Spring 2008 Issue
Special Report - Manufacturing 2008
Northwest Industrial Index
Posted: September 15, 2008
How, Why
If job counts were a be-all, end-all economic indicator, we should all be starving by now because of the drop in US farm jobs. Instead, we suffer from a national obesity epidemic.
Yet in spite of their limitations, job counts dominate public perceptions of US manufacturing because of all the media attention paid to employment reports published by state and federal agencies documenting the “drop in US factory jobs.” Each report is presented as if it is “news,” when it is usually anything but. US manufacturing employment has dropped in nearly each of the 29 years that have passed since the sector reached its historic job peak in 1979. As a percentage of the US job base, manufacturing has dropped nearly every year since 1950.
The Northwest Industrial Index produces a far different view of manufacturing because it captures business revenues as well as jobs, and because it has the capacity to track manufacturing at a high level of detail. Most other reports or surveys treat “manufacturing” as a singular entity, resulting in mountains of data that obscure the actual peaks and valleys that make up the manufacturing landscape.
Manufacturing takes in activities ranging from the production of apple juice to gasoline and the Northwest Industrial Index captures that diversity through its capacity to examine all 473 subsets of manufacturing that are defined by the federal governments of the US, Canada and Mexico.
Revenue figures are drawn from gross business revenues that must be reported to the Washington State Department of Revenue for tax purposes by all companies for their operations within the state. Job counts come from the state. Federal export data is included when it seems relevant. Statistical research is augmented by interviews with actual businesses to learn if the statistical trends ring true.
The Index is put together for Seattle Industry by the Manufacturing Industrial Council of Seattle, a group that represents traditional industrial companies. Results are updated regularly and distributed in various forms to elected officials in local, regional, state, and federal government.
“Smart regions build on their economic strengths, and it is hard to do that if you don’t have a good understanding of what your strengths really are,” said Dave Gering, MIC’s Executive Director. “More glamorous sectors usually make the headlines but basic industries still create the wealth and the career opportunities that make this region such a great place to live. Our goal is to help people remember the businesses that still bring home the bacon.”
Hotter the Wireless?
No, the metal trades cluster wasn’t hotter than wireless communications in the first half of the decade – but the metal benders didn’t miss by much. Washington State companies providing wireless communications reported 105% revenue growth – to $3.5 billion – from 2002 through 2006, while metal trades revenue grew 105% to $12.9 billion.
But the metal trades did grow faster than companies providing computer services. Firms that program, design, and maintain computer networks had 65% revenue growth to $6 billion and job growth of 8% to 24,739. The metal trades not only beat the computer geeks for revenue growth, but jobs in machine manufacturing and metal fabricating grew faster, too, rising 15% to 32,000. Jobs in metal production remain far below their peak from the late 1990s, but grew by 9% during the survey period, 4,855 to 5,318.
By volume, the metal trades also grew to generate far more sales in 2006 than these other, much more visible business sectors:
• All real estate companies, $8.9 billion.
• All telecommunications firms, $8.8 billion.
• All insurance companies, $6.3 billion.
• All private sector legal services, $4 billion.
