Economic Analysis and Statistics  Canadian Industry Statistics  Canadian Economy  Goods  Manufacturing

Performance
Petroleum and Coal Products Manufacturing
(NAICS 324)

The relative performance of industries, like the relative performance of businesses, can be analysed using a combination of quantitative and performance ratios. Some ratios focus on financial analysis and profitability in particular. These are not covered here, although some related information is available on the Performance Plus site for businesses earning between $30,000 and $5 million in gross annual revenues.

This chapter focuses on the manufacturing output for Canada’s Petroleum and Coal Products Manufacturing subsector relative to the size of its labour force, the hours worked by its production employees and the costs of employment, materials and supplies and of fuel and electricity between 1994 and 2003.

Manufacturing output can be expressed in terms of manufacturing shipments or manufacturing value added, while labour input can be measured in terms of the numbers of workers employed or in terms of the number of hours worked by production workers. Various combinations of the above will be presented in this section of the report.

The data is obtained from Statistics Canada's Annual Survey of Manufactures (ASM) and covers incorporated establishments with employees primarily engaged in manufacturing and with sales of manufactured goods equal to or greater than $30,000, herein, referred to as principal establishments. Thus, unless otherwise stated, it would exclude non-employers, unincorporated establishments as well as establishments where manufacturing activity is minimal.

Because of major conceptual and methodological changes to the Annual Survey of Manufactures made in the year 2000, the reader should exercise caution when interpreting data and subsequent rates of change between the years 1999 and 2000. The magnitude of the effect from these changes on the statistics from the Annual Survey of Manufactures will differ between industries.

It should be noted that, starting in 2000, the Annual Survey of Manufactures no longer collects data on Head Offices. This will affect the following variables:

• number of administration employees;
• number of total employees;
• salaries wages paid to administration employees;
• salaries and wages paid to all employees;
• cost of materials and supplies and goods for resale;
• total revenues (i.e. the value of shipments and other non-manufacturing revenues);
• total value-added.

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Position in NAICS Hierarchy

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Output per Employee

First, we analyse manufacturing shipments per employee over time. This can be calculated counting all employees or only production workers.

Manufacturing Shipments per Employee
Principal Establishments
All Employees vs. Production Employees
1994-2003
Petroleum and Coal Products Manufacturing
(NAICS 324)

Manufacturing shipments per production worker for this subsector increased $2.1 million in 1994 to $5.4 million in 2003 or at average compound annual rate of 9.2 % per year. If one also counts administrative workers the growth rate over this time span was 13.6%.

Output Per Employee Principal Establishments** Manufacturing Shipments and Manufacturing Value-Added 1994-2003 Petroleum and Coal Products Manufacturing Subsector (NAICS 324)
Type of Output	Value in $millions		CAGR* 1994-2003	% Change 2002-2003
	1994	2003
Manufacturing Shipments per Employee	1.1	3.6	13.6%	15.0%
Manufacturing Shipments per Production Worker	2.1	5.4	9.2%	-1.1%
Manufacturing Value-Added per Employee	183.8	397.2	8.9%	-10.5%
Manufacturing Value-Added per Production worker	347.1	599.8	6.3%	-8.8%
Notes: * Compound annual growth rate ** Incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000

Manufacturing value added per worker is another measure of performance. Value added reflects net output, that is, of gross output less those purchased inputs which have been embodied in the value of the product. Value added avoids double counting since products purchased from other establishments are deducted as input costs. Thus, manufacturing value added per employee is a measure of net output per worker and is a better indicator of labour productivity as variations in the cost of materials, supplies and purchased fuel and electricity used are excluded.

Manufacturing Value-Added per Employee
Principal Establishments
All Employees vs. Production Employees
1994-2003
Petroleum and Coal Products Manufacturing
(NAICS 324)

Manufacturing value added per production worker for the subsector increased by $347.1 thousand in 1994 to $599.8 thousand in 2003, or at average compound annual rate of 6.3% per year. If one also counts administrative workers, the growth rate over this time span was 8.9%.

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Labour Productivity : Manufacturing Value-Added per Hour

Labour productivity measures manufacturing value-added per unit of labour input. Starting in 2000, the Annual Survey of Manufactures stopped collecting data on hours worked by production workers. However, this information was captured in the past, and the last available data on output per hour (worked by production workers) is shown graphically below.

Labour Productivity : Manufacturing Value-Added Per Hour
Principal Establishments
1990-99
Petroleum and Coal Products Manufacturing
(NAICS 324)

Changes in labour productivity may result from changes in one or more of the following factors:

• the level of capital expenditures for the purchase of more efficient equipment;
• the amount and type of employee training and work incentives offered;
• the degree to which work flows are adjusted over time;
• the size and composition of the work force.

Labour productivity may fall if an industry does not adequately invest in the competence of its labour force, in modernizing its plants or in improving the efficiency of operations.

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Manufacturing vs Total Activity

Almost all manufacturing industries derive revenues from non-manufacturing activities. In some cases, such as Retail Bakeries (NAICS 311811) or Cut and Sew Clothing Contracting (NAICS 31521), these are reported with manufacturing shipments, but more generally revenues from non-manufacturing activity are obtained by subtracting manufacturing shipments from total revenues.

This residual amount is usually composed of the following :

• Revenues from the sale of goods purchased for resale in the same condition;
• Revenues from the lease or rental of proprety, machinery or equipment;
• Revenues from the operation of cafeterias, laboratories and the like;
• Revenues from other services rendered.

There may be also cases where non-manufacturing revenues actually outstrip those from manufacturing shipments. This would occur, for instance when there are a significant number of establishments within an industry that have a variety of other earnings from investments, wholesale or retail outlets and where none of these are large enough in themselves to cause the establishment to be assigned to another sector. For classification purposes, an establishment is assigned according to the sphere of economic activity where the highest proportion of the revenue is earned.

As previously noted, starting in 2000, the Annual Survey of Manufactures no longer collects data on Head Offices. This is likely to impact the value of non-manufacturing activities, such as other revenues, and should be taken into consideration when analysing the data reported in the following table. For instance, in 2003, revenues from manufacturing activities accounted for 93.1% of the total, which contrast with a share of 96.0% in 1994.

Total Revenue Principal Establishments** Manufacturing vs Non-Manufacturing Activity 1994-2003 Petroleum and Coal Products Manufacturing Subsector (NAICS 324)
Type of Output	Value in $billions		% of Total 2003	CAGR* 1994-2003	% Change 2002-2003
	1994	2003
Manufacturing Shipments	16.7	37.5	93.1%	9.4%	11.7%
Other Revenues	0.7	2.8	6.9%	16.6%	57.3%
Total	17.4	40.3	100%	8.4%	2.2%
Notes: * Compound annual growth rate ** Incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000

Total revenues in the Petroleum and Coal Products Manufacturing subsector has increased from $17.4 billion in 1994 to $40.3 billion in 2003 or by 8.4% per annum on average. In the latest year the growth rate was 2.2%. Over the 1994-2003 period, manufacturing shipments increased by 9.4 % on average, while revenues from non-manufacturing activities increased by 16.6% during the same time span.

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Net Revenues

A business will be judged successful if its profits are high enough to provide adequate return on investment. Profits will only be stable or increase if expenses do not outstrip revenues.

We can estimate net revenues by subtracting the total cost of material and supplies, the cost of fuel and electricity and the total wages paid to all workers from the total revenues, as recorded. This may not match exactly balance sheet information, but should be reasonably close.

Net Revenues
Principal Establishments
1994-2003
Petroleum and Coal Products Manufacturing
(NAICS 324)

Net revenues in the Petroleum and Coal Products Manufacturing subsector has increased from $1.9 billion in 1994 to $3.6 billion in 2003 or by 7.7% per annum on average. In the latest year the growth rate was -12.2%.