The State of Manufacturing: Why Manufacturing Matters To The Economy

Manufacturing

Competitive Analysis
Trendspotting
Economic & Workforce Strategy
Leadership
Data and Policy Geeks

CONTEXT

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Now think all the way back to 2003

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Facebook (2004)
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Twitter (2006)
IPhone (2007)
Mobile apps
Mobile maps
Fitbit (2007)
Spotify (2007)
Dropbox (2007)

Airbnb (2008)
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Kickstarter (2009)
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Pinterest (2010)
Tumblr (2010)
Snapchat (2011)
Udacity (2012)

Global Impact
High
Unemployment
Slowing GDP
Strong Dollar
Slow Productivity
Growth

Decomposition of Real GDP

5.0

10-Year Annual Growth Rates

5.0

4.5
4.0

4.5

GDP

4.0

3.5

3.5

3.0

3.0

2.5

Productivity

2.5

2.0

2.0

1.5

1.5

1.0

1.0
Employment

0.5

0.5

0.0

0.0

1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Note: Productivity is calculated as real GDP per employee, from the Household Survey.
Source: Bureau of Economic Analysis and Bureau of Labor Statistics via Haver Analytics

Global Impact
High
Unemployment
Slowing GDP
Strong Dollar
Slow Productivity
Growth
Shifting Geopolitics

USA Nonfarm Payroll Employment

Millions of Persons

150

150

15.5 million jobs added since

February 2010- The longest streak
of private job growth in history

145

September
144.74 mil.

145

140

140

135

135

130

130

125

125

120

120

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: Bureau of Labor Statistics via Haver Analytics

Foundation for the American South

September 2016

Southern States 1-Year

Total Employment Oct 2015 to Oct 2016
4.0%
3.1%

3.0%
2.0%

2.3%
1.8%

1.7%
1.2%
0.9%

1.0%

2.0%

2.0%

2.4%

1.7% 1.7%

1.3%

1.0%

0.0%

0.0%
-0.1%
-1.0%

-0.7%

-2.0%
-3.0%

-3.0%

-4.0%
USA

AL

AR

FL

GA

KY

LA

MD MO MS

NC

OK

SC

TN

TX

VA

WV

Source: Bureau of Labor Statistics

Southern States 1-Year

Manufacturing Employment Oct 2015 to Oct 2016
6.0%
4.1%

4.0%
2.5%

2.1%

1.7%

2.0%
0.2%

0.7%

1.2%
0.3%

0.0%
-0.4%

-0.3%
-0.8%

-1.0%

-2.0%

-1.5%
-2.3% -2.3%

-4.0%
-6.0%

-5.5%

-5.7%

-8.0%
USA

AL

AR

FL

GA

KY

LA

MD MO MS

NC

OK

SC

TN

TX

VA

WV

Source: Bureau of Labor Statistics

West Virginia Payroll Employment

YoY % Chg
U.S.
4

West Virginia

3
2
1
0
-1

-2
-3

October 2016
US: 1.7%
WV: 0.0%

-4
-5
-6
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: Bureau of Labor Statistics/Haver Analytics

West Virginia Industry Structure

U.S.

2015

West Virginia
0.6

Natural Resources and Mining

3.4
4.5
4.3

Construction

8.7

Manufacturing

6.2

19.0

Trade, Transportation & Utilities

17.7
1.9

Information

1.2
5.7

Financial Activities

4.8
13.9

Professional & Business Services

8.8

15.5

Education & Health Services

16.8
10.7
9.7

Leisure & Hospitality

4.0

Other Services

7.2
15.5

Government

19.9

8
10
12
14
16
Employment Share (Percent)

18

20

Source: Bureau of Labor Statistics/Haver Analytics

22

1
7

West Virginia Industry Growth

Percent Change in Employment from a Year Ago, NSA
U.S.

October 2016

West Virginia
1.6

Total

0.0

-12.8
Natural Resources & Mining -12.9
Construction

2.6

0.0
-0.5

Manufacturing

-1.5
1.3

Trade, Transportation & Utilities

-0.3

Information

0.3

-3.3

Financial Activities

2.1

-4.9

2.7

Professional & Business Services

0.0
2.6

Education & Health Services

3.6

1.9

Leisure & Hospitality

2.5

Other Services

1.4

-0.4

Government

0.9

-0.1

-14

-12

-10
-8
-6
-4
YoY % Chg (NSA)

-2

Source: Bureau of Labor Statistics/Haver Analytics

Foundation for the American South

September 2016

1
9

West Virginia Unemployment Rate

Percent
11

U.S.
West Virginia

10
9
8

7
6
5
4

October 2016
US: 4.9%
WV: 6.0%

2
1
0
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: Bureau of Labor Statistics/Haver Analytics

Labor Force
Participation Rates by
Sex
From the early 1950s until
its peak over 19972000,
the overall labor force
participation rate
increased.

The men's participation

rate has declined since the
late 1940s, accelerating
after the recession of
20072009.
The participation rate for
women peaked in 1999 at
60 percent and has been
declining since then.

2
1

West Virginia Labor Force Participation Rate

Percent
68

U.S.
West Virginia

66
64
62
60

October 2016
US: 62.8%
WV: 53.6%

58

56
54
52
50
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: Bureau of Labor Statistics/Haver Analytics

2
2

West Virginia Wages and Salaries

YoY % Chg
10

U.S.
West Virginia

8
6
4
2
0
-2

2Q: 2016
US: 3.8%
WV: -0.1%

-4
-6
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: Bureau of Economic Analysis/Haver Analytics

What Are the Big

Trends That Are
Shaping the Future
Workforce?

Accelerating Economic and Population

Urbanization

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or
LinkedIn Ted Abernathy

200,000

-200,000

-400,000

-800,000
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

Domestic Migration
2010-2015 for All States

1,000,000

800,000
650,660

600,000
The Winners
Texas
Florida
Colorado
North Carolina
Arizona

400,000

192,337
160,346

-266,115

The Losers
New York
Illinois
New Jersey
California
Michigan
West Virginia- -8,166
180,189

-191,130

736,492

159,023
124,326

2,005

-104,537
-153,296 -132,073

-269,194

-425,954

-600,000

-653,071

Source: US Census

Half of the US Population Lives in these 146 Counties

SOURCE: BUSINESS INSIDER 2013 WALTER HICKEY AND JOE WEISENTHAL

Technological Unemployment

Technological Unemployment
Coined in 1930 by John
Maynard Keynes
He predicted by 2030 we
could all be working 15 hours
a week
McKinsey says 45% of all
current job tasks could be
automated today with
existing technology

Follow on twitter @tedabernathy

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The Next Big Things-Technological

The Next Big Things-Business

The Bar Is Rising & There Is No Going Back

What Skills Do You Need To Be Successful in

a Rapidly Changing World?
Future
Skills
Job
Skills
Work
Skills

Life
Skills

Basic Knowledge Foundation

The Place Race to Competitive?

Top Factors for Companies

Considering New Investment
1) Availability of skilled labor
2) Labor costs
3) Proximity to major markets
4) State & Local Incentives
5) Availability buildings
6) Highway accessibility
7) Available land
8) Tax exemptions
9) Expedited or fast track permitting
10) Shipping costs
11) Accessibility of a major airport
12) Energy availability and costs

Site Selection
Consultants

Source: Area Development 30th Annual Survey of Corporate

Executives, March 2016

Global CEO Survey: Drivers of Global Manufacturing

Competitiveness

Source: Deloitte Touche Tohmatsu Limited and U.S. Council on

Competitiveness, 2016 Global Manufacturing Competitiveness Index

A New Blueprint Making the American Souths

Manufacturing Sector More Competitive by 2030

Foundation for the American South

September 2016

Manufacturing Jobs in the United States and the American South 1990-2015
20,000,000
18,000,000

17,797,353

16,000,000

30.9% loss

14,000,000

12,290,293
12,000,000
10,000,000
8,000,000

6,086,245

28.6% loss

6,000,000

4,347,055

4,000,000
2,000,000
-

South

US

Source: BLS.gov Quarterly Census of Employment and Wages

Southern States Manufacturing as a Share of GSP 2015

25.0%

20.0%

19.3%

19.6%

19.4%

17.1%

16.6%
15.2%

14.5%

15.0%

16.2%

13.1%

12.8%
11.9%
10.8%

10.0%

9.5%

9.0%

5.5%

5.1%

5.0%

8.6%

0.0%
USA

AL

AR

FL

GA

KY

LA

MD

MS

MO

NC

OK

SC

TN

TX

VA

Source: U.S. Bureau of Economic Analysis

WV

West Virginia Manufacturing Jobs and Manufacturing GDP Growth

1997 2015 (normalized as percent of levels in 1997)
160%

140%

118.7%
120%

100%

80%

60%

62.1%

40%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
WV MANUFACTURING GDP

WV MANUFACTURING JOBS

Source: US Bureau of Labor Statistics QCEW

US Bureau of Economic Analysis GDP

Measuring
Multifactor
Competitiveness

Innovation

Workforce

Manufacturing
Competitiveness

Business
Climate

Infrastructure

Business Climate Index Metrics

Manufacturing Industry Health Scorecard
Hourly Minimum Wage

Workers Comp Insurance Premiums

State and Local Tax Costs for Capital-Intensive
Manufacturing

Total Effective Business Tax Rate

State and Local Tax Costs for Labor-Intensive

Manufacturing

Legal Climate Rankings

Air Quality

Southern States Business Climate Index Performance

State

Average Business
Rank
Climate State
Rank

Average
Rank

Business
Climate
Rank

Virginia
North Carolina
Missouri

15.0
15.1
18.0

2
4
8

Maryland
Tennessee
South Carolina

22.8
22.9
25.4

25
26
30

Texas
Georgia
Louisiana

18.3
18.4
20.1

10
11
18

Oklahoma
Arkansas
Mississippi

25.6
27.0
28.5

31
33
36

Kentucky
Alabama

21.4
22.1

21
24

Florida
West Virginia

30.1
38.0

39
49

Infrastructure Index Metrics

Total State Spending on Highways Per Capita

Growth in Freight Shipments- Millions of Dollars

Average Retail Electricity Price for Industrial

Customers
Percentage of Structurally Deficient Bridges

Miles of Interstate Highways Per 10,000 People

Growth in Freight Shipments - tons

Average Retail Natural Gas Price for Industrial

Customers
State Transportation Expenditures as
Percentage of Total Expenditures

Southern States Infrastructure Index Performance

State

Average
Rank

Infrastructure
Rank

State

Average
Rank

Infrastructure
Rank

Texas
Oklahoma
Kentucky

14.0
18.1
19.8

3
6
9

Alabama
North Carolina
Florida

24.9
27.8
28.0

24
33
35

Virginia

20.9

13

Georgia

28.4

36

Louisiana
Mississippi

22.6
22.6

16
16

Maryland
Tennessee

29.3
31.1

37
41

West Virginia

23.3

19

South Carolina

32.0

43

Arkansas

24.0

21

Missouri

33.1

44

Workforce Index Metrics

Percentage of Population with Adult Obesity
Persons age 18 to 24 Not Attending School, Not Working,
and No Degree Beyond High School

Change in Manufacturing Output per Manufacturing

Employee
Number of Science, Engineering, & Technology Degrees Per
1,000 Persons Age 25-34

High School Graduation Rate

Age 25-44 Population Growth

Labor Force Participation Rate

Percent Change in Tech & STEM Education Program

Completions

Manufacturing Output per Manufacturing Employee

Southern States Workforce Index Performance

State

Average
Rank

Workforce
Rank

State

Average
Rank

Workforce
Rank

Maryland
Virginia

16.8
19.2

3
11

Kentucky
South Carolina

30.7
31.9

41
43

Texas

20.7

12

Oklahoma

32.0

44

Missouri

24.4

23

Louisiana

32.4

45

North Carolina
Tennessee

26.1
27.0

30
33

Arkansas
Georgia

33.9
34.6

46
47

Florida

28.1

35

Alabama

36.7

49

West Virginia

30.4

40

Mississippi

39.4

50

Innovation Index Metrics

Technology Licenses and Options Executed from
Universities

Business Performed R&D as a Percentage of Private

Industry Output

Patents Issued

Higher Education R&D in Science & Engineering

Fields as a Percentage of GSP

Patents Issued per 1 Million Workers

Venture Capital Funding Per $1 Million of GSP

Technology Industry Employment Growth

SBIR and STTR Funding Per $1 Million of GSP

Total R&D as a Percentage of GSP

Southern States Innovation Index Performance

State
North Carolina
Maryland
Texas
Georgia
Missouri
Virginia
Florida
Tennessee

Average
Rank
13.9
14.0
19.1
21.4
23.7
23.8
26.0
29.7

Innovation
Rank
6
7
16
19
27
28
30
33

State
Alabama
South Carolina
Kentucky

Average
Rank
30.8
31.4
36.2

West Virginia
Oklahoma
Arkansas
Mississippi
Louisiana

39.6
39.7
41.4
41.6
43.7

Innovation
Rank
34
36
41
43
44
46
47
48

SWOT Analysis of the Souths Data for

Manufacturing Competitiveness
Strengths

Excellent business climate (low wages,

low taxes)

University research and technology

transfer
Opportunities

With workforce development,

opportunity exists to attract more
advanced high-tech manufacturing
with lower wages and low energy
costs.

Weaknesses

Low levels of innovation funding

Tougher legal climate
Lower investment in highway
infrastructure from state governments

Threats

Workforce aging out and region not

able to attract millennial workers
Deteriorating highway infrastructure

Example State Policy Recommendations to

Strengthen Manufacturing
Overall

1) Focus on regionalism
2) Embrace policy coordination

For Business Climate

1) Build a governance structure competitively positioned on
taxes, regulation, legal environment and leadership.
For Workforce
1) Re-imagine readiness by strengthening the connections
between education and job skills, rethinking credentials
and giving students more exposure to work.
2) Focus on middle skill jobs by changing the public
perception

For Innovation
1) Monitor and engage new global markets and shifting
priorities for direct foreign investment and export
promotion.
2) Encourage and reward university leadership to build
business partnerships to commercialize new ideas
Infrastructure
1) Support existing and innovative financing options for
infrastructure construction and maintenance at both the
local and state level
2) Expand digital infrastructure broadly to create new
opportunities

1957

Wade

Roy
Margaret

Genora

Follow on twitter
@tedabernathy
or
LinkedIn Ted Abernathy
Leadership and learning are
indispensable to each other.
John F. Kennedy

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