Series: Advanced Industries Series | Number 3 of 19 « Previous | Next »

Interactive | May 9, 2012

Interactive: Locating American Manufacturing

Manufacturing is Not Just Another Industry

1. Manufacturing Pays Better Than Other Industries

Workers at all wage levels—men and women, and those in all racial/ethnic, educational attainment, and occupational groups—earn more in manufacturing than in other industries.

Simply put, if every manufacturing worker had an identical counterpart in a non-manufacturing industry, the manufacturing workers would, on average, always earn more.*

The differences are especially pronounced for low-wage workers, implying that more manufacturing jobs could help lessen earnings inequality.

*The sole exception to this result is for Hispanic workers, who earn 10 cents less per week in manufacturing than in non-manufacturing.

Source: Why Does Manufacturing Matter? Which Manufacturing Matters?

2. Manufacturing is a Major Source of Commercial Innovation

Manufacturing firms are far more likely than non-manufacturing firms to introduce new products and new production or business processes. The most innovative manufacturing industries relate to computers, communications, and pharmaceuticals.

Manufacturing makes up about 11 percent of U.S. GDP, but accounts for more than two-thirds (68 percent) of U.S. domestic company R&D spending—a key input to innovation.

Engineers are an essential input into technoligcal innovation and they are disproportionately concentrated in manufacturing. Furthermore labor productivity growth—a broad measure of innovation—is higher in manufacturing than in the private sector as a whole.

Source: Why Does Manufacturing Matter? Which Manufacturing Matters?

3. Manufacturing is Essential for Reducing the Nation's Trade Deficit

Manufacturing is strongly positioned to reduce America's trade deficit. If the current deficit persists, it could threaten our standard of living by lowering incomes and reducing job opportunities, and eroding the country's capacity for innovation.

Today, manufacturers are more likely to export than service-providing companies and firms that export today are the most likely firms to export in the future—an indication that manufacturing is likely to contintue leading on the exports front.

Indeed, manufacturing drove the export resurgence in 2010, accounting for 75 percent of growth. In addition, as costs rise abroad, some previously "offshored" manufacturing is likely to be "re-shored," moving the trade deficit in a positive direction.

Source: Why Does Manufacturing Matter? Which Manufacturing Matters? and Export Nation 2012

4. Manufacturing Drives Environmental Sustainability

Manufacturing makes a disproportionately large contribution to America's "clean economy"—the production of goods or services with an environmental benefit.

Many specific technologies and products that are critical to the clean economy are highly manufacturing-intensive.

At least 90 percent of all jobs in segments like electric vehicle technologies, water-efficient products, and green chemicals are in manufacturing. More than two-thirds of jobs in wind energy, solar photovoltaics, and solar thermal are manufacturing jobs.

Jobs in this sector have strong growth potential and, importantly, clean economy jobs tend to pay well.

Source: Why Does Manufacturing Matter? Which Manufacturing Matters? and Sizing the Clean Economy

Metropolitan Areas Contain the Large Majority of Manufacturing Jobs

80% of all manufacturing jobs and 95% of all very high tech manufacturing jobs are in metro areas

In 2010, 79.5 percent of all manufacturing jobs were located in metro areas, just less than the share of all U.S. jobs in these areas (85.2 percent).

Nevertheless, this still indicates that manufacturers gain important advantages from locating in metro areas.

Very high tech manufacturing was located almost exclusively in metro areas—only five percent of these jobs were located in non-metropolitan areas.

Specialization is a relative measure defined as the share of manufacturing jobs in a metro divided by the share nationwide.

From 1980 to 2010, the national share of jobs in manufacturing fell from 19.4 to 8.5 percent.

Similarly, manufacturing job shares fell across most metropolitan areas. Even so, the figure at right demonstrates how more metros fell well above the national average in 2010 than in 1980.

About two-thirds (237) of American metropolitan areas exhibit strong evidence of clustering, falling into one of six broad groups.

Each group is defined by one of six "anchor" industries or combination of industries—computers and electronics, transportation equipment, low-wage manufacturing, chemicals, machinery, and food—forming groups called Information Technology; Planes, Trains, Automobiles, and Ships; Low-Wage Manufacturing; Chemical Alley; the Machinery Belt; and Factories Near the Fields.

Pay varies by metropolitan areas both because of differences in local industry mix (i.e. which manufacturing industries are most and least prevalent) and because of location specific factors within an industry, one of which is the presence of high-road manufacturing firms.

High-road manufacturing—powered by highly skilled workers at all levels—is a technique that firms in any industry can use to innovate. Higher wages paid to more-skilled workers are offset by their higher productivity.

Plant size matters for the health of American manufacturing because small and medium-sized manufacturers are responsible for designing and producing an increasing amount of the content of manufactured goods.

At the same time, small and medium-sized firms do little R&D and lag in productivity, so metro areas with many small manufacturing firms could benefit most from assistance aimed at boosting productivity and innovation.

Between 1980 and 2000, the Northeast and Midwest lost manufacturing jobs as the South and West gained. Right-to-work laws, and, in the case of the South, lower wages and generous industrial recruitment subsidies are possible explanations for this trend.

Since 2000, however, the trend was partially reversed with all regions suffering large losses through 2010. During the last two years, the Midwest posted the strongest gains, fueled by double-digit growth rates in manufacturing centers like Youngstown and Detroit.

During the 1980s and 1990s, central counties lost manufacturing jobs while the outlying metropolitan counties gained them. Between 2000 and 2010, central counties lost 33.9 percent of their manufacturing jobs while outlying counties lost 29.3 percent.

Accompanying this trend, manufacturing jobs recently resumed their shift out of metro areas alltogether with metro area rates of change lagging non-metropolitan areas. The decentralization of manufacturing clusters could undermine the competitiveness of U.S. manufacturing.

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Indicators for Basic Geography

Manufacturing jobs reflect 2010 estimates. Estimates are gathered by place of work and reflect the number of jobs, not workers.

Manufacturing share of total employment reflects the share of total payroll employment, which does not include the self-employed.

Very high-tech and moderately high-tech manufacturing industries are designated as such because they have large shares of science and engineering occupations. To qualify as very high-tech, the share of science and engineering occupations within an industry must be at least five times the economy-wide national average. The threshold for moderately high tech industries is two times the national average.

Source: Brookings analysis of data supplied by Moody's Analytics and the Bureau of Labor Statistics' Occupational Employment Statistics survey (to determine industry technology level) for the year 2010.

Indicators for Industry Specialties

Industry specialization is a relative measure, defined as the metro area share of employment in a given industry divided by the national share of employment in that industry. We refer to this measure here as an index of the degree of specialization of an industry; it is also often called a location quotient.

A metropolitan area is considered to be strongly specialized in a manufacturing industry if it has an index of 1.05 or higher. Index values greater than 1.50 indicate very strong specializations and values greater than 1.90 indicate a highly specialized metro area.

Source: Brookings analysis of data supplied by Moody's Analytics

Indicators for Industry Patterns

Industry specialization groups are defined by an "anchor" industry or combination of industries, in which all metropolitan areas in the group are relatively strongly (usually highly) specialized, and by another industry in which all metropolitan areas in the group are less specialized.

The six "anchor" industries are computers and electronics, transportation equipment, low-wage manufacturing (including food, textiles, apparel, leather, wood, and furniture), chemicals, machinery, and food. These industries "anchor" the groups called Information Technology; Planes, Trains, Automobiles, and Ships; Low-Wage Manufacturing; Chemical Alley; the Machinery Belt; and Factories Near the Fields.

Of the metro areas that do not fall into these group, nearly all have diversified manufacturing employment that is spread out among many industries, while a few have idiosyncratic patterns of specialization. These metro areas make up the remaining two groups presented in this section.

Source: Brookings analysis of data supplied by Moody's Analytics for the year 2010

Indicators for Wage Variations

The wage data presented here represent average annual earnings per job for the year 2010.

Users should take caution in interpreting wages for metro areas outside of the 100 largest metro areas. This is due to data quality in the smaller metro areas; in several cases, industries with few employees, but extremely high average earning skewed overall estimates. This is why we do not present data for the very high-tech and moderately high-tech aggregates for the smaller metro areas.

Source: Brookings analysis of data supplied by Moody's Analytics for the year 2010

Indicators for Plant Size Variations

Average plant size is defined as total employment divided by the number of business establishments in a metro area.

In some cases, the source data for this indicator have been suppressed; in these cases we create an estimate using the midpoint of a range, which is usually specified in the source data in cases of suppression. Note that data are missing for three metro areas.

Source: Brookings analysis of data supplied by the Census Bureau's County Business Patterns for 2009

Indicators for Job Changes

This section presents percent change in manufacturing jobs for three distinct time periods: 1980 to 2000, 2000 to 2010, and from the first quarter of 2010 to the fourth quarter of 2011 (rates are not annualized).

Source: Brookings analysis of data supplied by Moody's Analytics

Indicators for Urban Location

This section distinguishes between job growth in the central and outlying counties of metropolitan areas. Central counties are those containing principal cities of metropolitan areas; outlying counties are all remaining metro area counties. Our analysis is restricted to metropolitan areas with three or more counties.

This section presents percent change in manufacturing jobs for two time periods: 1980 to 2000 and 2000 to 2010 (the last year for which county level data are available). Rates are not annualized.

Source: Brookings analysis of data supplied by Moody's Analytics

Number of manufacturing jobs, 2010

Number of manufacturing jobs, 2010
Share of manufacturing jobs: Very high-tech, 2010
Share of manufacturing jobs: Moderately high-tech, 2010
Manufacturing share of all jobs, 2010

Degree of Specialization, 2010
All Manufacturing
Very High Tech Manufacturing
Moderately High Tech Manufacturing
Food
Beverages & Tobacco
Textile Mills
Textile Product Mills
Apparel
Leather & Allied Products
Wood Products
Paper
Printing & Support Activities
Petroleum & Coal Products
Pharmaceuticals & Medicine
Chemicals
Plastics & Rubber Products
Nonmetallic Mineral Products
Primary Metals
Fabricated Metal Products
Machinery
Computer & Electronic Products
Electrical Equipment & Appliances
Motor Vehicles & Parts
Aerospace Products & Parts
Transportation Equipment (Non-Auto/Aerospace)
Furniture
Miscellaneous

Manufacturing specialization groups, 2010
Information Technology
Planes, Trains, Automobiles, and Ships
Low-Wage Manufacturing
Chemical Alley
Machinery Belt
Factories Near the Fields
Diversified Manufacturing
Other Specialized Manufacturing

Change in manufacturing jobs (%), 1980–2000
Change in manufacturing jobs (%), 2000–2010
Change in manufacturing jobs (%), Q1 2010–Q4 2011

Change in central county manufacturing jobs (%), 1980–2000
Change in central county manufacturing jobs (%), 2000–2010
Change in outlying county manufacturing jobs (%), 1980–2000
Change in outlying county manufacturing jobs (%), 2000–2010

Metro Finder

Quick Facts

United States

Number of manufacturing jobs, 2010

11,499,905

Manufacturing share of all jobs, 2010

8.5%

Share of manufacturing jobs considered very high-tech

16.1%

Share of manufacturing jobs considered moderately high-tech

18.6%

Top industry specializations, 2010

Values greater than one indicate specialization

Values are not shown for the U.S. because specialization in this context is only applicable to metro areas. This is because the index values are measured relative to the U.S. average.

Specialization groups

Information technology

Planes, Trains, Automobiles, and Ships

Low-Wage Manufacturing

Chemical Alley

Machinery Belt

Factories Near the Fields

Diversified Manufacturing

Other Specialized Manufacturing

Average annual wages, 2010

All manufacturing

$58,485

Very high-tech manufacturing

$93,315

Moderately high-tech manufacturing

$64,677

All jobs (includes non-manufacturing)

$47,290

Average plant size, 2009

All manufacturing

39.9 jobs

Percent change in all manufacturing jobs

1980–2000

-0.3%

2000–2010

-33.8%

Q1 2010–Q4 2011

+2.7%

Central versus outlying county manufacturing job change

1980–2000 (central)

-15.5%

1980–2000 (outlying)

+14.5%

2000–2010 (central)

-33.9%

2000–2010 (outlying)

-29.3%

Map Legend

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SUMMARY

With the slight resurgence of U.S. manufacturing in the recent years—termed a potential "manufacturing moment" by some—it is important to consider not just the future of manufacturing in America but also its geography. Geographic considerations are, in fact, central to whether the slow growth of U.S. manufacturing jobs during the last two years signals a renaissance of American manufacturing or merely a temporary respite from long-term decline.

Use this interactive feature to explore data on manufacturing industry geography, jobs, specialities, and patterns.

SERIES: Advanced Industries Series | Number 3

Locating American Manufacturing: Trends in the Geography of Production

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