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May 1997, Vol. 120, No. 5
Paul V. Kern and Patricia S. Wilder
Multifactor productivity in the refrigeration and heating equipment industry increased at an average annual rate of 1.5 percent over the 1967-94 period.1 This industry's output includes air conditioners, refrigeration equipment and systems, electric heat pumps, furnaces, refrigerated display cases, soda fountains, beer dispensers, and snowmaking machinery. Multifactor productivity is a measure used to analyze the overall economic efficiency of an industry. It relates the growth of the industry's output to the growth rate of the combined inputs of labor, capital, and intermediate purchases.
An important input for the refrigeration and heating equipment industry had been chlorofluorocarbons (CFC's), a chemical compound used since the 1930s. By Federal enactment, however, CFC's were phased out because they were linked to depletion of the ozone layer in the atmosphere.2 As a result, the industry has had to allocate a substantial amount of resources to the transition away from CFC's.
This article examines detailed productivity, output, and input data in the manufacture of refrigeration and heating equipment to provide measures of multifactor productivity growth over a 27-year period. Special emphasis is placed on the "productivity falloff" that began in 1973. This article also includes descriptions of recent production technology, new designs and methods of manufacturing, and market influences that could influence industry output and input.
This excerpt is from an article published in the May 1997 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 This industry is designated as Standard Industrial Classification (SIC) 3585 by the Office of Management and Budget in the 1987 Standard Industrial Classification Manual. The full title of this industry is "Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment."
2 In February 1992, the United States, responding to scientific findings, announced that the phaseout of the production of CFC's would be accelerated and that these substances would be phased out by December 31, 19955 years earlier than mandated by the 1987 Montreal Protocol.
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