2005 Rankings Report
The State Where Manufacturing Grows
Only 11 states in the U.S. actually grew their number of manufacturing establishments between 1998 and 2002.
Everyone knows that since the U.S. economy began stagnating around the turn of the millennium, manufacturing jobs have been harder to come by in the U.S. Factories have shuttered and consolidated. Some factories shut for good as production was cut; others moved out of the country.
In this ranking we look at the few states (11, to be exact) that actually managed to increase their number of manufacturing establishments in recent years. The source of the data is the Statistics of U.S. Businesses (SUSB) program, whose data is culled from public sources in cooperation with the Office of Advocacy of the U.S. Small Business Administration (SBA). We measured from the year 1998 (the first year for which the newer NAICS code data is available) to 2002 (the latest year for which data is available). We counted establishments only from companies with 100 or more employees to make sure we were measuring companies for which leaving the country was a feasible economic solution. It’s saying something just to be one of these 11 states—but of course, in the interest of science, we’ve ranked them for you.
To create the ranking, we looked at how many net new establishments were created over the 1998-2002 period, weighed equally with the percentage increase this same period. Note that even the state with the greatest increase in manufacturing establishments—Nevada—only gained 33 of them during this period. (Compare that to California, which lost 575.) Nevada also had the greatest percentage gain, 14.6%. (The biggest losses came in the District of Columbia, losing a whopping 44.4% of its establishments, and New Jersey, which lost 14.8%.)
Nevada, Arizona, and Colorado all did well here—attesting to the power of the Southwest to draw immigrants from other states and beyond. Whether the manufacturing plants or the people arrived first will be hard to decipher; likely, it was a self-sustaining cycle. Delaware, presumably due to its strengths in pharmaceuticals and finance (we sustained ourselves during the recession with drugs and credit cards, after all), came out very well. Notably absent is the South, which was pummeled with losses in the textile industry among other things—West Virginia and Maryland are the only possible exceptions, depending on where you choose to draw the regional boundary line.
Wyoming seems at first glance to be something of a puzzle—as the least populous state, it doesn’t have a great deal of manufacturing establishments in the first place, but it managed to gain nine net new ones of over 100 employees from 1998-2002. That’s a healthy 13.85% increase. The likely reason is that its capital, Cheyenne, is very close to Colorado and the corridor extending up from Denver; a company can enjoy the advantages of being in Wyoming while drawing labor from the rapidly growing state next door. Wyoming also tends to be counter-cyclical with its reliance on the natural resource and energy industries; increased natural gas and low-sulfur coal demand may have bolstered their manufacturing position lately.
It’s worth noting that the Western states have probably benefitted to some degree in this ranking from their efforts to pry disgruntled companies out of California. The effects of the famous rolling blackouts that left California companies without electricity in June 2000 and January 2001 would be partially captured in the data used for this ranking. States, particularly Nevada, have been aggressive and even bold (Nevada posted billboards in Los Angeles) in getting their message out—a message that basically says in California, power is unreliable, wages are high, and workers’ comp insurance is out of control.
New Mexico, ranked fifth, actively touts its competitive workers’ comp costs, and specifically notes on its main economic development Web site that these costs are less than half of California’s and “significantly lower” than those in Texas as well. Both of those states represent large targets for smaller states seeking businesses that feel the economic squeeze.
New Mexico also offers tax-exempt industrial revenue bonds for the construction, or acquisition and renovation of manufacturing facilities up to $10 million in total project cost.
Nebraska’s success could be a result of its position in Middle America—in this part of the country, Omaha, Lincoln, and the short corridor in between don’t have much competition. The small number of manufacturing establishments brought to life in Middle America may have been choosing Nebraska disproportionately.
The real, and most interesting test comes when we see manufacturing establishments start to rise across the board (and for most of these states, it couldn’t come soon enough). Watch these 11 states to see which ones have the capacity to add jobs and factories in good times as well as bad.
