Data Spotlight: Ranking States by Their Dependence on Manufacturing

Editor’s note: This is the first in a series of posts on manufacturing. We’ll look at specific manufacturing sectors that are performing well, and how regions are combating the shortage of skilled manufacturing workers. See here for all of EMSI’s manufacturing-oriented articles.

A recent Brookings paper makes a clear case from the start: “Manufacturing matters to the United States …” Other economists and econ bloggers aren’t so sure.

What’s clear, however, is certain states (think Indiana, Wisconsin, and Arkansas) depend on manufacturing to fuel their economies more than others. One way to measure just how dependent states are on manufacturing – rather than simply looking at total jobs or exports – is by looking at a common concentration measure known as location quotient (LQ).

In this post, we provide an overview of the 10 states most dependent on manufacturing, with the top five subsectors for each based on their concentration compared to the nation. (We also have data on all 50 states and Washington, D.C. below.) A location quotient of 1.00 is the national average, and an LQ of 1.20 and above indicates the industry is specialized in the state.

Industries with a high LQ are typically (but not always) export-oriented industries, which are important because they bring money into the region, rather than simply circulating money that is already in the region (as most retail stores and restaurants do). Industries that have both high LQ and relatively high total job numbers typically form a region’s economic base. Economic developers and government officials need to pay particular attention to these industries not only for the jobs they provide, but also for their multiplier effect – the jobs they create in other dependent industries like retail trade and food services.

As you scan through this list, also pay attention to industries with rapidly declining or growing LQs. For example, Michigan’s concentration in auto manufacturing declined 15% from 2001 to 2011 (not a good sign because it’s the second-largest manufacturing industry in the state and employment has plummeted). On the flip side, Alabama’s concentration in auto manufacturing grew more than 466% in the last decade, indicating that the state is now taking up a much larger share of national employment (third most among states, up from 14th in ’01). Keep in mind that growing employment paired with declining LQ indicates that the industry is not growing as fast in the state as it is in the national economy.

Note: All 2011 jobs and LQ figures are estimates because of lags in federal and state data sources. The numbers cited come from EMSI’s 2011.4 Covered Employment dataset.

1. Indiana (LQ: 1.86; 2001-11 Job Change: -26%)

Indiana is 86% more concentrated in manufacturing than average and just nudges Wisconsin for the top spot in our analysis. Auto manufacturing, with an LQ of 10.79 (or almost 11 times more concentrated in the state that nationally), is a big reason why. Iron and steel mills (9.94) and engine, turbine and power transmission equipment manufacturing (5.27) also factor prominently on our list.

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3362 Motor Vehicle Body and Trailer Manufacturing 25,555 $48,295 8.22 10.79 31.3%
3311 Iron and Steel Mills and Ferroalloy Manufacturing 18,766 $85,497 9.79 9.94 1.5%
3336 Engine, Turbine, and Power Transmission Equipment Manufacturing 10,539 $85,387 5.49 5.27 -4.0%
3363 Motor Vehicle Parts Manufacturing 47,592 $55,973 5.09 5.25 3.1%
3325 Hardware Manufacturing 2,304 $61,647 3.84 4.50 17.2%

2. Wisconsin (LQ: 1.85; 2001-11 Job Change: -21%)

Wisconsin is significantly more concentrated in manufacturing than the next state on the list, Iowa. Leading the way are other transportation equipment manufacturing (7.15) and dairy product manufacturing (6.24), the latter of which is certainly not a surprise to see high on this list. Notice the big increase in foundries (5.83, up 26.5%) compared to the nation, and the substantial decline in pulp and paper mills (5.82, an 17.6% decline).

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3369 Other Transportation Equipment Manufacturing 4,905 $86,543 7.78 7.15 -8.1%
3115 Dairy Product Manufacturing 16,749 $45,295 6.02 6.24 3.7%
3315 Foundries 14,157 $51,783 4.61 5.83 26.5%
3221 Pulp, Paper, and Paperboard Mills 13,353 $64,630 7.06 5.82 -17.6%
3353 Electrical Equipment Manufacturing 13,729 $71,270 4.62 4.86 5.2%

3. Iowa (LQ: 1.55; 2001-11 Job Change: -15%)

Like the two states above it, Iowa has seen a marked increased in manufacturing concentration over the last decade (see the state-by-state table below). Only a few states, in fact, have grown more in concentration percentage since 2001 than Iowa. The most concentrated manufacturing subsectors are related to agriculture (grain and oilseed milling) and animal food or slaughtering. Household appliance manufacturing, meanwhile, has dropped precipitously in concentration, at least partly because of the loss of Maytag in Newton.

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3112 Grain and Oilseed Milling 6,664 $68,252 9.58 10.09 5.3%
3331 Agriculture, Construction, and Mining Machinery Manufacturing 20,157 $66,849 7.80 8.34 6.9%
3111 Animal Food Manufacturing 3,219 $58,734 5.20 5.52 6.2%
3116 Animal Slaughtering and Processing 28,599 $37,843 4.95 5.23 5.7%
3352 Household Appliance Manufacturing 3,388 $36,761 7.07 5.05 -28.6%

4. Arkansas (LQ: 1.51; 2001-11 Job Change: -30%)

Arkansas has lost nearly a third of its manufacturing employment base in the last decade, and it’s the top state in the top four of our list to see its concentration retreat during that time. Nearly one in out of every five manufacturing job in Arkansas is classified under animal slaughtering and processing (7.01 LQ), an industry that was more concentrated in the state 10 years ago.

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3162 Footwear Manufacturing 1,182 $25,910 8.37 9.65 15.3%
3116 Animal Slaughtering and Processing 30,480 $27,262 7.88 7.01 -11.0%
3211 Sawmills and Wood Preservation 3,941 $35,606 5.93 5.34 -9.9%
3112 Grain and Oilseed Milling 2,333 $41,828 4.40 4.44 0.9%
3212 Veneer, Plywood, and Engineered Wood Product Manufacturing 2,398 $44,969 3.23 4.32 33.7%

5. Michigan (LQ: 1.46; 2001-11 Job Change: -39%)

No state in the country has lost the largest a bigger percentage of manufacturing jobs than Michigan since 2001. That’s no surprise. Nor is the fact that the most-concentrated industries in the state (and the ones that have seen the biggest drops in concentration) are related to car manufacturing.

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3361 Motor Vehicle Manufacturing 37,171 $96,951 9.51 8.06 -15.2%
3363 Motor Vehicle Parts Manufacturing 90,140 $70,296 7.77 7.10 -8.6%
3335 Metalworking Machinery Manufacturing 31,170 $61,097 5.80 6.52 12.4%
3372 Office Furniture (including Fixtures) Manufacturing 14,435 $54,897 4.73 5.14 8.7%
3328 Coating, Engraving, Heat Treating, and Allied Activities 12,445 $44,369 3.20 3.30 3.1%

6. Alabama (LQ: 1.45; 2001-11 Job Change: -27%)

Alabama is in the top 10 of our list largely because apparel/textile manufacturing, a subsector that’s taken a mammoth hit over the past decade but is still heavily concentrated in Alabama and other Southern states. Also notice motor vehicle manufacturing, which had a relatively small presence in 2001 (3,400 jobs) but has since become a big player in the state (10,400 jobs in 2011, 466% increase in LQ).

NAICS Code Name 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3151 Apparel Knitting Mills 2,630 $27,506 13.15 10.32 -21.5%
3131 Fiber, Yarn, and Thread Mills 3,420 $34,075 6.74 8.15 20.9%
3346 Manufacturing and Reproducing Magnetic and Optical Media 2,296 $40,704 3.88 6.51 67.8%
3221 Pulp, Paper, and Paperboard Mills 8,754 $85,485 4.81 5.56 15.6%
3361 Motor Vehicle Manufacturing 10,404 $73,961 0.83 4.70 466.3%

7. Ohio (LQ: 1.41; 2001-11 Job Change: -34%)

Ohio has the third most manufacturing jobs of any state and has actually expanded slightly since 2010. The rest of the previous decade, however, was filled with heavy job loss. Household appliance manufacturing (4.12) is the most concentrated subsector in the state; it grew 3.1% from 2009 to 2011.

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3352 Household Appliance Manufacturing 9,435 $41,793 3.45 4.12 19.4%
3312 Steel Product Manufacturing from Purchased Steel 7,852 $56,654 4.31 3.69 -14.4%
3363 Motor Vehicle Parts Manufacturing 56,185 $58,032 3.27 3.39 3.7%
3335 Metalworking Machinery Manufacturing 19,972 $52,477 3.04 3.19 4.9%
3361 Motor Vehicle Manufacturing 19,153 $74,595 3.16 3.18 0.6%

8 (tie). Kansas (LQ: 1.35; 2001-11 Job Change: -17%)

In terms of overall jobs and concentration, no manufacturing industry means more to Kansas than aerospace product and parts manufacturing. But the industry’s presence has already started to wane (27% decrease in LQ since 2001), and the decline will escalate with Boeing’s departure from Wichita by 2013.

NAICS Code Name 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3364 Aerospace Product and Parts Manufacturing 32,443 $73,447 9.09 6.58 -27.6%
3111 Animal Food Manufacturing 3,065 $51,185 4.18 5.79 38.5%
3159 Apparel Accessories and Other Apparel Manufacturing 597 $45,359 0.22 4.39 1895.5%
3116 Animal Slaughtering and Processing 17,830 $38,746 3.54 3.59 1.4%
3342 Communications Equipment Manufacturing 3,768 $63,272 1.03 3.16 206.8%

8 (tie). Mississippi (LQ: 1.35; 2001-11 Job Change: -33%)

With a huge ship and boat building presence (13.60 LQ), Mississippi slips into the top 10 of our list. But its overall manufacturing concentration is declining (see large state table below) and the state lost 33% of its manufacturing jobs from 2001 to 2011.

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3366 Ship and Boat Building 14,444 $62,441 10.11 13.6 34.5%
3117 Seafood Product Preparation and Packaging 2,593 $22,329 10.59 8.37 -21.0%
3371 Household and Institutional Furniture and Kitchen Cabinet Manufacturing 15,611 $29,742 6.66 8.35 25.4%
3211 Sawmills and Wood Preservation 4,001 $36,627 6.06 5.71 -5.8%
3212 Veneer, Plywood, and Engineered Wood Product Manufacturing 2,227 $41,643 3.76 4.22 12.2%

10. Kentucky (LQ: 1.33; 2001-11 Job Change: -27%)

Aluminum production/processing and motor vehicle manufacturing are the top two concentrated manufacturing industries in Kentucky. In terms of jobs, auto parts manufacturing is easily the largest (24,000-plus jobs).

NAICS Code Industry 2011 Jobs 2011 Average Earnings 2001 LQ 2011 LQ LQ % Change
3313 Alumina and Aluminum Production and Processing 4,739 $62,568 3.91 6.07 55.2%
3361 Motor Vehicle Manufacturing 11,997 $77,590 5.32 5.54 4.1%
3122 Tobacco Manufacturing 1,115 $46,030 3.84 5.07 32.0%
3352 Household Appliance Manufacturing 4,105 $70,294 3.47 5.00 44.1%
3363 Motor Vehicle Parts Manufacturing 24,292 $44,799 3.07 4.08 32.9%

Other Notable States

We should mention that several other states rely on manufacturing to drive their economy – even if they don’t show up in our top 10. For example, Pennsylvania has a sizable advanced manufacturing presence, and Nebraska is also focusing on light and advanced manufacturing, particularly in producing plastic products.

Manufacturing numbers for each state and Washington, D.C. are included below. Three Southern states – South Carolina, Tennessee, and North Carolina – didn’t make the above list but sit between 11 and 15 on our list.

Notice that Alaska is the only state in which manufacturing grew in the last decade. Despite the 7% increase, Alaska still is in the bottom 10 in terms of concentration.

Ranking (by 2011 LQ) State 2011 Manufacturing Jobs 2001-11 % Job Change 2001 Job Concentration (LQ) 2011 Job Concentration (LQ) 2001-11 LQ % Change
Source: EMSI Covered Employment (2011.4)
1 Indiana 454,542 -26% 1.70 1.86 9.4%
2 Wisconsin 444,824 -21% 1.64 1.85 12.8%
3 Iowa 204,560 -15% 1.33 1.55 16.5%
4 Arkansas 157,813 -30% 1.58 1.51 -4.4%
5 Michigan 499,462 -39% 1.47 1.46 -0.7%
6 Alabama 238,711 -27% 1.38 1.45 5.1%
7 Ohio 631,252 -34% 1.40 1.41 0.7%
8 Kansas 161,122 -17% 1.14 1.35 18.4%
9 Mississippi 133,634 -33% 1.40 1.35 -3.6%
10 Kentucky 213,869 -27% 1.31 1.33 1.5%
11 South Carolina 214,569 -32% 1.37 1.32 -3.6%
12 Tennessee 299,974 -34% 1.37 1.30 -5.1%
13 Minnesota 297,278 -21% 1.15 1.28 11.3%
14 North Carolina 435,580 -38% 1.45 1.24 -14.5%
15 New Hampshire 66,707 -32% 1.27 1.23 -3.1%
16 Vermont 31,798 -30% 1.21 1.19 -1.7%
17 Connecticut 166,861 -26% 1.08 1.16 7.4%
18 Oregon 167,264 -22% 1.08 1.15 6.5%
19 Pennsylvania 571,520 -31% 1.18 1.15 -2.5%
20 Illinois 570,811 -30% 1.10 1.14 3.6%
21 Nebraska 94,233 -15% 0.98 1.13 15.3%
22 Utah 114,459 -6% 0.91 1.08 18.7%
23 Missouri 250,231 -27% 1.02 1.07 4.9%
24 South Dakota 38,239 -7% 0.87 1.06 21.8%
25 Georgia 348,258 -30% 1.02 1.02 0.0%
26 Washington 260,471 -16% 0.91 1.00 9.9%
27 Rhode Island 41,040 -39% 1.13 1.00 -11.5%
28 Idaho 54,184 -21% 0.94 0.98 4.3%
29 Maine 51,449 -31% 0.99 0.98 -1.0%
30 California 1,253,988 -30% 0.94 0.96 2.1%
31 Oklahoma 131,477 -23% 0.91 0.95 4.4%
32 Massachusetts 256,398 -34% 0.95 0.90 -5.3%
33 Texas 825,002 -20% 0.87 0.88 1.1%
34 Louisiana 141,356 -18% 0.72 0.84 16.7%
35 West Virginia 49,544 -31% 0.83 0.78 -6.0%
36 New Jersey 251,872 -37% 0.82 0.75 -8.5%
37 Delaware 26,267 -33% 0.75 0.72 -4.0%
38 Arizona 150,102 -26% 0.71 0.70 -1.4%
39 Virginia 231,793 -32% 0.76 0.70 -7.9%
40 North Dakota 23,378 -3% 0.58 0.67 15.5%
41 Colorado 126,837 -30% 0.65 0.63 -3.1%
42 New York 453,679 -35% 0.67 0.60 -10.4%
43 Maryland 113,766 -33% 0.54 0.51 -5.6%
44 Florida 307,020 -29% 0.48 0.48 0.0%
45 Alaska 13,303 7% 0.33 0.43 30.3%
46 Montana 16,114 -25% 0.43 0.42 -2.3%
47 New Mexico 28,826 -30% 0.43 0.40 -7.0%
48 Nevada 36,156 -17% 0.33 0.36 9.1%
49 Wyoming 8,846 -12% 0.33 0.35 6.1%
50 Hawaii 13,134 -20% 0.22 0.23 4.5%
51 District of Columbia 1,209 -65% 0.04 0.02 -50.0%

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