Manufacturing growth ‘moderately high-tech’

Manufacturing in the Chicago region is more likely to expand in moderately high-tech industries such as chemicals, machinery, electrical equipment and appliances rather than in very high-tech industries, according to a new report by the University of Illinois at Chicago.

The report, “Locating Chicago Manufacturing: The Geography of Production in Metropolitan Chicago” compares manufacturing in the 14-county tri-state region, from Kenosha County, Wis., to Jasper County, Ind., to national data. The report can be read at http://www.uic.edu/cuppa/data/cued_manufacturing_brief_022113.pdf.

The overall number of manufacturing jobs has grown faster in the Chicago region than nationally since 2010 despite job losses from 2000 through 2010, writes Howard Wial, executive director of UIC’s Center for Urban Economic Development and a Brookings Institution senior fellow.

Moderately high-tech industries are growing in the Chicago area, where they account for 1.21 times their percentage of jobs nationwide.  By comparison, very high-tech industries here are losing jobs and make up less than their national percentage, Wial said.

“There’s nothing wrong with moderately high-tech industries — Germany has developed a very productive and innovative manufacturing sector based on them,” he said.

“Policy efforts to promote manufacturing should focus on industries in which the area already specializes; on new industries that can be developed from them; on other industries that share a skill or technology base with them; and on promoting high-wage, high-skill production regardless of industry,” he said.

Wial defines a region’s specializations as those industries in which their share of local employment is larger than their share of jobs nationally. He notes that food manufacturing is one of the Chicago region’s largest industries, but it is not a specialization, because it is equally large across the country. The region’s single largest industry, fabricated metal products, is a specialization.

The Chicago region has only one very high-tech specialization: pharmaceuticals. All other very high-tech industries employ a smaller percentage of workers in the region than they do nationally.

Among other findings:

–During the last two years, the Chicago region gained manufacturing jobs more rapidly than the nation as a whole. The number of manufacturing jobs increased by 5 percent in the Chicago area and 4 percent across the U.S.

–In 2011, the Chicago region had about 411,000 manufacturing jobs, second only to Los Angeles.  Manufacturing’s percentage of all Chicago-region jobs rose from 1.08 times the national percentage in 2001 to 1.11 times that percentage in 2011.

–Although almost half of the region’s manufacturing jobs are in Cook County, growth has been faster in outlying areas. Wial suggests that greater density of manufacturing jobs makes manufacturers more productive.

–Manufacturing offers average wages about 16 percent higher than other industries in the region. “Locating Chicago Manufacturing: The Geography of Production in Metropolitan Chicago” is the first in a planned series of reports on regional manufacturing. The next report will focus on the impact of manufacturing jobs on overall job growth in the region. It will be published in March.