While never reported widely in the media, manufacturing in Massachusetts has consistently been the second largest contributor to the wealth of our state during one of its highest periods of growth.
Rank of Top Three Industries Contribution to GDP in Massachusetts
Over the last 7 years, manufacturing actually produced a larger share of Gross State Product than it did in 1997, rising from 10.9 % to 13.3 %
Of course this was before the financial crisis that started last year with sub-prime lending and subsequent home foreclosures. These brought down the investment banking industry and gave us the current meltdown in the stock market.
In dealing with the aftermath, as the government does its part to work out this crisis, it is hoped that there will be some recognition that manufacturing needs to be part of the solution. While there is widespread anger and criticism of the financial sector, there needs to be widespread realization that the base of our troubled economy is our trade deficit. Continued belief that we can spend more than we make is the same type of self-delusion that created the current financial collapse.
On the positive side, manufacturing in Massachusetts has a long history of surviving – surviving recessions, changes in technologies, changes in markets and customers, etc. – while continuing to supply a disproportionate share of the state’s economic impact.
4 out of the 5 Gold Economic Impact awards went to manufacturers
9 out of the 15 total Economic Impact awards went to manufacturers
2 out of the 3 Companies to Watch awards went to manufacturers
All of this reinforces manufacturing’s economic leadership; we invest in our enterprises, which, in turn, produce an outsized contribution to the economy. Manufacturing’s sizeable economic impact is better illustrated in a study provided by the Massachusetts MEP that estimates the total economic contribution from firms whose employment, sales, or investment activity changed as a direct result of the assistance provided by the MassMEP.
MassMEP clients are surveyed by an independent, third-party organization. After surveying 503 companies who worked on projects with the MassMEP, they found that these firms:
Created or retained 5,094 jobs that otherwise would not have existed
Increased and retained $ 511.1 million dollars in sales
Spent $129.6 million dollars on new investments
Experienced $104.6 million dollars in cost savings
Effects of manufacturing’s increased economic activity extend beyond the surveyed client firms. Increased sales in the manufacturing companies require that they increase their purchases for intermediate goods and services from companies located in Massachusetts and elsewhere to support their increased output. The supplying companies, in turn, generate additional demands of their own. In this way, dollar expenditures for final demand can be traced to all affected industries in the regional economy.
In addition, income from new jobs generated by the MEP clients and the supplying firms result in increased demand for consumer goods. Each of these effects, in turn, generates subsequent ripples throughout the Massachusetts economy. The sum of these direct, indirect, and induced effects suggests that the small and medium size manufacturing companies that increased or retained jobs or sales and / or increased investments with the assistance from the MassMEP are responsible for contributing or retaining $960.7 million to the Gross State Product.
Now that is impact – which will be critically needed in this New Economy. Anyone interested in making an impact to their own bottom line can do so by calling Glen Gertridge at the MassMEP (781) 376-0028.
