America’s New Industrial Boomtowns
Evangelists of the “information economy” may think that industrial jobs are passé. In reality, the U.S. has added 647,000 manufacturing jobs since 2010. The shale revolution has sparked foreign industrial investment reflecting electricity costs that are now well below those in Europe or East Asia.
David Peebles works in a glass tower across from Houston’s Galleria mall, a cathedral of consumption, but his attention is focused on the city’s highly industrialized ship channel 30 miles away. “Houston is the Chicago of this era,” says Peebles, who runs the Texas office of Odebrecht, a $45 billion engineering firm based in Brazil. “In the sixties you had to go to Chicago, Cleveland and Detroit. Now Houston is the place for new industry.”
With upward of $35 billion of new refineries, chemical plants and factories planned through 2015 for Houston and the surrounding Gulf Coast, companies like Odebrecht, which runs chemical plants and is working on a new freeway in the area, have converged on the nation’s oil and gas capital. They are part of the reason why the Texas metropolis ranks first on our list of the best large cities for manufacturing.
Houston, with 255,000 manufacturing jobs, is not yet the country’s largest industrial center; it still lags behind the longtime leaders Los Angeles, with 360,000 manufacturing jobs, and Chicago, home to 314,000. But it is clearly on a stronger trajectory. Since 2008, Houston’s manufacturing workforce has expanded 5% while Los Angeles has lost 13% of its industrial jobs and Chicago’s factory workforce has shrunk 11%.
Why Manufacturing Matters
Whether America is on the path to a sustainable industrial expansion or is just seeing a weak bounce back has been widely debated, but the recent numbers are impressive. Since 2010 the U.S. has added 647,000 manufacturing jobs. New energy finds have led to the construction and expansion of pipelines and refineries, and has sparked foreign industrial investment reflecting electricity costs that are now well below those in Europe or East Asia. Besides Houston, also ranking high on our big cities list are two other energy towns, No. 5 Oklahoma City and No. 10 Ft. Worth, Texas. Our mid-sized cities list is led by Lafayette, La., with nearby Baton Rouge in 11th place.
Evangelists of the “information economy” may think that industrial jobs are passé, as epitomized by a recent Slate article that recommended that working-class people from places like Detroit should move to areas like Silicon Valley or Boston where they can make money cutting the hair and walking the dogs of high-tech magnates. But the notion that U.S. manufacturing is doomed, and that the jobs are of lower quality than those in high-tech centers, is largely bogus; even in Silicon Valley the majority of new projected jobs are expected to pay under $50,000 annually. In contrast manufacturers pay above-average wages, in some cases due to unionization, but in many others because of the increasing sophisticated skills required by today’s factories.
Although we will likely never see a boom in factory employment on the scale experienced in the last century, the demand for blue-collar skills is projected to increase in future years. Among all professions for non-college graduates, manufacturing skills are most in demand, according to a study by Express Employment Professionals. By 2020, according to BCG and the Bureau of Labor Statistics, the nation could face a shortfall of around 875,000 machinists, welders, industrial-machinery operators, and other highly skilled manufacturing professionals.
Our research suggests that much of this growth will be in metro areas in the South and the Great Plains that are known for friendly business climates. New industrial investment is tending to go to places that are largely non-union, and feature lower taxes and light regulation. Epitomizing this trend is the No. 2 city on our large metro area list, Nashville-Murfreesboro-Franklin, Tenn., where manufacturing employment is up 6% since 2008. Nashville has become a hotbed for foreign investment in manufacturing, with the expansion of the Nissan facilities in nearby Smyrna, as well as a host of suppliers.
This is occurring, in part, because some large companies are shifting production to America from China in response to rising Chinese wages as well as sometimes unpredictable business conditions there.
Investment inflows, both from overseas and domestic companies, have boosted other standout southern industrial hubs, as well as the smaller metro areas on our mid-sized city list, notably Mobile, Ala. (third place), with its expanding industrially oriented port, and No. 14 Charleston-North Charleston-Summerville, S.C., which has been a beneficiary of major new foreign investment as well as the expanded presence of U.S. aerospace giant Boeing. The South also is home to our No. 1 small manufacturing city, Florence-Muscle Shoals, Ala.