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Clusters

Chicago's freight and manufacturing clusters play a significant role in the region's economy, representing 15 percent of employment.  Metropolitan Chicago is the largest rail-truck intermodal port in the country.  In 2013, the region exported $41.8 billion of manufactured goods.

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Cluster Employment and Location Quotient

What
The number and concentration of manufacturing and freight cluster jobs among the top five U.S. metropolitan areas with the largest manufacturing and freight clusters. The analysis examines the same five regions for both freight and manufacturing because these regions are home to the most employment in both clusters.

Why it matters
Metropolitan Chicago's dual concentration in freight and manufacturing is one of the region's many built-in advantages that enhance its global competitiveness. As of 2014 the seven-county Chicago region was home to the third largest metropolitan manufacturing cluster in the nation, containing approximately 560,000 jobs. The region is also home to the third largest freight cluster in the nation with 179,000 jobs.

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The Chicago region enjoys a diverse mix of industries while also realizing significant gains through its economic specializations in freight and manufacturing.  The region's freight and manufacturing industry clusters create high-quality jobs, spur innovation, and generate growth among numerous interconnected industries.  The health of cluster economies within metropolitan areas can be measured by tracking both employment totals and employment concentration for each cluster.  Total employment measures provide an easy-to-understand metric for measuring the size of a cluster, while location quotients measure cluster employment concentration in the region compared to the national average.

Cluster Location Quotients

Not only are metropolitan Chicago's manufacturing and freight clusters large in terms of total employment, they are also highly concentrated in the region.  Location quotients are used to measure employment concentration in particular industries or clusters within metropolitan areas compared to national concentrations.  A location quotient greater than 1.0 indicates increasingly greater employment concentrations (also referred to as "specialization") in a cluster compared to the national average.  Metropolitan Chicago's manufacturing and freight clusters have location quotients of 1.06 and 1.17, respectively.  Among the five largest metropolitan manufacturing clusters, the Chicago region is one of only two areas to have an above-average manufacturing employment concentration (the other being Houston).  Among the five largest freight clusters in the nation, the region has the second highest concentration of freight employment, trailing only Dallas.

Industry clusters bring substantial benefits to regions.  As metropolitan industry clusters grow and become more specialized, they produce increasingly greater economic returns.  Clusters tend to attract both professionals and employers to a region -- professionals may move to a region seeking employment in that cluster, and related businesses follow in order to take advantage of a growing labor pool with industry-specific skills.  Ideas within concentrated clusters are more easily shared among firms and workers, and production costs decline as businesses cluster together to share common inputs and outputs.  A growing body of research on the effect of industry specialization shows that, as a result of these efficiencies, industry clusters are associated with more robust employment growth, higher wages, increased levels of patenting, and higher level of industry startup activity.  

Manufacturing Cluster Growth

Manufacturing cluster employment has grown since the recent recession regionally and nationwide.  However, among the top five metropolitan areas, manufacturing employment totals are still well below 2001 levels; only Houston has seen positive growth since 2001.  The following chart shows employment changes among the five largest metropolitan manufacturing clusters indexed to 100 in 2001.  

Although manufacturing employment levels have declined since 2001 in most regions, the past four years have seen a marked resurgence of manufacturing in the Chicago, Dallas, and Houston metropolitan areas.  Metropolitan Chicago's manufacturing cluster added approximately 29,000 manufacturing jobs between 2010-14, placing it behind Houston and Dallas but ahead of New York in terms of total jobs added.

Freight Cluster Growth

While manufacturing employment levels have experienced a net decline in most metropolitan areas, employment in freight clusters around the nation has grown, with Chicago, Houston and Dallas showing positive freight cluster growth since 2001. The Los Angeles metropolitan area has had only marginal increase in freight cluster employment over that time period. Contrary to national trends, the New York metropolitan area is now home to fewer freight cluster jobs than in 2001.  

Although growth in metropolitan Chicago's freight cluster has lagged behind that of Houston and Dallas, the region still remains the third largest freight cluster in the nation, adding more freight cluster jobs between 2010-14 than established peer regions.  Metropolitan Chicago's dominance as a transportation hub attracts not only traditional transportation jobs, such as trucking and warehousing, but also a variety of supporting industry jobs (traffic engineering, logistics management, packing material manufacturing).  Faster and more efficient movement of goods from the region gives local manufacturers a competitive advantage over manufacturers not located near efficient, cost-effective transportation infrastructure.  

Monitoring the health of industry clusters and understanding their future needs is a critical part of ensuring the region's current and future prosperity.  CMAP has produced detailed analyses of the region's freight and manufacturing clusters, as well as the nexus between the two.  The reports contain numerous policy recommendations for enhancing these industry clusters.

About the Data

Employment and location quotient data are compiled through EMSI.  Freight and manufacturing clusters data presented here are defined by CMAP's drill-down reports on freight and manufacturing. EMSI utilizes both public and proprietary data sources to estimate employment totals.

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Intermodal Lifts

What
The number of twenty-foot equivalent units (TEUs) of freight cargo containers moved through metropolitan Chicago's rail-truck intermodal terminals and other North American ports.

Why it matters
The Chicago metropolitan area is the largest inland port in North America.  The region's confluence of rail, truck, and air infrastructure make it a critical shipping node for North American freight.  Approximately 15.4 million TEUs of cargo were moved through the region's rail-truck intermodal facilities in 2014, which represents an increase of nearly 30 percent since 2009. 

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With its heavily used rail and intermodal yards; international airports; access to a transcontinental road network; and connection to the St. Lawrence Seaway, Great Lakes, and Mississippi River systems, metropolitan Chicago is one of the largest and busiest cargo hubs in the North America.  Estimates show that between one-quarter and one-third of all freight tonnage in the U.S. originates, terminates, or passes through the region. 

The constant movement of goods into and out of the region supports the region's economy by creating demand for freight and logistics services while providing manufacturers with timely, cost-effective, and reliable options for moving products to market.  Advances in logistics technologies and services, coupled with a dense network of infrastructure and carriers, have enabled shippers to minimize freight costs.  Shippers are increasingly using intermodal containers that can be transferred across ship, rail, or truck without repackaging shipments, thus reducing the time and cost of handling goods as they travel to their final destination.

Intermodal cargo volumes are often estimated in TEUs, with one TEU representing the volume of a standard twenty-foot cargo container.  TEUs are generally used to measure containers that move through sea ports.  The busiest sea port in the world in 2014, for example, was the port of Shanghai, which moved 35.3 million TEUs of cargo. 

The Chicago region receives intermodal cargo by rail or truck rather than by sea. A TEU equivalent for the region can be estimated, however, by tracking the number of intermodal containers that are lifted by crane and transferred from truck to train and vice versa at the region's twenty active intermodal facilities.  Containers that pass through Chicago without an intermodal lift are not included in total TEU estimates.  The interactive map below shows the locations of the region's intermodal facilities and lift volumes at each facility in recent years.

Click on facility to see intermodal lift estimates.

Trends in Intermodal Lifts

In 2014, the region's intermodal facilities moved an estimated 15.4 million TEUs of cargo.  Long-term trend data show that intermodal freight volumes in the region fell during the last recession but have since experienced a significant rebound, growing by 30 percent from 2009-14.

Comparing Chicago Region Freight Activity to other Metropolitan Areas

Metropolitan Chicago's TEU equivalent estimates suggest that the region is one of the busiest ports in North America, matching volumes at Los Angeles-Long Beach and significantly outpacing other major ports like New York, Seattle-Tacoma, Savannah-Brunswick, and Vancouver.  This is not surprising considering Chicago's unmatched freight infrastructure, which includes seven interstate highways and six of the nation's seven Class I railroads.

About the Data

TEU estimates for North American ports are from the American Association of Port Authorities, which collects self-reported data from each port.  TEU estimates for metropolitan Chicago are based on intermodal lift counts for intermodal facilities located within the seven-county region plus the UP Global III facility in Rochelle, IL.  Intermodal lift data are reported to CMAP by each railroad.  CMAP then sums the total number of lifts and multiplies the total by a container size factor for both U.S. and Canadian Railroads to estimate a total TEU equivalent.  This total is then multiplied by a "laden" container factor to eliminate empty containers from being counted in TEU estimates.  In some cases, intermodal lift data are not available, and lift totals are estimated by CMAP.  For more information on this methodology, refer to CMAP's freight data web page at http://www.cmap.illinois.gov/mobility/freight/freight-data-resources.

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Manufacturing Exports

What
The annual value of manufacturing exports from Chicago and peer Metropolitan Statistical Areas (MSAs).

Why it matters
The export of goods connects metropolitan economies with a growing global consumer base. Exports have been an important component of economy recovery in the Chicago region and in peer metropolitan economies. In 2013 the Chicago metropolitan area exported $41.8 billion of manufactured goods.  

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Advances in technology and logistics along with growth of the world's population and consumers outside of the U.S. have created a marketplace for goods and services that is increasingly global in nature.  Approximately 95 percent of the world's population lives outside of the U.S., and the vast majority of global economic growth in the future will occur outside U.S. borders.  Many American manufacturers are tapping into these new markets by exporting their products overseas.  Exporting brings new dollars into our metropolitan economy and supports higher-paying jobs in the region's manufacturing cluster.

Trends in Manufacturing Exports

Manufacturers that export goods gain access to new, growing markets, and have a more diverse customer base.  As demand for advanced manufactured goods continues to increase in developing countries, the region's success in exporting will serve as a measure of the competitiveness of Chicago's manufacturing cluster.  In 2013, the Chicago MSA exported $41.8 billion in manufactured goods.  The region's manufacturing exports come from a variety of manufacturing industries, reflecting the region's manufacturing diversity.  The region's top manufacturing exporting industries by value include: Chemicals, Computers and Electronics, Transportation Equipment, Petroleum and Coal Products, and Machinery.

Manufacturing export growth in the Chicago region has been relatively robust compared to peer metropolitan areas.  The chart below shows real manufacturing export growth for Chicago and peer regions indexed to the year 2001.  Between 2001-08, Chicago region exports grew the fastest among its metropolitan peers.  Exports declined sharply in all metropolitan areas during the 2007-09 recession, but have since recovered in each peer region.  Manufacturing exports from the region have grown by 59 percent since 2001, on par with export growth in the Los Angeles metropolitan area and ahead of peer regions such as New York and Boston. 

About the Data

Manufacturing exports values are based on the U.S. Census Bureau's Origin of Movement data series.  Export sales are attributed to metropolitan areas based on the zip code in which payment for a good is received.  Data provided via special request from the U.S. Census Bureau International Trade Evaluation Branch.

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Skills Gap

What
The number of job openings compared to corresponding post-secondary educational program completions in the Chicago region for the fields of Mechanic and Repair Technologies, Precision Production, and Transportation and Material Moving.

Why it matters
The comparison of job openings and related educational program completion data can be used as a rough measure of labor demand for specific occupations.  The three career fields measured here represent mid-skill manufacturing occupations, which require more than a high school diploma but not necessarily a college degree.  These types of occupations will become increasingly common as the region's manufacturing cluster businesses seek to fill positions vacated by retiring workers while competing in a global environment. Aligning educational programming to workforce needs can help ensure that the region's residents have the knowledge and skillsets required to foster growth of the region's industry clusters.

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Openings and Completions in Cluster Industry Jobs

Job openings and post-secondary educational program completion data provide insights into the regional balance of skills sought by employers and skills held by the region's workforce.  This indicator tracks three mid-skill career fields -- Mechanic and Repair Technologies, Precision Production, and Transportation and Material Moving -- in order to illustrate gaps between job openings and educational program completions, which can vary substantially from year to year.  Imbalances between job openings and program completions can lead to challenges for workers, employers, and training providers.  The following chart shows job openings and educational program completions from 2008-14.

The number of openings in each of the career categories tracked was relatively low during the economic downturn from 2008-09 with many more openings between 2010-14.  The Precision Production career field, which includes positions such as Machinist, Tool and Die Technician, Metal Fabricator, and Cabinetmaker, has had a significantly higher number of job openings than educational program completions for the past seven years.  An increase in the global movement of goods has helped increase openings in Transportation and Material Moving, and estimates from 2010-14 show job openings markedly outpacing educational program completions.

Aligning the region's workforce development assets with employer needs through strategic planning can help alleviate opening and completion imbalances.  In some parts of the region, employers are already working with education institutions to ensure that students receive the most up-to-date, relevant training required to gain employment after graduation.  Additional coordination among workforce development stakeholders and employers could further address these issues.

About the Data

The Classification of Instructional Programs (CIP) taxonomy is used to categorize fields and programs of study. This analysis tracks three separate CIP categories: Mechanic and Repair Technologies (CIP 47), Precision Production (48), and Transportation and Material Moving (49).

Job opening estimates are obtained from EMSI proprietary data sources and include job openings attributed to both industry growth and attrition (individuals leaving their position).  Completion data are obtained from EMSI and originate from the National Center for Education Statistics.  Job openings data represent point-in-time estimates of the labor market for each career and should be understood as a general illustration of market conditions.  Individuals completing a specific post-secondary training program may not necessarily be seeking a job in the corresponding industry field, and job opening data may not reflect actual job opening totals since some positions are filled without being advertised.

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