Manufacturing's post-recession rebound is happening most visibly in the Midwest — in metro areas like Omaha and in smaller communities, where companies are grouping together to share resources and ideas.
A new study of geographic trends in U.S. manufacturing, released Wednesday by the Brookings Institution's Metropolitan Policy Program, found that while the industry is in the middle of a resurgence, its impact varies depending on location. The Midwest is a particular hot spot, replacing the South as the biggest region for new manufacturing jobs.
That includes the Omaha-Council Bluffs metro area, which ranks 62nd among the 100 largest cities in the number of jobs in the industry (31,041) and 52nd in the growth in jobs from the beginning of 2010 to the end of 2011 (up 1.6 percent).
Researchers said manufacturing is still concentrated primarily in major population centers, with 79.5 percent of all manufacturing jobs in metropolitan areas in 2010. And in most of those cities, the industry has a broader reach than it did 30 years ago. In Omaha, manufacturing's percentage of overall employment has increased since 1980 to its current 6.6 percent.
But the factories where workers make farm equipment and tools and food are also increasingly popping up outside of cities. It's a trend that began in the 1980s and continued through the 1990s, the report says, but reversed in the early part of this century. But in 2010 and 2011, nonmetropolitan areas picked up manufacturing jobs at a faster rate than cities.
Eric Thompson, an associate professor of economics at the University of Nebraska-Lincoln, said that's been the situation for years in Nebraska, where smaller cities like Columbus and Grand Island have become well-established manufacturing centers.
“I believe it's because of the transportation infrastructure, and the skill of the workforce is growing increasingly strong in these nonmetropolitan areas,” Thompson said. “It's increasingly a good match for manufacturing. On the other hand, in the largest cities the cost of doing business has increased, the congestion is higher. These places have become more appropriate for high-level services, rather than manufacturing.”
The study's authors said manufacturing's recent growth is due to several factors. Rising labor and production costs in China have pushed some companies to bring outsourced jobs back to the U.S. An increase in oil and natural gas production has been good news for some equipment and chemical-producing firms.
On Tuesday, the manufacturing boom and the return of jobs to the U.S. was a key part of a speech by President Barack Obama, who was visiting a research, education and manufacturing resource center at the University of Albany-State University of New York.
Among the points from the White House:
>> The number of U.S. manufacturing jobs has increased by almost 500,000 in the last 26 months, which is the largest jump for any 26-month period since 1995.
>> Manufacturing production is up by 13 percent over the past 26 months, the fastest growth since the 1990s.
>> U.S. exports were $2.1 trillion over the last 12 months, a 35 percent increase over the level in 2009 and the highest level of exports in a 12-month period in U.S. history.
The Brookings report found that manufacturing centers — both in metropolitan and nonmetropolitan areas — are becoming increasingly focused on specific types of production.
In Omaha, food manufacturing makes up the largest share of manufacturing jobs, with 35.1 percent of the overall total. An additional 8.5 percent of the jobs fall in the “printing and related support” category, with 8.4 percent in machinery.
The focus on food in Omaha — and across Nebraska — has helped protect the local manufacturing industry from some of the ups and downs in recent years, Thompson said.
Between 2000 and 2010, the Omaha-Council Bluffs metro area lost 13.1 percent of its manufacturing jobs. It was a significant amount but far less than the average for other large cities (33.2 percent).
Thompson said food production is something that's less likely to be relocated to China or other foreign countries.
“That's an area where internationally, we're very competitive,” he said. “There's certainly less offshoring (of jobs).”
The report's authors say government policies at the state and local levels will play an important role in continuing manufacturing's rise in the U.S. They note that it's important for leaders to encourage the development of “manufacturing clusters” where training and research can flourish, rather than trying to attract businesses to more isolated areas where wages are lower.
“All too often, (governments) pursue policies that encourage firms to compete on the basis of low wages, using low-skilled workers and leaving innovation to chance,” they wrote.
Thompson said Nebraska has historically been competitive in terms of wages, though Omaha was in the bottom half of the 100 metro areas ranked in the study. (Omaha-Council Bluffs was 82nd for wages in all manufacturing jobs, though it's 59th for all jobs.) The average manufacturing salary in the metro area is $49,844 per year.
Thompson said one of the biggest challenges for this state, and others, is having the right kind of workers on hand when more manufacturing jobs are available.
“Probably the thing to think about more would be building up the skill of the workforce ... manufacturing is such a competitive industry that the skills of your workforce are a critical factor,” he said.
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