1. Manufacturing and the New Hampshire Economy Ross Gittell James R. Carter Professor University of New Hampshire

2. Manufacturing at Risk in NH Since 1984 manufacturing employment in NH has declined from about 116,000 to 85,000 or by more than 1/4th Manufacturing “recovered” during the 1990s but at a level more than 10 percent below its 1980s peak. Over last 3 years NH has lost 1 of every 5 manufacturing jobs…. Higher than national and regional declines

3. Manufacturing Decline over last 3 years (March 2000 to March 2003) 20%. The decline is steeper in NH than any other state. Since 2002 (annual average of 85,200) employment has declined to 81,300

4. Layoffs concentrated in high tech manufacturing in NH.. During period of extensive layoffs (1/01-8/02) about 50% of layoffs in the state were in industrial machinery and electronics manufacturing industries

6. Comparing the last 2 Manufacturing Downturns in NH: The good news is that manufacturing in NH economy might be is less cyclical than it once was because it is more diverse and not as concentrated in a few larger employers…the bad news is that NH is suffering from structural decline. Since 1998 approximately 2/3rds of decline is cyclical,1/3 structural

7. How long can the state continue to have the strongest economy in New England and lose its manufacturing base?

8. Why Should we Care About Manufacturing in NH?

9. Why Manufacturing Matters… Manufacturing accounts for: –1 out of every 7 jobs in the state –1 out of every 5 payroll dollars in the state –2 of every 3 high technology jobs in the state (manufacturing is very much part of NH’s “new economy”) –8 of 10 NH counties have above US average employment concentration in manufacturing (compared to only 5 in leisure & hospitality)

10. Why Manufacturing Matters Manufacturing directly accounts for 22 percent of gross state product. This compares to 18 percent for services and 15 percent for trade. Overall manufacturing accounts –directly, in- directly and in induced effects -- for 40 percent of overall NH economy. (This is a conservative estimate and compares to high tech’s 30%) Manufacturing in NH has high multiplier effects from supplier relations, high wages and export activities

11. Over 20% of payroll in the state from Manufacturing..as much as Retail and Health Care combined, five- times as much as Information Sector and Accommodation and Food Services

12. Employment Percentages…..manufacturing more important to NH economy than US or New England. NH ranks 14 of US states and 2 nd in Northeast in percent of employment in manufacturing..

13. NH Ranks #1 in Concentration of High Tech Manufacturing, 2/3rds of NH high tech employment is in manufacturing compared to a little over 1/3rd nationally

14. Trade: Concentrated in High Tech and Specialized Manufacturing

15. Manufacturing pays well with relatively low educational attainment

16. Manufacturing wages compared to retail and services… Retail average wages are about 50% lower than wages in manufacturing industries. Service industry wages are about 30% lower than manufacturing wages. These differentials have been consistent over the last decade

17. Profile of NH Manufacturing

18. Ranked by Employment Level in 2001… high tech concentration, with diversification

19. Highest relative concentration in NH compared to US

20. Most establishments

21. Largest average establishment size. (Overall NH has very similar average size of manufacturing establishment [43] as US average [45])

22. Highest pay per worker

23. Ranked by Industry Wages Relative to US average in that industry (from high to low)

24. Across the state.. Manufacturing’s significant role..

25. Percentage of Total Payroll, in five counties manufacturing represents at least 1/4 th of payroll

26. Manufacturing employment concentration in NH counties is high compared to US average. All but 2 NH counties have above US concentration

27. Example of how the mix of leading manufacturing industries varies by county

28. Structural Issues of Concern

29. The High Tech Advantage in NH: High Value Added per Worker in Manufacturing (e.g, Computer and Medical Equipment).

30. Capital Expenditures per Worker in NH High Tech Manufacturing is below average: What will be the effect of this on long term competitiveness?

31. R&D Expenditures not at level to sustain high technology rank Federal R&D as a percent of gross state product …NH ranks 29 th among the 50 states in at less than 50% of US average Also ranks low (relative to #3 high tech rank) in Industry R&D as percent of gross state product –ranked 12 th among 50 states

32. Percentage of Manufacturing workers with college degree is below NH All-Industry average and well below Services and High Tech averages

33. Manufacturing workers in NH lag behind educational attainment in other high tech states

34. Skilled workforce gaps NH ranks below the US mean and 50 state median in % of workforce with BS, MS and PhD degrees in engineering and sciences Degree completions in engineering and sciences declining while overall degrees are increasing in New Hampshire Low matriculation among females in sciences and engineering..a lost opportunity in NH and US

35. Distribution of Degrees NH compared to Colorado (number 1 ranking high technology state)

36. Looking Forward…

37. New England Economic Project (Spring 2003) NH employment growth expected to be higher than region and US in total and all sectors except manufacturing. Info and Business Services expected to rebound back close to 1990s growth rates but not manufacturing

42. What to do? Some thoughts Focus on product development (“D” of R&D) and also pilot manufacturing.. (move away from mass production, cannot compete with China and East Asia) Leverage engineering talent and intellectual capital in the state along with ties to greater Boston-128 to compete in high value- added manufacturing Industry Partnerships..with UNH and Dartmouth in areas of research strength and tied to economy..including environmental engineering and homeland and national security.. Try to get Fed R&D funds to help seed and support collaborate efforts. Invest in skills and training of manufacturing workforce.. From K- 16+ get students interested in engineering and manufacturing …in inventing and producing “things” Strategic alliances among NH manufacturers …with state and local government as facilitator and entrepreneurial in helping businesses connect and secure resources