The annual survey is an integral part of a program of industrial statistics which reached its present development following legislation that shifted the Census of Manufactures from a biennial

to a quinquennial basis. There is general agreement that a complete and comprehensive census every 5 years, combined with annual intercensal plant surveys, current commodity surveys, and improved small area manufacturing employment data (developed jointly with the Bureau of Old-Age and Survivors Insurance), constitute a more efficient means of satisfying business and government needs for industrial statistics than a biennial census program. At the present time, these data furnish a background against which defense agencies can measure the impact of their mobilization efforts on all important segments of manufacturing.

The annual survey, based on a representative sample of manufacturing establishments, carries forward yearly the general statistics of manufacturing activity (value added by manufacture,

value of shipments, cost of materials, fuels and electric energy consumed, employment, man-hours, pay rolls, inventories, and capital expenditures), which are covered in detail by the quinquennial census. In addition, it fills in important gaps in the Bureau's existing monthly, quarterly, and annual reports on selected manufactured products. The annual survey is designed to yield estimates of most of these general statistics for industry groups, important individual industries, geographic divisions and States, and for important crosstabulations of major industry groups by division and by State. It also provides broad industrial and geographic totals for inventories, fuels, and expenditures for plant and equipment, and United States totals for selected product classes and metals consumed. In addition, comparable county-by-industry group employment figures have been developed jointly with the Bureau of Old-Age and Survivors Insurance to meet the needs for small area manufacturing data in the County Business Patterns publication.

The 1949 Annual Survey was financed by funds specifically appropriated by the Congress for this purpose to the National Security Resources Board. Funds for the 1951 and 1950 surveys were provided in large part through the National Production Authority.

Over a 10-year period, it is believed that the cost of the Census-annual survey program will be considerably less than that of a biennial census program. The savings possible under this program arise from several sources. In the first place, much of the detail collected in a complete Census is eliminated from the annual survey and the questionnaire is restricted to measurement of only the most essential characteristics of manufacturing activity. Secondly, whereas the census covers all manufacturing plants (of which there were some 240,000 in 1947), the annual survey covers a sample of only about 45,000 plants. Finally, through improvements in the quality of reported data which may be expected as a result of continuing contact with the larger manufacturing companies and many of the smaller ones, it appears likely that part of the cost of the annual surveys will be recovered indirectly by enabling some reduction to be made in the outlays for the quinquennial censuses.

It should be noted, however, that a sample survey as large as this one presents some very difficult problems in coverage, collection, processing, tabulation, and controls.

2.

Establishments Covered in the Annual Surveys

a. Definition of Manufacturing Establishments:

Following previous census procedures, the annual survey is conducted on an establishment reporting basis. The term "establishment" generally signifies a single plant or factory where manufacturing operations are performed and is not necessarily identical with the business unit or company which may consist of one or more establishments. A company operating establishments in more than one county is generally required to submit a report for each location; also, companies engaged in different lines of activity at the same general location are required to submit separate reports if their operations are large and distinct in character.. (See "General Explanations," 1947 Census of Manufactures, Volumes I, II, or III, Section 5.)

b. Definition of Industries:

An industry consists of a group of establishments primarily engaged in the same line or similar lines of economic activity. In the manufacturing field, the line of activity is generally defined in terms of the products made, although in some cases the determining factor is the process of manufacture used. (See "General Explanations," 1947 Census of Manufactures, Volume I, Section 10, or Volumes II or III, Section 9.)

c. Scope of the Surveys:

The annual surveys, as did the 1947 Census, include establishments primarily engaged in manufacturing as defined in the Standard Industrial Classification Manual, Volume I, Manufacturing Industries, dated November 1945. The Standard Industrial Classification Manual describes manufacturing establishments as those engaged in the mechanical or chemical transformation of substances into new products. These activities are usually carried on in plants, factories or mills, which in the United States characteristically use power-driven machines and materials-handling equipment.

Manufacturing production is usually carried on for the wholesale market, for inter-plant transfer, or to the order of industrial users, rather than for direct sale to the household consumer. Some manufacturers in a few industries sell chiefly at retail to domestic consumers through the mail, through house-to-house routes, or through salesmen. Some activities of a service nature (china decorating, engraving, etc.) when performed primarily for the trade are included in the manufacturing division; when performed primarily to the order of the household consumer, they are considered nonmanufacturing.

The scope of the annual surveys coincides with the Standard Industrial Classification System, with the following minor exceptions:

(1) Manufacturing establishments with no employees were omitted from the surveys (except for certain jobbers as described in (2) below). The exclusion of such establishments has virtually no effect on the statistics except those for number of establishments. (See "General Explanations, 1947 Census of Manufactures, Volume I, Section 9, or Volumes II or III, Section 8.)

(2) Textile, apparel, and leather jobbers who assign materials to contract factories for fabrication were covered in the annual survey although they are not classified as manufacturers by the Standard Industrial Classification. These establishments were included mainly to obtain more complete data on cost of materials consumed, value of products shipped, inventories, and value added by manufacture for the industries to which they are assigned. Their inclusion has virtually no effect, however, on the figures for employment, earnings, and man-hours.

The annual surveys covered the following types of establishments which were omitted from the 1947 Census: (1) Logging camps and logging contractors and (2) Sawmills that produce less than 200,000 board feet of lumber a year.

3. Design and Selection of the Annual Survey Sample

Nearly 45,000 manufacturing establishments were selected for the annual surveys' sample. They were drawn from the 1947 Census of Manufactures directory of manufacturing plants, supplemented by Bureau of Old Age and Survivors Insurance lists of manufacturers. Small Eastern sawmills, which are not well covered by the available lists, were represented by an area sample.

The sample design emphasized industry group (3-digit) estimates for 1949, and important individual (4-digit) industries for 1950 and 1951. All large companies (single-unit as well as multiunit) were included in the sample, however, regardless of industry.

All independent" establishments (i.e., single-unit companies) with 250 or more employees, all multi-unit companies which any establishments of 250 or more employees, and all other multi-unit companies with aggregate employment of 1,000 or more in the 1947 Census were selected for the sample. Smaller companies were sampled at rates that decreased with decreasing size in terms of their 1947 employment, the specific pattern varying by industry group for 1949, and by individual industry for 1950 and 1951. A similar pattern was used in sampling from the supplemental BOASI names.

Companies rather than individual establishments were used as sampling units, and those selected for the sample were required to file separate reports for each of their establishments. (For a detailed explanation of the sampling technique, as well as of the methods used in drawing