Regional Competitive Industry Analysis

Transcription

1 Regional Competitive Industry Analysis Jackson and Josephine Counties October 2016 Josephine Jackson Michael Meyers, Economist (503) Jill Cuyler, Research Analyst (503) Economic Strategies and Policy Division One World Trade Center 121 SW Salmon Street, Suite 205 Portland, OR 97204

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3 Table of Contents EXECUTIVE SUMMARY... 3 INTRODUCTION... 4 SECTION 1: SOURCES AND METHODOLOGY...4 Regional Indicators... 4 Competitive Industry Indicators... 5 Employment Growth Projections... 6 Caveats and Limitations... 6 SECTION 2: OVERVIEW OF THE REGIONAL ECONOMY...7 Employment, Total Payroll and Average Wage per Job...7 Employment Growth... 7 Manufacturing Employment and Wages...8 Unemployment Rate... 9 SECTION 3: REGIONAL COMPETITIVE INDUSTRIES Location Quotient Analysis Shift-Share Analysis Regional Employment Projections by Industry...12

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5 Regional Competitive Industry Analysis Jackson and Josephine Counties Executive Summary This region in southwest Oregon includes the Medford Metropolitan Statistical Area (Jackson County) and the Grants Pass Metropolitan Statistical Area (Josephine County). Jackson County accounts for over three-quarters of total private sector employment in the region, and has a higher average wage than Josephine County. Forestry and wood products, food and beverages, and agriculture have been staples of the economy here, along with competitive industries in performing arts and e-commerce. Between 2005 and 2015, private sector employment in the region grew by just 0.5 percent, well below the statewide average of 8.8 percent. The average wage in the region is also 23 percent lower than the statewide average. Manufacturing was 11 percent of the region s private sector employment in 2015, slightly less than the statewide average of 12 percent. With a location quotient of 1.08, manufacturing is important to the region s economy and competitive advantages. Wood product manufacturing is the largest manufacturing subsector in the region, followed by food and transportation equipment manufacturing. The region has a higher than average number of very small manufacturers (under 20 employees). While forestry and wood products continue to be competitive industries in the region, food and beverages, performing arts, and professional services provide unique opportunities for growth. Fruit and vegetable preserving and specialty food manufacturing experienced the highest competitive advantage percent and job gains between 2005 and 2015 in the region. In the forestry and wood products industry group, some industries experienced competitive advantage gains, like veneer, plywood, and engineered wood product manufacturing and support activities for forestry, while others such as logging and sawmills experienced losses in competitive advantage. Metalworking machinery manufacturing, beverage manufacturing, and performing arts companies were additional industries that had high competitive advantage percent gains between 2005 and Electronic shopping and mail-order houses experienced the largest competitive share percent and job losses between 2005 and Amongst emerging industries in the region, motor vehicle parts manufacturing, management, scientific, and technical consulting services, pharmaceutical and medicine manufacturing, and the combined industries of software

6 and computer systems design experienced the largest competitive advantage percent and job gains between 2005 and Private sector payroll employment in the region is projected to grow by 10 percent between 2014 and 2024, significantly lower than the statewide rate of 16 percent. Health care is projected to grow the fastest and add the most jobs in the region. Manufacturing is projected to grow by 11 percent, slower than the statewide average of 12 percent. Introduction The purpose of this report is to present a competitive industry analysis of the regional economy consisting of Jackson and Josephine counties. Regional trends in employment and wages are analyzed and compared to trends in Oregon and the U.S. This report provides data and analysis to help economic development practitioners, policy makers, and businesses identify strengths, weaknesses, opportunities, and threats that pertain to their regional economy. The information in this report can be used to help guide strategic economic development efforts in the region. This report is composed of three sections. Section one outlines the data sources and methodology behind the creation of this report. The second section provides an overview of the regional economy by analyzing employment and wage trends over time. Section three supplies a framework to identify industries in the region that may have a competitive advantage in developing or expanding regional industry specialization. Ten year employment projections of the region s main industries are provided to help identify industries with above average growth potential. Section 1: Sources and Methodology This report is based on analysis of statistical data from the U.S. Bureau of Labor Statistics (BLS), Oregon Employment Department (OED), and U.S. Census Bureau. The majority of data is presented for traded sector industries only. However, non-traded sector employment data is provided as part of OED s projections (Table 9). The methodology for this report uses a series of indicators to provide a framework for evaluating the competitive strengths and growth opportunities of the regional economy. The following indicators are used for this report. Regional Indicators Section two begins with a comparative analysis of the regional economy focusing on private sector business establishments, employment, total payroll, and average wages to

7 show the geographic distribution and characteristics of employment in each region. Recent employment and wage trends are also analyzed and compared to the state. This is followed by an analysis of manufacturing employment and wages. Employment and average annual wages of leading manufacturing subsectors are presented, along with their location quotients. A location quotient measures the employment concentration of a given industry in a region compared to that industry s employment concentration in the nation as a whole. Location quotients above 1.0 indicate that an industry s share of employment in the region is greater than its share of employment nationwide. For example, an industry with a location quotient of 2.0 has twice as much employment locally as the national average for that industry. Location quotients are a simple way to help identify industries in the region that have a competitive advantage as demonstrated by a greater than average employment concentration. An analysis of manufacturing establishments by size class follows, which shows the distribution of manufacturers in the region amongst four different size classes. This analysis shows how much a region may be dependent on small, medium, or large-size manufacturers. The unemployment rate analysis reveals how well the region has done at creating and retaining jobs for its working-age population. The analysis compares the regional unemployment rate to rates from Oregon and the U.S., which shows whether the region has performed better or worse than average. This comparative analysis also provides insight into how autonomous the region s economy is from Oregon and the U.S. Competitive Industry Indicators Section three begins with two detailed analyses that attempt to identify industries that have a competitive advantage in the region. A detailed location quotient analysis by four digit NAICS codes shows industries in the region that appear to have a competitive advantage based on high location quotients. This analysis includes all traded sectors of the economy, not just manufacturing. Industries with high location quotients and higher than average wages are highlighted. Following the location quotient analysis is a shift-share analysis. Shift-share analysis, like location quotient analysis, is useful in identifying industries with a competitive advantage in the region. Unlike a location quotient analysis that is a point-in-time analysis, shiftshare analysis looks at industry performance over time to measure how employment in an industry changed in relation to national and industrial trends. If a region s industry consistently outperforms its peers nationwide over a period of time this indicates a growing competitive advantage for that industry. The shift-share analysis examines the ten-year growth rates for regional and nationwide industry employment. Employment change over the past ten years for each industry is broken out by change due to national total employment trends, change due to national industry employment trends, and change due to competitive advantage. Tables 6, 7, and 8 present competitive share percent

8 changes and competitive share job gains and losses for industries in the region that had the largest gains and losses in competitive advantage. Employment Growth Projections Section four examines employment growth projections for the major industries in each region. Current projections cover the period from 2014 to Caveats and Limitations Employment and wage data throughout the report comes from Quarterly Census of Employment and Wages (QCEW) data from the BLS and OED. Data was also used from the U.S. Census Bureau s Local Employment Dynamics (LED) program, which is also based on QCEW data. All of these sources are limited to employment and wages covered under unemployment insurance. The final table in this report (Table 9) is not limited to covered employment and includes total non-farm employment. A substantial amount of industry employment and wage data for Oregon counties is confidential and not published by BLS or OED. Estimates were created for confidential three and four digit NAICS industries by county. The primary method used to create estimates was wage share calculations from LED data. Unlike BLS and OED employment and wage data, LED data includes wages for many industries for which employment is confidential. As a result, one can produce employment estimates for industries with confidential employment by calculating the share of wages in a particular industry compared to other confidential industries under the same parent industry and applying that ratio to the amount of unpublished confidential employment amongst those industries. Estimates were done for industries with at least $3 million in annual payroll. Local knowledge and analyst judgment were used to vet the reliability of final employment data. In just in few cases, more reliable employment figures from other sources such as Hoovers (Dun & Bradstreet), newspapers, or company websites were substituted for wage share employment estimates. In these instances, the wage column reads N/A in relevant tables. The manufacturing establishments by size data in Table 3 is a combination of two data sets. The total number of manufacturing establishments comes from QCEW data from the BLS. The percent of manufacturing establishments by employment size-class data comes from County Business Patterns (CBP) data from the U.S. Census Bureau. The two data sets are combined in this table because the QCEW data is more accurate in its total count of establishments, but it does not include size class data for counties. The CBP data does have size class data for counties, but its overall number of establishments by county is not as accurate as the QCEW. Combined, one can estimate the number of establishments by employment-size class.

9 Tables 6, 7, and 8 include ten year employment change analyses by industry. Due to the administrative nature of QCEW data, changes in industry employment can occur that are not the result of actual economic changes within the industry. Some, but not all, of these so-called non-economic changes were identified in the ten year analyses and industry employment adjustments were made so that industry employment trends could be more accurately captured. Section 2: Overview of the Regional Economy Employment, Total Payroll, and Average Wage per Job Private sector employment in this region accounted for 6 percent of Oregon s total private sector employment in The 2015 private sector average annual wage in the region was $36,944, 23 percent lower than the statewide average. Jackson County accounts for over three-quarters of total private sector employment in the region. Jackson County also has a higher average annual wage in the region, $38,057. Table 1: Employment, Total Wages, and Average Wage per Job, Private Sector, 2015 Average % of Region % of Statewide Area Employment Total Payroll Wage Employment Avg Wage Jackson 71,375 $2,716,358,698 $38, % 79.7% Josephine 21,488 $714,371,946 $33, % 69.6% Region 92,863 $3,430,730,644 $36, % 77.3% Oregon 1,509,651 $72,125,345,230 $47, % Source: Oregon Employment Department, Quarterly Census of Employment & Wages. Employment Growth The region s ten year private sector employment growth ranked 9 th in the state out of 11 regions. Private sector employment in the region grew much slower than Oregon over the past ten years. Private sector employment in Josephine County grew nearly five times faster than Jackson County, but was still well below the statewide average.

10 Table 2: Change in Private Sector Employment, Employment Employment Area Employment Employment Change Change Rank Jackson 71,148 71, % 24 Josephine 21,191 21, % 22 Region 92,339 92, % 9 Oregon 1,386,917 1,508, % N/A Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment & Wages. Manufacturing Employment and Wages Manufacturing was 11 percent of the region s private sector employment in With a location quotient of 1.08, manufacturing is somewhat important to the region s economy and competitive advantages. Wood product manufacturing is the largest manufacturing subsector in the region, followed by food and transportation equipment manufacturing. The region has a higher percentage of small manufacturers than the statewide average, as well as a lower percentage of medium and large manufacturers. Table 3: Manufacturing Employment and Wages, 2015 Location Average NAICS Industry Employment Quotient Wage Manufacturing 10, $43, Wood Product Manufacturing 2, $45, Food Manufacturing 1, $33, Transportation Equipment Manufacturing $59, Furniture and Related Product Manufacturing $37, Chemical Manufacturing $58, Fabricated Metal Product Manufacturing $40, Computer and Electronic Product Manufacturing $56, Miscellaneous Manufacturing $34, Machinery Manufacturing $42, Printing and Related Support Activities $32, Beverage and Tobacco Product Manufacturing $26, Nonmetallic Mineral Product Manufacturing $39, Plastics and Rubber Products Manufacturing $43, Electrical Equipment, Appliance, and Component Mfg $49,548 Source: Business Oregon with data from U.S. Bureau of Labor Statistics, Oregon Employment Department, U.S. Census Bureau ( ), and other public documents.

11 Table 4: Manufacturing Establishments by Size, 2015 Percent of Manufacturing Establishments by Employment-Size Class Total Manufacturing 250 or Area Establishments More Jackson % 14.8% 2.6% 1.3% Josephine % 14.7% 3.7% 1.8% Region % 14.8% 2.9% 1.5% Oregon 5, % 19.0% 4.4% 2.3% Source: Total establishments from U.S. Bureau of Labor Statistics, Quarterly Census of Employment & Wages; employment-size class data from U.S. Census Bureau, County Business Patterns, Unemployment Rate For the ten year period from , the region s unemployment rate has been higher than Oregon s and the U.S., particularly at the height of the last recession when it reached a peak of 13.2 percent in Since its recessionary peak, the region s unemployment rate has declined, although at a slower rate than the state s, but at a faster rate than the nation. The region s lowest unemployment rate across the ten year period, 5.9 percent, occurred in % Chart 1: Average Annual Unemployment Rate % 10% Unemployment Rate 8% 6% 4% 2% Region Oregon U.S. 0% Source: US Bureau of Labor Statistics, Local Area Unemployment Statistics.

12 Section 3: Regional Competitive Industries Location Quotient Analysis Forestry and wood products is the industry group with the highest location quotients in the region, with many of these jobs paying above average wages. E-commerce stores (includes Harry & David), performing arts companies (includes Oregon Shakespeare Festival), and food and beverages, chemical products, furniture, aerospace, and ship and boat manufacturing are other competitive industries in the region. Table 5: Industries with Highest Location Quotients Private Sector, 2015, U.S. Base Area, Industries with Employment Greater than 100 and Location Quotient of 1.2 or Greater, Industries with Average Wage above Region Average Shaded Location Average NAICS Industry Employment Quotient Wage 1153 Support Activities for Forestry 1, $34, Veneer, Plywood, and Engineered Wood Product Mfg. 1, $49, Logging $46, Electronic Shopping and Mail-Order Houses 2, $36, Fruit and Vegetable Preserving and Specialty Food Mfg $39, Performing Arts Companies $37, Other Wood Product Manufacturing $33, Other Chemical Product and Preparation Manufacturing $59, Fruit and Tree Nut Farming $25, Household and Institutional Furniture Manufacturing $36, Sawmills and Wood Preservation $43, Miscellaneous Durable Goods Merchant Wholesalers $38, Beverage Manufacturing $26, Aerospace Product and Parts Manufacturing $54, Other Miscellaneous Manufacturing $32, Business Support Services 1, $30, Other Food Manufacturing $31, Miscellaneous Nondurable Goods Merchant Wholesalers $39, Ship and Boat Building $39, Drinking Places (Alcoholic Beverages) $14, Metalworking Machinery Manufacturing $34,943 Source: Business Oregon with data from U.S. Bureau of Labor Statistics, Oregon Employment Department, U.S. Census Bureau ( ), and other public documents.

13 Shift-Share Analysis Fruit and vegetable preserving and specialty food manufacturing experienced the highest competitive share percent and job gains between 2005 and Metalworking machinery manufacturing, beverage manufacturing, and veneer, plywood, and engineered wood product manufacturing were additional industries that experienced the highest competitive share percent gains between 2005 and Forestry and performing arts companies also experienced high competitive share job gains between 2005 and Electronic shopping and mail-order houses was the industry that experienced the largest competitive share percent and job losses between 2005 and Logging and fruit and tree nut farming were additional industries that experienced large competitive share percent and job losses. Amongst emerging industries in the region with location quotients below 1.2, motor vehicle parts manufacturing, management, scientific, and technical consulting services, pharmaceutical and medicine manufacturing, and the combined industries of software and computer systems design experienced the largest competitive share percent gains between 2005 and Table 6: Competitive Industries with Highest Competitive Advantage Percent Gains, Shift-Share Analysis, Private Sector, U.S. Base Area, Industries with LQ Greater than 1.2 and Employment Greater than 100 Employment Location Competitive Competitive NAICS Industry 2015 Quotient Share Percent Share Jobs 3114 Fruit and Vegetable Preserving and Specialty Food Manufacturin % Metalworking Machinery Manufacturing % Beverage Manufacturing % Veneer, Plywood, and Engineered Wood Product Manufacturing 1, % Other Food Manufacturing % Drinking Places (Alcoholic Beverages) % Performing Arts Companies % Miscellaneous Nondurable Goods Merchant Wholesalers % Support Activities for Forestry 1, % Business Support Services 1, % Other Miscellaneous Manufacturing % Freight Transportation Arrangement % Miscellaneous Durable Goods Merchant Wholesalers % Household and Institutional Furniture and Kitchen Cabinet Man % 20 Source: Business Oregon; data from U.S. Bureau of Labor Statistics, Oregon Employment Department, and U.S. Census Bureau.

14 Table 7: Competitive Industries with Highest Competitive Advantage Percent Losses, Shift-Share Analysis, Private Sector, U.S. Base Area, Industries with LQ Greater than 1.2 and Employment Greater than 100 Employment Location Competitive Competitive NAICS Industry 2015 Quotient Share Percent Share Jobs 4541 Electronic Shopping and Mail-Order Houses 2, % -1, Logging % Beer, Wine, and Distilled Alcoholic Beverage Merchant Wholesal % Fruit and Tree Nut Farming % Sawmills and Wood Preservation % Ship and Boat Building % Other Wood Product Manufacturing % Other Chemical Product and Preparation Manufacturing % -9 Source: Business Oregon; data from U.S. Bureau of Labor Statistics, Oregon Employment Department, and U.S. Census Bureau. Table 8: Emerging Industries with Highest Competitive Advantage Percent Gains, Shift-Share Analysis, Private Sector, U.S. Base Area, Industries with LQ Less than 1.2 and Employment Greater than 100 Employment Location Competitive Competitive NAICS Industry 2015 Quotient Share Percent Share Jobs 4251 Wholesale Electronic Markets and Agents and Brokers % Motor Vehicle Parts Manufacturing % Management, Scientific, and Technical Consulting Services % Pharmaceutical and Medicine Manufacturing % Computer Systems Design and Related Services % Nondepository Credit Intermediation % Architectural and Structural Metals Manufacturing % Software Publishers % Navigational, Measuring, Electromedical, and Control Instrumen % Other General Purpose Machinery Manufacturing % Traveler Accommodation 1, % Motor Vehicle and Motor Vehicle Parts and Supplies Merchant W % Electrical Equipment Manufacturing % Professional and Commercial Equipment and Supplies Merchan % Medical Equipment and Supplies Manufacturing % Printing and Related Support Activities % 20 Source: Business Oregon; data from U.S. Bureau of Labor Statistics, Oregon Employment Department, and U.S. Census Bureau. Employment Projections by Industry The Oregon Employment Department projects total private sector employment in the region to grow by 8,800 jobs between 2014 and 2024, a 10 percent increase. This growth rate is less than the projected statewide growth rate of 16 percent.

15 Health care, construction, professional and business services, and leisure and hospitality are projected to experience the largest percent gains in employment Health care, leisure and hospitality, and manufacturing are projected to add the most jobs between 2014 and Manufacturing is projected to grow by 11 percent, slightly less than the statewide rate of 12 percent. Information, state education, and federal government employment are expected to decline in the region. Table 9: Regional Industry Employment Forecast, Jackson and Josephine Counties Change % Change Total employment 111, ,260 9,690 9% Total payroll employment 105, ,590 9,150 9% Total private 90,500 99,380 8,880 10% Natural resources and mining 2,940 3, % Mining and logging % Construction 4,060 4, % Manufacturing 10,090 11,170 1,080 11% Durable goods 6,860 7, % Wood product manufacturing 2,500 2, % Trade, transportation, and utilities 22,940 24,430 1,490 6% Wholesale trade 3,210 3, % Retail trade 16,380 17,420 1,040 6% Transportation, warehousing, and utilities 3,350 3, % Information 1,600 1, % Financial activities 4,830 5, % Professional and business services 8,780 9,800 1,020 12% Private educational and health services 18,410 21,170 2,760 15% Private educational services % Health care and social assistance 17,510 20,180 2,670 15% Health care 15,330 17,500 2,170 14% Leisure and hospitality 12,660 14,130 1,470 12% Accommodation and food services 10,930 12,220 1,290 12% Other services and private households 4,190 4, % Government 14,940 15, % Federal government 1,970 1, % State government 3,280 3, % State education % Local government 9,690 9, % Local education 5,690 5, % Self-employment 6,130 6, % Source: Oregon Employment Department

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