Where U.S. Manufacturing Is Thriving In 2018
The ‘80s futurist John Naisbitt once called manufacturing a “a declining sport,” and to be sure the share of Americans working in factories has fallen far from the 1950 peak of 30% to roughly 8.5% last year.
Yet, manufacturing’s contributions to the economy are far out of proportion to its shrinking share of employment. In 2013, the manufacturing sector employed 12 million workers, but generated an additional 17.1 million indirect jobs. It has the largest multiplier of any economic sector: each dollar’s worth of manufactured goods generates $1.40 in output from other sectors of the economy. Perhaps most important may be the higher wages it provides for blue-collar workers. According to the latest BLS data, goods-producing industries pays $56,799 a year on average during the latest period in our rankings—much higher than other working-class fields like health care and education (averaging $45,676 annually) and leisure and hospitality ($20,879).
To determine the places where manufacturing growth is the strongest, we looked at employment in the sector in 373 metropolitan statistical areas, assessing short-, medium- and long-term trends going back to 2006 and adding in variables for persistence and momentum. The results of these trends, based on three-month averages, are normalized and each MSA is assigned a score based on its relative position in each area.
Over the past eight years manufacturing has bounced back strongly from the crater the sector fell in during the Great Recession, gaining 1.1 million jobs. In recent months, 17 of the 18 major industries have been in growth mode, according to the Institute for Supply Management. Manufacturers expect to add nearly 2% more jobs nationally during calendar 2018 and the Institute’s Purchasing Manager’s Index has shown 20 months of continuous growth through April 2018.
A broad array of places across the U.S. are benefiting, ranging from the industrial Midwest to the Sun Belt to even California, a state that has long been bleeding industrial jobs but is lately showing some signs of resurgence. Oakland-Hayward-Berkeley ranks second on our list of the large metropolitan areas that have added the most industrial jobs over the past decade -- its factory job count has jumped 22% since 2012, as the red-hot tech sector has fueled a manufacturing surge in the Bay Area. Meanwhile the San Diego-Carlsbad area ranks 10th.
In first place? The vast majority of Americans are more likely to associate the Orlando metro area with Mickey Mouse than Rosie the Riveter, but Orlando-Kissimmee-Sanford is tops in manufacturing job growth among the 71 largest metros (those with more than 450,000 nonfarm jobs), racking up 23.6% growth since 2012 and 7.9% last year. Large companies including Lockheed Martin, Mitsubishi Hitachi Power Systems Americas and Siemens Energy have brought advanced manufacturing jobs to the Orlando area, as well as a host of smaller firms.
Manufacturing is surging elsewhere in Florida as well, with Miami-Miami Beach-Kendall placing fourth on the strength of 22.6% growth in industrial jobs since 2012 to 43,800, and 6.1% growth last year alone, while West Palm Beach-Boca Raton-Delray Beach places fifth with 27.3% job growth since 2012. Florida is well positioned due to its lack of income taxes, reasonable housing prices and generally pro-development policies. Manufacturing employment in the state had risen for 86 straight months through February.
Tech hubs throughout the South and West are seeing a surge in tech development that’s boosting manufacturing employment, In No. 14 Phoenix-Mesa-Scottsdale, for example, the downtown core has seen a 318% increase in tech companies since 2012, with manufacturing employment in the area surging 5.5% last year to 127,100 jobs. Phoenix, as well as high-ranked places like Salt Lake City and Raleigh, N.C., boast the high-skill workforces and low-cost, business-friendly environments that companies are looking for with today’s increasingly tech-driven manufacturing processes.
Heartland Comeback Hubs
But much of the action in manufacturing remains in the industrial Midwest, and the news there is surprisingly good. Leading the pack is Grand Rapids-Wyoming, Mich., which places third on the strength of a 20.5% jump in industrial employment since 2012 to 115,700 jobs, a fifth of all non-farm jobs in the metro area. The Grand Rapids area boasts a vast array of 2,500 manufacturing companies in diverse industries, including metals, plastics, biopharmaceuticals, medical devices, production technology, automotive and food processing. Four out of five of them have less than 250 employees, but there are also operations of big companies like General Motors, Amway, Cargill, Kellogg’s and Bissell. Manufacturers in Grand Rapids are supported by the region’s research institutions, like the Van Andel Institute, the Michigan Alternative and Renewable Energy Center and the University Research Corridor.
Many other Rust Belt cities are also shining up. No. 6 Warren-Troy-Farmington Hills, Mich., -- also known as “automation alley” -- continues to perform well, with 18.5% industrial job growth since 2012. The metro area may be one to watch as more electric and eventually autonomous vehicles begin to hit the streets. No. 8 Louisville-Jefferson County is another Heartland metro area with a growing, diverse range of industries from automotive to lighting to food processing.
Even long-suffering Detroit-Dearborn-Livonia is on the upswing, placing 19th with 15% growth in manufacturing employment since 2012, paced by the recovery of the auto industry. Yet many other traditional industrial centers are stagnating or even shrinking, including No. 53 Milwaukee-Waukesha-West Allis, Wisc., No. 56 Buffalo-Cheektowaga- Niagara Falls, N.Y., No. 59 Pittsburgh and No. 66 Rochester, N.Y.. The Rust Belt is coming back, but only in pieces.
The Largest Manufacturing Hubs Stagnate
Only three U.S. metro areas still have more than 200,000 manufacturing jobs and none of them show signs of participating in the reindustrialization trend. Los Angeles-Glendale-Long Beach, with 348,000 manufacturing jobs, is still the largest industrial center in the nation, but its famously diversified economy, once a model, is in a need of a major retrofit. The area has lost an estimated 20% of its manufacturing jobs in the past decade, many in the aerospace and garment sectors, and 1.9% last year, earning it 68th place in our ranking.
A similarly poor picture emerges in No. 54 Chicago-Naperville-Arlington Heights, where industrial employment has increased a scant 0.5% since 2012 while some of its Midwest neighbors have done much better. The “city of big shoulders” memorialized by Carl Sandburg is slouching a bit these days.
But perhaps the most surprising decline is in No. 58 Houston-Woodlands-Sugar Land the country’s third largest industrial center. After a decade of strong growth, Houston manufacturing was hit hard by the energy industry decline, with industrial employment down 10% since 2012, although employment did tick up last year. The energy connection may also explain poor performances by other energy hubs like No. 60 New Orleans-Metairie and No. 61 Oklahoma City.
Is The Future Of Manufacturing Small?
The real stars of the manufacturing resurgence may be smaller cities. As logistics improve it is increasingly possible for smaller areas to compete with larger ones. Nine of the top areas for industrial growth are small and medium-sized metros.
The small stars are a remarkably diverse lot. They include high-cost places like top-ranked San Rafael, Calif., an admittedly tiny industrial area but one where manufacturing employment has expanded 92.5% to 5,100 jobs since 2012.
The most encouraging growth has been in small towns in the Rust Belt, places some sophisticates in places like Silicon Valley dismiss as “shitholes.” For example, second-ranked Elkhart-Goshen, Ind., is thriving, with industrial employment up 35.4% since 2012 to 70,500 jobs. Worse than that, to the green Valleyites, they make much of their money producing recreational vehicles!
Other unfashionable but thriving industrial centers include No. 4 Kankakee, Ill., No. 7 Kokomo, Ind., as well as small Western towns like No. 10 Prescott, Ariz., and No. 12 St. George, Utah, and southern auto hubs like No. 11 Spartanburg, S.C.
But perhaps the most interesting manufacturing boomtown owes much of its momentum to the Valley. No. 3 Reno, having lost the gambling wars to Las Vegas, won the jackpot by landing Tesla’s giant battery plant. Last year the small city’s manufacturing job base expanded 30.2% to 19,100, the fastest growth of any metro area in the nation.