February 2, 2017

Manufacturing employment trends in Illinois’ metropolitan and nonmetropolitan areas
The Chicago Metropolitan Agency for Planning's (CMAP) regional economic indicators microsite explores key measures of metropolitan Chicago's economy and, where applicable, compares these measures to peer metropolitan economies. The following Policy Update supplements the indicators by examining manufacturing employment and output trends for the seven-county CMAP region and the rest of Illinois from 2001-16. 
Metropolitan Chicago plays a critical role in Illinois' manufacturing landscape. Home to more than 360,000 manufacturing jobs, the region accounted for more than 60 percent of the state's manufacturing employment, establishments, and output in 2016. CMAP's previous economic clusters analyses highlighted the importance of manufacturing in the Chicago region due to its contributions to innovations that spur broadly shared economic prosperity.
This Policy Update compares manufacturing employment shifts in the Chicago region and Illinois' other metropolitan and nonmetropolitan areas, with particular focus on the loss of high-skilled manufacturing jobs across each of those geographies. CMAP analysis of Economic Modeling Specialists International (EMSI) data found that although the Chicago region's rate of manufacturing employment loss mirrored the Illinois average, the region maintained a larger share of highly skilled, highly productive advanced manufacturing jobs.

Decreasing manufacturing employment across Illinois

Manufacturing employs fewer people today than in previous decades. From 2001-16, the Chicago region and state lost approximately 30 percent of their manufacturing jobs. Other metropolitan and nonmetropolitan areas of Illinois experienced manufacturing job losses at a similar pace. Despite decreasing by nearly 170,000 manufacturing jobs, the Chicago region maintained its share of 64 percent of Illinois' total manufacturing employment over the period. 
Manufacturing employment has decreased while employment has increased in service sector industries such as health care, finance, and business services. In Illinois' metropolitan and nonmetropolitan areas, the manufacturing sector's share of total employment decreased between 3.2 and 4 percent from 2001-16. The national shift toward service jobs has occurred over decades: Service sector employment has grown from 60 percent of employment during the 1940s to more than 83 percent today.
Overall job gains in the rest of metropolitan Chicago's economy have tempered manufacturing job losses. From 2001-16, metropolitan Chicago's overall employment grew by more than 80,000 jobs. Other economies throughout the state have not benefitted from similar gains. Employment in all other areas of Illinois decreased by more than 100,000 jobs from 2001-16.

Increasing advanced manufacturing productivity

Conversely, total manufacturing output (the amount of goods produced) and productivity (the efficiency by which goods are produced) increased both nationally and in the Chicago region. According to Moody's Analytics, output for Chicago region manufacturers increased by nearly 5 percent from 2001-16, in step with other metropolitan areas of Illinois. Output has increased every year since the end of the recession in 2010 and hit an all-time high of $74.8 billion in 2015. These measures underscore manufacturing industries' evolving workforce needs and continued ability to produce more innovative and specialized goods. 
Advances in technology have transformed every aspect of production. Manufacturers can use data and sophisticated logistics to ensure that supplies are available on-demand. One advanced machine can complete tasks that used to require multiple machines, and digitized instructions connect engineers to production equipment. These and other advances have amplified productivity, transformed organizational processes, and shifted the role of workers toward more complex tasks. 

Shifts in advanced manufacturing employment

The region's competitive advantage lies in manufacturing that leverages advanced skills.  Advanced manufacturing employment is also a useful indicator of economic prosperity due to its ability to generate additional jobs and output in the broader economy. With productivity rates nearly twice as high as all other industries, advanced manufacturing industries contain large concentrations of skilled workers in science, technology, engineering, and mathematics (STEM) fields. Employment in advanced manufacturing industries, such as biopharmaceuticals and electrical equipment, account for nearly 40 percent of metropolitan Chicago's 360,000 manufacturing jobs. These jobs tally half of all manufacturing jobs in other Illinois metropolitan areas, and nearly 40 percent of all nonmetropolitan manufacturing jobs. 
Illinois' advanced manufacturing employment declined overall, but the geographic distribution of these jobs shifted slightly between 2001-16. Metropolitan Chicago's share of the state's advanced manufacturing remained at 60 percent. Nonmetropolitan areas' share of these jobs decreased by 2 percent to 13 percent, while all other metropolitan areas' share increased by 2 percent to 27 percent. 
From 2001-16, lower skilled, non-advanced jobs represented most of metropolitan Chicago's manufacturing job losses; only 38 percent of the manufacturing jobs lost were advanced. These findings suggest that the region has a competitive advantage in advanced manufacturing that other parts of Illinois lack: As demand for advanced goods increases, the region's success in fostering advanced manufacturing industries, which often export products to global markets, will serve as a measure of competitiveness.

A new era of manufacturing 

Manufacturing job losses are indicative of shifts in the U.S. economy. Numerous factors contribute to national manufacturing employment decline, including increased levels of efficiency from automation and technologically enhanced production equipment, as well as international competition. Today, fewer workers are required even as production levels increase. Meanwhile, advances in telecommunications and transportation allow manufacturers to stretch supply chains across the world.  
The region's response to challenges and opportunities in key industries can foster long-term economic prosperity. This Policy Update supplements our understanding of the region's manufacturing employment in relation to the U.S. and other areas of Illinois. Manufacturing remains a major part of metropolitan Chicago's economy because of its outsized role in stimulating economic activity. To capitalize on our manufacturing concentration, ON TO 2050 will focus on strategies to leverage the same competitive advantages that fueled manufacturing growth in the past—innovative advancements, industry clustering, and a skilled workforce—to thrive in a new era of manufacturing.