Economic Impact: Manufacturing industry still challenged but the sector has changed

Posted on April 10, 2017 by Chris Chmura

Manufacturing often gets a bad rap.

That’s probably because the sector has declined by more than 4.9 million jobs since January 2000.

The industry also has perception issues. Who wants to work in a dirty old factory with oil on the floor and dust in the air?

But the manufacturing industry has changed - it is more high tech and offers better wages, making for a good career choice.

The manufacturing industry employs more than 12.6 million people in the nation. The Bureau of Labor Statistics forecasts that it will decline by about 900,000 jobs in the next 10 years.

However, the sector will add over 2.8 million workers over that same period because employees in the manufacturing industry are either retiring or moving into new occupations.

And even though the industry is shedding jobs, output continues to grow. Since 2000, manufacturing production increased by 37 percent or by $1.555 trillion in 2016, according to the Bureau of Economic Analysis.

Productivity gains are part of the reason for the historical decline in jobs as well as the expected future decline.

Productivity in the manufacturing industry grew an annual average 1.7 percent from 2007 through 2016 compared with 1.2 percent for nonfarm businesses.

Although high productivity means doing more with fewer workers, it also means the remaining workers are paid well.

Average annual wages for manufacturing workers in the nation was $63,903 during the 12 months that ended December 31, 2016 compared with $52,285 for all industries, based on data computed by Chmura Economics & Analytics.

And what about the perception issues?

Consider touring the Rolls-Royce North America plant in Prince George County, Virginia, where the company makes components for aircraft engines.

As you drive to the plant in the Crosspointe development, you pass through a well-manicured manufacturing campus that would convince you you were entering an upscale office park.

Entering the nearly 300,000-square-foot plant, you see spotless floors, large machines suspended off the floors, and workers with computer skills operating the facility.

On the same campus is the Commonwealth Center for Advanced Manufacturing, a 60,000-square-foot research center jointly operated by private companies and several Virginia universities.

The environment at both facilities is far from your grandfather’s plant.


This blog reflects Chmura staff assessments and opinions with the information available at the time the blog was written.