Technological Progress and the Quality of Machines
Abstract Generated abstract
This paper examines the economic relationship between technological progress and the quality, reliability, and durability of machinery, with particular attention to logging equipment. It argues that improvements in machine quality are justified when the resulting savings of social labor and operating costs exceed the additional production and capital costs, while excessive durability may become uneconomic if moral depreciation shortens useful service life. Using examples from the Tomles combine and broader repair practices, the paper shows that current and major repairs absorb substantial resources, but rejects proposals to abolish major repairs altogether. It concludes that repair decisions should be based on comparisons between repair cost, residual machine value, and post-repair operating costs, and that timber-machine building has significant reserves for improving reliability at the design and production stage.
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PUBLISHED BY
TOMSK ORDER OF THE OCTOBER REVOLUTION
AND ORDER OF THE RED BANNER OF LABOR
POLYTECHNIC INSTITUTE
named after S. M. KIROV
Volume 292 1974
TECHNOLOGICAL PROGRESS AND THE QUALITY OF MACHINES
A. V. ANDREEV
Under the conditions of the scientific and technological revolution, the problem of the operational reliability and durability of machines and equipment is acquiring exceptionally great importance. Technological progress in all branches of the national economy must be combined with an improvement in the quality of equipment.
Improving the quality of the means of labor makes it possible, with their quantity unchanged, to perform a greater volume of work and, consequently, to satisfy a greater social need for them. But since improving the quality of equipment means increasing its use value, that is, the degree of its utility, it is equivalent to increasing its quantity. Improving the reliability and durability of machines and equipment, in addition to a conditional increase in their quantity, leads to significant savings of labor and material resources in the process of their production and operation. At the same time, the costs of transporting equipment are substantially reduced, which, under the conditions of our vast country, entails a large saving of social labor and has enormous national-economic significance.
At the same time, improving the quality of the means of labor very often entails increased material and labor expenditures, which must be offset by the savings obtained when using means of labor of higher quality. In addition, increasing the durability and reliability of machines, as is known, lengthens the periods of their physical wear, whereas technological progress shortens the periods of their moral depreciation and, consequently, reduces the economically expedient periods of their operation. Therefore, beyond a certain limit, durability may become an obstacle to technological progress and lead to losses of social labor.
Hence, each time the question arises of increasing the reliability and durability of machines and equipment, an accurate calculation is required of the economic expediency of the expenditures for carrying out these measures, comparing the growth of costs associated with improving quality with the saving of social labor obtained as a result of such improvement. The advantages of equipment of higher quality manifest themselves in many ways.
The generalized indicator of improvement in the quality of the produced means of labor is the economic effect that they yield in the process of consumption and that accumulates within itself the advantages of equipment of higher quality and reflects savings both on current
expenditures on operation and in the capital outlays for creating equipment of higher quality.
The economic effect from the use of improved means of labor, and the magnitude of the costs of raising their quality (taking into account the time factor, that is, the periods of physical and moral wear), lead to a conclusion about the advisability of capital outlays for measures to increase the reliability and durability of means of labor. At the same time, the saving of social labor is the main criterion for determining the optimal limits of improving the quality of means of labor.
It is obvious that it is economically advisable to introduce those measures aimed at improving the quality of equipment whose economic effect exceeds the costs. High-quality equipment may be characterized as the most efficient, ensuring the maximum saving of social labor.
The problem of the reliability and durability of equipment has become very acute in the logging industry. The means of labor used here (skidding tractors, timber-hauling machines) are used under difficult conditions of roadlessness and low temperatures; they come into contact with heavy and massive objects of labor—trees with crowns, tree-length logs. And since they are not distinguished by high reliability and have many design shortcomings1, this causes frequent machine breakdowns and worker downtime, leads to enormous losses of social labor, and entails large repair costs to restore the necessary reliability.
Thus, at the Tomles combine in recent years, expenditures on current repairs of equipment have amounted to significant sums and have been growing both in absolute terms and per 1 cubic meter of harvested timber. From 4.9 million rubles in 1965 they increased to 5.3 million rubles in 1969, which amounts to more than 8% of the value of the combine’s fixed assets.
Such significant expenditures on current repairs of equipment are characteristic not only of the Tomles combine but also of logging enterprises in other regions of the country2.
Along with current repairs, the repeated restoration of the reliability of machines and mechanisms by means of major repairs is practiced very widely; in the course of these repairs, essentially obsolete equipment is reproduced, often equipment that has been withdrawn from production in machine-building.
The costs of major repairs of vehicles and working machines at the Tomles combine in recent years amount to about 12% of their book value; they absorb the bulk of the funds spent on the major repair of all industrial-production fixed assets and are constantly growing both in absolute terms and per 1 cubic meter of harvested timber.
Depreciation deductions earmarked for major repairs, calculated for the given groups of fixed industrial-production assets, do not cover expenditures on major repairs, even after 1963, when they were increased. This means that a significant part of the expenditures on major repairs of logging machines and equipment is financed from funds intended for the major repair of structures, buildings, and equipment of other groups of industrial-production assets, which may lead to a deterioration in the physical condition of the latter.
In analyzing expenditures on the repair of machinery and equipment in the timber industry, it turns out that the cost of a single capital repair is always greater than the cost of a current repair. However, the total annual expenditures on current repair of logging equipment are significantly higher than expenditures on capital repair.
The pace of technological progress in the logging industry will increase sharply in the very near future. This means that the service life of machinery and equipment—and consequently the number of capital repairs—will decline. Current repair will play an ever greater role in maintaining the reliability of equipment. Therefore ever-increasing attention must be paid to the organization of current-repair work for machinery and equipment, to detailed economic substantiation, and to monitoring its execution at logging sites.
Citing the high level of expenditures on capital repair and technical servicing of logging machines, some authors and practitioners propose abandoning capital repairs altogether.^3 In our opinion, this proposal cannot be accepted.
First, the growth of expenditures on capital repair is natural, because the total number of machines and mechanisms at logging sites is increasing. Thus, at the enterprises of the “Tomles” combine in 1965–1969, fixed assets in the groups “Working machinery and equipment” and “Transport vehicles” grew by 32%. Expenditure of funds on capital repair over the same years also increased by 32%. However, repair costs per 1 ruble of the value of fixed assets in the indicated groups decreased by 5.3%.
Second, in the production process, individual parts and assemblies of machines and mechanisms perform different functions and wear out unevenly: some quickly, others over a longer period. Naturally, replacing them in the course of current and capital repairs, up to known limits, is cheaper than replacing the entire unit.
Third, the need for capital repair of machinery and equipment is determined not only by technical reasons—physical wear—but also by economic reasons. By restoring the use properties of equipment, capital repair makes it possible to preserve that part of its value which is not transferred to the value of the product created before the repair. Despite the comparatively high depreciation rates established for the principal logging machines, a significant part of their value has not been returned by the time of the first capital repair. Under these conditions, refusal to repair would mean a loss of large sums for society. It is no accident, therefore, that the current methodology for calculating the standard service life provides for advancing funds for repair work for the reproduction of machinery and equipment.
Fourth, it should be borne in mind that the capacities for producing equipment and supplying it to the various branches of the national economy are still limited. Therefore it does not appear possible to replace with new ones all machines subject to capital repair. Thus, in 1968 agriculture was supplied with 290.3 thousand tractors and 113.8 thousand trucks. The stock of these machines in agriculture at the end of 1966 amounted to 1,821 thousand tractors and 1,097 thousand trucks.^4
^3 See: K. M. Arastanov, Ways of Improving the Use of Fixed Assets. Kirov, 1963, p. 112; V. Wolf, “Are Capital Repairs Necessary?” Lesnaya promyshlennost’ [Forest Industry], January 24, 1963.
^4 See: The National Economy of the USSR in 1968. Moscow, 1967, pp. 415, 422.
Thus, the presently existing possibilities make it possible to replace the tractors currently used in agriculture in 6 years \(\left(\frac{1821}{290.3}\right)\), and trucks in 10 years \(\left(\frac{1097}{113.8}\right)\). The latter figures make it possible to conclude that, in the future as well, a significant part of agricultural machinery will be subject to major overhaul.
Enterprises’ demand for new equipment has increased substantially; under the given operating conditions they have been permitted to use part of the funds earmarked for major overhauls to purchase new equipment. Funds intended for complete renewal, which previously went into a centralized fund and now go into the production-development fund, are also spent for these same purposes. Along with the expansion of demand for equipment, state capital investments in the logging industry will grow through the enterprises’ own resources. In many forested regions of the country, new logging enterprises will be created, and they too will need new equipment. Therefore, the issue should concern economically expedient limits for major overhauls, improvement of their organization, and reduction of their cost.
In connection with the diversity of specific conditions for operating equipment in each separate region of the country, in the logging industry it is impossible to recommend a single optimal service life for it, because it will differ under different logging conditions. In our opinion, the question of the service life of logging equipment and the expediency of its major overhaul in each concrete case should be resolved by comparing the costs of the next major overhaul with the residual value of the machine. It appears that carrying out a major overhaul will be expedient only in those cases when its cost is lower than the residual value of the machine subject to repair. Since, as a rule, after repair the costs of operating the equipment increase, because the repair does not completely eliminate physical wear and also does not fully restore its production capabilities, when deciding on the expediency of carrying out a major overhaul, the difference in operating costs before and after the repair must also be taken into account.
The enormous expenditures of social labor caused by technical maintenance, preventive inspections, and current and major repairs of logging equipment also testify to its insufficiently high quality. It is obvious that increasing the operational reliability and durability of logging equipment would yield a significant effect.
At present, in the timber industry the physical durability of most machines is less than their moral durability. And this indicates that timber-machine building has enormous reserves for increasing the reliability and durability of logging equipment. At the same time, one must bear in mind the circumstance that it is simpler and cheaper to create a more reliable machine at a modern, highly mechanized enterprise than to ensure reliability through technical servicing and repair under difficult operating conditions.