Productivity in Australian Manufacturing · Productivity Commission Paula Barnes . Productivity...

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Productivity Commission Paula Barnes Productivity Analysis Branch Productivity Commission PC-ABS Productivity Perspectives Conference, Canberra 20 November 2012 Productivity in Australian Manufacturing: Some preliminary results

Transcript of Productivity in Australian Manufacturing · Productivity Commission Paula Barnes . Productivity...

Productivity Commission

Paula Barnes

Productivity Analysis Branch

Productivity Commission

PC-ABS Productivity Perspectives Conference, Canberra 20 November 2012

Productivity in

Australian Manufacturing: Some preliminary results

Productivity Commission 2

MFP for manufacturing and the market sector

Data source: ABS (Cat. no. 5260.055.002, 2010-11)

60

70

80

90

100

110

120

1985-86 1988-89 1991-92 1994-95 1997-98 2000-01 2003-04 2006-07 2009-10

MFP Manufacturing

MFP Market sector (12 industries)

Index 2009-10 = 100

Productivity Commission 3

MFP for manufacturing and the market sector over cycles

Data source: ABS (Cat. no. 5260.055.002, 2010-11)

60

70

80

90

100

110

120

1988-89 1993-94 1998-99 2003-04 2007-08 2010-11

Mfg 0.0 Mkt 0.9

Mfg 0.6 Mkt 2.5

Mfg 1.3 Mkt 1.2

Mfg -1.4 Mkt 0.0

MFP Manufacturing

MFP Market sector (12 industries)

Av. annual growth

Incomplete cycle

Mfg -0.8 Mkt -1.0

Cycle 1 Cycle 2 Cycle 3 Cycle 4

Index 2009-10 = 100

Productivity Commission 4

Large decline in Manufacturing MFP growth between the last 2 complete cycles

Data source: ABS (Cat. no. 5260.055.002, 2010-11)

-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.0

1998-99 to 2003-04 2003-04 to 2007-08 difference between cycles

Manufacturing MFP growth (average annual % growth by productivity cycle)

Cycle 3 Cycle 4

1.3

-1.4

-2.7

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Less negative MFP growth in the incomplete period

Data source: ABS (Cat. no. 5260.055.002, 2010-11)

-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.0

2003-04 to 2007-08 2007-08 to 2010-11 difference between periods

Manufacturing MFP growth (average annual % growth by productivity cycle)

Cycle 4 Incomplete cycle

-1.4 -0.8

0.6

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What does negative MFP growth mean?

• Technological regress?

• Compositional effects?

• New impediments; new standards?

• Producers making poor decisions?

• Adjustment?

• Measurement issues?

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Approach to analysis

• Aggregate manufacturing − Proximate causes of MFP growth

(growth in VA, K, L)

• Subsectors within manufacturing − Main contributors to aggregate decline − Proximate causes of MFP growth − Possible influences on the main

contributors

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Proximate causes of the MFP growth decline in manufacturing

Data source: ABS (Cat. no. 5260.055.002, 2010-11)

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

1998-99 to 2003-04 2003-04 to 2007-08 Difference between thecycles

Value added growth Weighted hours worked growthWeighted capital services growth MFP growth

Cycle 3 Cycle 4

Growth in VA, inputs and MFP (average annual % growth by productivity cycle)

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Subsector MFP estimates

• Manufacturing divided into 8 subsectors (still diverse in activities) • Food, beverage & tobacco products (FBT) • Textile, clothing & other mfg (TCO) • Wood & paper products (WP) • Printing & recorded media (PRM) • Petroleum, coal, chemical & rubber products (PCCR) • Non-metallic mineral products (NM) • Metal products (MP) • Machinery & equipment mfg (ME)

• Data and methodological limitations

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… how does MFP growth vary across subsectors?

-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0

Food, beverage & tobacco products (FBT)

Petroleum, coal, chemical & rubber products (PCCR)

Printing & recorded media (PRM)

Textile, clothing & other manufacturing (TCO)

Wood & paper products (WP)

Metal products (MP)

Machinery & equipment manufacturing (ME)

Non-metallic mineral products (NM)

Total manufacturing - ABS

Cycle 3: 1998-99 to 2003-04 Cycle 4: 2003-04 to 2007-08

% per year

Data source: Authors’ subsector estimates (preliminary); Total manufacturing ABS (Cat. no. 5260.055.002, 2010-11)

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Change in subsector MFP growth between cycles 3 and 4

-9.3

-4.7

-4.1

-3.7

-2.7

-2.3

-1.8

-1.4

-0.1

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0

Printing & recorded media

Petroleum, coal, chemical & rubber products

Textile, clothing & other manufacturing

Food, beverage & tobacco products

Total manufacturing (ABS)

Metal products

Machinery & equipment manufacturing

Non-metallic mineral products

Wood & paper products

Change in average annual % growth

Data source: Authors’ subsector estimates (preliminary); Total manufacturing ABS (Cat. no. 5260.055.002, 2010-11)

Productivity Commission 12

Manufacturing subsector sizes (Shares of gross value added at basic prices 2009-10)

Data source: ABS (5204.0, 2010-11)

Food, beverage and tobacco products

22%

Metal products 20%

Machinery and equipment 18%

Petroleum, coal, chemical and rubber

products 17%

Wood and paper products 7%

Textile, clothing and other manufacturing

7%

Non-metallic mineral products 5%

Printing and recorded media 4%

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Subsector contributions to the decline in mfg MFP growth between the cycles 3 and 4

Data source: Authors’ estimates (preliminary)

-0.81

-0.73

-0.42

-0.40

-0.35

-0.32

-0.07

0.0

-1 -0.8 -0.6 -0.4 -0.2 0 0.2

Petroleum, coal, chemical & rubber products

Food, beverage & tobacco products

Metal products

Textile, clothing & other manufacturing

Printing & recorded media

Machinery & equipment manufacturing

Non-metallic mineral products

Wood & paper products

Percentage point change in contribution

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Differing contributions to the proximate causes of the aggregate MFP decline

Data source: Authors’ estimates (preliminary)

-1.5

-1.0

-0.5

0.0

0.5

1.0

FBT PCCR MP Rest of Manufacturing(5 Subsectors)Value added Labour Capital MFP

Contributions to change in growth in aggregate manufacturing output, inputs and MFP between cycle 3 and cycle 4 (percentage points)

Productivity Commission 15

Metal products (MP)

Data source: Authors’ estimates (preliminary) based on ABS data

-5

-4

-3

-2

-1

0

1

2

3

4

5

1998-99 to 2003-04 2003-04 to 2007-08 Difference between the cycles

value added growth weighted hours worked growthweighted capital services growth MFP growth

% per year

Cycle 3 Cycle 4

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Food, beverages and tobacco products (FBT)

Data source: Authors’ estimates (preliminary) based on ABS data

-5

-4

-3

-2

-1

0

1

2

3

4

5

1998-99 to 2003-04 2003-04 to 2007-08 Difference between the cycles

value added growth weighted hours worked growthweighted capital services growth MFP growth

% per year

Cycle 3 Cycle 4

Productivity Commission 17

Petroleum, coal, chemicals, and rubber products (PCCR)

Data source: Authors’ estimates (preliminary) based on ABS data

-5

-4

-3

-2

-1

0

1

2

3

4

5

1998-99 to 2003-04 2003-04 to 2007-08 Difference between the cyclesvalue added growth weighted hours worked growthweighted capital services growth MFP growth

% per year

Cycle 3 Cycle 4

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• Less value adding − Declining domestic feedstock − Trend in importing refined fuel − Underutilised capacity

• Significant investment due to Cleaner

Fuels Program − Higher quality fuels not fully reflected in

productivity measures

Influences on PCCR – Petroleum

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• Diverse subdivision − Including plastics, paints, foam rubber,

adhesives and tyres

• Mixed influences − Greater import competition in plastics and

tyres − Increased demand from construction

‘boom’

Influences on PCCR – Polymers and rubber

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• Very diverse subdivision − Industrial gases, fertilisers,

pharmaceuticals, cosmetics and cleaners (to name a few)

• Agricultural and mining related products

− Strong demand growth − Investment to expand capacity, but slow

response in output – long lead times

Influences on PCCR – Chemicals

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• Pharmaceutical products − Strong output growth and very strong

export growth − Between the productivity cycles, a

decline in investment and employment − Substantial increase in R&D

expenditure

Influences on PCCR – Chemicals (cont’d)

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Three main subsectors have differing proximate causes of MFP decline

Data source: Authors’ estimates (preliminary)

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

FBT PCCR MP

Value added Labour Capital MFP

Contributions to change in growth in aggregate manufacturing output, inputs and MFP between cycle 3 and cycle 4 (percentage points)

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Summary and ongoing research

• Summary − Diversity − Multiple influences

• Ongoing research

− Further work on influences − Linking the disaggregated picture with

the aggregate estimates