How Much Should Manufacturing Matter to Mississippi?

The ten states where “manufacturing still matters,” according to a Wall Street Journal story, include Alabama and Louisiana, but not Mississippi.

The WSJ determined this by dividing each state’s manufacturing output (2012 numbers) by its gross domestic product. For example, the top state was Indiana with a ratio of 28.2%, meaning 28.2% of Indiana’s economic output came from the manufacturing sector. Second was Oregon at 27.8%. Louisiana came in third at 22.6%. Alabama was 10th with a ratio of 16.6%. States between Louisiana and Alabama were North Carolina at 19.4%, Wisconsin at 19.1%, Kentucky at 17.1%, Ohio at 17.1%, Iowa at 16.7%, and Michigan at 16.5%.

Note that Texas, with its booming oil and gas industry, and California, with Silicon Valley, are not included. Texas’ ratio was 15.5%, California’s 11.1%.

Mississippi’s ratio was 14.5%. The national average was 12%.

The rest of the story, as Paul Harvey used to say, is that other sectors have become more important to many state economies than manufacturing.

In California, real estate was the top sector generating 15% of the state’s gross domestic product. Next was professional and business services at 13.3%.

In Florida, real estate (15%), health care (8.1%), retail trade (7.7%), wholesale trade (7%), and finance and insurance (5.5%) production topped manufacturing (5%).

In New Mexico, real estate (11.8%) and professional and business services (10.1%) production are significantly higher than manufacturing (6.3%).

And so on.

In many states, like Mississippi, manufacturing is still the top producer but the ratio keeps falling. In 1997, manufacturing output in Mississippi was 20% of gross domestic product. A decade later it fell to 17%. Now it’s below 15%.

This is not to say that manufacturing jobs are not important. They are. In Mississippi average manufacturing wages are among the highest of all sectors. But, the output rise of other economic sectors besides manufacturing does give rise to certain questions:

Are manufacturing jobs worth what we have to pay for them? State and local governments are called upon to invest ever more resources to land major manufacturing prospects.

Why do growing sectors like health care, real estate, and professional and business services not attract such resources?

Is our economic development model, crafted almost 90 years ago when Mississippi pioneered using bonds to finance industry locations through Hugh
White’s Balance Agriculture With Industry program, wrong for today’s economy?

Smart communities have already altered course. Their economic development models focus on capital investment, jobs, and wage enhancement, not how many manufacturing plants they land.

Some now choose not to chase after major projects because of the significant costs involved. They focus, instead, on growth of existing businesses, growing their own new businesses, and attracting small businesses.

The right question might be how much should manufacturing matter to Mississippi in the future?

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