North Carolina's Manufacturing Economy Transitioning to High-Tech: TD Economics
CHERRY HILL, N.J. and PORTLAND, Maine, June 22, 2011 /PRNewswire/ -- North Carolina's economy continues to be in a period of transition, and while the ride to diversification may be bumpy, the state will ultimately become more resilient to economic downturns. That is the message of a report released today by TD Economics (www.td.com/economics), an affiliate of TD Bank, America's Most Convenient Bank®.
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"North Carolina's transition from traditional manufacturing, like textile and apparel, to high-tech manufacturing, biotechnology and services, is a necessary transition," says TD Economist Christos Shiamptanis, who authored the report. "High-skilled jobs are less sensitive to economic contractions than middle-skilled jobs, and the creation of high-tech business clusters is enhancing efficiency, improving productivity and bolstering the state's output."
The TD Economics report cites several opportunities for North Carolina, including the development of technology clusters, the strength of its world-class research universities, and the shift toward high potential industries like electronics and pharmaceuticals.
"In North Carolina, between 1999 and 2009, computer and electronics manufacturing output went up by a massive 569 percent, surpassing the national increase. Likewise, chemical manufacturing output increased by just over 9 percent, while the national average declined by 3 percent," Shiamptanis says. "And, even when the economy is under-performing, pharmaceutical companies tend to do well and high-tech computers tend to get smarter. So as the share of high-tech and drug-producing firms increase in North Carolina, manufacturing jobs should become less volatile."
Unfortunately, the outlook for the state's traditional manufacturing industries is not as positive. Textile and apparel output now amount to slightly less than 5 percent of North Carolina's manufacturing production, and with fierce competition from abroad, declines are likely to persist.
According to the TD Economics report, this shift in output and resources away from traditional manufacturing sectors toward high-tech manufacturing is deepening a labor market divide already in play.
"North Carolina is seeing middle-skill jobs disappear and its workforce is becoming increasingly polarized between those that have high skills and those that have low skills," Shiamptanis says. "High-tech industries are creating a lot of new high-skilled jobs in engineering, software design, nano-manufacturing and bio-processing, which generate higher incomes as they require significant investment in education and training. However, the tragedy of the high-tech industries is that many medium-skilled workers are discovering that they do not have the skills to compete for the jobs that are in high demand, and may have to settle for low-skill jobs."
The change from old school manufacturing to high-tech sectors isn't going to be smooth, but the positive opportunities created by industrial transition should not be underestimated, the TD Economics report says. High-skilled jobs tend to be more resilient than low-skilled jobs, and high-tech manufacturing sectors tend to be less volatile than other manufacturing sub-sectors during economic downturns. In addition, the benefits of business clusters are having a crucial impact across the state, so much so that smaller communities, not just metropolitan areas, are investing in new high-tech clusters, which will create construction jobs in the short-term and permanent ones in the long-term.
"North Carolina is benefiting from the industrial transition, becoming more diverse and more resilient to economic downturns," Shiamptanis says. "High-tech computer and electronic, pharmaceutical and medicine manufacturing have grown strongly and are poised to play a leading role in the state's manufacturing sector."
TD Economics provides analysis of global economic performance and forecasting, and is an affiliate of TD Bank, America's Most Convenient Bank®.
The complete findings of the TD Economics report are available online at http://www.td.com/economics/special/cs0611_north_carolina.pdf under "Regular Publications."
SOURCE TD Bank
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