New Directions in Manufacturing Report of a Workshop (2004) / Chapter Skim
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Part III Presented Papers: View from Three Manufacturing Sectors
Part III Presented Papers: View from Three Manufacturing Sectors
7 Trends in Rural Manufacturing
Pages 39-45
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Part III Presented Papers: View from Three Manufacturing Sectors 39
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This paper examines the importance of factory activity to rural areas across the country and examines how rural factories have performed relative to their urban counterparts in recent years. The paper also discusses the short-term outlook for rural manufacturing, as well as ongoing challenges posed by increased global competition and rapidly emerging technologies in production.2 MANUFACTURING IN RURAL AREAS Prior to the national recession of the early 1980s, the manufacturing sector accounted for approximately 20 percent of employment and 25 percent of personal earnings in both urban and rural areas of the United States.3 Since then, as the U.S.
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Moreover, manufacturing's presence in the region strengthened during the 1990s, allowing steady job growth to continue. Rural factory employment in the 1990s also rose considerably in the Plains and Rocky Mountains regions.
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This sharper decline, combined with the fact that manufacturing makes up a larger share of rural jobs and, especially, rural earnings, has depressed total economic activity in rural areas more than in metropolitan areas over the past couple of years. A major reason why manufacturing has declined more in rural areas recently is that some industries experiencing the sharpest declines are more concentrated there.
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Rural areas of these regions were undoubtedly helped by a relatively high concentration of food-related manufacturing and low concentration of textile and wood manufacturing. On the other hand, rural factory employment in the eastern, southern, and western United States fell approximately 40 percent more than did urban factory jobs in those parts of the country.
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. One small firm participating in the manufacturing survey conducted by the Federal Reserve Bank of Kansas City reported, "We are canceling plans for capital expenditures in order to be able to continue to provide health insurance and afford property and casualty insurance." Another plant manager stated, "Insurance costs have depleted cash that was earmarked for capital expenditures." While concerns about poor sales and excess capacity have also contributed to a lack of investment over the past year, firms tend to recognize the cyclicality of these issues.
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than have larger firms.8 Since nearly all rural manufacturers are also small manufacturers, the difficulties caused by rising insurance costs have likely hit them disproportionately. CONCLUSION Manufacturing remains a driving force in many of the nation's rural areas, but it also faces many challenges.
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