Patterns of Industrial Change in the USA since 1960: A Preliminary Summary

Doblin, C.P. (1983). Patterns of Industrial Change in the USA since 1960: A Preliminary Summary. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-83-103

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Abstract

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 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. Industries with slower growth than that for 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 disaggregated 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 addition 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 machinery), electrical 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 manufacturing 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 currently depressed industries that have been retooling, such as 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-intensive but low in value added, and the growth of industries with new and more sophisticated technologies based on innovation, which are high in value added. This demonstrates that over the last 20 years US industry has continued on the path towards higher industrialization. The impact on the economy as a whole may be a slowdown in the growth (not an absolute decrease) of energy demand by the industrial sector, if and when a substantial recovery occurs.

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