Small to Medium Enterprise Manufacturing

Definition and Overview: Greater Manhattan’s manufacturing sector has experienced numerous positive developments in recent years. In 2016, GTM Sportswear was sold to HanesBrands Inc., who cited the strength of GTM Sportswear’s workforce and its growth potential as key factors driving the purchase. Other global brands have also expanded into the Greater Manhattan market, including Caterpillar, who announced a 40,000 square foot facility in 2011. The Small to Medium Enterprise (SME) manufacturing target reflects these rising opportunities. Small to Medium Enterprise manufacturers are highly automated, capital intensive operations which rely on a well-educated talent pool to operate computer controlled equipment and optimize production efficiency. The SME manufacturing target covers a wide swath of production activity ranging from athletic textiles to automotive trailer manufacturing. Wholesale activity, which supplies parts and inputs into the production process, is also incorporated into the Small to Medium Enterprise manufacturing target. This reflects the more coordinated nature of modern supply chains and logistical operations, often requiring “just-in-time” part and product shipments.

Company Composition: Greater Manhattan small to medium size manufacturers include Florence Corporation, GTM Sportswear, Caterpillar Inc., Custom Wood Products, Onyx Collection, R-Tech Tool & Machine, and Travalum Trailers, among others.

Market Segments: Advanced materials, metal and metallic products, and transportation and construction equipment are core areas of manufacturing strength in Greater Manhattan. Although three market segments are identified as particular areas of strength in Greater Manhattan, it does not preclude local economic development organizations from providing relocation, expansion, or retention services to companies operating outside of these segments.

Site Considerations: Typical manufacturing location considerations include reliable, low cost power, a healthy labor pool, well connected transportation infrastructure, large contiguous tracts of land, and an abundant supply of water (for certain operations). Other factors that may also weigh on location decisions include state and local tax climates, proximity to consumer markets, access to water or inland ports, or closeness to other suppliers within the manufacturers’ distribution chain. With three full service industrial parks, Greater Manhattan is well-positioned to attract small to medium sized manufacturing

National Trends: Automation and globalization have forever altered the nation’s manufacturing sector. As reported by Bloomberg News, manufacturing’s share of total U.S. employment reached an all-time low of 8.48 percent in May 2017, down from 40 percent in the 1940s. Despite these trends, there is cause for optimism. Rising global labor costs, concerns over the security of intellectual property, supply chain disruptions, government corruption, and other factors are reinvigorating the sector nationally. New technologies are also driving further productivity gains. Interconnected sensors capable of instantly adjusting production processes, augmented reality technologies which enhance front-line workers’ capabilities, and rapid prototyping that reduces product-development cost and duration will transform the factory floor and the nature of manufacturing work. Technology literacy, computer coding, team collaboration, and technical communication are rising skill-sets sought by successful manufacturers.

REGIONAL EMPLOYMENT TRENDS

In many respects, manufacturing activity in Greater Manhattan has defied national trends, particularly in the textile sector. Textile manufacturing was among the first manufacturing subsectors to globalize as China focused its initial industrialization efforts on textile production. As a result, numerous textile mill towns throughout the United States entered a period of sharp, lasting economic decline. Some textile manufacturing communities, such as the carpet manufacturing capital Dalton, Georgia, have withstood foreign competition. Greater Manhattan’s textile sector was similarly insulated from globalization pressures; employment within the other textile product mills sector nearly doubled over the last decade. This growth is emblematic of Greater Manhattan’s vibrant manufacturing sector as a whole.

Greater Manhattan’s Small to Medium Enterprise Manufacturing has defied national employment trends. From 2006 to 2016, SME manufacturers added 1,060 employees, a growth rate of 45.3 percent. Nationally, employment among SME manufacturers declined by -3.3 percent. Shift-share analysis (an analytic tool that determines the cause of growth – whether due to industry, national, or local factors) reveals that employment gains among the regional SME manufacturing sector is almost exclusively caused by local competitive factors.

Several SME manufacturing subsectors in Greater Manhattan are highly concentrated. For example, employment in other textile product mills is almost 18 times more concentrated than the average community nationwide. Rubber product manufacturing (3.6 times more concentrated than the national average); boiler, tank, and shipping container manufacturing (7.4 times); and agriculture, construction, and mining machinery manufacturing (4.4 times) are also highly localized. Strong employment concentrations in specific subsectors could serve as a lure to attract other manufacturers who utilize these skill-sets or outside suppliers who may benefit from proximity to their customer bases.

The average size of manufacturing operations (in terms of employment) has grown in Greater Manhattan. In 2006, the average SME manufacturer employed 43 workers at a single establishment. By 2016, the average SME manufacturer employed 54 workers. If establishment sizes continue to grow, manufacturers could require additional industrial space to expand their operations (provided the size of their operations is a function of their space requirements).

The real impact and benefit to Greater Manhattan of the Small to Medium Enterprise Manufacturing target can be seen in its export data. In 2016, Greater Manhattan manufacturers sold approximately $700 million in intermediate or finished goods to other areas across the nation and globe. This total doubled the next most robust export sector among the Manhattan Area’s targets, Agriculture and Animal Health. The tremendous export potential of the manufacturing sector is why regions and states so heavily incentivize the relocation of these firms and why Greater Manhattan should not take for granted these jobs. Multiplier effects from SME Enterprise Manufacturing employment can lead to significant secondary economic impact in the region.

OCCUPATIONAL TRENDS

Over 5,200 Greater Manhattan workers are employed in occupations supportive of SME Manufacturing, representing 7 percent of the regional total. From 2006 to 2016, SME Manufacturing occupations grew by 16.4 percent compared to a 2.2 percent decline nationally. Because many of these jobs are located outside of the Manhattan core, there is the potential to overlook their impact and importance to the broader region. Viewing the Manhattan region as an integrated labor shed will help leaders engage partners from across the three-county area and better coordinate growth strategies.

According to EMSI, the Manhattan Area’s manufacturing employment is expected to increase by 13.4 percent (457 jobs) over the next decade (2006-2016). Filling SME manufacturing workforce demand will rest squarely upon the shoulders of Manhattan Area Technical College. According to the National Center for Education Statistics, Manhattan Area Technical College furnished 17 welding and 35 other SME manufacturing-related degrees in 2016. This capacity will prove vital as SME manufacturing grows regionally but must increase to accommodate future demand.

Occupational concentrations among machinists (20 percent more concentrated), sewing machine operators (50 percent), and general maintenance and repair workers (10 percent) could be attractive to certain SME manufacturers who utilize these skill sets in production processes.