International Institute for Applied Systems Analysis, Laxenburg, Austria
1. INTRODUCTION
This analysis of industrial changes in the USA is the first in a series of case studies on structural changes since 1960. Generally, this has been a period of economic growth in the USA, but by no means all industries have shared in it to the same extent. Measured by means of index numbers, the growth of total national production represents the national average. Indus- tries with slower growth than that of total industrial production may be viewed as underperformers, and those with faster growth as overperformers.
The growth differential is also reflected in the percentage shares held by individual industries in total output (sales values and value added) and capital stock (equipment). The analysis covers 127 US industries at the dis- aggregated 3-digit SIC level. The major results are that the combined share in total output (sales values at 1972 prices) by the underperformers receded from 61% in 1960 to 50% in 1980; or from 55 to 43% in terms of value added (also at 1972 prices). The most prominent 'losers' are: food (dairy, grain mill, and bakery products); primary metals (steel); transportation equipment
(automobiles); and stone, clay, and glass products (cement). With the addi- tion of industries that were still growing faintly in the 1960s, but more slowly than the average in the 1970s, for example, textile mill products, metal fabrications, and others, the combined share of the losers eroded from 78% of total output in 1960 to 67% in 1980 (sales values) or from 73% in 1960 to 62% in 1980 (in terms of value added), whereas the share of the 'winners' moved up from 20% in 1960 to 32% in 1980 (sales values) and from 26% in 1960 to 37% in 1980 (value added). The growth industries include nonelectrical machinery (office and computing machinery; refrigeration and service machine- ry), electric and electronic equipment (especially electronic equipment and accessories and communication equipment, as well as radio and TV equipment), investments, and chemicals (drugs and pharmaceuticals, soap and toiletries-- but not industrial inorganic chemicals). Only one industry, furniture and fixtures, did not change its output share over the period studied.
The age and structure of the stock of capital equipment held by the manu- facturing industries also reflected some of the structural changes in output.
Primary steel and textile mills were found to have the oldest equipment. But not all of the losers in output were losers in terms of capital stock growth.
This reflects the investment activity since the 1970s and may indicate a more promising future for the currently depressed industries that have been re- tooling, as for example automobiles and, at one time, coal processing.
Overall, the structural changes reflect the decline of the more basic industries using long-established technologies that are both labor- and energy-
i n t e n s i v e b u t low i n v a l u e a d d e d , and t h e g r o w t h of i n d u s t r i e s w i t h new and
i n n o v a t i o n s , and which were t h e new i n d u s t r i e s t h a t blossomed i n t h e s i x t i e s
motor v e h i c l e s - - t h o u g h l i m p i n g b e h i n d t h e n a t i o n a l average--should s t i l l h a v e
SIC 36
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e l e c t r i c and e l e c t r o n i c e q u i p m e n t , i n c r e a s e d i t s s h a r e i n t o t a lrate was 5.86% for equipment and structures and 6.55% for equipment only put are SIC 35 - nonelectrical machinery and SIC 36
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electric and electronic equipment. ing remaining at about 0 . 7 0 % throughout the period 1960-1980. The shares of the other industries changed as follows:1 . Industries whose share in the stock of manufacturing equipment de-
creased continuously from 1960 to 1980. The share of this group in total manufacturing equipment fell from 55.51% in 1960 to 46.15% in 1980. All the industries whose share in capital stock eroded were underperformers in the sense that their production growth trailed the national average. Consequent- ly, their shares in total manufacturing output (sales values and value added) also decreased. These industries are SIC 20 - food and beverages; SIC 21 - tobacco products; SIC 22 - textile mill products; SIC 23 - apparel; SIC 24 -
share in total manufacturing output rose continuously over the period studied:
SIC 28
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chemicals; SIC 35 - nonelectric machinery; SIC 3 6 ' - electric and electronic equipment; and SIC 3 8 - instruments. The increase of the capital stock (equipment) in the chemicals industry is remarkable, though not all of its components shared in this growth: for example, the share of SIC 281-
industrial inorganic chemicals fell from 2 . 3 7 % in 1960 to 1 . 6 9 % . Yet total chemicals moved to first place in the 1980 ranking of manufacturing capital (equipment), topping primary metals whose share had dropped from 1 4 . 1 9 % in 1960 (first place) to 1 0 . 6 4 % in 1980 (second place).
sixties but increased in the seventies. This group includes SIC 37 - trans- portation equipment, whose share in total capital stock (equipment) dropped to the estimates prepared by the BIE, the industry that in 1980 had the oldest capital stock (equipment), measured in 1972 prices, was SIC 3 3 - primary metals. As much as 36% of this industry's equipment was 1 0 years old or older.
Primary metals were followed closely by SIC 22 - textile mill products, where 35% of the equipment was 1 0 years or more old. Another aging industry
is SIC 31 - leather andleather products, with 33% of the capital equipment in the 1 0 years plus age bracket. All of these industries have been lagging in growth, not only in terms of capital equipment but of output as well
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and much of their misery has been due to lack of competitiveness.On the other hand, some industries with relatively young capital stock (equipment) did not enjoy healthy sales growth over recent years. This is true for example of SIC 29
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petroleum and coal products, where in 1980 barely19% of the equipment was 1 0 years old or older, and over 5 0 % was four years
old or less. The same is true for SIC 37
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transportation equipment, where2 2 . 2 % of the equipment in 1980 was 1 0 years old or older, whereas 47% was
four years old or less. However, these industries may have more potential for a future come-back, and, in the case of automobiles, may be better pro- tected against foreign imports.
Other industries with a relatively young capital equipment stock seem to have good prospects for continued sales growth. This applies to SIC 35 - non- electric machinery, where in 1980 only 2 3 . 7 % of the equipment was 1 0 years old or older, while 4 7 . 3 % was four years old or even younger. It may also be true for SIC 36 - electrical and electronic equipment, where in 1980 47% of the
equipment was four years old or younger and only 22% had reached the age of 10 years or more.
4. OUTLOOK
Much still remains to be done in the analysis of structural changes based on manufacturing output and capital stock (equipment). For example, input- output analysis and the establishment of capitalloutput ratios have not as yet been tackled from these data. Before going any deeper into this time- consuming task, one might want to consider the results of the admittedly superficial analysis carried out so far. This has demonstrated that over the last 20 years, US industry continued on its way to higher industrializa- tion. This meant moving away from primary industries and those based on long- established technologies, and a shift towards more sophisticated industries and technologies in which the US still has an edge.
The analysis has also identified the long-term losers, whose shares in total manufacturing output and capital have been receding since 1960. Among them steel, basic chemicals, textiles, and leather are prominent examples.
Will the 20-year slide continue for these and other industries: for example food, which is affected by changes in taste as well as increasing affluence;
or stone, clay, and glass, which suffers from an increasing general prefer- ence for lighter materials, as does steel, to some extent? What are the chances for a come-back for transportation equipment and the petroleum and coal products industry? How much more can drugs and pharmaceuticals, office and computing machinery, and electronic equipment expand? Equally important, to what extent can the losses (output and capital) of the losers be compen- sated by the gains of the winners? This is a question of particular relevance to labor, and it will be reviewed in a forthcoming report.