The Manufacturing Industry in New England: The State of the States
by Gus N. Luparelli, Ph.D., Business/Economics Department, Worcester State College
New England has continually sprouted a variety of manufacturing factories, from large iron works and shipyards to small family-owned job shops. During the 1980’s, New England had a higher level of defense spending, per capita, than other US regions. The level of defense spending did a very good job of masking the decline of non-defense related manufacturing during this period of time. The late 1980’s and early 1990’s ushered in a period of declining defense-related spending and the resulting loss of high quality manufacturing jobs was felt in the six state area. The loss of quality manufacturing facilities and jobs, in turn, adversely affected the supply chain and supply chain network, resulting in company closings and a loss of jobs. The long-term health of the manufacturing industry in the New England area is in question as many local plants have closed, laid-off workers, and moved operations overseas.
The Shift in Growth
Faced with aging plants, equipment, and high labor costs, New England has been unable to keep up with the costs of technology, make capital investments, and compete with cheaper overseas production costs. However, they have begun the slow metamorphosis from heavy and light manufacturing to the trade and service industries. Even with regional layoffs, the shift in growth areas within the manufacturing industry has included telecommunications, plastics, medical equipment, and biotechnology (Developments in New England, Fall, 2000).
There are pockets of employment buoyed up by the defense industry, even though the government has been going offshore to secure lower costs. Many global corporations with production facilities in New England are maintaining some production capacity. Small regional niche players have also found a way to survive and prosper in a global economy. The self-employed, the number of entrepreneurs, and cottage industries in New England have also grown steadily over the last several years because of the uncertainty of an individual’s continued corporate employment. However, this group has not been counted, or included, in any formal government manufacturing database (Developments in New England, November 2003).
Federal Policies
The New England manufacturing industry has, in the past, turned to
the state and federal government to "do something about losing
manufacturing jobs." However, government policies, trade agreements,
and tax incentives may have done more to weaken the manufacturing
industry than investing in it. Future government policies may
not assist in keeping manufacturing industries and jobs from going overseas
because of the nature of globalization. However, by taking advantage
of a skilled and educated labor base and lowering its cost structure,
New England regional manufacturers may be able to compete effectively
in a global economy. Given the nature of large, U. S. multi-national
and globally integrated manufacturing firms, there is little evidence
to suggest that Congress will adopt an inclusive program to address
manufacturing job losses (Business Facilities, The Location Advisor,
March, 2004).
Regional Summary: Massachusetts
Manufacturing in Massachusetts accounts for a much smaller share of jobs than the nation at-large. Jobs in the manufacturing industry have been decreasing at an alarming rate over the last few decades. Massachusetts also derives a smaller share of its GSP from manufacturing than does the nation. However, the productivity of the Massachusetts worker, measured by a value added per production hour worked, exceeds the national average by 20%. This is a most remarkable statistic. Much of the high worker productivity comes from the concentrations of computer, high-tech, and electronics production located in the Route 495 and Route 95/128 corridors. The largest manufacturing industries in the state are (1) computer, electronics, communications equipment, (2) chemical, pharmaceuticals, (3) medical equipment, supplies, and the new growth industry (4) biotechnology. Manufacturing’s share of the state’s GSP fell from 1986 to 2002. Manufacturing’s share of the GSP declined from 17.5% to 15.1% over the same period while the nationwide share of GSP increased from 16.5% to 17.1%. Massachusetts R&D for 1999 was 3.5% of GSP. Nationally, R&D investment was 1.9% of GSP (Manufacturing Extension Partnership Program, 2004).
Regional Summary: Maine
The manufacturing industry accounts for a smaller share of employment in Maine than the national average. There has been a steep loss of manufacturing jobs over the last 10 years and the state receives a smaller share of the GSP from manufacturing than the national average. The largest manufacturing industries are (1) paper, accounting for over one-fourth of Maine’s value added from manufacturing, (2) electronic products, (3) transportation/ship and boat building. Maine also specializes in leather (footwear), paper, wood products, textile and textile mill products including carpets, curtains, canvas bags, rope, and tire cord. Maine’s labor productivity for manufacturing, as measured by the value added per production hour worked, is much less than the national average by approximately 10%, according to the latest data. R&D performed by industry was approximately 0.4% of the state’s GSP. Nationally, that figure amounted to 1.9% (Maine Manufacturing Extension Program, 2004).
Regional Summary: Rhode Island
Manufacturing accounts for a larger share of employment in Rhode Island than the national average. Rhode Island, like the state of Maine, has also suffered a steep decrease in manufacturing jobs over the last 10 years. It derives a smaller share of the gross state product (GSP) from manufacturing than does the national average. Rhode Island has a lower level of labor productivity for manufacturing. However, the method of computing the level of productivity per worker may be the reason for the low manufacturing numbers. Rhode Island takes into account the rental value of owner occupied housing and treats it as economic output from the real estate industry. This boosts the numbers for the real estate, insurance, and banking industries, shrinking the size of other industries. The most prominent manufacturing industries in the state, as measured by output, are, (1) electrical equipment, appliances, and component manufacturing, (2) miscellaneous manufacturing category, jewelry, (3) computer and electronics product manufacturing, navigational, measuring, medical, and control manufacturing. The state specializes in (1) electrical equipment, (2) textile mills, (3) miscellaneous manufacturing category, and (4) textile production mills. Rhode Island’s labor productivity for manufacturing trails the national average by approximately 25%. However, productivity in the electrical equipment, appliance, and component manufacturing was twice the national level . R&D within the state, for 1999, was approximated 3.9% of GSP while the national average was 1.9% (Rhode Island Manufacturing Extension Partnership Program, 2004).
Regional Summary: New Hampshire
Manufacturing in New Hampshire accounts for a larger share of employment than the nation-at-large. Manufacturing jobs in New Hampshire have grown over the last decade as the national manufacturing employment declined. The state also derives a larger share of its GSP from manufacturing than the national average. Manufacturing output for New Hampshire has grown more than 165% from 1986 to 2000. The most prominent manufacturing industries have been (1) computer and electronic products, semiconductors, and electronic components, (2) fabricated metal, (3) machinery/industrial machinery. Computer and electronic products account for almost one-third of New Hampshire’s value added from manufacturing. Labor productivity, as measured by the value added per production hour worked, trails the national average by over 15%. The state specializes in (1) leather/allied products, (2) electrical equipment, appliance, and component manufacturing, (3) computer and electronic products. The R&D performed in the state was estimated at 2.5% in 1999 while the national average was approximately 1.9% (Manufacturing Extension Partnership Program for New Hampshire).
Regional Summary: Vermont
Manufacturing accounts for a large share of total employment than the nation because of the growth in manufacturing jobs over the past 10 years. Vermont derives a larger share of GSP from manufacturing than the nation . Manufacturing output has more than doubled from 1986 to 2000 by 113%. Labor productivity for manufacturing exceeds the national average by 2.3%. Vermont has a concentration of the value added computer and electronics product industry. The largest manufacturing industries in the state are food, dairy product manufacturing, and machinery. In terms of value added, computer and electronic component production is the largest manufacturing industry group in the state. Recent data is difficult to come by for Vermont because of concerns that the release of information could disclose company-specific information. R&D performed in the state was estimated at 1.9% for 1999, the same as the national R&D data collected for that year. Vermont state colleges, collectively, have recently introduced educational programs that assist the manufacturing industry to survive, continue to grow and prosper (Vermont Department of Economic Development, 2004).
Regional Summary: Connecticut
Manufacturing accounts for a much larger share of total employment in Connecticut than in the nation even though there has been a sharp decline in manufacturing jobs in the state over the last decade. Connecticut’s labor productivity for manufacturing, as measured by the value added per production hour worked, exceeds the national average by more than 10%. That productivity level is assisted by the presence of the state’s high value-added aerospace industry. Connecticut derives a smaller share of its GSP from manufacturing than does the nation. However, the GSP share may be high due to the way the figure is computed. Like the state of Rhode Island, the rental value of owner occupied housing is treated as economic output from the real estate industry. This boosts the size of the financial, real estate, and insurance industries. The largest manufacturing industries in the state are (1) transportation equipment/aerospace, (2) fabricated metals, machine shops, forging, and stamping operations, (3) chemicals, pharmaceuticals. The state specializes in (1) medical equipment and supplies, (2) fabricated metal, (3) transportation equipment, (4) electrical equipment, appliances, and component manufacturing. In 1999, R&D was estimated at 2.6% of GSP, higher than the 1.9% of GSP national estimate (Connecticut Manufacturing Extension Partnership Program, 2004).
There is an opportunity for manufacturing companies to collaborate with area colleges and universities in regards to internships and building awareness about the manufacturing industry as a future career opportunity. Contact your local college or university and aid in building the future of manufacturing.
Gus Luparelli can be reached at [email protected].
Gus N. Luparelli, Ph.D.
Worcester State College
Business/Economics Department
486 Chandler Street
Worcester, MA 01602
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