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U. S. SHIPMENTS OF PAPER MACHINERY 1958-86
Year Industry Shipments Product Shipments
Source: 1972-1985, U.S. Industrial Outlook - 1988, pp.
suspension of work on Greenfield mill projects.” After recovery sets in, paper companies often have been slow to place orders for new or rebuilt paper machinery. As a consequence of the long lead times noted earlier, paper machinery shipments have only recently begun to reach pre-recessionary levels.
Valuable Bureau of Census Statistics
The principal sources of U.S. Government statistics on shipments and employment in the U.S. paper machinery sector are the Annual Survey of Manufactures and the every 5 year Census of Manufactures, both conducted by the Bureau of the Census. Though these data are valuable indicators of industry trends, several modifications that would make them more useful are recommended in the final chapter of this assessment.
2 For example, Champion International Corporation suspended work on its Greenfield pulp mill at Quinnesec, Michigan during the 1982–83 recession, then restarted the project with mill startup in 1986.
1973-1986 Billions $ 100 [. 80 H. 60 H. 40 H. -oPapermills Shipments (product) 20
Shipments with 3Types of Paper-Pulp Shipments,
NOTE: Analysis revealed the following linear correlation coefficients between (1) paper machinery industry shipments and (2) each of the 3 types of paper-pulp shipments: papermills: 0.90; paperboard Mills: 0.93; pulp Mills: 0.96.
Source: U.S. Department of Commerce, Bureau of Census, Census of Manufactures, 1982, 1977, 1972; Annual'Survey of Manufactures, 1986 and previous years.
Employment and Productivity
Employment in the U.S. paper machinery industry has trended downward
throughout this decade, as illustrated in Table 4. From a high of
19, 600 in 1980, total employment in the industry dropped by 28
percent to 14, 100 in 1983. Production worker employment Fell by
nearly 30 percent in 1 year, from 10,000 in 1982 to 7, 100 the next
year. By 1985, partial recovery had brought the total of production workers to 8,900.
Many lost jobs were in foundries which were closed or consolidated by such industry leaders as Beloit and Black Clawson. In an industry characterized by fraternal, small town attitudes, many of these layoffs were wrenching, involving long-time employees. Few of these lost jobs are ever likely to return. New jobs are being created in expanded research and development (R&D) facilities and at foreign-owned firms expanding into the U.S. market. Industry employment stood at 15, 400 in 1986. However, the recent spate of mergers is expected to bring a further reduction in industry employment.
SELECTED YEARS 1958-86
Source: Annual Survey of Manufactures and Census of Manufactures, various years, U. S. Bureau of the Census, U.S. Department of Commerce.
From 1972 to 1986, the productivity record of the U.S. paper machinery industry, as measured by output (shipments in 1982 dollars) per production worker hour, had trended downward (Table 5). However, the industry has had some success in improving productivity during phases of this period.
A major factor in the rise and fall of the industry's productivity has been the fluctuation of its capital expenditures (Table 8). For example, productivity recovered somewhat during 1974-79, alongside rising capital expenditures by the industry during this period. In contrast, output per worker hour decreased from 1980 to much lower levels in 1981 and 1982 coincident with a sharp downturn in capital expenditures from 1980 to 1983. Since 1983, both productivity and capital expenditures have shifted upwards.
The temporary exceptional productivity boost from 1982 to 1983 also reflected a faster decline in man-hours than in real shipments during a recessionary period. The improvement in the industry's productivity from 1985 to 1986, however, stemmed from an increase in real shipments value and a slight decline in production worker hours.
In terms of value added measurements from 1978 to 1985, the paper machinery industry has usually exceeded those of all U.S. manufacturers, both in value added per production worker hour and in value added as a percent of shipments value (Table 6).
Until quite recently the U.S. paper machinery industry was almost exclusively characterized by closely held, family-owned firms, few of which were publicly traded. There was almost no data available on corporate financial results. However, this pattern has changed markedly in less than 5 years as large corporations such as Combustion Engineering and Thermo-Electron have bought smaller, privately held firms and incorporated them into divisions serving the paper and process industries. Harnischfeger Corporation's February 1986 purchase of Beloit Corporation shifted the industry's largest producer from private to publicly held status. Changes such as this have made it possible to assess the industry's financial performance meaningfully by aggregating individual firms operating results.
Table 7 shows recent net sales and income of selected U.S. firms. The figures indicate that the industry has struggled to regain both sales volume and net income since the 1982-83 recession. Both net sales and net income trended downward after 1980 and had largely not recovered to pre-recessionary levels by the end of 1986. Figures available for 1987 and part of 1988 do show further improvement in both net sales and net income for several firms.
Industry Capital Expenditures
Producers of paper machinery are traditionally cautious in their
PAPER MACHINERY INDUSTRY
Value of Production
Industry Production Worker Value of
Shipments Workers Man-hours Shipments Year (m$-1982) (000) (million) (PWMH) * 1972 1, 473 9. O 18. 6 79.2 1973 1,656 9. O 19 - 5 84.9 1974 1, 778 12. 0 25. 3 7 O. 3 1975 1, 604 11.5 22.2 72. 3 1976 1,619 10. 6 21 - 1 76. 7 1977 l, 416 9. 3 18.8 75.3 1978 l, 427 10. 1 19 - 5 73. 2 1979 1, 630 ll. 1 22.0 74.1 1980 1,596 ll. 3 22. 7 7 O. 3 1981 1,471 1O.8 21. 6 68. 1 1982 l, 387 10. 0 20. 2 68. 7 1983 1, 104 7 - 1 13. 7 80 - 6 1984 1, 169 8. 5 16.9 69. 2 1985 1, 253 8.9 17. 6 71 - 2 1986 1, 296 8. 7 17. 4 74 - 5
* Dollars per production worker man-hour = value of industry shipments divided by production worker man-hours.
SOURCE: 1982 Census of Manufactures, Statistics for Industry Groups and Industries, MC-82-I-35D, and Annual Survey of Manufactures, M86AS-1, M85AS-1, and M84AS-1, Bureau of the Census, U.S. Department of Commerce.
approach to new capital expenditures, especially for the expansion of centralized manufacturing facilities. Two primary constraints limit these investments. The many privately held firms in this industry often lack the resources to undertake large capital projects, even when the need for such expenditures is foreseen. Further, the sheer physical size of much of the equipment produced in the industry requires substantial plant space in which to erect the machinery. These space requirements make the construction of a new plant a very expensive undertaking. Even foreign competitors have found it cheaper to buy existing U.S. facilities rather than to erect a new U.S. plant. Instead most capital expenditures appear to have gone into improvements in machine tools, materials