CIRAS report shows signs of growth in Iowa manufacturing

AMES, Iowa – An annual review of manufacturing by the ISU Extension and Outreach Center for Industrial Research and Service shows positive signs of growth in Iowa. According to the CIRAS report, manufacturing employment increased 2.5 percent in 2011 from the previous year.

“Just in the past year or so, we’ve been on more of an upward track in employment. So we look to be gaining back some of the jobs we lost during the recession. That’s good news,” said Liesl Eathington, an assistant scientist in Iowa State University’s Department of Economics.

However, employment in this sector is still 10 percent lower than pre-recession levels in 2007. With changes in manufacturing, Eathington said it is possible that Iowa will never return to those levels.  

“Manufacturing remains a huge part of our economy, but it’s relying on less and less labor over time. That’s something that we’ve been seeing; it’s a pretty long-term trend. As they get more and more efficient, they need fewer workers and are more capital intensive. Even if we have a healthy and growing manufacturing sector, it doesn’t necessarily mean that it’s going to be a huge jobs producer for our state anymore,” Eathington said. 

Manufacturing highlights

There are several numbers in the report that stand out:

  • There are more than 5,980 manufacturing firms in Iowa
  • More than half of Iowa’s manufacturing jobs are located in non-metro areas
  • Manufacturing contributed $27.6 billion to Iowa’s economy in 2011
  • The average manufacturing job in Iowa paid $51,120 in wages and salaries in 2011
  • Iowa exported $11.7 billion worth of manufactured goods to other countries in 2011

Interestingly, the report shows that nearly half of Iowa’s manufacturing firms – 47.6 percent – are “non-employer firms” with no paid employees other than the owner/operator. Only 293 firms – or about 5 percent – have more than 500 employees.

“One thing we did see during the recent recession was that there has been a change in the relationship between manufacturing firms and their workers. A lot of them have gone to working with contract employees,” Eathington said. “We’ll have to wait and see if that’s just something that they did to be flexible in their payrolls when there was a lot more uncertainty in the economy. As things improve, maybe they’ll be moving the workers back to their own payrolls.”

Manufacturing trends

Iowa’s manufacturing sector is about evenly split between durable and nondurable goods. However, this latest summary shows employment growth only in the durable goods sector. From 2010-11, employment in nondurable goods – such as food, printing and chemical manufacturing – declined by a half percent.

The report shows manufacturing in the state remains diversified, but Iowa’s dependence on this sector ranks sixth in the U.S. Eathington said that can be both good and bad.

“Manufacturing tends to have a lot of linkages to other parts of the economy. So if you have a good-sized manufacturing sector then you’ve probably got a lot of other firms that are linked to that so that’s a good thing. But as we’ve just seen here recently, that can also be a vulnerability for the state because when your manufacturing sector takes a hit then also those linked firms take a hit,” Eathington said.

The annual manufacturing review is based on analysis of data from the Bureau of Economic Analysis, Bureau of Labor Statistics, U.S. Census Bureau and the International Trade Administration.