Manufacturing in MassachusettsEarly Results from the Survey of Massachusetts Manufacturers

Don WalshBarry Bluestone

Alan Clayton-MatthewsLauren Nicoll

Marc HorneAbby Goldstein

Part I: Characteristics of

Manufacturing Firms

Demographic Information with an Emphasis on Springfield

Top Industries in Massachusetts by NAICS Code as found by the Northeastern

Manufacturing Study(N=706)

1. Fabricated Metal Product Manufacturing 20%2. Misc. Manufacturing 14.6%3. Printing and Related Support Activities 11%4. Plastics and Rubber Plastics Manufacturing 7.9%5. Primary Metal Manufacturing 7.1%6. Machinery Manufacturing 7.0%7. Electronic Equipment, Appliance and Component Manufacturing 5.1%8. Misc. Manufacturing Services 4.9%9. Wood Product Manufacturing 4.1%10.Food Manufacturing 4.0%

Question: Which industry sectors best describe your company’s operations in Massachusetts?

Industries in Springfield, MARespondents to the Massachusetts

Manufacturing Survey•Plastics and Rubber Manufacturing•Fabricated Metal Product Manufacturing•Misc. Manufacturing Services•Machinery Manufacturing•Misc. Manufacturing•Paper Manufacturing•Primary Metal Manufacturing

All Springfield Firms•Printing•Fabricated Metal Products•Computers and Electronic Products•Misc. Manufacturing•Furniture•Transportation Equipment•Food•Apparel•Paper Manufacturing•Chemicals•Primary Metals•Nonmetallic Mineral Products•Wood Products•Electronic Equipment•Plastics and Rubber•Beverage and Tobacco•Textile Products•Petroleum and Coal Products

Top Cities for Manufacturing in MA, All Cities Sampled

1. Boston – 532 firms

2. Worcester – 271

3. Woburn – 207

4. Springfield – 153

5. Waltham – 138

6. Attleboro – 134

7. Billerica – 130

8. Lowell – 129

9. Fall River – 119

10.New Bedford - 114

12%

18%

45%

19%

6%

1-10 years11-20 years21-50 years51-100 years101+ years

Number of Years Manufacturers Have Operated in MA

Question: How long has your company had operations in Massachusetts?

8%

42%

33%

17%

1-10 years11-20 years21-50 years51-100 years101+ years

Number of Years Springfield Manufacturers Have Operated in MA

N=12

Ownership Structure of Manufacturers in MA

0

10

20

30

40

50

60

70

80

Privatefamilyowner-

operated

Privateinvestor-owned

Publiclyownedstock

corporation

Other

Massachusetts

Springfield

Size of the Manufacturing Industry in Massachusetts: Number of Employees

31%

20%24%

11%

10%4%

0-9

10-19

20-49

50-99

100-499

500+

Size of the Manufacturing Industry in Springfield: Number of Employees

(N=12)

46%

27%

18%

9%

0-9

10-19

20-49

50-99

100-499

500+

Part II: Labor Force Characteristics of

Massachusetts Manufacturing Firms

Education Requirements

Level of Education/Skills Required - High School Diploma/GED

0

20

40

60

80

100

0-25% 26-50% 51-75% 76-100%

Percent of Jobs

Per

cen

t o

f F

irm

s

Percent of firms

Question: Approximately what percentage of the jobs in your Massachusetts facility(ies) requires no more than a high school diploma/GED? A bachelor’s degree but no more? A graduate degree/formal education beyond the bachelor’s degree? Specific advanced/technical skills (e.g., skilled craftsman)? 0-25%, 26-50%, 51-75%, 76-100%

Education Requirements

Level of Education/Skills Required - Technical Skills

0

20

40

60

80

100

0-25% 26-50% 51-75% 76-100%

Percent of Jobs

Per

cen

t o

f F

irm

s

Percent of firms

Question: Approximately what percentage of the jobs in your Massachusetts facility(ies) requires no more than a high school diploma/GED? A bachelor’s degree but no more? A graduate degree/formal education beyond the bachelor’s degree? Specific advanced/technical skills (e.g., skilled craftsman)? 0-25%, 26-50%, 51-75%, 76-100%

Education Requirements

Level of Education/Skills Required - BA/BS

0

20

40

60

80

100

0-25% 26-50% 51-75% 76-100%

Percent of Jobs

Per

cen

t o

f F

irm

s

Percent of firms

Question: Approximately what percentage of the jobs in your Massachusetts facility(ies) requires no more than a high school diploma/GED? A bachelor’s degree but no more? A graduate degree/formal education beyond the bachelor’s degree? Specific advanced/technical skills (e.g., skilled craftsman)? 0-25%, 26-50%, 51-75%, 76-100%

Education Requirements

Level of Education/Skills Required - MA/PhD

0

20

40

60

80

100

0-25% 26-50% 51-75% 76-100%

Percent of Jobs

Per

cen

t o

f F

irm

s

Percent of firms

Question: Approximately what percentage of the jobs in your Massachusetts facility(ies) requires no more than a high school diploma/GED? A bachelor’s degree but no more? A graduate degree/formal education beyond the bachelor’s degree? Specific advanced/technical skills (e.g., skilled craftsman)? 0-25%, 26-50%, 51-75%, 76-100%

Difficulty in Recruitment

0

1

2

3

4

5

R&D SkilledCraftsmen

Exec. Mgt. MiddleMgt.

EntryLevel

Most commonanswer of difficultyon a 1 to 5 scale,1=Not Difficult,5=ExtremelyDifficult

Type of Labor in MA

Mean Answer for Estimated Percentage of of Labor Used in Manufacturing Process

50.51%

35.09%

13.15%

Labor Intensive, UsingSkilled Labor

Labor Intensive UsingUnskilled Labor

Non-laborIntensive/Automated

Wages for Manufacturing in MA

• Average Hourly Pay for Skilled Workers:

$20.48

• Average Hourly Pay for Unskilled Workers:

$12.81

Part III: Characteristics of Production in MA

Manufacturing Firms

Lean Production Methods

42%

42%

16%

A Great Deal

Somewhat

Not at All

Question: To what extent does/do your Massachusetts facility(ies) employ continuous improvement/lean/just-in-time production methods?

Supply Chains in MA

73.70%

26.30%

Member of a SupplyChain

Not a member of aSupply Chain

A “supply chain” refers to an integrated network of manufacturers who share common production standards, jointly plan work and produce individual parts and components that are ultimately assembled into end products. Based on this definition, is your company’s Massachusetts facility(ies) a member of one or more supply chains?

Outsourcing by MA Manufacturers

Does your company outsource/offshore any of

its Massachusetts manufacturing activities?

23%

77%

Yes

No

Most Important Reasons for Outsourcing

• Need for lower cost supplies, energy, services or parts

• Need to cut labor costs• Other reasons including

improving delivery time, reducing the distance to markets and accessing supplies.

Massachusetts Incentive Programs

0

5

10

15

20

25

30

InvestmentTax Credit

R&D TaxCredit

WorkforceTraining

Grant

TaxIncrementFinancing

LowInterestLoans

LoanGuarantees

Site FinderAssistance

EquityFinancing

Percentage ofBusinessesTakingAdvantage ofState or LocalIncentivePrograms

Changes Experienced by MA Manufacturers Over the Past Decade

Increased use of new technology 3.00 Substitution of less skilled labor for skilled labor

1.87

Increase in productivity 3.22 Increased customer demand for product quality

3.57

Reduction in employment due to improved technology

2.25 Increased customer demand for improved service delivery

3.70

Increased off shoring 1.66 Increased customer demands for lower prices

3.85

Increased outsourcing to other MA firms

1.77 Shift from local to national markets 2.65

Increased outsourcing to non-MA firms

1.77 Shift from national to global markets

2.42

Substitution of skilled labor for less skilled labor

1.96 Other 3.09

Question: To what extend has/have your Massachusetts facility(ies) experienced the following characteristics over the past decade? (1=Not at all, 5=A great deal)

Factor Mean Factor Mean

Factors Important to Continued Operations in Massachusetts

• Reasonable or low taxes and fees

• Strong work ethic in workforce

• Inertia (too hard to relocate)

• Reasonable cost of living

• Timely permitting, licensing and regulatory environment

• Availability of appropriate and reasonably priced labor

Question: How important is each of the following factors to your decision to continue to operate manufacturing facilities in Massachusetts (1=Not important at all; 5=Extremely important)

Challenges to Sustaining or Expanding Manufacturing in Massachusetts

High Labor Costs 3.88 Aggressive Unions 1.91

Cost of Construction 2.96 Cost of Supplies, Services, or Parts 3.25

Inferior Quality of Massachusetts supplies, services, or parts

1.88 Customers are moving to other locations

2.46

Suppliers are moving to other locations 2.04 High taxes 3.97

Zoning and building code regulations 3.16 Environmental regulations 3.18

Inadequate supply of appropriately skilled labor force

3.15 High energy costs 3.94

Massachusetts weather and climate 2.23 Inadequate transportation or infrastructure

1.90

Ability to import skilled foreign labor (H1B)

1.62 Increased merger and acquisition activities

1.68

Succession plan for ownership/operations (private business)

2.22 High cost of housing 3.38

High cost of health care 4.35 High cost of Worker’s compensation 4.09

Other challenge 3.93 Question: To what extent does each of the following factors present a significant challenge to sustaining or expanding your company’s operations in MA? (1=Not at all, 5=A great deal)

Factor Mean Factor Mean

Manufacturer Perspectives onPolicy Initiatives

Most Popular Ideas

• Reduce health insurance costs• Reduce cost of Worker’s compensation• Reduce cost of unemployment

insurance• Ensure availability of lower cost energy• Encourage business-friendly state

governmentQuestion: Below are a number of state or local initiatives that, if implemented, could affect

business in Massachusetts. To what extent would each help your company sustain or expand its operations in Massachusetts? (1=Not at all; 5=A great deal)

The Future of Manufacturing in Massachusetts

28%

55%

12%5%

Continuedproduction atcurrent levels

Continuedproduction atincreased levels

Continuedproduction, but atreduced levels

Cessation ofproduction inMassachusetts

Production Levels Over the Next Five Years

Question: What do you expect production levels to be for your company’s Massachusetts facility(ies) over the next five years?

The Future of Manufacturing in Massachusetts

32%

29%

27%

6%6%

Expansion by 1-10%

Expansion by morethan 11%

Maintain currentlevelsReduction by 1-10%

Reduction by morethan 11%

Employment Levels Over the Next Five Years

Question: What do you expect employment levels to be for your company’s Massachusetts facility(ies) over the next five years?

The Future of Manufacturing in Massachusetts

• 70.4% of manufacturers in Massachusetts expect to initiate the production of new products over the next five years.

• 37.2% anticipate that they will need more real estate space over the next 5 years, 53.8% expect to use the same amount of space, and 8.9% expect to use less space.