New Manufacturing Report Card
When the Dukakis Center published its major report on manufacturing in July 2008 – Staying Power: The Future of Manufacturing in Massachusetts – few believed that manufacturing could rebound in the U.S. and even fewer thought it had much of a future in the Commonwealth. Manufacturing was moving offshore to places like China and Vietnam. If it remained at home, it did so only by substituting highly automated machines for its workforce.
But the Staying Power report told a very different story. Based on a historical analysis of data on output and employment, a survey of over 700 manufacturing firms in Massachusetts, and more than 100 personal interviews with CEOs and owner/managers, the Dukakis study revealed an industry that after a long decline was coming back. Employment was still shrinking by about 3,000 jobs per year, but this was a far cry from the losses of 15,000 or more a year during the previous decade. Manufacturing output as a share of Gross State Product (GSP) was actually higher in 2006 (13.3%) than in in 1997 (10.9%). Huge productivity gains based on investments in new technology and the shift from relatively low productivity industries like apparel to high productivity production in aerospace, machine tool, and plastic extrusion was responsible for growth in output despite a shrinking workforce.
What was more, the Dukakis researchers found that more than 55 percent of the manufacturers surveyed expected their firms to increase production over the next five years with another 28 percent suggesting that production would be sustained in their Massachusetts facilities at current levels. Only 11 percent reported that production in the state would be reduced and only 5 percent believed they would be out of business five years hence. As for employment, more than one firm in twelve suggested they would be increasing employment by at least 25 percent with another one in five expecting an expansion in their workforce of between 11 and 24 percent. Altogether, more than 60 percent believed they would increase employment rather than hold it constant or reduce it. Only one in eight reported a likely reduction in jobs.
It was great news and the report helped prompt a renewed interest in the state’s manufacturing sector. Indeed, following a report of the Economic Development Strategy Council established by the Governor and the Legislature, an Advanced Manufacturing Collaborative (AMC) has been created in the Commonwealth to help the manufacturing sector grow and prosper. Nationally, the Dukakis Center report and others like it have created a new perspective on the importance of manufacturing for the future prosperity of the nation. President Obama devoted a significant share of his January State of the Union address to manufacturing and how the federal government could help sustain it.
But the Staying Power report came out in 2008 and it was based on research that was completed in 2007 just before the national recession began and hit manufacturing hard. No one at the time of the report could have predicted the impact on this sector in the Commonwealth.
As such, the Dukakis Center has been funded by the Massachusetts Technology Collaborative (MTC), Citizen’s Bank, and the Greater Boston Manufacturing Partnership (GBMP) to carry out a new study of the state’s manufacturing sector. Led by Dukakis Center director Barry Bluestone with a team including Anna Gartsman, a Ph.D. student and Dukakis Center research associate; Alan Clayton-Matthews, senior research associate; and two expert consultants, Don Walsh and Russ Eckel, a new report is being prepared with fresh data and a new survey of over 9,200 Massachusetts manufacturing firms.
The new study is intended to see how these industries have fared since 2007 and what their prospects for the future may now be. The research will look at output and employment trends, at changes taking place in either the products or processes in these firms, the need for capital finance, changes in the skill sets required by employees, and ways the state and local government can help manufacturers prosper here in the Commonwealth.
The goal is to complete the report by mid-summer so that it can inform the work of the Advanced Manufacturing Collaborative. Preliminary results show that manufacturing employment has been bouncing back since 2009 and that manufacturers seem more optimistic about the future.
Based on this preliminary work, the final results of the study should be quite interesting. Stay tuned!