According to new data collected by MNI, compiler and publisher of the industrial data that powers IndustryNet, manufacturing employment in Texas surged over the past year, boosted by a recovering oil/gas sector. IndustryNet reports the state added 21,513 jobs, amounting to a 1.8% gain.
This article will take a closer look at the major developments that have occurred in Texas since the recession and examine the state’s outlook in light of new federal and state policies.
Texas manufacturing: the year in review
Texas manufacturers added more than 20,000 jobs between May 2017 and May 2018 or 1.8%.
Gains were led by the state’s oil/gas sector, which grew 2.3% after sputtering in recent years, while the petroleum products sector grew 8.3%. MNI reports this is the first time the oil/gas extraction sector has added jobs in three years, as sinking oil prices gutted the industry. With oil prices at a three-year high, however, the industry appears to be climbing back.
Additional gains were reported in transportation equipment; furniture/fixtures; instruments/related products; electronics; and food processing.
Losses were seen in industrial machinery; primary metals; and printing/publishing.
IndustryNet’s city data shows the state’s top cities by industrial employment all added jobs over the year, with Austin gaining 6%; Dallas adding 2%; Houston 1.3%; and San Antonio 1%.
Texas gained a number of new manufacturers over the year including a Medline manufacturing facility in Laredo and a LaModerna’s pasta plant in Cleburne.
Numerous biotech companies invested in Texas over the year including Fujifilm Diosynth Biotechnology, which established a gene therapy Flexible Manufacturing Facility in College Park, and Switzerland-based cell and gene therapy drugmaker Lonza, which invested in a site in Pearland. In addition, Yara and BASF announced a joint venture to break ground on a massive ammonia production facility in Freeport; while Japan-based Nissei announced plans to open a plastic injection molding plant in San Antonio.
Texas is currently home to 21,385 manufacturers employing 1.2 million workers, ranking it first in the nation for both number of manufacturers and industrial jobs.
Looking ahead: Texas' manufacturing outlook
As the nation’s top exporter, and major center for manufacturing, Texas is in many ways on the front line of emerging trade tensions.
Accelerating trade disputes with China, including the import tariffs on steel and aluminum enacted in 2018 continue to be an area of concern for many of the state’s manufacturers.
Industries that rely on imported steel and aluminum are bracing for higher prices. Parts for offshore oil & natural gas, drilling and production platforms, for instance, are among the products included among the massive list of 6,000 + Chinese parts to be affected by the tariffs.
In sheer numbers, Texas is first among U.S. states for steel and aluminum import reliance, with 496,000 workers employed in industries that utilize imported steel and aluminum, according to a study by MarketWatch.
Adding to this, retaliatory tariffs coming from China, Canada, and Mexico, have mainly hit the state’s agricultural sector, and a number of manufactured products have also been affected, including oil and gas drilling products and refrigeration parts.
The Texas Association of Manufacturers reports many of the state’s manufacturers are essentially in “wait and see” mode, holding off on major capital investments and working through some temporary supply chain disruptions. Texas governor Greg Abbot recently sent a letter to the Trump administration, highlighting the importance of NAFTA for an export-heavy state like Texas, stating" What is good for the Texas economy is going to be essential for the American economy."
On the other hand, U.S. steel producers stand to benefit from revamped trade policies. The same MarketWatch study finds Texas accounts for 7,685 workers directly employed by steel and aluminum producing companies.
Currently, China tariffs are mostly targeting agricultural products, but the list also includes some steel and aluminum products. China is Texas’ largest trading partner, and trade with China has grown by 50% between 2016 and 2017, according to the U.S. Census Bureau. 25% of all Texas manufacturers distribute their products internationally, according to IndustrySelect, MNI's database of the nation's 400,000 U.S. manufacturers.
Despite the many challenges U.S. industrial businesses are facing today, the nation’s manufacturing sector continues to expand, with industrial productivity and employment in full swing. Next, we’ll take a look at some of the specific qualities that make Texas a favorable place for manufacturing.
Why Texas is tops for manufacturing
Just this month, Texas was named America’s top state for business by CNBC, moving up four spaces from 2017’s rankings.
Among the many factors the Lonestar State ranked high for were its large workforce, solid infrastructure, and robust economy.
An abundance of capital and a clear focus on technology have made it easier for innovative industrial companies to start up in the state. The cost of doing business is low, relative to most U.S. states, and its cost of living is on the lower end as well.
Texas is home to the most business incentives in the U.S. Among them are the Texas Enterprise Fund; the Governor’s University Research Initiative; the Texas Enterprise Zone Program; and the Capital Access Program.
Texas was given a “D”, however, for education by CNBC, ranking it 37th in the nation, and cultivating an educated workforce remains a top concern for the state. Many states across the nation are facing the same shortage of skilled labor or “skills gap” A recent survey by the Institute of Supply Management shows many U.S. businesses are running up against a labor shortage, which threatens to slow U.S. industrial production.
Texas has made some progress in addressing educational shortfalls with programs like the Skills Development Fund which partners with local community colleges and technical schools to provide on-the-job training for Texas businesses.
In conclusion, Texas’ unique business environment and its growing focus on technology and innovation have helped the state’s manufacturers thrive, while the oil/gas industry is strengthening as prices rise. A number of factors suggest growth will continue in the years ahead, but the importance of nurturing a skilled workforce will be key in this process.
Next, we’ll take a look at the rise of Texas’ manufacturing sector in the years following the recession, based on developments tracked by IndustryNet.
2011-2012
A decade ago, Texas was home to 24,273 industrial companies employing 1,206,759, which means the state now accounts for more industrial jobs than it had prior to the recession – a milestone few other states have achieved.
As with most states across the nation, Texas shed thousands of jobs during the recession. By May of 2011, the state’s industrial sector shrank to 1,158,471 jobs. Overall the state shed nearly 50,000 jobs or about 4.1%.
Texas’ road to recovery was not quite as long that faced by states of similar size, such as Pennsylvania which lost 100,000 jobs or Ohio, which lost 200,000, and by May of 2012, the state had recouped a significant number of jobs.
In that survey year, Texas’ industrial employment rose by 9,000 jobs, largely driven by the state’s oil/gas extraction sector. That industry shot up by 8%, overtaking food processing as Texas’ third-largest industry by employment.
Industrial machinery, which ranks first in the state for number of factory jobs, also saw a significant gain, up 3% in that year.
Other sectors adding jobs included paper products; petroleum and coal products; instruments/related products; rubber/plastics; and primary metals.
In this year, Japan-based Kuraray America announced plans to build a PVA resin plant in La Porte, and we also saw the opening of two CK Technologies plants in Fort Worth and Brownsville.
BAE broke ground on a new manufacturing facility in Austin, while Brazilian denim manufacturer Santana Textiles announced plans to open a new facility in Edinburg (that facility has yet to open, however). In addition, FlexSteel opened a new location in Baytown; and Texas Star & Nut expanded its facility in Boerne.
2012-2013
In this year, Texas added a staggering 32,000 industrial jobs, led once again by the booming oil/gas extraction sector, up 8% in that year.
Gains were spread out across multiple other sectors, such as industrial machinery; fabricated metals; instruments/related products; rubber/plastics; transportation equipment; primary metals; and electronics.
Houston industrial jobs were up 4.3% in this year, and gains were also recorded in Austin, San Antonio, and Fort Worth.
A few industrial locations did shut down in that year, including Beef Products Inc., which shuttered a plant in Amarillo due to the “pink slime” controversy, and BAE Systems’ plant in Irving.
A number of innovative new operations were announced in Texas that year, denoting the state’s diverse and tech-driven industrial sector. Apple unveiled plans for its new assembly plant in Austin, where it would make the new MacPro in partnership with Flextronics.
Caterpillar built a new excavator factory in Victoria, while pet food maker CANIDAE set up shop in Brownwood, and Motorola announced plans to establish a new facility in Fort Worth. Samsung expanded its semiconductor plan in Austin and chemical-maker Kuraray America Inc announced plans to expand facilities in LaPorte and Pasadena.
2013-2014
Texas added another 31,000 jobs in this year, led by continued gains in the state’s oil/gas sector, which overtook fabricated metals as the state’s second-largest industry by number of jobs. Jobs in oil/gas surged nearly 11%; while other top sectors such as industrial machinery and fabricated metals also gained jobs.
We also saw gains in chemicals; instruments/related products; transportation equipment; and petroleum products. Losses were few, reported in food processing and lumber.
Houston continued to add jobs, up nearly 5% in this year.
We saw a number of new expansions in the state over the survey year, including Ruiz Food Products in Denison; chemical makers Oxea in Bay City; Ashland Specialty Chemical in Texas City; Natgasoline LLC in Beaumont; and VIVA Railings in Carrollton.
New plant announcements were also numerous and included the establishment of a new GM stamping facility in Arlington. Goya Foods broke ground on a cannery in Brookshire; while Bold Ideas unveiled plans to open a rifle-making operation in Breckenridge.
2014-2015
Texas added industrial jobs in this year, but at a much slower rate, edging up by 8,500 jobs. This marked the state’s fifth straight year of gains, adding more than 80,000 jobs, and recovering all of the jobs lost during the recession. But oil prices continued to drop precipitously, impacting a number of Texas industries.
Oil/gas extraction still added jobs in this year, but at a much slower rate, and industries related to oil/gas also took a hit, with growth in industrial machinery at a standstill.
Other industries adding jobs included stone/clay/glass; fabricate metals; rubber/plastics; and transportation equipment.
Good news was abundant and included Hillmar Cheese Co.’s plans to expand its Dalhart plant, and the opening of Rio Ammunition’s factory in Marshall. A number of new manufacturing operations were announced that year, including oil and gas supplier Polyflow in Midland; Roll-Kraft in East Houston; Aluf Plastics in Sulphur Springs; and Gold Medal Packing in Lockney.
Losses were seen in Texas’ electronics sector, as well as printing/publishing and food processing.
We saw the closures of Bae Systems, which shut down operations at its Sealy military vehicles plant, and Maritech Windows, which shuttered its Carrollton facility. L&H Packing stopped meatpacking operations in San Antonio, and American Cotton Growers shut down its denim plant in Littlefield.
2015-2017
During this two-year period, Texas shed 1.6% of its industrial workforce, as falling oil prices continued to tank the state’s oil/gas extraction sector.
The oil/gas extraction sector shed more jobs, while major sectors such as industrial machinery; fabricated metals; and transportation equipment, also posted losses. Numerous other sectors also posted losses or came to a standstill. Growth was scarce, and was most significant in food processing, while paper products and primary metals posted slight gains.
Industrial employment declined in Houston for the first time in many years, while Dallas and San Antonio also saw declines. We saw closures at National Oilwell Varco’s facility in Houston; Sun Products Corp’s chemical plant in Pasadena; and Lufkin Industries’ oil/gas parts supply facility in Lufkin.
The year was not without its good news, however, with Bassett Furniture announcing a new factory in Grand Prairie, while France-based Total SA’s broke ground on a specialty fluids plant in Pasadena. JW Nutritional established a factory in Allen, and Voltabox’s opened a new lithium-ion battery plant in Cedar Park.
The 20,000-job gain reported over this past year, however, bodes well for the state’s future. Oil prices are finally on the rise again, which is helping to jolt the oil/gas extraction sector, while the state continues to invest in advanced manufacturing. Next, we'll take a look at the top industries, regions, and companies that are fueling Texas' manufacturing today.
Texas manufacturing by the numbers
Top Texas manufacturing sectors by employment:
16% Industrial machinery and equipment
12% Fabricated metal products
11% Food and kindred products
9% Electronic and other electric equipment
8% Transportation equipment
Largest Texas manufacturing companies by number of employees:
Lockheed Martin Aeronautics Co. (Fort Worth) - 14,000 employees
Dell, Inc. (Round Rock) - 13,000 employees
Exxon Mobil Chemical Co. (Spring) - 10,000 employees
NXP Semiconductors N.V. (Austin) - 8,500 employees
KBR, Inc. (Houston) - 6,000 employees
Texas counties with the most manufacturing jobs:
Harris - 353,752 jobs
Dallas - 183,634 jobs
Tarrant - 109,81 jobs
Travis - 61,059 jobs
Bexar - 57,805 jobs
Texas cities with the most manufacturing jobs:
Houston - 286,971 jobs
Dallas - 79,525 jobs
Fort Worth - 72,623 jobs
Austin - 58,476 jobs
San Antonio - 53,787 jobs
For more information on Texas manufacturing companies
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