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Regional Matters

September 13, 2016

Made in the Fifth District: A Snapshot of Manufacturing

In 2015, manufacturers in the Fifth District employed over a million people and added nearly $200 billion of value to the economy. The manufacturing industry in North Carolina accounted for the largest share of both employment (42.6 percent) and output (49.0 percent) in the District. South Carolina and Virginia ranked second and third, respectively, in terms of share of employment, but Virginia manufacturing contributed more to GDP than South Carolina. Maryland, West Virginia, and the District of Columbia rounded out the District manufacturing sector, in that order of size, according to both measures.

So, in which sectors of manufacturing are workers in the Fifth District employed?


Employment

The chart below shows that the largest share of employment came from the food, beverage, and tobacco products, which accounted for 13.3 percent of total manufacturing employment in the District. North Carolina and Virginia contributed the most to employment in this industry, which was largely attributable to meat processing activity in those states.

The second-largest sector in the District was transportation equipment, which was fairly equally spread across Virginia, South Carolina, and North Carolina. The contributing subsectors, however, varied by state. In North and South Carolina, motor vehicle and parts manufacturing was the primary contributor, followed by aerospace products. In Virginia, it was ship and boat building that was the largest subsector by far, accounting for 64.9 percent of transportation equipment employment in the state.

Chemical products was the third-largest manufacturing sector in 2015, with North and South Carolina accounting for the largest shares. The pharmaceutical and medicine subsector was the primary contributor to chemical manufacturing in North Carolina while resin, rubber, and artificial fibers led in South Carolina. In West Virginia, the chemical products industry accounted for the largest share of total manufacturing employment in the state.

Although computer and electronic products manufacturing ranked seventh of all manufacturing industries in District employment, the sector was the primary manufacturing employer in Maryland. Within that sector, electronic instrument products manufacturing was the largest contributor to employment.

Are the industries with the highest levels of employment also the ones that add the most value to the economy?


Gross Domestic Product

While data on GDP by state are available for 2015 at the industry level, lower levels of detail are lagged by a year. Using data from 2014, the graph below shows that the top three sectors by employment share were also the top three in terms of output; however, the ordering was slightly different.

Chemical products manufacturing was the primary manufacturing contributor to total output in the Fifth District, accounting for 22.8 percent of GDP in 2014. Production out of North Carolina accounted for the majority of total District output in this sector. Additionally, chemical products manufacturing was the largest output category in every state except South Carolina and Virginia — South Carolina's largest category was transportation equipment, and Virginia's was food, beverage, and tobacco.

In the District on whole, food, beverage, and tobacco products ranked second, with the largest shares of output coming from North Carolina and Virginia. In addition to meat processing, both states also have sizeable beverage and tobacco manufacturing industries. In South Carolina, employment in this sector accounted for 13.8 percent; however, it was only 6.0 percent of output.

Transportation equipment manufacturing, the second-largest sector by employment, ranked third in output but contributed about half as much to GDP as food, beverage, and tobacco products. Computer and electronic products, on the other hand, accounted for a larger share of output than employment. The remaining industries had comparable sizes of output as they did for employment.


Summary

The manufacturing sector in the Fifth District is a large employer and contributes notably to output, but the range of products can vary considerably among jurisdictions. Virginia, for example, has a high concentration of activity focused around ship and boat building, primarily in the Hampton Roads area of the state. North Carolina, on the other hand, has sizeable employment and output coming from meat processing and chemical and medical manufacturing. And, although they are much smaller in terms of both employment and output, North Carolina has comparatively high concentrations of textile mills and furniture manufacturing activity. On the whole, the Fifth District's largest two sectors of manufacturing are chemical and food, beverage, and tobacco products.


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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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