Manufacturing across the 10 county capital region

Sources: JobsEQ, U.S. Bureau of Economic Analysis and Texas Comptroller of Public Accounts

.

Long-Term Regional Trends

Between 2001 and 2019, manufacturing employment in the Capital Region fell by about 18 percent or nearly 14,000 jobs.

Manufacturing’s share of total regional employment fell from 11.4 percent to 5.9 percent in this period (Exhibit 2).

.

Sources: JobsEQ and Texas Comptroller of Public Accounts

 

The region recovered some manufacturing jobs between 2009 and 2019, adding nearly 13,700 jobs for a 26.6 percent increase.

By comparison, Texas and U.S. manufacturing jobs rose by 8.0 percent and 8.2 percent, respectively (Exhibit 3).
.

 

Sources: JobsEQ and Texas Comptroller of Public Accounts

Between 2009 and 2019, the Capital Region added 455 manufacturing establishments, a 29 percent increase, compared to gains of 9 percent in Texas and 1 percent in the U.S. (Exhibit 4).
.

Sources: JobsEQ and Texas Comptroller of Public Accounts

The region’s manufacturing jobs paid average wages of $106,581 in 2019, far exceeding the Texas and U.S. averages.

Between 2009 and 2019, its average wages rose by 38 percent, versus 32 percent in Texas and 27 percent in the U.S. (Exhibit 5).
.

Sources: JobsEQ and Texas Comptroller of Public Account

 

The manufacturing sector’s GDP value for the Capital Region rose by an inflation-adjusted 62.6 percent between 2009 and 2019, for an average annual increase of 5 percent.

The sector’s average annual GDP changes in Texas and the U.S., by comparison, were 2.6 percent and 1.9 percent, respectively (Exhibit 6).
.

Sources: U.S Bureau of Economic Analysis and Texas Comptroller of Public Accounts

.
Pandemic Effects

All Texas industry sectors have been affected by the pandemic to some degree, and manufacturing is no exception. Monthly jobs data show that manufacturing jobs in the Austin-Round Rock-Georgetown metropolitan area fell by 900 (or -1.4 percent) in February 2021 compared to the previous year.

This fall is less than manufacturing job declines in Texas (-6.0 percent) and the U.S. (-4.1 percent) in this period (Exhibit 7).
.

.
Key Manufacturing Industries

The interactive exhibit (Exhibit 8) reveals regional manufacturing industry strengths and weaknesses through the use of two common analytical tools that compare regional manufacturing employment trends to national averages. These tools serve as an educational resource to assess industry strengths and inform development prospects.

First, the location quotient (LQ) measures state and regional industry concentration levels by comparing an industry’s share of total regional employment to its share of total national employment. If the regional industry share exceeds the national share (an LQ greater than 1.00), the industry is more “concentrated” in the region than nationally.

A score above 1.00 may indicate that the regional industry is strong and self-sufficient and that it exports its products or services outside of the region. Regional industries with below-average employment concentrations (LQs of less than 1.00) often import goods or services from other areas.   

A second tool, shift-share analysis (SSA), measures regional industry job changes and assesses the role of local competitiveness on industry job gains or losses. The SSA uses national employment and industry trends to produce expected employment changes for a regional industry.

If a regional industry’s actual employment changes exceed expected changes (a positive local competitiveness effect), the region may have a productive advantage in the industry.

Between 2009 and 2019, SSA shows that manufacturing employment in the Capital Region exceeded expected changes by more than 12,000 jobs.

The Capital Region’s manufacturing industries plotted in the exhibit fall into one of four quadrants based on 2019 LQ values and SSA values between 2009 and 2019:

• Strong and growing: Industry has above-average concentration levels (2019 LQ value > 1.00) and industry job changes exceeded expected changes between 2009 and 2019 (positive competitiveness effect);
• Strong but declining: Industry has above-average concentration levels (2019 LQ value > 1.00) and industry job changes fell below expected changes between 2009 and 2019 (negative competitiveness effect);
• Weak but growing: Industry has below-average concentration levels (2019 LQ value < 1.00) and industry job changes exceeded expected changes between 2009 and 2019  (positive competitiveness effect); and
• Weak and declining: Industry has below-average concentration levels (2019 LQ value < 1.00) and industry job changes fell below expected changes between 2009 and 2019 (negative competitiveness effect).

While manufacturing isn’t highly concentrated in the Capital Region (2019 LQ = 0.68), it has competitive factors that allowed manufacturing employment to flourish; regional manufacturing jobs exceeded expected changes by more than 12,000 jobs between 2009 and 2019.

The region’s computer and electronic products industry is its most heavily concentrated manufacturing industry, with an LQ value of 3.5. (In other words, the industry’s share of Capital Region employment is 3.5 times as high as the industry’s nationwide share.)

The industry was also one of the region’s most competitive, as employment exceeded expected gains by more than 5,400 jobs.

The computer industry is highly important to the region and the state — its 28,026 jobs in 2019 accounted for 43 percent of the Capital Region’s total manufacturing employment and 66 percent of its total manufacturing wages. The region also is home to 30 percent of the industry’s total Texas employment.  

The levels of employment concentration for many of the region’s manufacturing industries remain below national averages, yet several show high levels of competitiveness, including medical equipment and food and beverage manufacturing. Such developments could identify emerging industries and prospects for further growth.    

A note of caution: A positive competitive effect indicates that some economic advantages exist in a region, such as access to natural resources or access to a more productive labor pool, management or technologies. A positive competitive effect indicates some economic advantages exist but cannot identify the source of that advantage.
.

 

Summary

Manufacturing employment in the Capital Region rose by nearly 27 percent between 2009 and 2019, greatly outpacing state and national growth.

In the Austin-Round Rock-Georgetown MSA, manufacturing fell during the COVID-19 restrictions of 2020, but the drop was less than declines in Texas overall and in the U.S.

Regional manufacturing is led by computer and semiconductor manufacturing, an industry that invests heavily in design activities and research and development. Such activity boosts jobs in other industries, particularly related service providers.

Regional employment in the computer systems design and related services industry, for example, rose by 26,154 jobs between 2009 and 2019, a 184 percent increase.