Economic activity in America’s manufacturing sector rose for the thirteenth consecutive month this June, according to the Institute for Supply Management. Manufacturing jobs have been on the upswing as well, rising for the eleventh straight month in June. Despite employment growth in the sector, manufacturing jobs appear unlikely to reach the relative share of total U.S. jobs they once held.
Manufacturing accounted for more than 12% of the United States’ GDP in 2013, with output from the sector totaling more than $2 trillion. In some states, manufacturing makes up a far greater share of the local economy. Last year, manufacturing accounted for more than 30% of Indiana’s state GDP, the most in the nation. Using 2013 figures published by the Bureau of Economic Analysis for 2013, 24/7 Wall St. identified the 10 states where manufacturing still matters.
A number of factors suggest a healthy manufacturing sector Chad Moutray, chief economist at the National Association of Manufacturers, said in an interview with 24/7 Wall St. These factors include continued long-term and recent growth, high levels of investment, and the addition of 600,000 manufacturing jobs post-recession. “I think that really speaks to that boost in the sector since the recession. Many people call it a renaissance,” Moutray said.
Many of the top manufacturing states are located in the Midwest and the Southeast. In the Midwest, Moutray noted, we see more traditional manufacturing industries such as auto production, airplane production, metals, machinery, plastics and chemicals. The Southeast, he added, offers more of a growth story. “The southeast is a very attractive place to do business,” Moutray said. “Investment is really flowing into the Southeast. And I think that’s really helping to drive a lot of additional manufacturing growth and employment.”
The states with the biggest manufacturing economies specialize in different industries. In Oregon — the state with the second highest share of GDP coming from manufacturing — high-tech manufacturing is especially prominent, Moutray pointed out. Oregon’s computer and electronic product manufacturing industry alone accounted for 23.1%, or $48.6 billion, of the state’s output in 2012. In Louisiana, 9.2% of the state’s 2012 GDP came from petroleum and coal-based product manufacturing.
Consistent auto industry growth in recent years helped drive manufacturing output in several states. Michigan and Indiana, two of the top five states where manufacturing still matters, both depend heavily on auto manufacturing. The states’ motor vehicle sectors generated 7.6% and 5.0% of their total 2012 output, respectively, the two highest auto-industry contributions nationwide.
Other industries are also playing a huge role in manufacturing’s recovery, Moutray noted. These include industries such as machinery and electrical equipment, as well as raw metals and metal products manufacturing. Moutray also cited growth in plastics making, which “speaks to the growth of energy and shale,” since natural gas and petroleum products are used to make plastics.
Many of the states with strong manufacturing industries are able to export large quantities of their products. Seven states were among the 15 top national exporters of manufactured goods in 2012, with exports totaling at least $32 billion per state. These states’ export growth rates since the end of the recession has been among the largest. Michigan and Louisiana in particular have exported around 20% more manufactured goods each year over that period.
Moutray also highlighted the importance of exporting to states’ manufacturing sectors. “When you look at the states that are doing well … since the end of 2009, it’s not surprising that those are the states that are exporting most.” He added that this “shows the importance of trade for manufacturers,” and “that manufacturers in the U.S. can compete” on the global stage.
To identify the 10 states where manufacturing matters, 24/7 Wall St. used state gross domestic product (GDP) figures published by the Bureau of Economic Analysis for 2013. We determined which states had the largest percentage of total output attributable to manufacturing. Data on specific industries within the manufacturing sector are from 2012 and represent the most recent available figures. Employment figures for each state come from the Bureau of Labor Statistics and are seasonally adjusted.
These are the states where manufacturing still matters.