From the IES Blog: 4th Place or 3rd for NC Manufacturing?

(Cross-posted from the Industrial Extension Service blog. Originally entitled, “For NC Manufacturing, 4th Place May Be Better Than 3rd.” Emphasis in original.)

A few days ago I had the chance to look into some statistics about manufacturing in North Carolina, and I found that manufacturing is doing pretty well here. Yes, we’ve seen some downturn and some of our companies are struggling, but overall the state has been doing well and is poised to do even better.

(Yes, there is a community in North Carolina called “Whynot.” Image: Whynot ? by Donald Lee Pardue, on Flickr, under Creative Commons.)

Amid the statistics on manufacturing output, contribution to Gross Domestic Product, exports, and so forth, I found that North Carolina rates highly compared with other states. For example, NC is 4th in the nation in terms of total manufacturing output, with California, Texas, and Illinois making up the top 3 (though Illinois is not too far ahead of us).

On another measure, NC is 3rd in the nation, but whether that’s good or bad depends on your point of view. As reported in a 07/18/11 Charlotte Business Journal article, NC is 3rd in terms of our dependence on manufacturing; i.e., in the share of total state GDP generated by manufacturing. By this measure, Indiana is 1st in the nation and Oregon is 2nd; in contrast, both states are behind North Carolina in total manufacturing: Indiana is 6th and Oregon is 16th.

I submit that it’s better for North Carolina to be in 4th place nationally in total manufacturing than it is to be in 3rd place in dependence on it. After all, what does dependence on manufacturing mean for the overall economy?

What would it mean if dependence on manufacturing changes? If that statistic rises, and we grow more dependent on manufacturing, it may be because factory output has improved, or other sectors of the economy have suffered, or a little of both. Likewise, if that statistic falls, and NC becomes less dependent on manufacturing, it simply means that comparatively more economic output is coming from other sectors — which isn’t necessarily bad.

For now, at least, NC is the 3rd most manufacturing-dependent state. Whether that’s good or bad depends on whether manufacturing begins to falter, taking the rest of the economy with it, or whether manufacturing holds its own or improves and so buoys the rest of the economy. Are you an optimist or a pessimist? That kind of statistic works for both types of people, but ultimately it really doesn’t mean much.

Think about it this way: Oregon’s manufacturing output in 2010 was less than half of ours, yet their state is actually more dependent on manufacturing for total GDP than the Old North State. Based on that statistic, problems with manufacturing output are likely to have much worse general economic consequences for Oregonians than for North Carolinians.

So I say it’s far better for North Carolina to take pride in being the 4th most productive manufacturing state in the nation. Maybe we should set our sights on knocking off Illinois and taking 3rd place in that statistic.

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