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Kyle Fee |

Economic Analyst

Kyle Fee

Kyle Fee is an economic analyst in the Research Department of the Federal Reserve Bank of Cleveland. His research interests include economic development, regional economics and economic geography.

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03.30.09

Economic Trends

Employment Loss in Ohio's Manufacturing Industry

Kyle Fee

Ohio is often thought of as a state with a relatively large share of economic activity coming from the manufacturing sector, especially heavy manufacturing. Even after the sharp declines in the iron and steel industries in the 1980s, Ohio still had 21.7 percent of its workforce in the manufacturing sector in 1990. This was 34 percent more than the U.S. manufacturing employment share.

However, over the last several decades, Ohio’s manufacturing employment has declined more rapidly than the nation's as a whole. By 2007, Ohio’s share of employment in manufacturing reached 14.2 percent, while the nation’s stood at 10.1 percent. But manufacturing still makes up an important share of employment in Ohio, and the current recession has hit Ohio’s primary manufacturing industries, such as the automotive sector, particularly hard.

Ohio’s trends in manufacturing employment have followed the nation’s over the last three business cycles. After the recession of the early 1990s, manufacturing recovered slowly, and it never returned to prerecession employment levels. In the 2001 recession, employment in manufacturing declined sharply and never recovered. In fact, between the last recession and the current recession, manufacturing employment in both the state and the nation steadily declined, with Ohio experiencing a larger drop. This steady employment decline reflects both the movement of manufacturing overseas and improvement in productivity, which made manufacturing leaner, especially with respect to labor inputs.

Since December 2007, employment losses in manufacturing have accelerated. Ohio saw losses of 13.5 percent, while the nation saw losses of 9.5 percent. Employment losses in the manufacturing sector account for a disproportionate amount of overall job loss in the current recession in the United States, but especially in Ohio. Forty-seven percent (102,700 jobs) of total job losses in Ohio and 30 percent (1,300,000 jobs) of total U.S. job losses are due to the manufacturing sector.

Looking at job declines by specific manufacturing industry shows which industries are driving the employment losses. Several industries stand out. First, the metals industry accounts for a larger share of Ohio manufacturing employment than U.S. manufacturing employment, and while the industry has experienced similar percentage employment losses in both the state and the nation, Ohio’s larger employment share makes the industry a more important contributor to Ohio’s employment losses.

Industry Employment Growth Since December 2007

 
Ohio, percent of total manufacturing (2007)
Nation, percent of total manufacturing (2007)
Ohio, employment growth since December 2007 (percent)
Nation, employment growth since December 2007 (percent)
Nonmetallic mineral products
4.0
3.6
−12.2
−13.1
Primary mentals
6.5
3.3
−11.4
−13.1
Fabricated metal products
15.3
11.3
−11.2
−10.5
Machinery
10.7
8.6
−9.3
−7.7
Computer and electronic products
2.9
9.2
0.1
−4.7
Electrical equipment, appliances and components
4.1
3.1
−8.2
−5.9
Transportation
17.4
12.3
−21.6
−15.8
Furniture and related products
2.7
3.8
−17.5
−18.6
Food
7.0
10.7
−7.9
−1.3
Printing and related support activities
4.0
4.5
−7.4
−10.1
Chemical
6.0
6.2
−4.3
−3.0
Plastic and rubber products
8.3
5.5
−15.5
−10.7
Miscellaneous
11.1
18.0
−22.9
−10.4

Source: Bureau of Labor Statistics.

Second, Ohio has a relatively large employment share in transportation-related manufacturing industries, and these industries have experienced relatively large employment declines in Ohio. In the United States as a whole, manufacturers of transportation goods have shed 15.8 percent of their employment since the recession began, but in Ohio the decline is 21.6 percent. In fact, the transportation industry accounts for 27.8 percent of the entire manufacturing sector’s employment loss in Ohio, or about 28,400 jobs. For the United States as whole, transportation accounts for only 18.5 percent of the nation’s losses in manufacturing, or about 240,000 jobs.

Third, industries in which employment losses so far have been relatively small across the country, such as computers and electronics and food and chemical industries, fared differently in Ohio and the U.S. as a whole. Ohio’s computers and electronics industry actually had positive growth, but this was primarily due to the state’s smaller share of employment in the industry, 2.9 percent, compared to the nation’s 9.2 percent. Somewhat surprisingly, Ohio’s food industry has also been hit relatively hard in this recession, with job losses of 7.9 percent, compared to the nation’s loss of 1.3 percent.

A finer industry breakout of the transportation sector shows the role of the automotive industry on employment losses. The two largest employment sectors in transportation are motor vehicles and parts and aerospace products and parts. All things considered, aerospace has held up relatively well. However, employment in the automotive industries has declined 25 percent in both the United States as a whole and Ohio. Unfortunately, the automotive industry is much more important as a share of manufacturing employment in Ohio than in the nation as a whole. It represented 13.8 percent of manufacturing employment in Ohio at the start of the recession, compared to 7.2 percent nationwide. The “other” segment in the chart below represents a relatively small share of manufacturing transportation employment and is primarily composed of manufacturing related to railroads, rolling stock, and ship and boat building. Ohio has seen a decline in excess of 20 percent for this segment compared to -4.4 percent for the nation.

Given the current state of the automotive industry, it would not be surprising to see employment in automotive-related industries decline further in both Ohio and the country at large, as industry restructuring continues.