On their own, the freight and manufacturing industries are vital to metropolitan Chicago’s economy and standing as a global commerce center. Taken together, the two interwoven and specialized industries are Chicago’s built-in advantage and a big reason why it is “poised to translate recent manufacturing momentum into regional economic growth,” the Chicago Metropolitan Agency for Planning asserts in a new paper.
Starting in mid-2012, CMAP — a regional planning organization for seven northeastern Illinois counties and an EMSI client — published research on the freight and manufacturing industries with individual drill-down reports. In August, it released a complementary report, The Freight-Manufacturing Nexus: Metropolitan Chicago’s Built-in Advantage.
The authors of the new report show how Chicago’s strongly concentrated cluster of freight industries support regional manufacturing competitiveness. How so? CMAP explains the freight-manufacturing nexus this way:
CMAP’s nexus describes how a concentration in freight supports substantial regional manufacturing productivity by examining those industries directly enabling and contributing to the region’s industrial value-add. On the freight side this includes carriers that bring in raw materials and intermediate inputs, enable intraregional supply chains, and provide access for final goods through local consumption and exporting. It also includes logistic services provided to freight carriers and manufacturers, an increasingly indispensable element in an era of global supply chains and just-in-time production.
With this concentration of freight carriers and logistics firms, regional manufacturers can better develop supply chains, realize cost savings and efficiencies, optimize distribution and inventory, and exploit comparative advantage. In short, the regional concentration and co-location of freight and manufacturing provides rooted economic benefits.
The economic benefits of having concentrated and interdependent freight and manufacturing clusters can be exhibited in a number of ways: “The region’s freight system provides choice, impacts time, enhances market accessibility, improves logistics, and ultimately reduces costs, allowing regional manufacturers to focus on and better exploit their own comparative advantage to improve economic performance.”
CMAP used EMSI’s employment data and location quotient analysis to show how the core industries of the freight-manufacturing nexus — manufacturing firms, freight carriers, and logistics providers — are regionally important. These core industries were responsible for more than 20% of metro Chicago’s new jobs from 2010 to 2012, and they have grown at more than double the rate of the rest of the Chicago economy (7 percent to 2.8 percent).
They have also grown faster in metro Chicago than at the national level (indicated by the positive change in location quotient), which means the employment growth in these industries “reflects the region’s existing advantages.”
In each report, CMAP clearly articulates economic concepts and displays EMSI data in compelling graphs and charts. For example, in the manufacturing and freight drill-down reports, CMAP used EMSI’s input-output model to help explain manufacturing and freight’s ripple effect in creating jobs outside the clusters. CMAP found that more than a quarter of metro Chicago’s jobs are in industries directly tied to freight, while manufacturing has the largest job multiplier of any industry: each new manufacturing job supports at least two additional jobs in the region.
But specialized industries like rail equipment manufacturing (see chart below) have an even bigger impact in metro Chicago. As CMAP writes, “One-hundred more jobs in this industry would support an additional 407 in the region, of which 124 positions would fall within the manufacturing cluster (depicted in red, blue, gray, and gold), with the other 283 outside the cluster (depicted in green).”
For the full list of CMAP freight and manufacturing reports, see http://www.cmap.illinois.gov/policy/drill-downs.
For more examples of how regional planners and workforce and economic development practitioners use EMSI data, peruse EMSI’s case study page. And for more on EMSI data, see this page or contact Josh Wright (email@example.com). Follow EMSI on Twitter @DesktopEcon.