UT Report: Consistent Decline in State Manufacturing

NASHVILLE — While the number of jobs in manufacturing is expected to grow slightly in the coming year, manufacturing is becoming an ever-smaller slice of the state’s economic pie, according to a report released today by the University of Tennessee’s Center for Business and Economic Research at the 2005 Manufacturing Summit presented by the Tennessee Chamber of Commerce.

“The state’s manufacturing sector has experienced setbacks every year going back to 1998,” according to UT economist Matt Murray, associate director of CBER and project coordinator. “The report shows the pattern taking place in Tennessee is similar to the pattern for the nation and for other states in the southeast. Tennessee’s experience is certainly not unique.”

Although the report projects a 0.3 percent growth in manufacturing jobs in 2006, it notes an overall downward trend in the manufacturing sector for more than a decade. In 1990, more than 22 percent of all nonfarm jobs in Tennessee were in the manufacturing sector.

By 2004, manufacturing jobs accounted for only 15.2 percent of all nonfarm jobs. CBER estimates that manufacturing jobs will fall to 13.5 percent of all nonfarm jobs by 2014.

Several factors have contributed to the decline in manufacturing jobs, most importantly intense global competition.

“Even the loss of jobs arising from the use of computers and other new technologies can be linked in part to competitive pressures from abroad,” said Murray.

Nevertheless, the report notes, manufacturing in Tennessee remains an important part of the state’s economy:

— Manufacturing contributes almost one of every six dollars of Tennessee’s Gross State Product, a measure of the value of goods and services produced in the state.

— Tennessee’s manufacturing jobs paid an average wage of $41,144 in 2005, ranking behind only the salaries in the financial activities and information services sectors. In addition, manufacturing jobs commonly come with fringe benefits, such as health insurance.

— Manufacturing firms pay significant taxes to state and local governments in Tennessee.

“Despite the downward trend, opportunities remain in the manufacturing sector,” Murray said. “Some manufacturers continue to expand and new companies are locating in Tennessee on a regular basis.”

Even so, he notes that businesses, workers and state and local government will have to work harder in the years ahead to attract and retain manufacturing firms.

The report was funded by UT’s Institute for Public Service which serves business, industry and city and county governments in Tennessee.

Contact: Matt Murray (865-974-6084)
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