

L a b o r im p lic a tio n s

c a r r ie r
used

by

s u p p le m e n t

to

b e in g

D e c lin e

in

e m p lo y m e n t

D iffu s io n

of

lin e

or

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 ­

S in g le

and

c h in e s

tio n s (M W )

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 f a
lt
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— the shipper’s dock— either TOFC or COFC
at
in
traffic. Thus they can arrive at the consignee’s dock with­
out being subjected to reloading— major cause of break­
a
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
1 5 ,0 4 3

1 .9

1 6 ,7 0 4

3 .4

0 .7

1 6 1 ,4 5 2

2 0 .7

1 0 2 ,6 4 5

2 1 .0

-3 .0

1 1 8 ,5 1 6
T r a n s p o r ta tio n

8 1 ,5 0 7

1 6 .7

-2 .4

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

(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 .2

1 8 4 ,0 0 6

(y a r d m a s te r s , s w itc h
1 2 ,0 8 2

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 .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

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 ­

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

s to c k ro o m

ic a lly

tic k e ts

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

to

and

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

o n - lin e

to

d a ta

re c o rd

o ffic e

c le r k s f o r p r e -s a le d a t a

d e s ig n s

tic k e tm a k e r
e n te re d

w it h

B o th

a u t o m a t ic

an

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

p ro c e s s

and

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
and

bank

c o m p u te r.

m a jo r

and

s a le s p e r s o n s

to

th e

la te d

and

re ­

w o r k lo a d

of

p e r s o n n e l,

and

C o m p u te riz e d

of

r e q u ir e m e n ts

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 .

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

by

la b o r

c re d it

a u t h o r iz a t io n

s a le s p e r s o n

u n it

c le r k s

th e

check

c o m p u te r iz a tio n

duces

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 ;

U n it

in ­

d is tr ib u te

on

lis t s

re q u ire m e n ts

of

s a le s ­

a re

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

lo c a ­

fo r

are

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

m ic r o film

m ic r o film

la b o r

p e rs o n s

in c re a s e d

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 ­

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
C e n tr a l r e t a il d i s t r i b u t i o n

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

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

m ic r o film

s e l f - s e r v ic e ,

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 o t iv e r e p a ir p a r ts d e p a r tm e n t s .

of

s to c k in g

p r ic e m a r k in g

d is ­

in c re a s e d
ite m s

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 .
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

S u p e r m a r k e t a u t o m a t io n

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

A lm o s t

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

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

ie rs a n d b a g g e r s . 4

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

sum er

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

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

Percentage change
10

2.0

M anagers, o ffic ia ls ,
a n d p r o p r ie to r s

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

S e rv ic e w o rk e rs

L a b o re rs

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.1
11

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

Current-dollar retail sales grouped by type of store as published
4
Jay Scher, Department and Speciality Store and Merchandising
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:

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BARGAINING
AGREEMENTS
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issues in collective bargaining. The bulletins are based on analysis of about 1800 major
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The studies are complete with illustrative clauses identified by the company and union
signatories, and detailed tabulations on the prevalence of clauses.
ORDER

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Deferred Wage Increase and Escalator Clauses
Management Rights and Union-Management Cooperation
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Insurance Plans..................................................................
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Bulletin
Number

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1425-2

Date of
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1425-3
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1425-7..............
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1425-10............
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1425-1 1............
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1425-15............
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