The Unfabricated Story of Manufacturing in Eastern OregonSeptember 30, 2016 Manufacturing is often thought of as a backbone industry which provides quality jobs and decent wages. In 2015, just 3.7 percent of private firms in the U.S. were classified as manufacturing. The manufacturing industry, however, accounted for 10.4 percent of private employment and 12.6 percent of private wages for the year.
Employment in the U.S. manufacturing industry reached its peak of 19.5 million in 1979. Employment then dropped and bounced between 16.7 and 18.0 million from 1983 to 2001. By 2010, the industry's total employment had plummeted to 11.4 million. Employment has ticked up slightly since then, reaching 12.3 million in August 2016; down 31.7 percent from 2001. Total manufacturing employment in the U.S. is projected to drop another 7.0 percent between 2014 and 2024, according to data from the Bureau of Labor Statistics.
Oregon's manufacturing industry held a larger share of private firms (4.3%), private employment (12.3%), and wages (16.9%) than the U.S. in 2015. Oregon manufacturing lost more than 43,000 jobs (-21.0%) between 2006 and 2010 due to the Great Recession, but since 2010 the industry has added back more than 22,000 jobs. Unlike the U.S., Oregon's manufacturing industry is projected to grow 12.0 percent between 2014 and 2024. The projected industry growth will put Oregon back at the 2006 level of 206,000 jobs.
Like the U.S., Oregon manufacturers produce products in all 21 manufacturing sub-sectors. The computer and electronic product manufacturing sub-sector held a large cache of the industry in Oregon in 2015. Computer and electronic products accounted for 20.2 percent of manufacturing employment and 39.0 percent of industry wages. The second and third slots were held by food manufacturing (15.1% of employment and 9.1% of wages) and wood product manufacturing (12.1% of employment and 8.5% of wages).
Made in the E.A.S.T.
Manufacturing in Eastern Oregon (Baker, Grant, Harney, Malheur, Morrow, Umatilla, Union, and Wallowa counties) has much in common with Oregon and the U.S., but there are notable differences. Manufacturing accounted for only 3.5 percent of private firms in 2015; a smaller share than Oregon and the U.S. Although fewer Eastern Oregon firms were classified as manufacturing, 15.4 percent of private employment and 18.0 percent of private wages came from manufacturing; a larger share.
In 2006, employment in manufacturing was 8,509 for the region. Manufacturing provided 16.9 percent of private employment and 20.1 percent of private wages for the year ($322.5 million; adjusted for inflation to 2015 dollars). Employment in manufacturing fell to 6,731 jobs (-20.9%) by 2009 due to the Great Recession. The result was a 21.9 percent drop in manufacturing's share of private wages and roughly $71.0 million (inflation adjusted) less in manufacturing wages for Eastern Oregon in 2009. By 2015 the industry regained 1,398 jobs to total 8,129 and manufacturing's share of total private wages rose to 18.0 percent. Total inflation-adjusted manufacturing payroll has increased only 1.5 percent since 2006, due to the drop from 2006 to 2009. Manufacturing's inflation-adjusted total payroll has grown 30.1 percent since 2009 however, reaching $327.2 million in 2015. Employment in the manufacturing industry is expected to grow 6.0 percent in Eastern Oregon between 2014 and 2024. This rate of growth puts total manufacturing employment for the region back at the 2006 level by 2024.
Eastern Oregon manufacturers produced products in only 18 manufacturing sub-sectors in 2015; apparel manufacturing, paper manufacturing, and electrical equipment and appliances manufacturing were not found in the region. Food manufacturing gobbled up much of the industry in Eastern Oregon in 2015, providing 50.5 percent of all manufacturing employment and 49.3 percent of all industry wages. Wood product manufacturing held a sizeable cut, providing 17.1 percent of manufacturing employment and 18.8 percent of wages. A third sub-sector, transportation equipment manufacturing, also delivered a large chunk of the industry's employment and wages in 2015. However, due to confidentiality laws the actual share of the region's manufacturing industry by this sub-sector and the full impact on the region's economy cannot be disclosed.
Manufacturing firms in four Eastern Oregon counties (Harney, Umatilla, Union, and Wallowa) manufactured transportation equipment in 2006. Harney and Wallowa each had one firm in the sub-sector and employment and wage information was confidential. Umatilla and Union had a total of 14 firms operating in transportation equipment manufacturing and provided 1,739 jobs and $68.1 million in wages to the region. This accounted for 20.4 percent of all manufacturing employment and 21.1 percent of manufacturing wages for Eastern Oregon in 2006. By 2015, only firms in Umatilla and Union counties manufactured transportation equipment in Eastern Oregon. There were six in Umatilla, but employment and wage information for the sub-sector was confidential for the county in 2015. Union County's transportation equipment manufacturing employment and wages were not confidential and can help to gauge the impact of transportation equipment manufacturing in the region. In Union County, four transportation equipment manufacturing firms provided 559 jobs and $26.6 million in wages. This represented 6.9 percent of Eastern Oregon's total manufacturing employment and 8.1 percent of wages.
Did We Make That? A County Level Breakdown
In 2015, manufacturing in Umatilla County represented 41.4 percent of Eastern Oregon's total manufacturing industry and 37.1 percent of manufacturing wages. In Umatilla County, manufacturing provided 3,363 jobs and $121.5 million in wages (15.0% of private employment and 15.7% of private wages). Food manufacturing grabbed the largest slice of the industry in Umatilla, accounting for 50.7 percent of total manufacturing employment and 51.9 percent of manufacturing wages. Umatilla's wood product sub-sector accounted for 10.5 percent of total manufacturing employment for the county and 10.4 percent of manufacturing wages in 2015.
Morrow's total private employment was 4,808 in 2015. But despite its small employment footprint (just 8.1% of Eastern Oregon's total private employment), Morrow County manufacturing represented 22.1 percent of Eastern Oregon's total manufacturing employment and 25.4 percent of manufacturing wages. Manufacturing provided 1,793 jobs and $83.0 million in wages. This accounted for a whopping 37.3 percent of all private employment and 33.8 percent of private wages for the county. Food manufacturing devoured all other sub-sectors, providing 89.8 percent of Morrow's total manufacturing employment and 87.9 percent of manufacturing wages. According to the 2012 Census of Agriculture, Morrow County ranked second in the state in total value of agricultural products sold and first in the state in total value of livestock, poultry, and their products sold. This makes the dominance of food manufacturing in Morrow not so surprising. What might be surprising is that Morrow County's food manufacturing sub-sector is responsible for 42.3 percent of all regained manufacturing jobs since 2009 in Eastern Oregon; after factoring in growth and decline of manufacturing in all eight Eastern Oregon counties. Food manufacturing employment and wages for the county have grown 103.0 percent and 120.8 percent, respectively, since 2006.
Manufacturing in Union County represented 16.7 percent of Eastern Oregon's total manufacturing industry and 20.0 percent of manufacturing wages in 2015. Manufacturing provided 1,358 jobs and $65.3 million in wages (17.7% of private employment and 24.5% of private wages) to Union County's workforce. The impact of transportation equipment manufacturing for Union County was large. The sub-sector accounted for 41.2 percent of manufacturing employment and 40.8 percent of manufacturing wages for the county in 2015. While transportation equipment was big in Union, wood product manufacturing carved out the top slot. Wood product manufacturing accounted for 45.7 percent and 48.8 percent of manufacturing employment and wages for the county, respectively.
Malheur County's manufacturing industry represented 10.3 percent of Eastern Oregon's total manufacturing employment and 8.3 percent of manufacturing wages in 2015. Malheur County had 27 firms manufacturing in 11 sub-sectors that provided 841 jobs and $27.2 million in wages (9.1% of private employment and 9.9% of private wages) for the county in 2015. Nonmetallic mineral product manufacturing, fabricated metal product manufacturing, and machinery manufacturing were the only sub-sectors not confidential in 2015. Combined, these three accounted for only 8.3 percent of total manufacturing employment and 8.0 percent of manufacturing wages. An historical look shows that prior to the recession food product manufacturing bit off the lion's share of total manufacturing employment and wages. In 2004, this sub-sector provided 1,221 jobs and accounted for 91.4 percent of Malheur's total manufacturing employment. This was the last year the sub-sector was not confidential. According to the 2012 Census of Agriculture, Malheur County ranked fourth in the state in total value of agricultural products sold.
Baker County's manufacturing industry represented 6.0 percent of Eastern Oregon's total manufacturing employment and 6.5 percent of manufacturing wages in 2015. Baker County had 24 firms manufacturing in 12 sub-sectors that provided 490 jobs and $21.3 million in wages. Manufacturing accounted for 12.1 percent of private employment and 16.4 percent of private wages. In Baker County, all manufacturing sub-sectors were confidential for 2015. Two manufacturing sub-sectors which historically have provided much of Baker's manufacturing employment are wood product manufacturing and fabricated metal product manufacturing. In 2007, wood product manufacturing provided 267 jobs which accounted for 41.7 percent of the county's total manufacturing employment for the year. In 2011, fabricated metal product manufacturing provided 73 jobs which accounted for 14.9 percent of the county's total manufacturing employment for the year. These were the last years that the two sub-sectors were not confidential.
Wallowa County's manufacturing industry represented just 1.8 percent of Eastern Oregon's total manufacturing employment and 1.1 percent of manufacturing wages in 2015. Wallowa County had 16 firms manufacturing in nine sub-sectors that provided 144 jobs and $3.5 million in wages. Manufacturing accounted for 7.8 percent of private employment and 6.6 percent of private wages for the county. Primary metal manufacturing, the only manufacturing sub-sector in Wallowa not confidential in 2015, accounted for 29.9 percent of the county's total manufacturing employment and 40.7 percent of manufacturing wages.
Combined, Grant and Harney represented 1.7 percent of Eastern Oregon's total manufacturing employment and 1.6 percent of manufacturing wages in 2015. Last year, Grant County had six manufacturing firms and Harney County had two. Manufacturing employment and wages were confidential for each of the two counties for the year. An historical look reveals that in 2013 (manufacturing's last non-confidential year), Grant County's manufacturing industry provided 141 jobs through seven manufacturing firms; this accounted for 10.4 percent of private employment for the year. These firms were in wood product manufacturing, fabricated metal product manufacturing, machinery manufacturing, and miscellaneous manufacturing. In 2011, Harney County's manufacturing industry provided six jobs through three firms. Harney County's manufacturing employment and wages have been confidential all years since 2006 except for 2009 and 2011. For Harney County, manufacturing became confidential during the Great Recession when two large manufacturing firms closed and the bulk of the county's manufacturing employment was lost.
How Many Manufacturers Does It Take to Make a…?
Manufacturing operations have been slowly disappearing in Eastern Oregon over the years. The total number of manufacturing firms has dropped from 222 in 2006 to 194 in 2015; a decrease of 12.6 percent. Manufacturing firms represented 4.3 percent of all private firms for the region in 2006, but only 3.5 percent in 2015. Umatilla County was home to 39.9 percent of the region's manufacturing firms which is nearly the same as the county's share of all private firms. Harney held the smallest share (1.0%) with Grant a close second (3.1%). The remaining five counties hovered between 8.2 percent and 13.8 percent of Eastern Oregon's manufacturing firms.
The total number of manufacturing firms in a county can be misleading when it comes to a county's manufacturing strength. Morrow County, for instance, had 17 manufacturing firms in 2015, just one more than Wallowa County, and yet manufacturing firms in Morrow employed 1,145 percent more people than in Wallowa County. When it comes to a county's manufacturing strength, firm size matters. More than 60.0 percent of manufacturing firms in Eastern Oregon employed 10 or fewer people and roughly 84.0 percent employed fewer than 50. But there were 23 manufacturing firms with more than 100 employees in Eastern Oregon in 2015. These firms were spread around the region and accounted for 72.9 percent of Eastern Oregon's total manufacturing employment. Six of these firms had more than 300 employees and accounted for 39.9 percent of all manufacturing employment in the region.
Data from the U.S. Census Bureau helps to reveal where these firms are located. In 2014 the following breakdown occurred for manufacturing firms with more than 100 employees in Eastern Oregon:
- Two firms with 500 to 999 employees; one in Morrow County and one in Malheur.
- Three firms with 250 to 499 employees; one in Union County and two in Umatilla.
- Twelve firms with 100 to 249 employees; two in Baker County, one in Grant, four in Morrow, five in Umatilla, and four in Union.
Look into My Crystal Ball: The Future of Manufacturing in Eastern Oregon
Several manufacturing sub-sectors experienced a fast rate of growth or decline from 2006 to 2015 in terms of percentages. However, in terms of total jobs for Eastern Oregon much of this growth and decline was small. Employment in beverage and tobacco product manufacturing grew 77.6 percent in the region since 2006; the sub-sector represented only 1.3 percent of the region's total manufacturing employment in 2015 and grew by only 45 jobs. Employment in machinery manufacturing grew 47.4 percent since 2006; the sub-sector represented only 2.4 percent of the region's manufacturing employment and grew by only 63 jobs. Furniture and related product manufacturing saw the biggest loss in terms of percentages, dropping 74.0 percent of its employment since 2006; a loss of 37 jobs. Printing and related support activities dropped 44.1 percent; down 15 jobs.
Employment in wood product manufacturing, a large block of Eastern Oregon's manufacturing industry, is still down 28.4 percent (550 jobs) from 2006, but up 16.7 percent (199 jobs) from 2009. Wood product manufacturing was in all Eastern Oregon counties in 2015. This sub-sector is driven by the housing market and construction demand, both foreign and domestic. Competition from substitute construction materials and environmental regulations inside and outside of the industry often put downward pressure on growth. Technological advancement continues to offer substitution of capital for labor when cost effective; a boon for the firm's bottom line, but not necessarily for the employee who is replaced.
Transportation equipment manufacturing was in only two counties in Eastern Oregon in 2015, but the sub-sector continues to play a large role in driving the region's economy. In Union County, transportation equipment manufacturing was down 17.8 percent (121 jobs) from 2006. Much of this sub-sector is dedicated to trailer and camper manufacturing in Eastern Oregon which is largely driven by luxury spending. Competition from other forms of vacation and travel spending tends to put downward pressure on growth. Transportation equipment manufacturing and wood product manufacturing are generally volatile during recessions and can see large losses in employment.
Morrow County saw employment in food manufacturing more than double since 2006 and the sub-sector grew 19.7 percent in Eastern Oregon overall. Food manufacturing represented 50.5 percent of the region's total manufacturing employment in 2015 and 80.7 percent of food manufacturing employment was in two counties: Morrow (39.2%) and Umatilla (41.5%). Growth in food manufacturing can be aided by both recessions and expansions. In a recession, people with less available cash often decrease spending on luxury items and increase spending on food items. In expansions, demand for food can also increase as people dine out, stock up, and over indulge. Expanding foreign economies also drive food demand through U.S. exports.
The impact of the manufacturing industry in Eastern Oregon seems evident, but the shape of the industry is unclear. The majority of manufacturing employment in Eastern Oregon came from three sub-sectors and 23 firms in 2015. Three counties (Morrow, Umatilla, Union) accounted for 80.2 percent of total manufacturing employment in the region for the same year. Not all of Eastern Oregon's manufacturing sub-sectors suffered losses during the Great Recession. Some manufacturing sub-sectors experienced growth through the recession and continue to grow. Although the volatility of demand plays a pivotal part in Eastern Oregon's manufacturing industry, some sub-sectors have gained a foothold and rapid growth among these firms might just hint at the direction of the industry.