Economic Trends

“All growth depends upon activity. There is no development … without effort, and effort means work.” Calvin Coolidge (1872 - 1933)

The “modern”, “high-tech”, “advanced” and “creative” economy are over-lapping and ambiguous terms for new economic forms that have developed in the last decades. In a recent analysis completed for the Centralina Council of Government, a through examination of the presence and impact of Advanced Manufacturing is provided. A review of the report’s findings relating to Salisbury and Rowan will provide insight into current economic trends and a greater understanding of our community.

Manufacturing is a broad industry that covers an array of sectors and is specifically defined as “establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products” (NAICS codes 31-33). Manufacturing accounts for 13% of GDP and 11% of total U.S. employment. As discussed in the July Newsletter, about 21% of Rowan’s employment is in manufacturing.

While manufacturing’s share of GDP and employment has declined in recent years, the industry remains crucial to the U.S. economy. Manufacturing is a key component in the health and function of American commerce. The sector buys and sells goods from a wide range of businesses, creating wealth throughout the economy. This interaction creates demand across a variety of industries, requiring raw materials for production and numerous support activities like software, finance, accounting, health services, and business consulting. For every $1 of final demand spent on manufactured goods, $0.55 of GDP is generated in the manufacturing sector and $0.45 is generated in non-manufacturing sectors (Bureau of Economic Analysis).

Advanced Manufacturing is a broad term with various interpretations. Generally, advanced manufacturing includes any manufacturing sector that employs at least twice as many research and development employees than the average industry. Advanced manufacturing is generally a high-technology industry but is not always comparable with “high-tech manufacturing.” The underlying reason being that in advanced manufacturing, the emphasis is weighted more on the high-tech processes used in production rather than on the final output of high-tech products. Some of its major industry sectors include: computer equipment, electronics, auto assembly, aerospace, biotech, machinery, pharmaceuticals, and medical equipment and instruments. Other niche sectors that are linked to advanced manufacturing include automation and manufacturing technology; chemicals and advanced materials; computer and telecommunications hardware; electronics and components; engineering, and environmental testing and measurement; and photonics, optics, and lasers.

Fundamentally, advanced manufacturing involves the implementation of innovative and revolutionary manufacturing techniques, while using highly automated manufacturing equipment that combines the very latest advancements in information technology, semiconductors, advanced materials, and new and more efficient organizational manufacturing processes. For example, accuracy and speed have remarkably improved due to computer numeric controls that have been installed to oversee the machining, forming, cutting, and molding phases of the manufacturing process. As a result, the use of highly automated machines and robots are being used for welding, painting, and material handling applications. Computer-aided Design (CAD), Computerintegrated Manufacturing (CIM), and optical monitoring are just a few of the processes that have revolutionized the industry, each improving quality control, lowering costs, reducing development timelines, and creating precision oriented assembly.

The advanced manufacturing industry was born from the ever-intensifying movement towards heightened global competitiveness and the battle for market share. With added countries opting for liberal international trade standards, advanced manufacturing processes are continuously becoming highly sophisticated and refined. Other major factors influencing the rapid pace of change in the industry are the increased demands for improved customer service, diversity of product offerings, improved product quality, quicker time-to-market new product cycles, and increased corporate profit margins.

There is a compelling case for viewing advanced manufacturing as a growth industry, one that provides high wages, a large economic impact, and significant opportunities for local economies. While the manufacturing industry has suffered in recent years, the potential for future growth and domestic relocation is high. Given the local depth of manufacturing industries and workforce, advanced manufacturing is a natural target for Rowan, one that will bring collaboration between educational institutions, economic developers, workforce development agencies, the broader public sector, and private sector firms large and small.

11 of Rowan County’s top 15 existing industrial groups are a mix of low and high tech manufacturing industries; most of which are strong businesses for the region as well. Of the county’s 15 top industries, none are in professional business services or research related industries, which could make it difficult to support further growth in advanced manufacturing. Rowan County is one of few counties where manufacturing growth exceeded services growth over the past two years.

A closer look at the manufacturing industry in Rowan County reveals that the county’s strengths lie in textile mills, transportation equipment, nonmetallic mineral product, wood product manufacturing, and chemical manufacturing. Emerging industrial groups in Rowan County that have recently experienced strong positive growth include motor vehicle parts and paper manufacturing. Both overall wages and manufacturing wages in the county are below the national average.
 
Click here for a map of the locations of Advanced Manufacturing firms located in Rowan County.
Thanks to Centralina Council of Governments, Centralina Economic Development Commission (CEDC), Angelou Economics and RTI International for the study. The full document is available at the CEDC website (http://www.4noboundaries.org/).