State of manufacturing 4 – Ohio trends

Federal Reserve Bank of Cleveland

Employment Loss in Ohio’s Manufacturing Industry

Kyle Fee of the Federal Reserve Bank of Cleveland did some nice analysis earlier this year (March 2009) in an article entitled, “Employment Loss in Ohio’s Manufacturing Industry” .  Three things struck me: (1) over the last 20 years, Ohio has continued to be a prime US manufacturing state (even with the decline), (2) since the onset of the recession, job losses in Ohio have been much higher because of it, and (3) Ohio’s leading role in the automotive industry (#2 in US in number of vehicles, #1 automotive suppliers). 

The following chart shows how manufacturing declined about 5% (in terms of the number of employees) in both the US and in Ohio, but now Ohio has 50% more concentration in manufacturing instead of 1/3 more.  This means that even though both had the same absolute drop, Ohio stayed more of a manufacturing state than before (relative to the rest of the country) is a key reason for job loss. 

Ohio - Manufacturing as a Percent of Total Employment
(Source: Cleveland Federal Reserve)

Industry Employment Growth Since December 2007

The following table, also from Lee’s article, focuses on the relationship between Ohio and the US in terms of employment concentration (percentages) in various industries at the time when the last recession started (Dec. 2007) and then looks at the job losses over the next year and a half (percentage of all job losses.

There are three things that I observe (and I am sure there are others).  1. Ohio’s largest concentration (by far) is transportation (17.4%), whereas the US is significantly less (12.3%).  The job losses were also proportionately large (22% versus 16%).  2. Machinery, fabricated metals, primary metals, printing, etc. all were not particularly noteworthy.  3. Food is remarkable in this respect (and I can’t explain this, looking for any thoughts).  The US had a higher percentage of concentration (10%  v. 7%), but the job losses were much higher in Ohio (1% in US v. 8% in OH).  Food, one would think, would be very stable (which it was in the US).  This was not the case in Ohio.

Industry Employment Growth Since December 2007  
  Ohio, percent of total mfg (2007) Nation, percent of total mfg (2007) Ohio, employment growth since December 2007 (percent) Nation, employment growth since December 2007 (percent)
Nonmetallic mineral products 4 3.6 −12.2 −13.1
Primary metals 6.5 3.3 −11.4 −13.1
Fabricated metal products 15.3 11.3 −11.2 −10.5
Machinery 10.7 8.6 −9.3 −7.7
Computer + electronic products 2.9 9.2 0.1 −4.7
Electrical equipment, appliances + components 4.1 3.1 −8.2 −5.9
Transportation 17.4 12.3 −21.6 −15.8
Furniture + related products 2.7 3.8 −17.5 −18.6
Food 7 10.7 −7.9 −1.3
Printing + related support activities 4 4.5 −7.4 −10.1
Chemical 6 6.2 −4.3 −3.0
Plastic + rubber products 8.3 5.5 −15.5 −10.7
Miscellaneous 11.1 18 −22.9 −10.4
Source: Bureau of Labor Statistics.    

The Doctor is In: The Ohio Economy

I thought this blog post from the Columbus Chamber was good and relates to the topic very well.  It points out that Ohio as a state was one of the hardest hit before the recession and then other states have joined us since with some doing worse.  It also emphasizes that productivity has had a huge role in the decline of manufacturing jobs (not manufacturing necessarily) and that Ohio had a much larger proportion of manufacturing.  It therefore makes sense that Ohio would get harder hit.  Lastly, we will have potentially have stable or slightly increasing manufacturing employment.

The Doctor is In: The Ohio Economy

While the Ohio economy has lost jobs at a higher rate than the U.S. as a whole, there are other states doing worse.  When the recession began in December 2007, Ohio was one of only four states with fewer jobs than in February 2001 – just before the beginning of the last recession.  In other words, our state was one of the few that never fully recovered from that downturn before this one hit.  However, there are now 23 states with fewer jobs than eight years ago.  Since December 2007, Ohio employment has fallen 4.8 percent, versus the 3.7 percent national loss.  But there are now eight states that have done worse.  Michigan is still on that list, with a job loss of 7.1 percent.  But at the very bottom of the list is Arizona, which has lost 7.7 percent of its pre-recession employment base.  Many of the other states are also not typically on a list like that: North and South Carolina, Oregon, Florida, Nevada.  That fact gives a clue to what is going on: the highest fliers during the boom are those suffering the most now.

But will Ohio sink to the bottom again once the economy recovers?  Possibly not.  Ohio employment growth started seriously lagging the national average only toward the end of the 1990s.  The primary reason for this was an extraordinary decline in manufacturing employment, which was a national phenomenon.  Ohio suffered more than average from this decline not so much because our losses have been proportionally greater than average (although they have been), but more because we had so much manufacturing employment to lose.  This employment decline was accompanied by a strong increase in manufacturing output, both nationally and in Ohio.  The net result has been that the typical manufacturing worker can produce one-third more output now than in 2001 – a staggering increase in productivity.  Thus, U.S. and Ohio manufacturing are much stronger than what the employment trends would suggest.  Also, because producers will be hard-pressed to coax this kind of productivity gain out of their plants during the coming recovery, we may have stable or even slightly growing manufacturing employment – thus, stronger employment growth for Ohio during the next decade than during the last one.  The real challenge is likely to be attracting people to the technical and skilled trades that manufacturing employers will need.

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