NNDA: Manufacturing is here to stay in Nevada
July 18, 2018
CARSON CITY, Nev. — Now that Nevada is past the Great Recession, manufacturing has become important for statewide economic development. It is a good fit for the Silver State as it helps to create new jobs, economic growth, and an overall better quality of life for communities, both now and for the future. Manufacturing has the same potential for profitability as tourism, logistics, mining and agriculture.
There have been those who thought manufacturing was going nowhere, and that information technology was taking its place. They believed the industrial era was over, and the knowledge economy was the future. Instead, not only is the industrial era still around, it does not seem to be going away anytime soon. The demand for tangible products remains high, thanks to e-commerce, and information technology is simply helping manufacturers to make products faster and more cost-efficiently.
Manufacturing is thriving across America. Not only is it a key industry sector of the U.S. economy, it is a vital one. In Nevada, it is a major industry that is continuing to grow in both size and importance. More than 47,000 Nevadans are employed statewide by over 1,800 manufacturing companies. This article includes data and statistics to show the economic impact that manufacturing is having on the U.S. and the Silver State.
Once again, the manufacturing sector is a major job creator. During the next decade, U.S. manufacturers project that close to 3.5 million new manufacturing jobs will be needed, and 2 million of those are expected to go unfilled due to a skills gap. Nationwide, 80 percent of manufacturers have reported a moderate or serious shortage of qualified applicants for skilled and highly skilled production positions. Nevada's community colleges are working with manufacturers in their regions to address the workforce development and training programs necessary to meet their employment needs.
The latest statistics from the National Association of Manufacturers (NAM) support the strength of the manufacturing industry and the economic and job growth that it generates. In 2016, manufacturing contributed $2.25 trillion, accounting for 11.7 percent of U.S. gross domestic product (GDP).
In addition, U.S. manufacturers perform over three-quarters of all private sector research and development nationwide, driving more innovation than any other economic sector. By itself, U.S. manufacturing would be the ninth-largest economy in the world.
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According to NAM, for each $1 dollar spent on manufacturing, another $1.89 is added to the economy, making it the highest multiplier effect of any economic sector. One manufacturing employee generates another 3.4 workers hired elsewhere. In fact, the manufacturing sector multiplier is far more impactful than those from the business services, information technology, transportation and logistics, retail trade, or financial services sectors.
Currently, there are approximately 12.5 million manufacturing workers employed in the U.S., or about 8.5 percent of the total workforce. Since the end of the Great Recession, manufacturers have hired over one million workers. Manufacturing is an important provider of jobs that offer good wages and upward career paths for workers without college degrees. In 2016, NAM reports that the average U.S. manufacturing worker earned $82,023 annually, including pay and benefits.
The manufacturing footprint extends beyond the sector. It has a significant "indirect employment multiplier" due to the purchase of U.S. goods and services by manufacturers which provides jobs outside of manufacturing. For each worker directly employed in manufacturing, the sector's output supports over 1.4 jobs elsewhere in the economy, making a substantial contribution to GDP annually.
However, GDP data does not completely cover manufacturing's impact, as there is no accounting for how manufactured goods generate significant demands from other sectors of the economy. These range from energy and natural resources to construction of new factories to services provided by accounting, engineering, software, and temporary employment firms.
Overall, Nevada is very attractive to manufacturers because of its business-friendly regulatory environment and favorable tax structure. Also, the Silver State ranks as having both one of the lowest workers' compensation rates and lowest incorporation costs. There are economical utility rates for commercial operations with a robust power transmission infrastructure that includes a renewable energy mix.
The Silver State is favorably located in close proximity to major Western U.S. markets and deep-sea ports, with easy access to Nevada's multimodal transportation infrastructure. This enables companies to gain quicker access to markets by rail, air and roads, and reduce bottom-line costs. Nearly 60 million customers can be reached in a one-day truck transit range.
It is no wonder Nevada's manufacturing sector is strong, accounting for 3.3 percent of total new jobs.
Lynn O'Mara is Director of Economic Development for the Northern Nevada Development Authority (NNDA). The organization can provide economic development assistance to Nevada tribal communities. For information, visit http://www.nnda.org or contact the NNDA tribal liaison, Valerie Meléndez, RSIC tribal citizen, at email@example.com and 775-624-3962.
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