20 Questions that Underscore the State of U.S. Manufacturing

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The manufacturing sector in the U.S. is in a strong position as it heads toward the close of 2016.

It has been one of the lone bright spots in a lengthy economic recovery, creating more economic value and supporting more new jobs than any other sector. And it attracts significant investment from overseas.

To highlight the current state of the sector, the National Association of Manufacturers (NAM) assembled data from a variety of sources. The following list of economic questions is adapted from the NAM’s Top 20 Facts About Manufacturing.

  1. How much does manufacturing contribute to our economy?

Quite a lot. According to the most recent data available, manufacturers contributed $2.17 trillion to the U.S. economy in 2015, up from $1.70 trillion in the second quarter of 2009, the end of the Great Recession. During that same time, value-added output from durable goods manufacturing grew from $0.87 trillion to $1.18 trillion; nondurable goods increased from $0.85 trillion to $0.99 trillion. In 2015, manufacturing accounted for 12.1% of U.S. gross domestic product (GDP). (Bureau of Economic Analysis.)

  1. How much does the sector add to the American economy?

For every $1 spent in manufacturing, $1.81 is added to the economy. That’s the greatest multiplier effect of any economic sector. In addition, for every worker in manufacturing, another four are hired elsewhere. (NAM calculations using economic impact modeling.)

  1. How large are most manufacturing companies?

Actually, they’re quite small. In the most recent data, there were 251,857 firms in the manufacturing sector in 2013, with all but 3,702 firms considered to have fewer than 500 employees. Three-quarters of those firms had fewer than 20 employees. (U.S. Census Bureau, Statistics of U.S. Businesses.)

  1. What’s the business structure of most manufacturers?

Nearly two-thirds (65.6%) of manufacturers are organized as either S corporations or partnerships. When self-employed manufacturers are added to the mix, the percentage rises to 83.4%. (Internal Revenue Service, Statistics of Income.)

  1. How many workers are employed in manufacturing?

Currently, there are 12.3 million manufacturing workers in the United States, accounting for 9% of the workforce. There are 7.7 million workers in durable goods manufacturing and 4.6 million workers in nondurable goods manufacturing. (Bureau of Labor Statistics.)

  1. How much do those workers earn?

In 2014, the average manufacturing worker earned $79,553 a year, including pay and benefits. In wages alone, they earned nearly $26 an hour. The average worker in all industries earned $64,204. (Bureau of Economic Analysis, Bureau of Labor Statistics.)

  1. Do most manufacturers provide health benefits?

Yes, 92% of manufacturing employees were eligible for health insurance benefits in 2015. This is significantly higher than the 79% average for all U.S. companies. Of those who are eligible, 84% participate in their employer’s plan (the take-up rate). There are only two other sectors with higher take-up rates: government (91%) and trade, communications and utilities (85%). (Kaiser Family Foundation.)

  1. How has manufacturing growth compared with other business sectors over the past few decades?

Manufacturers have experienced enormous growth, becoming more “lean” in the process and more competitive globally. Worker output per hour has increased more than 2.5 times since 1987. In contrast, productivity is roughly 1.7 times greater for all non-farm employers.

Durable goods manufacturers have seen even greater growth, almost tripling labor productivity over the same time frame. This growth has pushed down unit labor costs 8.4% since the end of the Great Recession, with even larger declines for durable goods makers. (Bureau of Labor Statistics.)

  1. What is the expected demand for manufacturing workers in the next decade?

It’s likely that almost 3.5 million manufacturing jobs will be needed. In fact, 2 million jobs likely won’t be filled due to a skills gap. According to a recent report, 80% of manufacturers see a moderate or serious shortage of qualified applicants for skilled and highly skilled production positions. (Manufacturing Institute.)

  1. How do exports affect manufacturing jobs?

Favorably. Jobs supported by exports pay, on average, 18% more than other jobs. Furthermore, employees in the most trade-intensive industries earn an average pay of nearly $94,000 — more than 56% higher than in firms less engaged in trade. (MAPI Foundation, using data from the Bureau of Economic Analysis.)

  1. How fast have U.S. exports grown?

They’ve quadrupled over the past 25 years. In 1990 exports totaled $329.5 billion in goods. That number doubled by 2000 to $708 billion and hit a record $1.403 trillion in 2014, despite slowing global growth.

That was the fifth record in a row. Since then, however, economic problems have damped demand, and exports are down 6.1% in 2015 to $1.317 trillion. (U.S. Commerce Department.)

  1. Where are U.S. goods shipped?

Since 1990, exports have grown substantially to the country’s largest trading partners, including Canada, Mexico and China. Also, free trade agreements (FTAs) have become an important factor in opening markets. The United States showed a $12.7 billion manufacturing trade surplus with its FTA partners in 2015. (U.S. Commerce Department.)

  1. How much in manufactured goods is exported to countries that have FTAs with the United States?

Almost half. In 2015, U.S. manufacturers exported $634.6 billion in goods to FTA countries – 48.2% of the total. (U.S. Commerce Department.)

  1. How much has global trade of manufactured goods expanded since 2000?

It more than doubled between 2000 and 2014 — from $4.8 trillion to $12.2 trillion. World trade in manufactured goods greatly exceeds that of the U.S. market for those goods. Domestic consumption of manufactured goods (domestic shipments and imports) equaled $4.1 trillion in 2014, about 34% of total global trade. (World Trade Organization.)

  1. How strong is the manufacturing economy in the United States?

Taken alone, U.S. manufacturing in the United States would be the ninth-largest economy in the world. With $2.1 trillion in value added from manufacturing in 2014, only seven other nations rank higher in terms of GDP. (Bureau of Economic Analysis, International Monetary Fund.)

  1. What about investments from foreign sources?

In 2014, foreign direct investment (FDI) in manufacturing exceeded $1 trillion for the first time. Between 2005 and 2014, FDI has more than doubled from $499.9 billion to $1.05 billion. That figure is expected to continue to grow, particularly as several announced ventures come online. (Bureau of Economic Analysis.)

  1. How many U.S. workers are employed by foreign manufacturers?

Affiliates of foreign multi-national enterprises employ more than 2 million workers in the United States — almost one-sixth of total manufacturing employment. In 2012, the most recent year with data, sectors with the largest employment from foreign multi-nationals included:

  • Motor vehicles and parts (322,600),
  • Chemicals (319,700),
  • Machinery (222,200),
  • Food (216,200),
  • Primary and fabricated metal products (176,800),
  • Computer and electronic products (154,300), and
  • Plastics and rubber products (151,200).

(Bureau of Economic Analysis.)

  1. What effect has manufacturing on innovation?

U.S. manufacturers drive innovation more than any other sector, performing more than three-quarters of all private-sector research and development (R&D) in the nation. R&D in manufacturing has increased from $126.2 billion in 2000 to $229.9 billion in 2014. In the most recent data, pharmaceuticals accounted for nearly one-third of all manufacturing R&D. That amounted to spending of $74.9 billion. Aerospace, chemicals, computers, electronics and motor vehicles and parts were also significant contributors. (Bureau of Economic Analysis.)

  1. How does manufacturing affect energy consumption?

Manufacturers consume more than 30% of the nation’s energy. Industrial users consumed 31.5 quadrillion BTU of energy in 2014, 32% of the total. (U.S. Energy Information Administration, Annual Energy Outlook 2015.)

  1. How has regulation affected manufacturing?

This has become a critical issue. The cost of federal regulations falls disproportionately on manufacturers, especially smaller firms. On average, manufacturers pay $19,564 per employee to comply with federal regulations, nearly double the $9,991 per employee cost for all firms. Small manufacturers with fewer than 50 employees spend 2.5 times the amount of large manufacturers. Environmental regulations account for 90% of the difference in compliance costs between manufacturers and the average firm. (Crain and Crain 2014.)