Midland and Odessa in West Texas. Pascagoula, a port town on the Mississippi Gulf Coast. Fargo and Bismarck, the two largest cities in North Dakota. These were among the USA’s 10 fastest-growing metro economies in 2013, as ranked by growth in real gross metropolitan product (GMP), and they have a few things in common.
For one thing, none are huge population magnets. They’re also either at the center of the energy boom or indirectly benefiting from the advances in fracking technology. And they share another common trait, too: along with Columbus, Ind., also in the top 10, most of these metro areas depend on one major, export-oriented industry sector to bring in outside income and drive growth.
In Columbus’ case, it’s manufacturing. In Odessa and Midland’s, it’s oil and gas extraction. Fargo and Bismarck have diversified economies, but they’ve a seen surge in economic activity because of North Dakota’s oil and gas boom. And in Pascagoula, it’s shipbuilding (and shipments of liquefied natural gas through the Port of Pascagoula).
USA TODAY had a good rundown from 24/7 Wall St. of the top 10 (and bottom 10) economies, which were based on a Conference of Mayors report released in January. The authors of the piece touched on the reliance most of these metros have on one industry, and the ups and downs that can come with that. In the case of Columbus, they pointed to EMSI’s recent analysis:
The area is highly dependent on manufacturing, and according to a 2012 report from Economic Modeling Specialists Intl., it highly “exemplifies the intriguing potential, and inherent risks, that come with relying on the manufacturing sector.” Engine and motor vehicle parts makers are a huge part of the area’s economy, where manufacturing jobs accounted for nearly 20,000 of the 53,000 total jobs as of November.
Columbus, Ind., which was No. 9 on the fastest-growing economy list, is home to engine-maker Cummins. The central Indiana metro has a remarkable concentration of manufacturing jobs — more than a third of jobs in Columbus are manufacturing-based, and it has the highest share of mechanical engineers in the U.S. (just ahead of Peoria and Bloomington-Normal, Ill.). In recent years, employment growth in Columbus has sizzled, while Cummins continues to prosper.
When a regional economy relies on a single basic industry like manufacturing or energy for much of its employment and exports, it can mean lots of prosperity — and a big jump in gross metro product, as USA TODAY’s list indicates. But it’s also a risky proposition. For every spike in manufacturing production, there are pullbacks and plant shutdowns. Energy booms don’t (usually) last for decades.
“If you’re a small metro area depending on a vulnerable export sector, once that industry goes, you’re in big trouble,” Alec Friedhoff of the Brookings Institution told 24/7 Wall St.
For metros like Midland and Odessa, the natural multiplier effects that come with energy booms will lead to more jobs in business services, retail, and especially transportation. Public-sector infrastructure jobs also usually follow. But the end goal is to spur innovation and sustainable job creation elsewhere in the economy.
With that in mind, which of these 10 fastest-growing metros based on GMP growth is the most diversified already? The following table shows the largest contributor to gross regional product (as shown EMSI’s Analyst), as well as the sector with the largest share of jobs in each metro. The table is ranked by how the 10 metros fared in 2010-2013 job growth.
|Fastest-Growing MSAs (Based on 2013 GMP Growth)||2013 Jobs||2010-2013 % Job Growth||Largest Sector||Largest Contributor to 2012 GRP (Private)|
|Source: QCEW Employees, Non-QCEW Employees & Self-Employed - EMSI 2013.4 Class of Worker; EMSI Social Accounting Matrix model (2012)|
|Midland, TX||92,857||23%||Mining/Oil & Gas Extraction (22% of jobs)||Mining/Oil & Gas Extraction (55% of total)|
|Odessa, TX||80,360||23%||Mining/Oil & Gas Extraction (15% of jobs)||Mining/Oil & Gas Extraction (28% of total)|
|Columbus, IN||52,014||18%||Manufacturing (36% of jobs)||Manufacturing (50% of total)|
|Bismarck, ND||75,090||10%||Government (19% of jobs)||Health Care (13% of total)|
|Fargo, ND-MN||143,563||9%||Health Care (13% of jobs)||Manufacturing, Wholesale Trade, Finance/Insurance, and Health Care (each 10% of total)|
|Sioux Falls, SD||153,358||6%||Health Care (17% of jobs)||Finance/Insurance (18% of total)|
|Cheyenne, WY||53,917||6%||Government (32% of jobs)||Manufacturing and Real Estate (each 10% of total)|
|Trenton-Ewing, NJ||253,751||4%||Government (27% of jobs)||Professional, Scientific, and Technical Services (13% of total)|
|St. Joseph, MO-KS||60,643||2%||Manufacturing (17% of jobs)||Manufacturing (25% of total)|
|Pascagoula, MS||60,214||-3%||Manufacturing (22% of jobs)||Manufacturing (46% of total)|
Manufacturing in Columbus makes up the highest percentage of jobs (36%), and mining and oil and gas extraction in Midland is the most dominant GRP force (55% of the total in 2012). Fargo and Bismarck, despite getting lumped in with other North Dakota oil hubs, are fairly spread out in both employment and contributors to GRP. And Pascagoula, where manufacturing accounted for 46% of GRP in 2012, is the only one of the fastest-growing metros to see an employment decline (-3% since 2010).
Sioux Falls, however, stands out in terms of industry mix and GRP — finance and health care are strong industries, and the metro has seen seen steady job growth.
Employment has increased 17% since 2003, and the gains have been broad-based. Nine major sectors, including health care, retail trade, finance, government, and professional, scientific, and technical services, have added at least 1,000 jobs in the last decade.
That’s a diversified economy, all right. But most of the other less-diversified economies on this list are doing just fine, too.