Manufacturing is Pennsylvania's Largest Economic Sector

Feb. 24, 2011
Accounts for the largest portion of gross state product -- 13.6%

A new statewide study shows that manufacturing is still Pennsylvanias number one economic driver, accounting for the greatest portion of gross state product (13.6%). The sector ranks as the fourth largest provider of jobs, with an average annual salary of $52,204.

And it has the highest multiplier effect of any economic sector in the state --a $1 million increase in final demand for manufactured products in Pennsylvania results in the creation of 4.2 jobs, according to a study commissioned by Pennsylvania's Industrial Resource Centers.

"The significant contribution manufacturers make to Pennsylvania's economy cannot be overstated," said Joseph Houldin, CEO for Delaware Valley Industrial Resource Center (IRC). "Small and mid-sized manufacturers represent an economic asset that requires continued public support and strategic investment. For every $1 in state funding the IRCs returned $51 in new and retained sales. In addition, IRC activity affected more than 6,331 jobs in fiscal year 2009, with clients reporting 1,498 new jobs created and 4,833 jobs retained.

The study's lead researcher, Dr. Edward Hill, and manufacturing leaders from across the state called on lawmakers to help the industry grow through policy changes such as reducing the Corporate Net Income Tax, and through strategic investments in areas such as improved management practices, new product development, and workforce training.

"While Pennsylvania's tax structure is very important, improving it won't get rid of all the weeds stifling growth for manufacturers," said Dr. Hill, Dean of the Levin College of Urban Affairs at Cleveland State University. "The state should continue to invest in strategic economic development programs."

One troubling trend points to the significant decline of PA manufacturing jobs -- nearly 230,000 lost between 1998 and 2008, largely due to the recession, a global economy, and an undervalued Chinese currency. Much of that decline, however, occurred in two sectors -- pharmaceutical and petrochemical-- and the majority of job losses were in large firms.

However during 2006 and 2008 manufacturing firms with between 250-499 employees added jobs. A soon-to-be-released Delaware Valley Industrial Resource Center survey of regional manufacturing firms will illustrate that the sector is hiring now and will continue to hire over the next 12-24 months.

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