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Which states have the strongest manufacturing environments?

8/1/2019

Which states have the strongest manufacturing environments?

The manufacturing industry has made a big comeback nationwide over the past decade and much of its strength is expected to continue growing in the years ahead. However, not all states are getting the same kind of benefit from the sector's regrowth, as some have seen their regional manufacturing environments take massive steps forward.

In 2019, eight states across the country saw the sector in stronger territory on an annual basis - in terms of situations like related logistics, human capital, worker benefit costs, taxation, innovation and more, according to the latest Manufacturing Scorecard from the Center for Business and Economic Research at Ball State University. Meanwhile only five took a step back in this regard. The remaining 37 states saw their sectors hold steady.

In all, 15 states had their manufacturing sectors rated an A or B, with five in the former category and 10 in the latter, while only four states received F ratings, the report said. That meant the plurality of states were ranked squarely in the middle with C averages across the eight categories considered.

A closer look
Right now, the U.S. has one of the strongest manufacturing environments in the world for a number of the industry's subsectors, such as aerospace. New research from PricewaterhouseCoopers, found that the U.S. ranked in the global top eight for six of the seven aspects of aerospace manufacturing in the world, with only tax policy (37th) falling outside that realm. Nonetheless, that wasn't enough to keep the U.S. out of the top spot, well ahead of second- and third-place Canada and Singapore.

Perhaps not surprisingly, given the number of industry heavy hitters located there, Washington ranked at the top of the list for individual states' aerospace manufacturing environments, just ahead of Georgia, California, Michigan and Illinois.

A deeper understanding
What may be interesting to understand here is that the vast majority of manufacturers nationwide - nearly 99% - are considered small businesses, and in fact, more than 3 in 4 companies in the industry have 20 employees or fewer, according to Dean Swanson, a certified SCORE mentor, writing for the Rochester Post Bulletin. Indeed, about 355,500 manufacturers nationwide are one-person operations, meaning they have no employees at all. Nearly 188,000 have between one and 20 employees.

The heft of the industry, then, comes in its numbers, because the roughly 607,000 companies in the sector nationwide employ about 12.75 million people, an average of just 21 people each, the report said. Moreover, those companies typically have more job openings than they can reasonably fill because of the long-extant and seemingly ever-growing skills gap for the industry. In reality, employment numbers for the whole sector could be much higher and is often what's holding back more robust growth in many of the lower-scoring states from the Ball State study.

When manufacturers are trying to boost their hiring efforts, perhaps the best way to do so is by raising wages and increasing benefits and perks extended to employees. This helps not only attract talent, but also retain it in a hyper-competitive field.

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