Question

Technical Changes in Piano Making It takes one year and more than 200 production workers to build a Steinway Model D grand piano, which has 12,000 parts. The factory produces 150 of these pianos per year. Steinway's technology virtually stopped evolving about 1900. The number of pianos produced per year and the number of workers in the factory has remained constant. They can't use machinery to replace workers, but they can use machinery to aid the workers. Steinway still uses some equipment that was built in the Victorian era, such as a veneer-edge cutter from 1871. Modern equipment is used to refine the tools they use, improve the tolerances of action parts, and make parts that don't need custom fitting. A computer-aided router cuts the final shape of the top lid. A "sounder" machine breaks the pianos in by pounding every key 8.000 times within 45 minutes. An engineer uses CAD/CAM software on a computer to design an action part. Similarly, new materials are used, partly of necessity. Since the ban on the trade of ivory in 1989, keys are now made of a mock-ivory polymer. Cloth bushings that line certain metal pins that serve as hinges in the action are now made of TeflonTM-impregnated wool. Yamaha, using a more mechanized approach, makes 250,000 pianos per year, compared to the 523,000 pianos Steinway has produced in 140 years. Yamaha makes fine instruments, but they are not in the class of the Steinway grand piano. a. Given the information provided, what do you predict about the shape of isoquants for Steinway? b. The story about production at Steinway is very similar to that of the C. F. Martin Company, makers of some of the world's finest acoustic guitars. The production of Martin guitars is also characterized by the use of highly skilled labor, limited substitutability between capital and labor, and use of very old machines to perform certain tasks. Why do you suppose that this limited substitutability occurs in the musical instrument industry, when other industries, such as the automobile industry, are characterized by a much greater degree of input substitutability?

Answer 1

a. The shape of the isoquants is kinked isoquants. This is because the inputs show limited substitutability and there are only few processes for producing any one commodity.

b. In industries such as automobiles, the parts of an automobile are produced on a large scale using the assembly lines etc. This allows the continuous substitutability between the factors of production.

However, in musical industries, the making of musical instruments cannot be done at a large scale without compromising on the manual and intricate touches it requires which are only possible through the use of manual labour. Moreover, in automobile industries, people value the technical advancements and therefore go for better and upgraded versions.

On the other hand, in musical industries, the tradition is vued more. Due to this, hand crafted and carefully assembled instruments using manual labour are valued more. Due to this, we have limited substitutability of labour and capital in these industries.