Low Capacity Utilization Research Articles

Price Inflation in the UK: Has Anything Changed?

Since leaving the ERM, the UK has had low inflation while unemployment has fallen substantially. This suggests that wage and price behaviour may have changed over the recent past. In this article, Ken Coutts and Brian Henry review the evidence for such change, particularly in pricing behaviour, but find little convincing evidence of a major structural shift. Rather, low inflation can be attributed to the effect of weak demand and low capacity utilisation on prices (and wages) which are larger and longer lasting than is generally believed, together with beneficial effects from low world inflation. On leaving the ERM, the government also instituted a classic combination of expenditure‐switching and expenditure‐reducing policies which played an essential part in promoting recovery without increasing inflation.

Services provided by manufacturing The Hungarian case

The paper is built on an empirical study of the service factory concept in Hungary. The importance of the possible service roles that manufacturing can play, and the general service features that a manufacturing company can posess are examined at Hungarian companies. The results show that service is still not the strongest competitive factor in Hungary, quality and costs get much more emphasis. Comparing the results with those of an English survey, the main tendencies are similar, except that the laboratory role seems to be more important in Hungary, possibly due to the relatively low capacity utilization.

Some Results on Optimal Penal Codes in Asymmetric Bertrand Supergames

Optimal penal codes in asymmetric Bertrand supergames exhibit security level punishments for the largest firm. If no firm has sufficient capacity to service the market, then collusion that is barely sustainable by optimal penal codes entails higher capacity utilization by the largest firm than by the other firms. Collusion supported by optimal penal codes in models with a large firm facing a competitive fringe can result in the large firm having low capacity utilization and thus providing a "price umbrella" for the fringe firms, which have high capacity utilization. Journal of Economic Literature Classification Numbers: C72, C73, L11, L13.

Analysis of energy utilization in the grain mill sector in Karnataka

Energy is a major constituent of a small-scale industry such as grain mills. Based on a sample survey of several mills spread over Karnataka, a state in India, a number of energy analyses were conducted primarily to establish relationships and secondarily to look at them in more detail. Initially specific energy consumption (SEC) was computed for all industries so as to compare their efficiencies of energy use. A wide disparity exists in SEC among various grain mills. In order to understand the disparities better, regression analyses were performed on the variables energy and production, SEC and production, and energy/SEC with percentage production capacity utilization. The studies show that smaller range industries have lower capacity utilization. This paper also examines the energy savings possible by shifting industries from the lower production ranges to the next higher range (thereby utilizing installed production capacity optimally). This leads to an overall energy capacity saving of 23.12% for the foodgrain sector and 18.67% for the paddy dehusking subgroup. If this is extrapolated to the whole state, we obtain a saving of 55 million kWh.

Implications of current factor proportions indices for the competitive position of the U.S. manufacturing and service industries in the year 2000

Over the last 2 decades major changes occurred in the ability of many U.S. manufacturing industries to compete with foreign producers, particularly those in developing countries. Differences in relative wage costs were a major factor providing developing country producers of labor-intensive manufactures like textiles, clothing, and footwear with a growing comparative advantage vis-a-vis U.S. producers. As a result, some U.S. industries experienced major structural adjustment problems that were reflected in considerable job shedding and depressed wages and profits for those employees and firms that continued in operation, persistent low-capacity utilization for established plants and equipment, and steadily increasing market penetration as measured by the share of imports in domestic consumption.' While most economists recommend the adoption of trade, financial, fiscal, and other This study utilizes factor proportions indices for assessing the probable competitive pressures developing countries will exert on U.S. manufacturing and service industries over the next decade. The results show that in many labor-intensive industries like textiles and clothing the competitive position of the U.S. has worsened and developing countries' comparative advantage increased. The data also suggest that developing countries generally have a comparative advantage in most service industries (aside from banking and finance), and U.S. net exports may not expand as a result of a global liberalization. Over 40% of current U.S. employment is now in sectors that appear vulnerable to developing country competition. * The views expressed in this article may not reflect those of the World Bank and its staff. We would like to thank Bela Balassa, Paul Meo, and Alasdair Sinclair for comments and suggestions. 1. Tuong and Yeats (1981) compute import penetration ratios for 77 U.S. manufacturing industries over 1967-76 and

Foreign exchange and industrial development: A frontier production function analysis of two Tanzanian industries

A frontier production function is used to analyze the importance of foreign exchange for efficiency in two Tanzanian industries: textiles and beverages. In both industries, foreign exchange is found to be the most important factor of production. We also find, somewhat surprisingly, that there is some technical progress, at least for textiles, at the frontier (i.e. for the best-practice firms). The reason for the overall decline in industrial performance is instead found to be the poor individual performance of many plants due to low capacity utilization.

Funding, selected issues and trends in Tanzania higher education

The purpose of this article is to discuss the funding constraints as related to higher education in Tanzania. The article discusses also the trend of internal and external efficiency indicators. The funding constraints include: the low growth rate of GDP, balance of payment problems, inflation, devaluation of the shilling, absence of cost-sharing and resources mismanagement. Higher education is characterized by high unit costs, low capacity utilization and high teacher-student ratios and yet private benefits are high as compared to social benefits. Tanzanian higher education remains elitist and continues to serve a well-to-do minority.

An application of goal programming to production planning in the crushed stone industry

ABSTRACT The problems facing the aggragate stone industry in Zambia such as low capacity utilization, failure to meet customer requirements, unnecessarily high operating costs, poor inventory control practices, heavy borrowing and overall poor economic performance are as a result of subjective decision-making related to production planning. This is also true of the industry in nearly all member countries of the SADDC(Southern African Development Co-ordinating Conference) where quarry closures are not uncommon. As a solution to the problem of production planning and control in the crushed stone industry, this paper presents results of an application of the goal programming technique to a Zambian case study engaged in the production of limestone powder for the chemical industry. The formulation of a mathematical model for handling multiple objectives is discussed. The goal programming model can be used by management as a strategic decision support instrument. Results of the study show that over time work is...

Economies of Scale and Utilization: An Analysis of the Multi‐Plant Generation Costs of the Electricity Commission of New South Wales, 1970/71–1984/85*

We examine the average costs of electricity generated in NSW at the site level employing a new simultaneous‐equations model approach Further, we argue that costs depend principally on unit size and capacity utilization We reinterpret capacity utilization as a compositional variable which is a continuous proxy for the (inverse of) the intensity of demand for electricity, thus partially addressing the multi‐product nature of electricity. Low capacity utilization corresponds to intense demands and hence peaking output We find that costs per kWh, as conventionally measured, are highly sensitive to the degree of capacity utilization but less so to unit size (scale). The results emphasize the need for tine‐related pricing

Demand for Major Industrial Gases Expected To Rise Slightly

Although demand for the various major industrial gases is forecast to grow faster than in 1986, producers are facing the same problems of low capacity utilization and low profitability they did last year. Increased activity in several industries—steel, chemical, refining, and electronics—that are large users of gases are behind the modest growth. The forecast for improved demand presumes that the current higher production in those industries will continue throughout the rest of 1987. Production of industrial gases produced by distillation of liquefied air—including argon, oxygen, nitrogen, and the tiny volumes of rare (or noble) gases—is expected to increase about 2 to 3%, nearly double the increase of last year when the business was best characterized as flat. The outlook for other industrial gases—such as carbon dioxide, helium, and hydrogen—is expected to vary widely, because the supply/demand situations vary so much for the individual gases. Of those three, only carbon dioxide is expected to ...

Inter-factor Substitution, economies of scale and technical change: Evidence from Canadian industries

This paper explores the causes of inter-temporal variations in factor intensities and total factor productivity (TFP) in Canadian industries. For this purpose, we estimated translog cost function at the sector level allowing for non-homotheticity and non-neutral technical progress. Our empirical results suggest that about 15 to 20 per cent of the post-1973 slowdown in TFP is due to the inter-industry shifts in factor inputs. The remaining productivity slowdown could be attributed to the world wide slowdown in aggregate demand (lower capacity utilization rates) and the substantial increase in the relative price of energy and raw materials.

Profit, Relative Prices and Unemployment: A Reply

The Comment by Taylor and Cunningham is welcomed for showing that the evidence supporting the profit's share hypothesis needs interpreting with care after the mid-I970s. Taylor and Cunningham (T and C) then attempt to resurrect Keynesian hydraulics by taking into account the capacity of the pipes as well as the flow of expenditure through the pipes. They are to be congratulated on finding some quantity variables which fit with unemployment, but they have transformed the problem of explaining unemployment into two problems of explaining low capacity utilisation and slow economic growth. T and C have misunderstood the profit's share hypothesis. Its policy implication is not to let unemployment' find its own level' but to allow profits to increase faster than national income so that unemployment will be reduced. There is only a very loose analogy between the hypothesis and the Treasury's use of w/M as a leading indicator of unemployment, a use which implies both constant velocity and proportionate employment taxes; the profit's share hypothesis shows, for example, that changes in employment taxes could shift the relation between w/M and U by reducing companies' costs. T and C criticise the statistical corroboration of the hypothesis. They extend the period back to I 95 I, forward to the late I 970s, use a different definition of the unemployment rate and use a specification involving differences rather than levels. The period before I953 is not relevant for testing an hypothesis which involves the timing of market reactions. The massive rise in defence spending during the Korean War was combined with tightened coal allocations and other restrictions on quantities. Two thirds of all materials were controlled in I 952. The abolition of tea rationing in late I 952 seems an appropriate symbol of the return of the U.K. economy to peacetime; see Dow (I964). Even without I95i and I 952, the relation given in the text of the article breaks down when the period is extended to run from I 953 to I 979, as shown by equation (i ) .1

Time assignment speech interpolation system—a microprocessor based design

A normal synchronous time multiplexed system has low capacity utilisation of a trunk channel, owing to the ON-OFF nature of speech in human conversation. A time assignment speech interpolation (TASI) system nearly doubles this efficiency, at relatively small increase in hardware cost. In TASI, during the silent period of speech, the channel is allotted to some other ‘active’ subscriber on a first-come-first-serve basis. A microprocessor based system offers a very cost effective solution from hardware count. Intel 8085 A has been selected for the purpose. The microprocessor functions in a distributed processing mode together with the main CPU controlling the stored program exchange. The system uses digital dynamic speech detectors for detecting transitions in speech over a channel, as they show considerably superior performance over amplitude detectors. An assembly language program for the system has been developed.

The growth of Indian nitrogen fertilizer manufacture: Some lessons for industrial planning

Large‐scale manufacture of nitrogen fertilizers in India originated during the Second World War as a result of the interruption of the import of rice from Burma. The growth of production has been at the prodigious rate of 22 per cent per annum in the 17‐year period 1949/50–1965/6. Demand has never acted as a constraint; this suggests that agro‐industry can play an important part in an industrializing strategy for development. In spite of this success two negative features have characterized the economic history of fertilizer production: gestation lags and under‐utilized capacity. Had the establishments worked at design capacity and had the average gestation lag not exceeded three years, less than 60 per cent of the 2.1 million tons of nutrient imported into India during these 17 years would have been required. This highlights the need to include in planning models of output expansion both of these variables, getstation lag and low capacity utilization. Some of their causes have been exogenous to the industry. But a number are internal and recurrent. Unjustified technical risks, plant dis‐integration, faulty process selection and inadequate project appraisal in investment decision‐making. Attempts to reduce the balance of payments deficit have had a negative feedback on the foreign exchange flow by reducing the industry's average annual output. Such negative effects should be included in formulating import control, import substitution and export promotion policies. Finally the ubiquity of excess capacity and the invariance of labour force size with the degree of capacity utilization in this sector is shown to lead to large over‐estimates of the future required‐labour force when certain forecasting techniques are used, even in the absence of trends to increasing labour productivity.