Author: Neil Harrington
In North Carolina, it’s hard to overstate the importance of the Manufacturing Industry. The proliferation of early manufacturers like textile and tobacco mills in the late 19th and early 20th centuries were largely responsible for transitioning the state from a primarily agrarian-based economy to an industrial one. As these new industries expanded and others located here throughout the 20th century, manufacturing helped to increase economic prosperity in the state and provide good-paying jobs for working people. Today, the Industry still has an outsized role in our economy, employing hundreds of thousands of people across both urban and rural areas of the state and contributing billions to economic output each year.
This blog explores the contemporary importance of North Carolina’s Manufacturing Industry, with comparisons to the industry’s performance on key economic indicators at the national level. It is the first in a series of LEAD Feed articles exploring the Industry and discussing strategic frameworks to help it continue to remain globally competitive in a rapidly changing economic environment.
Manufacturing provides hundreds of thousands of good paying jobs
In 2022, the state’s Manufacturing Industry employed 472,000 people or 10 percent of all employment, making it the third largest sector by total employment. Since 1990, Manufacturing has not ranked outside of the top three sectors with the most jobs in North Carolina and held the top spot for nearly 20 years between 1990 and 2007. Manufacturing’s 10 percent share of employment in 2022 was higher than the industry’s 8.5 percent share at the national level, meaning the state’s industry has a slightly outsized role in our labor market relative to its role at the national level.
And it’s not just urban or rural areas posting strong Manufacturing employment numbers; manufacturers are important pieces in every regional economy in North Carolina. Manufacturing is in the top five industries with the most jobs in 70 of North Carolina’s 100 counties, and, as Figure 2 shows, these counties span the entirety of the state. More than half of North Carolina counties have Manufacturing in the top three employment sectors, while industry employs the most people in 37 counties.
North Carolina manufacturers don’t just employ a lot of North Carolinians, they pay good wages. Manufacturing’s $67,912 average annual wage in 2022 was higher than the $63,180 average across all industries, and manufacturers were responsible for about 11 percent of all wages paid in 2022, roughly comparable to the industry’s share of total wages nationally. For many working people in the state, Manufacturing has provided a pathway to the middle class without requiring a four-year college degree for most jobs.
Manufacturing isn’t just big business
When most folks think of manufacturing, they probably think of industry giants who employ thousands of people at single factories. These businesses of course have a part in North Carolina’s industry and tend to create the splashiest economic development deal headlines. But it’s important to remember that plenty of small establishments—those employing fewer than 100 people—also play a big role. In fact, firms with fewer than 100 employees made up about 90 percent of all manufacturing establishments in 2022. However, they hold smaller but still meaningful shares of total manufacturing employment and wages: about 31 percent and 27 percent, respectively. Ensuring these businesses are productive and globally competitive is especially important for North Carolina, our Manufacturing Industry, and our workforce.
Manufacturing’s economic output tops almost all industries, with productivity higher than all but four
North Carolina’s Manufacturing also contributes a considerable amount to the state’s overall economic output. Only one sector— Professional and Business Services —held a larger share of North Carolina’s real total gross domestic product (GDP) in 2022, but the difference in the two industries’ shares was less than half a percentage point (or about $1.5 billion in economic output). Manufacturing’s 15.4 percent of GDP in North Carolina was higher than the 11.4 percent the sector contributed at the national level, continuing to make the case for the importance of the sector here in our state. Without Manufacturing, North Carolina would have produced about $86 billion less in goods and services in 2022.
Additionally, North Carolina’s Manufacturing Industry is highly productive. In 2021, real GDP per worker in the Manufacturing industry was about $182,300—more than double the productivity of workers across all industries in North Carolina. Manufacturing ranks fifth out of all 2-digit NAICS industries in this productivity measure, trailing only the Utilities, Information, Real Estate and Rental and Leasing, and Professional, Scientific, and Technical Services sectors.
As Figure 5 shows, North Carolina Manufacturing workers are also more productive than their counterparts at the national level. However, compared to all other states, North Carolina ranks 12th in Manufacturing GDP per worker, suggesting there might still be room to improve the industry’s productivity.
Next in the series: Changes in NC Manufacturing through the years
The importance of Manufacturing to North Carolina’s economy warrants consideration of how state policy can ensure the industry maintains its ability to provide good paying jobs for North Carolinians. The next blog in this series will explore how our economy and manufacturing are engaged in the fourth industrial revolution—one driven by technology and automation—and how that movement will reshape Manufacturing. Subsequent articles will discuss the opportunities and threats the industry faces and policy strategies to address them.