greater at the 10.000 birds per hour level than at 150. For the receiving, 

 hanging, and killing; cooling, sizing, packing, and shipping; and eviscer- 

 ating functions the corresponding ratio is closer to 2:1, The cutting-up 

 function shows the lowest rate of increase in output per worker as plant 

 size increases. The number of birds processed per hour per employee in- 

 creases from 15.0 to 35.1 from the 150 to 10.000 broilers per hour sizes, 

 whereas the corresponding figures for the same plants processing fowl 

 would be 12.0 and 21.1 (Table 9). Hence, the greatest relative advantage 

 for large plants, insofar as labor efficiency is concerned, lies in processing 

 broilers. 



Plant wages are the largest item of cost in the operation of poultry pro- 

 cessing plants. The effect of plant wages is important in producing a de- 

 clining average cost curve. 



The increased output per worker as volume increases to 100 percent 

 of capacity substantially reduces unit labor costs. Beyond 100 percent of 

 capacity, a combination of overtime wage rates and some declines in out- 

 put per worker increases labor costs. It is the only element observed which 

 causes average cost to increase beyond 100 percent of capacity. Average 

 labor costs per pound for selected plant sizes and the existence of a clearly 

 defined economies of scale curve for plant labor costs are shown in Figure 9. 



Managerial Efficiency 



Substantial economies in managerial, office, and supervisory functions are 

 inherent in large-scale operations. These deserve more attention than they 

 generally have been given. Their qualitv is indirectly reflected in efficiencies 

 obtained in the operating departments. Plant operators regard the problem 

 of obtaining an experienced supervisory group as one deterrent to multi- 

 ple shift operations. 



The development of poultry processing as a mass-volume business is still 

 of fairly recent origin. Since it occurred to a considerable extent during 

 a period of comfortable margins, management has probably not yet assumed 

 its eventual role in increasing efficiency. The lack of consistently good 

 and uniform records and the frequent dearth of essential information on 

 which it can base decisions suggests "playing by ear" is still commonplace. 



For many plants, management must maintain widespread trade contacts 

 since selling is a daily job. This is because of the general lack of long- 

 range sales arrangements or systems of outlets integrated into the firm 

 structure. The "poultry buying" role of large firm management may become 

 virtually non-existent with the increased control of supply through growing 

 programs. 



Processing firms do not entirely operate as independent entities. A rudi- 

 mentary set of institutional mores seems to be emerging and groups of 

 plants work jointly through associations or by less formal arrangements 

 on advertising, promotion, and certain other activities. 



Table 10 contains a suggested breakdown by job assignments for man- 

 agerial functions. In terms of the number of birds per employee engaged 

 in these functions, the ratio is almost 4:1 when comparing a 10.000 broiler 

 per hour plant with the 150 size. Although salaries for specific jobs in- 

 crease with plant size (see Appendix Table II), the decline in cost per 

 pound of annual capacity (100 percent) as plant size increases is still 

 important. 



35 



