Chicago ahead of nation in recent manufacturing surge
Manufacturing growth in Chicago outpaced the national rate from 2010 to the third quarter of 2012, leading to the revival of the city’s previously depressed manufacturing industry, according to a Feb. 25 report by the University of Illinois at Chicago Center for Urban Economic Development.
During the last two years, the number of manufacturing jobs in Chicago increased by 5 percent, while the national increase trailed at just 4 percent, according to the report. The study used the most recent set of Moody’s Analytics data from 2011 to examine manufacturing employment numbers in the region and the city
Howard Wial, author of the study, said Chicago has the right tools to promote growth in the manufacturing industry. Having an experienced workforce and a large employment base contributes to the city’s production, he said.
“One thing Chicago has going for it is infrastructure,” Wial said. “We are the rail crossroads of the U.S., and we have great highway and air connections all over the country and the world, as well.”
Wial attributed the increase in jobs to a shift in companies doing production in America as opposed to manufacturing overseas to make a larger profit. After a few years abroad, companies have started to feel the hidden costs of offshoring, he said.
“[There are] not only the extra transportation costs, but the extra coordination costs of maintaining production far away in a different country and maintaining engineering and management here in the U.S.,” Wial said. “Increasingly, companies have come to see that offshoring is not a free lunch and those hidden costs are very real.”
The report found the Chicago metropolitan area had about 411,000 manufacturing jobs in 2011, second to metropolitan Los Angeles. Despite the recent surge, Wial said Chicago is still about 185,000 jobs short of where it was during its manufacturing peak a decade ago
“Even though Chicago manufacturing has grown faster than national manufacturing in the past couple years, that growth has just been a drop in the bucket to all the job losses that the region and the nation suffered in manufacturing over the course of the previous decade,” Wial said.
The Chicago Metropolitan Agency for Planning also released a 122-page report in February addressing Chicago’s manufacturing industry. This study differs in that it focuses on what it terms “clusters,” or a circle of interrelated industries. The CMAP study concluded that metropolitan Chicago’s manufacturing industry generates more than $65 billion annually and accounts for 85 percent of all private research and development in the Chicago area.
Garett Ballard-Rosa, a CMAP policy analyst who worked on the study, said the Chicago region has added 15,000–20,000 manufacturing jobs in the past two years.
“This added employment is an encouraging sign,” Ballard-Rosa said. “On the other side of that encouragement is where the stakeholders are coming to the table, and this is at every level. The president talked about manufacturing in the State of the Union address, the governor talked about it. Here in the region, private industry is partnering with workforce development.”
Gardner Carrick, vice president of Strategic Initiatives at the Manufacturing Institute, said the U.S. has added approximately 500,000 manufacturing jobs in the past three years, marking the first time in 20 years the industry has seen year-over-year increases.
“The U.S. would like to be in the position where anything that is on the leading edge of manufacturing is being done in the states,” Carrick said. “Ensuring that happens means continuing to have a workforce that can work with advanced machines and high technology and having access to that through greater partnerships with universities through focused research and development.”
The average annual salary of a metropolitan Chicago manufacturing employee was $67,168 in 2011, close to 16 percent more than average annual earnings for all jobs in the region, according to the report. Wial said the report is the first in a series of manufacturing studies the Center for Urban Economic Development hopes to publish in the next couple of years.
“I hope we will be saying that the last couple years marked a turnaround for manufacturing jobs in the Chicago area,” Wial said. “Whether that will come about will depend in part on the success of these local policy efforts that we mentioned in the report but also on the existence and success of supportive national level policies.”