Estimates of emergency operating capacity in US manufacturing and nonmanufacturing industries - Volume 1: Concepts and Methodology

Abstract

To develop integrated policies for mobilization preparedness, planners require estimates of available productive capacity during national emergency conditions. This two-volume report presents estimates for emergency operating capacity (EOC) for 446 manufacturing industries at the 4-digit SIC level of aggregation and for 24 key nonmanufacturing sectors. This volume lays out the general concepts and methods used to develop the emergency operating estimates. The procedure for estimating the manufacturing EOC basically follows that used in a previous study for the Federal Emergency Management Agency (FEMA) in 1984. The key data input is the set of historical capacity utilization measures collected by the Bureau of the Census in its Survey of Plant Capacity. These utilization measures are used in conjunction with output measures to develop estimates of "practical 11 capacity by 4-digit SIC industry. Data collected in the Survey of Plant Capacity on weekly plant hours are used to estimate the additional output that may be expected should the plant operate 7 days per week, 24 hours per day. The resulting emergency capacity estimates are adjusted to account for required maintenance and the loss of productivity from greater reliance on shift work. The historical analysis of capacity extends from 1974 through 1986. Projections of emergency capacity are provided through 1992. The projection methodology relies on establishing a relationship between the capital stock and capacity output, then using forecasts of investment, by industry, to augment the capital stock, and finally using these forecasts of capital to project capacity. Tabular and graphical results of the historical analysis and the projections of EOC by 4-digit SIC industry are shown in Volume 2. This study also developed estimates of emergency capacity for a number of nonmanufacturing industries. In addition to mining and utilities, which were addressed in the 1984 study, key industries in transportation, communication, and services were analyzed to derive estimates of EOC. Given the diversity of the nonmanufacturing sector, it was necessary to address each of the nonmanufacturing industries by first defining an appropriate concept for measuring output and the corresponding measure of capacity, and then determining the availability of data to implement these measures. Also, unlike the manufacturing sector, there is no general survey of capacity and capacity utilization in the nonmanufacturing sector. Thus, a measure of EOC was developed for each industry. Industry specific EOC measures fell into two types, measures of physical capacity and measures of efficient production. The estimates for the nonmanufacturing industries are shown in this volume. This study includes the results of some exploratory work that was performed to investigate the potential contribution of "frontier" production function analysis to the estimation of emergency capacity. The frontier approach seeks to measure maximum physical capacity by examining the industry under the most efficient use...