Team NEO report shows evolving scope of manufacturing
Rachel Abbey McCafferty
Manufacturing productivity in Northeast Ohio is expected to continue to rise in the next nine years, but employment in the sector is projected to stagnate, according to a new report from Team NEO.
The economic development organization highlighted manufacturing in its most recent quarterly economic review, making the case that while the industry isn’t the force it once was, it’s still a significant part of the region’s economy.
In 1970, manufacturing made up about 58% of the employment in the region’s traded industries, or the industries producing goods and services, some of which may be exported. In 2015, the manufacturing sector made up about 26%. Team NEO likes to see this type of diversification, said vice president of strategy and research Jacob Duritsky.
“It makes us more resilient to things like recessions,” he said.
The industry makeup has changed in that time, too.
In 1970, the top three sectors by percentage of employment were motor vehicle parts, iron/steel mills/ferroalloy and foundries. In 2015, the motor vehicle parts sector was still in the top three, joined by plastics products and machine shops.
Manufacturing is one of Team NEO’s targeted industries, Duritsky said. It’s about retention, but also about leveraging the base to attract suppliers and emerging industries.
The report highlighted manufacturing segments expected to see high growth from 2015 to 2025. The standouts for expected growth are all relatively high-tech: semiconductors and other electronic components and navigational/measuring/electromedical/control instruments are two expected to see growth above 80%.
The computer and peripheral equipment sector is expected to grow by 104% in that time, but the total growth to the region may not be huge. It’s expected to grow from a $40 million industry to an $85 million one, Duritsky said. North Canton-based Diebold Inc. is the company driving the main growth in this sector in the region, he said.
Overall, the report found employment in manufacturing has been relatively flat since 2009, following a drop that started around 2000. And that trend is expected to continue through 2025. But productivity for manufacturing has been rising slowly but overall steadily since 1990 and sharply since about 2009. The industry’s productivity is expected to continue to increase significantly through 2025.
“We are doing a lot more with less people,” Duritsky said.
Ethan Karp, CEO and president of Magnet, the manufacturing advocacy and growth network, said that the loss of low-tech jobs in manufacturing and that the migration into higher-tech jobs is a positive for the economy.
Team NEO’s report cited data from the Quarterly Census of Employment and Wages that showed employment in the region overall had improved year to year in 2015. In the fourth quarter of 2015, the region averaged a total employment of about 1.9 million, an increase of almost 15,000 jobs from the same time in 2014. The service sector saw a year-over-year increase of about 12,000 jobs in that time, while manufacturing lost about 1,700, the report stated.
Duritsky said this was the first drop for manufacturing in quite a while, as the industry had been growing pretty steadily year-over-year since 2009. Construction was flat.
Article reprinted with permission, Copyright 2016, Crain’s Cleveland Business, Some rights reserved.
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