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Technological Extinctions of Industrial Firms: An Inquiry into their ...

Technological Extinctions of Industrial Firms: An Inquiry into their ...

30 Firestone prior to

30 Firestone prior to 1914 show a similar pattern, with uneven growth through 1909 and then high growth subsequently. Crude estimates of total factor productivity growth compiled by French [1985, p. 362] similarly show no growth prior to 1909, with annual TFP growth rising from 3.1% in 1909-1919 to 12.6% in 1919-1929 and then becoming negative in 1929-1937. Together, these series suggest there was little process innovation prior to 1909 and then a surge in process innovation lasting well into the 1920s, if not beyond. This pattern is similar to autos. These trends agree with the qualitative information available about tire process innovations. Improvements in the production process have come from sources including labor saving machinery, chemical innovations, better quality inputs, and improved labor practices. Perhaps the biggest improvements stemmed from new machinery, with tires following automobiles down the path of mechanization and mass production. Prominent mechanical innovations in the period 1901-1934 are catalogued in Table 9, along with dates for when the innovations were introduced. The list was compiled from studies of technological change in the production process by Wanning [1921], Stern [1933], Carlsmith [1934, pp. 124-147], Gaffey [1940], and French [1985]. Of the innovations in the list, only two were developed before 1909, and one of them reflected a continuous trend extending well beyond 1909. The rest of the innovations were spread over the next twenty years or so, reflecting the continuous efforts to improve the production process. Thus, the timing of prominent mechanical innovations corresponds closely to trends in labor productivity. The production of tires was organized into departments, which facilitated process innovation and also limited the ramifications of product innovations. The innovations in Table 9 affected nearly every aspect of the production process and typically yielded large savings in labor. 23 Steps of the production process affected by these innovations included cutting and washing of rubber (affected by plasticators); drying (vacuum dryers); compounding with chemical ingredients (mixing mills, Banbury mixer); sheeting of rubber alone or with fabric or cords (new calenders); preparation of rubber sheets or 23 Stern [1933] provides estimates of the labor saved by many of the innovations in Table 9.

31 plies for tire building (bias cutting machine); building beads, treads, and rubber sheets into tires (core and drum tire building machines, merry-go-round conveyor); vulcanization (new vulcanizers, pneumatic mold openers); and transportation between steps (conveyors). The leading producers, most prominently the big four, were in the forefront in developing and adapting new machines used in the production process. While the identity of the innovators has not been determined systematically for all the innovations in Table 9, the three most important innovations in the table illustrate the role of the leading firms in major process innovation. The core tire building machine was patented by Goodyear in 1909. Goodrich, Firestone, and many mechanical engineering firms developed competitive machines (French [1985, p. 233]). The Banbury mixer was patented in 1916 and produced by Birmingham Iron Foundry Company, a supplier of machinery to the industry. Upon the insistence of Goodyear, it was first used in Goodyear’s Akron plant during its development and before it was even on the market (Allen [1949, pp. 44-45]). The drum tire machine was financed and patented by Ernest Hopkinson of U.S. Rubber. Firestone developed a competitive machine. Thus, the big four producers were the leaders among tire manufacturers in the development and use of the most important process innovations. These and other innovations tended to diffuse quickly through licensing and sale by both tire producers and suppliers. Goodyear widely licensed its core tire building machine, with 50 firms licensing it by 1920, and collected over $2 million in royalties from 1909 to 1920. The rival machines developed by Goodrich, Firestone, and equipment supply firms ensured that royalties remained low (French [1985, p. 233]). 24 The Banbury mixer was sold throughout the industry by Birmingam Iron Foundry, and was widely adopted (Stern [1933, pp. 40-42]). The drum tire machine was widely adopted in the mid 1920s after it was improved and licensed at the modest rate of 2 to 4 cents per casing (French [1985, p. 257]). Firestone’s competitive machine again helped 24Goodyear sued Firestone for infringing its patent on the core tire machine but ultimately lost its case (French [1985, p. 231]).

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