2 Industries Buck Trends as Their Output Rises

CLEVELAND – Manufacturing in Ohio, western Pennsylvania, eastern Kentucky and the northern panhandle of West Virginia accounted for only 13.6% of the U.S. economy, down from 26.3% in 1997, the Federal Reserve Bank of Cleveland reported Thursday. But two industries bucked this trend: petroleum and coal products and computers and electronic products.

In their article in Forefront, a publication of the Cleveland Fed, Ruben Hernandez-Murillo and Sarah Mattson write that petroleum and coal products made in the Fourth Federal Reserve District had risen to sixth-largest contributor to the national economy from 13th during those 17 years and computer and electronic products went to 10th from 16th.

“By 2014, declining output across most [U.S.] manufacturing industries lowered this [Fourth] District figure significantly to 14.7%,” they write, “from only slightly above that of the nation as a whole at 11.3% the same year.”

Manufacturing across the district fell over those 17 years in both share and real dollar value. Manufacturing contributed $128 billion to the national economy in 1997, Hernandez-Murillo and Mattson write, but by 2014 had fallen to $125 billion in 2009 dollars.

They described the decrease in manufacturing as “significant” because the contributions of employers in the Fourth District “rocketed to $852 billion by 2014” from $489 billion in 1997.

Over those 17 years, no industry other than petroleum and coal and computers and electronics had an annual growth rate that exceeded 1%. Petroleum and coal enjoyed an average annual growth rate of 7.8% during that period while computers and electronics grew at an annual average rate of 10.4%.

For petroleum and coal, the growth translated from just under $3 billion in output in 1997 to almost $10 billion in 2014.

Those employed in oil and coal production made up 0.8% of the workforce compared to 0.6% in 1997.

The computers and electronics industry grew to almost $5 billion in output in 2014 from less than $1 billion in 1997.

The authors were struck by the productivity and innovation within that industry, made up of computers, computer equipment, audio and visual equipment, semiconductors and electronic components and various electronic and control instruments.

In 1997, the industry was the third-smallest in the district as measured by output, accounting for only 0.7%. By 2014, however, it jumped to 10th place from last (18th) and its share to 3.8% of total manufacturing output. The number of workers needed to achieve the elevenfold increase in productivity fell.

Those employed in the computers and electronics industries constituted 3.3% of the workforce in the Fourth District compared to 4.5% in 1997, dropping four places.

“These facts suggest a spectacular increase in labor productivity in computer and electronics products,” the authors write.

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