By Jim Robson, Senior Economist
As 2021 begins, Utah’s manufacturing industry has reached new, higher levels of employment, wages and output among a diverse and steady number of activities. In Utah, we currently have about 144,000 manufacturing payroll jobs out of a total of 1,600,000 nonfarm jobs. In other words, one in every 11 jobs is in manufacturing. Wages paid by manufacturers in the first quarter of 2021 were $2.2 billion or 10.3% of payroll wages in the state.
Last year, 2,600 manufacturing worksites employed five or more workers, 270 worksites employed 100 or more workers and 16 worksites employed 1,000 or more workers. The value of the total output of all manufacturers was estimated to be $20.2 billion or 10.4% of all nonfarm production in Utah.
For the purposes of this blog, the thousands of Utah manufacturers have been divided into 13 groups.
- Food and Beverage – meat and dairy processing and products, bakeries, fruit and vegetable preserving and products, confectionery products, beverages and other food manufacturing.
- Textile and Apparel – textile and fabric mills and finishing. Also apparel, accessories and footwear manufacturing.
- Wood/Paper/Furniture – sawmills, wood products, paper and paperboard products, and furniture.
- Fuels/Chemicals/Plastics – oil refineries, asphalt, basic chemicals, plastics and their derivative products (resins, rubber, artificial fibers, paint, coatings, soaps, compounds, and associated products).
- Pharmaceuticals and Medicinal – products
- Nonmetallic minerals – cement, concrete, clay, stone, glass, lime, gypsum and other nonmetallic mineral products.
- Metals – primary metal: mills, smelting, refining, foundries, rolling, drawing, extruding, and alloying. Fabricated metal products: architectural and structural, machine shops, boilers, tanks, containers, tubing, wires, coating, engraving and heat treating and other fabricated metal products.
- Machinery – agricultural, construction, mining, commercial, metalworking and other machinery.
- Computer and Electronic – electronic instruments, semiconductors, electronic components, communications equipment, computers and peripherals and other electrical equipment.
- Transportation equipment – primarily parts for motor vehicles, aircraft and space vehicles.
- Surgical and Medical – equipment and supplies used in medicine and dentistry.
- Sporting and Misc. – sporting and athletic goods and other miscellaneous manufacturing.
The data presented covers the years 2000 to 2020 and the first three months of 2021, with Figure 1 showing the monthly manufacturing employment. Across this period, there were two recessions and a pandemic which in turn negatively affected the manufacturing industry.
Click here to enlarge the visual in a new window.
The “Dot Com” recession began in March 2001 and officially ended in November 2001. The Dot Com recession’s negative effects lingered in 2002 and 2003 and was known as the “jobless” recovery. This was particularly true in manufacturing, which had its lowest job counts in 2003. After 2003, a recovery ensued and picked up steam through 2007. Unfortunately, a housing bubble developed during this period and set up the serious economic problems that followed.
The “Great Recession” began in December of 2007 as the housing bubble was unraveling and the U.S. and world financial systems developed severe and even existential problems on the verge of collapse from late summer to early fall of 2008. Central banks and legislative bodies around the world averted the collapse. The Great Recession hit its U.S. production low point in the U.S. during June 2009. From there, the next recovery had begun. Once again, negative job impacts continued after the recovery started with Utah manufacturing employment reaching its low points during 2010.
The longest sustained economic recovery in U.S. history proceeded from June 2009 through February 2020. Utah manufacturing employment grew each year from 2010 through 2019. Average annual employment reached a high of 136,923 in 2019.
The COVID-19 Pandemic
The 2020 pandemic was a relatively sudden and severe blow to the health and welfare of the United States and people all around the world. Usually, recessions are caused by imbalances in the economy that become unsustainable. Economic activity declines as corrective action is necessary, often exacerbated by some sudden economic shock to the system. For the pandemic, this was not the case. As a defense against a spreading and dangerous pathogen, significant types of economic activity were abruptly and sharply curtailed. Learning to deal with the spreading coronavirus was very disruptive and difficult while trying to keep essential and other comparatively safe activities functioning.
Many industries were almost completely disrupted such as indoor dining, tourism and hospitality and air travel. Other industries fared much better. Such was the case for manufacturing.
From Figure 1 we see that in the first months of 2020, manufacturing employment was almost 137,000. With pandemic closings beginning at the end of March, April recorded a drop of about 4,000 jobs. The actual number of people not working during April would be considerably more because they were temporarily sent home. The manufacturing jobs count for May was 131,580, about 5,400 below 137,000. Again actual workers would likely be much lower. In June, the recorded job counts began to increase each month. By September 2020, the manufacturing employment count had returned to 137,051 and in October there were 138,271 jobs surpassing the previous high of 138,127 of December 2019.
Clearly during these trying times, particularly from March 2020 to October 2020, Utah manufacturers went through difficult adjustments of social distancing, masks and other protective measures to continue essential and other production activities at high levels. From October 2020 to March 2021 manufacturing jobs recorded new highs reaching 143,122.
It should be acknowledged that since the start of the pandemic some manufacturers have experienced large increases in demand such as medical supplies and equipment, pharmaceuticals, paper and plastic products.
Selected Years: 2000 - 2020
Following are two figures that illustrate the employment changes that have occurred for the 13 industry groups over the past 21 years. There are seven selected years used in Figures 2 and 3.
The years 2003 and 2010 correspond to the low points in annual average manufacturing jobs after the Dot Com and Great recessions respectively. The year 2000 is the high point before the Dot Com recession and 2007 is the high point before the Great Recession. The year 2015 is about midway through the post-Great Recession’s 10-year expansion with the end year being 2019. Of course, 2020 is the pandemic year.
Figure 2 and 3 can be used to follow the changing fortunes of the industry groups over the two recessionary periods and subsequent expansionary years. Overall manufacturing jobs totaled 125,903 in 2000 and grew by 10,543 or 8.4% to reach 136,446 in 2020. From the employment low of 111,075 in 2010 jobs increased by 22.8% or 25,372 to reach the 2020 level.
If you compare the pandemic year 2020 average employment to 2019 it is somewhat of a mixed bag. Some sectors had to meet new demand and grow – food, paper, plastics and pharmaceuticals; others had reasonably stable employment – metals, computers, electronics and medical supplies; and still other sectors faced some struggles with a reduced number of jobs – transportation equipment, machinery, nonmetallic minerals and miscellaneous manufacturers.
Figure 4 (below) gives a summary of the 13 industry groups from the year 2000 compared to 2020. This comparison permits contemplating some of the structural changes that have occurred among the industry groups over the past 20 years. While distinct industry sectors have different rates of growth or decline, all manufacturing activities provide important products, jobs, and income for the people of Utah; they also are economic drivers and wealth creators when their products are exported outside of Utah.
In addition to the four expanding industry groups (Food and Beverage, Surgical and Medical, Fuels/Chemicals/Plastics, and Pharmaceuticals); there are three other large industries of particular note with high employment: metals, computer and electronic and transportation equipment. All seven of these industry groups are capital intensive, subject to productivity increases and produce products that are either exported and/or provide important inputs to the functioning of the Utah economy.
The Geography of Manufacturing
Let’s now take a look at the differential impact of manufacturing employment and its geographic placement around the state among metropolitan and rural counties. Figure 5 provides the latest data from the first quarter (January through March) 2021 of total manufacturing employment and wages paid by county. The counties in Figure 5 are sorted by the data in the first column; the percent of total nonfarm payroll jobs that are in the manufacturing industry.
The top three counties – Box Elder, Juab, and Cache have relatively high concentrations of manufacturing employment – 28.8%, 22.9%, and 21.1 % respectively. Note that the statewide average for the proportion of jobs that are in manufacturing is 9%. Of all 29 counties, 21 have a smaller proportion of jobs in manufacturing than the state average.
When looking at the second column, manufacturing payroll wages as a percent of total nonfarm wages, the proportion of wages paid to workers in manufacturing is generally higher than the proportion of manufacturing jobs. This is because jobs in manufacturing are usually full-time employment with relatively high hourly wages. In Box Elder County an outsized 38.4% of wages come from manufacturing activities compared to the statewide average of 10.3%. For wages, of the 29 counties, 20 have a smaller proportion of manufacturing wages than the state average.
The information contained in Figure 5 illustrates that there are unequal impacts and economic activity distributions within manufacturing among counties large and small, urban and rural. Of course, each county’s economy has different characteristics and industry compositions that provide insights into an area’s economic performance.
Utah has one of the nation’s best performing and expanding economies coming out of the pandemic. The state has generally positive indicators of job growth, comparatively low unemployment, with wage and income growth. The state’s healthy, diverse and stable manufacturers of all types are a big part of Utah’s resilience under the arduous conditions of the past 17 months. Overall, manufacturing has been a bulwark to the continued well-being and prosperity of Utah.