Bureau of Business Research College and Graduate School of Business, University of Texas at Austin April 1993 Manufacturing Growth Trends in Texas Although U.S. manufacturing employment has declined in recent years, manufacturing activity in Texas has been expanding. Nationwide, manufac­turing employment reached its most recent peak in 1989 and has declined by 7.2 percent since then. The nationwide decrease in manufacturing jobs since 1989 has been more than 1.4 million. Al­though Texas manufacturing employment dropped slightly from 1989 to 1990, subsequent years have seen growth, with a gain of about 42,500 manufac­turing jobs since the 1988 low point. While the gain ) has not been overwhelming, any growth by a major state in the face of a severe national decline is somewhat remarkable. Table 1 shows national and state trends in manufacturing jobs for the last six years for which data are available. Another indicator of increasing manufacturing activity in Texas can be found in the Directory of Texas Manufacturers, published by the Bureau of Business Research at the University of Texas at Austin. The new 1993 edition, which provides data for firms in operation in 1992, lists a record total of 17 ,020 plants. This total represents an increase of 11.5 percent from the number of plants listed five years earlier. Table 1 Manufacturing Employment, United States and Texas, 1987-1992 (Thousands) Year United States Texas 1987 19,104 956.4 1988 19,593 947.6 1989 19,659 972.9 1990 19,131 963.3 1991 18,402 980.0 1992 18,242 990.I Note: Data are for July of each year. Source: Employment and Earnings, Bureau of Labor Statistics, U.S. Department of Labor, various issues. Battered by adverse trends in the energy industry and other factors in the mid-l 980s, the Texas economy has been recovering for most of the past five years. Some of the subsequent growth could be described as recovery of lost ground. Nevertheless, both the Texas economy and the Texas manufactur­ing sector are growing. Texas and U.S. Manufacturing Employment Trends Nationwide, total nonagricultural civilian employment increased by almost 6.5 million jobs during the past five years while the manufacturing sector lost about 862,000 jobs. In Texas, total employment increased by about 767,000 jobs, and manufacturing gained about 34,000 jobs. All but three of the 28 metropolitan areas registered gains in total nonagricultural civilian employment. The biggest increases have been along the border and in southeast Texas. The metropolitan areas with the largest percentage increases in job growth are Laredo, Brazoria, Brownsville, Beaumont, McAllen, Bryan, El Paso, and Fort Worth, all of which registered increases of 15 percent or more. The three areas with decreases in total employment are Sherman, Abilene, and Wichita Falls. Manufacturing employment in Texas increased by 3.52 percent from 1987 to 1992 with most of the increase concentrated in metropolitan areas. Table 2 shows total manufacturing employment for Texas metropolitan areas during the period. The overall growth rate for manufacturing employment in Texas metropolitan areas was 4.02 percent against 0.87 percent in the nonmetropolitan counties. The metropolitan areas with the largest increases in manufacturing employment were Bryan-College Station, Austin, Brownsville, El Paso, Odessa, and Corpus Christi. The increase in manufacturing employment was not universal among Texas metropolitan areas: 14 of the 28 areas showed decreases. Midland, Texarkana, San Angelo, lllI I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJDr Table 2 Manufacturing Employment, Metropolitan Areas, 1987-1992 (Thousands) Area 1987 1988 1989 1990 1991 1992 Abilene 4.7 4.8 5.0 4.5 4.5 4.3 Amarillo 9.8 9.6 8.8 8.7 8.5 8.8 Austin 39.4 39.6 41.8 45.6 48.9 51.8 Beaumont-Port Arthur 24.0 25.5 25.6 25.1 25.9 25.9 Brazoria 15.0 15 .6 16.3 16.5 17.l 17.5 Brownsville-Harlingen 9.7 10.6 10.2 10.8 12.4 12.0 Bryan-College Station 3.0 3.2 3.6 3.8 3.6 4.2 Corpus Christi 11.6 11.3 11.3 12.0 12.2 13.1 Dallas 222.8 222.4 222.4 221.8 214.9 209.6 El Paso 35.5 37.9 40.5 40.7 41.4 42.5 Fort Worth-Arlington 113.7 118.2 121.3 117.3 104.3 102.7 Galveston-Texas City 9.1 8.4 8.5 8.8 8.6 8.7 Houston 149.6 151.4 158.7 165.5 178.0 180.I Killeen-Temple 8.8 8.5 8.7 8.8 8.8 8.5 Laredo 1.9 1.7 1.8 1.8 1.5 1.7 Longview-Marshall 14.9 16.0 15.7 16.4 16.I 16.3 Lubbock 7.2 7.4 7.6 7.2 7.1 7.0 McAllen-Edinburg 12.5 11.3 14.3 12.5 13.0 13.6 Midland 2.9 2.9 2.5 2.3 2.3 2.3 Odessa 3.7 3.8 4.0 4.2 4.7 4.3 San Angelo 5.8 5.4 5.5 5.0 5.0 5.0 San Antonio 46.0 46.6 48.2 46.3 43.9 46.5 Sherman-Denison 11.3 11.4 11.2 10.9 10.9 9.8 Texarkana 7.2 7.1 7.7 7.1 6.6 6.2 Tyler 10.9 10.4 10.5 11.0 10.9 11.4 Victoria 2.9 3.0 3.1 3.1 3.1 2.8 Waco 14.8 14.9 15.3 15.7 15.6 14.9 Wichita Falls 8.2 8.3 8.1 8.0 8.0 7.8 Total metropolitan 806.9 817.2 838.2 841.4 837.8 839.3 Total nonmetropolitan 149.5 130.4 134.7 121.9 142.2 150.8 Total Texas 956.4 947.6 972.9 963.3 980.0 990.I Source: Employment and Earnings, Bureau of Labor Statistics, U.S. Department of Labor, various issues. Sherman, Laredo, and Amarillo, all of which respectively. Other metropolitan areas with in­ experienced decreases in manufacturing employ­creases of more than 50 new plants were San ment of 10 percent or more, showed the most severe Antonio, Beaumont, and El Paso. declines in manufacturing employment. Seven Texas metropolitan areas recorded losses in manufacturing plant numbers during the five-year period. The Longview-Marshall area had the largest Growth in Texas Manufacturing decrease, with 20 fewer plants than were listed five Establishments years earlier. Odessa, McAllen, Wichita Falls, The number of manufacturing plants listed in the Texarkana, Laredo, and Amarillo also lost manu­Directory ofTexas Manufacturers has increased in facturing plants. recent years, with 1,758 plants added between the In relative terms, the areas exhibiting the largest 1988 and 1993 editions (table 3). Most of this net increases in manufacturing plants were Victoria, increase has been concentrated in metropolitan Austin, Midland, and Beaumont. Each of these areas. The number of manufacturing plants in the areas registered increases of more than 30 percent in state's 28 metropolitan areas increased by 1,566 the number of manufacturing plants over the 1988 plants between 1988 and 1993. In contrast, non­levels. Interestingly, in both Victoria and Midland metropolitan counties across Texas registered a net the relative numbers of manufacturing plants grew increase of 192 plants during that period. during that period, but total manufacturing employ­ As would be expected, the largest absolute net ment decreased. increases in the numbers of manufacturing plants are in the state's largest metropolitan areas. With Smaller Plants Most Numerous more than 427 new plants, Houston showed the largest gain. Austin ranked second with 301 and Most Texas manufacturing plants are relatively Dallas and Fort Worth were next with 267 and 210, small. Among the 16, 170 plants listed in the 1993 lll1111 i I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJir ltl11111 !I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJDr Directory that specified numbers of employees, plants active in each industrial category (table 4). 12,738, or almost 79 percent, had fewer than 50 For example, Standard Industrial Classification employees. The number of these smaller plants (SIC) Major Group 35, i.e., "machinery including increased by 1,624 during the past five years, selected electrical and electronic machinery," has representing about 93 percent of the new increase in both the largest number of active plants and the plants for which employment data are available. largest increase (305 plants) of any of the SIC major Texas plants with between 50 and 499 employees groups. Other industries with increases of more than number 3, 125, an increase of 69 facilities from five 200 plants between 1988 and 1993 were miscella­years earlier. The number of large plants (more than neous manufacturing (291 plants), rubber and 500 employees) also increased, from 260 in 1988 to plastics products (269 plants), and instruments (253 307 in 1993. There are 850 plants listed in 1993 for plants). Five additional categories saw increases of which employment data are not available, an at least 100 plants. These industries were electron­ increase of 18 from the 1988 level. ics, printing, apparel, fabricated metal products, and chemicals. Only three industries-stone, clay, glass, and concrete products; products recovered from Changes by Industrial Category natural gas; and food processing-registeredBecause many Texas manufacturing plants declines in the numbers of active Texas plants. produce more than one type of product, data for the various industrial categories do not compare pre­ Why Has Texas Gained? cisely with the overall total number of manufactur­ ing plants. Nevertheless, some insight into the With nationwide manufacturing activity in changing nature of Texas manufacturing can be decline, why has Texas manufacturing grown gained by examining changes in the number of during the past five years? Possible contributing Table 3 Number of Manufacturing Plants, Metropolitan Areas, 1988-1993 Area 1988 1989 1990 1991 1992 1993 ) Abilene 113 1S2 148 148 132 123 Amarillo 176 181 184 177 179 17S Austin 6S6 7SO 770 802 912 9S7 Beaumont-Port Arthur 234 342 341 316 312 308 Brazoria 136 147 146 14S 144 147 Brownsville-Harlingen ISi 204 203 196 178 172 Bryan-College Station 71 78 78 79 84 81 Corpus Christi 211 213 224 226 229 229 Dallas 2,967 3,00S 3,131 3,166 3,206 3,234 El Paso 360 378 394 40S 422 413 Fort Worth-Arlington 1,469 l,S82 1,612 1,637 l,6S7 1,679 Galveston-Texas City 104 106 !OS 106 107 112 Houston 3,08S 3,192 3,310 3,427 3,476 3,Sl2 Killeen-Temple 121 124 127 129 120 121 Laredo S3 S7 S7 SI S2 46 Longview-Marshall 2S8 26S 2S6 2S4 24S 238 Lubbock 220 227 227 230 227 22S McAllen-Edinburg 170 181 179 174 168 160 Midland 80 92 96 98 102 107 Odessa 209 211 211 204 20S 198 San Angelo 96 99 102 103 102 101 San Antonio 798 86S 889 916 912 93S Sherman-Denison 116 134 13S 137 133 131 Texarkana 83 82 77 7S 7S 76 Tyler JS8 IS7 182 180 169 162 Victoria 41 SS 60 61 60 63 Waco 211 217 217 217 217 217 Wichita Falls 140 138 140 134 130 131 Total metropolitan 12,487 13,234 13,601 13,793 13,9SS 14,0S3 Total nonmetropolitan 2,77S 3,09S 3,139 3,044 2,991 2,967 Total Texas IS,262 16,329 16,740 16,837 16,946 17,020 _) Note: Dates refer to Directory of Texas Manufacturers editions. Data actually cover previous year. Source: Directory of Texas Manufacturers, Bureau of Business Research, The University of Texas at Austin, various years. ltl1111 i ! I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJDr tdll I I I I 11 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IDr Table 4 Texas Manufacturing Plants by Standard Industrial Classification Major Group, 1988 and 1993 SIC major group number and name Number of plants* 1988 1993 13 Products recovered from natural gas 289 224 14 Mined sulphur 2 2 20 Food and kindred products 1,174 1,148 21 Tobacco products 1 2 22 Textile mill products 90 108 23 Apparel and related products 723 905 24 Lumber and wood products 893 948 25 Furniture and fixtures 662 747 26 Paper and allied products 415 468 27 Printing and allied industries 2,657 2,841 28 Chemicals and allied products 1,096 1,202 29 Petroleum refining 219 236 30 Rubber and plastics products 1,015 1,284 31 Leather and leather products 170 197 32 Stone, clay, and glass products 1,276 1,177 33 Primary metal industries 396 427 34 Fabricated metal products 2,904 3,055 35 Machinery 2,876 3,181 36 Electrical and electronic machinery 989 1,177 37 Transportation equipment 624 683 38 Instruments and related products 641 894 39 Miscellaneous manufacturing 973 1,264 Total number of plants in directory 15,262 17,020 Total number of plants in Texas 15,241 17,003 *Many plants produce in more than one category. Source: Directory of Texas Manufacturers, Bureau of Business Research, The University of Texas at Austin, 1988 and 1993 editions. factors include a relatively favorable tax and busi­ness climate. Despite recent tax increases and probable future increases, Texas continues a tradi­tion of relatively low taxes for its level of economic activity. In comparison with the rest of the nation, Texas continues to be regarded as a favorable location in which to do business. The high productivity of Texas workers could also be a factor contributing to manufacturing growth in the state. Positive evidence exists that Texas manufacturing workers are more productive than most U.S. manufacturing workers, relative to their compensation. In terms of value added by manufacturing relative to production worker wages, Texas ranks third among all states and second among the major manufacturing states. Some of this edge can be attributed to the type of industries in which Texas specializes, but Texas workers outper­form the national average in fourteen of the seven­teen industrial categories for which detailed data are available. It should also be noted that low-wage workers and low-wage states are not among the winners in the worker payroll productivity race. The five leading major industrial states in payroll productivity are Louisiana, Texas, New York, New Jersey, and California. Of these, the latter three are certainly not considered low-wage areas. Finally, the hard times in Texas brought about by the events of the mid-l 980s stimulated a certain amount of entrepreneurial activity. Commercial and industrial properties were available in most parts of the state at bargain prices. The numerous "now leasing" and "for sale" signs that blanketed Texas provided many new industrial plants with suitable facilities at favorable prices. Similarly, many areas had available labor either already trained or willing to be retrained and eager to work. Texans have always been adaptable, and some of the new manu­facturing activity doubtless resulted from adaptation to hard times. -Charles P. Zlatkovich Associate Professor ofAccounting University ofTexas at El Paso tdll I ! I I I l I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IDr ltlllll ll llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll llllDr Employment and Unemployment Rate by Metropolitan Area Total nonagricultural employment (thousands) Total employment (thousands) Unemployment rate Area Jan. 1993 Jan. 1992 Percentage change Jan. 1993 Jan. 1992 Percentage change Jan. 1993 Abilene 50.7 49.3 2.8 48.4 47.9 1.0 7.1 Amarillo 80.8 78.9 2.4 91.3 91.0 0.3 6.4 Austin 413.4 397.4 4.0 446.6 434.9 2.7 5.4 Beaumont-Port Arthur 150.2 148.8 0.9 156.8 157.5 -0.4 12.1 Brazoria 67.9 67.8 0.1 81.9 83.2 -1.6 9.2 Brownsville-Harlingen 83.3 78.7 5.8 97.8 94.1 3.9 13.2 Bryan-College Station 57.3 56.2 2.0 61.1 61.1 0.0 4.5 Corpus Christi 140.5 132.7 5.9 154.0 148.7 3.6 9.9 Dallas 1,396.9 1,365.1 2.3 1,342.8 1,342.8 0.0 7.4 El Paso 220.6 211.1 4.5 233.0 226.5 2.9 11.4 Fort Worth-Arlington 590.8 579.5 1.9 677.5 680.3 -0.4 8.1 Galveston-Texas City 82.7 78.8 4.9 108.4 104.8 3.4 9.4 Houston 1,621.3 1,609.4 0.7 1,610.7 1,628.9 -I.I 8.3 Killeen-Temple 80.9 75.2 7.6 95.7 91.0 5.2 8.3 Laredo 51.0 48.4 5.4 52.5 51.0 2.9 10.I Longview-Marshall 69.1 69.4 -0.4 71.5 72.9 -1.9 11.0 Lubbock 98.l 97.3 0.8 106.1 107.8 -1.6 6.5 McAllen-Edinburg-Mission 110.2 104.5 5.5 138.l 134.3 2.8 18.l Midland 45 .3 45 .9 -1.3 44.5 45 .9 -3.1 8.4 Odessa 44.3 45 .8 -3.3 47.5 50.4 -5.8 11.7 San Angelo 38.8 38.0 2.1 42.7 42.3 0.9 7.0 San Antonio 555.l 528.6 5.0 583.8 568.7 2.7 6.9 Sherman-Denison 36.8 36.3 1.4 42.7 42.4 0.7 8.2 Texarkana 47.0 46.3 1.5 52.1 NA NA 8.4 Tyler 64.l 63.1 1.6 69.7 69.6 0.1 8.8 Victoria 31.5 30.7 2.6 36.6 36.6 0.0 7.1 Waco 83.0 81.1 2.3 86.2 85.3 1.1 7.2 Wichita Falls 49.8 49.0 1.6 49.7 50.0 -0.6 7.6 Total Texas 7,338.1 7,097.8 3.4 7,953.1 7,924.3 0.4 8.4 Total United States 107,329.0 106,607.0 0.7 116,123.0 115,122.0 0.9 7.9 Note: Data are not seasonally adjusted. Figures for 1992 have undergone a major revision; previously published 1992 figures should no longer be used. Revised figures are available upon request. All 1993 figures are subject to revision. NA: Not available. Sources: Texas Employment Commisson and U.S. Department of Labor, Bureau of Labor Statistics. An Economic Compass: Texas Business Review in 1992 December Retailing in Texas: Beyond Sales Forecasts, Larry G. Gresham Total Quality Management in the Private Sector: Lockheed Austin, Sylvia Simpson October The Commercialization of New Technologies: The Case of DTM Corp, David V. Gibson and Paul F. McClure Total Quality Management in the Public Sector: The University of Texas Quality Center, Edwin R. Sharpe and Michelle O' Reilly August The Size, Distribution, and Growth of the Texas Population, 1980-1990, Robert K. Holz June Reaction to Recession: State and Local Government in Texas, Jerry Olson The Impact of the U.S.-Mexico Free Trade Agreement on Texas Cotton Producers, Mina Mohammadioun, Jerry Olson, and Allen Blackman April Texas and U.S. Families, 1990, Deanna Schexnayder and Leslie Lawson Texas Family Law: Changing Times, Changing Laws, Gaylord A. Jentz February Natural Gas Substitution Under the "National Energy Strategy," Stephen L. McDonald and Mina Mohammadioun ltllll llll lllllllllllllllllllllll lllllllllllllllllll lll llllllllllllllllllllll ll llDr tdtl I I I I 1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I llbr Editor: Lois Glenn Shrout Assistant Editor: Sally Furgeson Texas Business Review is published six times a year (February, April, June, August, October, and December) by the Bureau of Business Research, Graduate School of Business, University of Texas at Austin. Subscriptions to Texas Business Review are available free upon request, as are back issues. The Bureau of Business Research serves as a ·\ primary source for economic and demographic ··· data on the state of Texas. An integral part of UT Austin's Graduate School of Business, the Bureau is located on the sixth floor of th~'..\ College of Business Administratiortbuiiding. . j Announcement The 1993 Directory of Texas Manufacturers is now available from the Bureau of Business Research sales office. Purchase price for the Directory, which includes twelve issues of Texas Industrial Expansion, is $125 plus tax for Texas residents. For company information on diskettes or mailing labels, call (512) 471-1616 for details. This edition of the two-volume Directory of Texas Manufacturers includes more than 17,000 manufacturers, with changes in better than 60 3. percent of the entries from the 1992 edition. Our 1 survey data also indicate that 909 companies have been dropped and 1,000 added, for a final total of 17 ,020 companies. The Directory, which has been the primary resource for information on Texas manufacturers since '1933, is supplemented monthly by reports on new and expanding firms in Texas Industrial Expansion. To order the Directory and Texas Industrial Expansion, call (512) 471-1616 or fax (512) 471­1063. ·palsanba.1 uo1pa.1.10:> ssa.1ppv 6~tL-£Il8l smcai 'unsnv 6~tl xos: Ud H~V3S3~SS3NISna .fO fi'lf3~na