NJ Ranks 15th in the nation in Manufacturing Employment, 2006
Source: Northeast Midwest Institute

* See below for a commentary on how these statistics can affect your business

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MANUFACTURING EMPLOYMENT IN THE UNITED STATES

According to data collected by the Northeast Midwest Institute (NEMW) in 2006, New Jersey employed 319,300 in the manufacturing sector.  This represents a 3.7 percent decrease from 2005 and a 27 percent decrease from a decade earlier.  New Jersey experienced a faster decline in manufacturing employment compared to the rest of the nation.  However, due in part to the fact that about one-third of the manufacturing sector in New Jersey is highly-specialized, high-value pharmaceuticals and chemicals, the manufacturing labor productivity in the State surpassed the national average by 20 percent.  Other large manufacturing industries in New Jersey include computers, electronics, and food.(1)

The trends in New Jersey generally reflect national economic indicators and increasing global economic competition.  For example, the United States has suffered considerable manufacturing employment decline since the early 1990s.  The following graph displays the transition in this sector:

MANUFACTURING EMPLOYMENT IN THE UNITED STATES, 1950-2000

The recession of 2001 and the subsequent modest economic recovery partly contribute to the sharp spike following 2000.  Furthermore, there are several long-term factors which have caused this decline, including: a shift in demand from manufactured goods to other specialized areas, investment in more efficient technology resulting in increased manufacturing productivity, foreign competition, and a shift in manufacturing employment structure towards hiring more temporary workers.

However, it is critical to note the intimate relationship between manufacturing and small business.  Thomas M. Sullivan of the US Small Business Administration indicates in a testimony to the House Committee on Government Reform in September 2005, “Small business is the driving force behind U.S. manufacturing. Economic data from 2002 indicates that nearly 99 percent (98.6 percent) of all manufacturing firms are small businesses…small firms innovate more than large ones do, producing 13 to 14 times more patents per employee than larger firms do [and] small manufacturing firms are more likely…to produce specialty goods and custom-demand items." (3) 

Although the statistics denote reductions in manufacturing employment, we also find that the country has experienced growth in manufacturing productivity and accordingly, the industry still plays a very significant role in the market.(4) Recognizing its value, New Jersey has invested in several programs to encourage manufacturing.  For example, in 2002, $2 billion in federal research and development (R&D) funds were spent in the State.  Considering all sources of R&D, including business, R&D totaled over $13.1 billion in 2002 in New Jersey.(5)  Additionally, the State has initiated various economic development programs including, the New Jersey Manufacturing Extension Program (NJMEP), which aims to provide on-site visits and offer technical assistance to firms and the New Jersey Industries of the Future (NJIOF), a program that intends to find energy efficiency and productivity solutions for participating businesses.

(1) “Manufacturing in the Northeast-Midwest.”  http://www.nemw.org/mfgnj.pdf.

(2) “What Accounts for the Decline in Manufacturing Employment?” http://www.cbo.gov/ftpdoc.cfm?index=5078&type=0&sequence=0.

(3) “The Impact of Regulation on U.S. Manufacturing: Spotlight on the Environmental Protection Agency,” http://www.sba.gov/advo/laws/test05_0928.html.

(4) “US Manufacturing: Challenges and Repercussions.”    http://www.whitehouse.gov/cea/forbes_nabe_usmanufacturing_3-26-042.pdf.

(5) “New Jersey R&D 2007,” The Alliance for Science & Technology Research in America, http://www.agiweb.org/gap/cvd/cvd2007/State-factsheets/CVD07NewJersey.pdf.