Manufacturing in Rural Oregon
by Andrew R Crollard
Oregon Employment Department
Manufacturing plays a large role in the economy of Oregon’s rural counties. Almost 20 percent of Oregon’s manufacturing employees work in rural Oregon. In 2009, the manufacturing industry in rural Oregon included 1,222 firms spread across the state’s 25 rural counties. These businesses supported 32,351 jobs, with total payroll of more than $1.3 billion.
Defining Rural Oregon
Rural Oregon includes all the counties that do not contain at least part of an area classified as a metropolitan statistical area. This means some counties that may be thought of as rural are really classified as a metropolitan county. For example, Columbia County has a population of less than 50,000 but is considered a metropolitan county because of its proximity to Portland and the tendency for residents to commute there for work. Conversely, there are metropolitan counties with large cities that also have areas some might consider to be rural. Lane County is an example of this, containing both the population center of Eugene and rural areas outside of Eugene. So, “rural Oregon” includes 25 counties: Baker, Clatsop, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Hood River, Jefferson, Josephine, Klamath, Lake, Lincoln, Linn, Malheur, Morrow, Sherman, Tillamook, Umatilla, Union, Wallowa, Wasco, and Wheeler.
Change in Manufacturing and Total Employment
From 2001 through the start of the Great Recession at the end of 2007, growth in rural manufacturing employment lagged behind that of total nonfarm payroll employment as seen in Graph 1. Total nonfarm payroll employment grew 6 percent from 2001 through 2007. During this same time period, employment in the manufacturing industry in rural Oregon declined 3 percent. From 2007 through 2010, the difference in growth rate was even less favorable for manufacturing (-21%) compared with total nonfarm employment (-8%). During this time period, the rural manufacturing industry lost 9,940 jobs, almost two-fifths of the total jobs lost (24,980) in rural Oregon.
Rural Oregon manufacturing growth hasn’t kept up
Rural manufacturing is dominated by two subsectors: wood product manufacturing and food manufacturing (Table 1). Wood product manufacturing includes production of lumber, plywood and manufactured homes, and represented almost one-third of total manufacturing employment in 2009. Food manufacturing includes activities such as grain and oilseed milling, dairy product manufacturing, seafood product preparation and packaging, and bakeries. Food manufacturing employed 23 percent of the total rural Oregon manufacturing workforce. There are only three other industries with a share of 5 percent or greater in rural manufacturing: paper manufacturing (7%), primary metal manufacturing (6%) and transportation equipment manufacturing (5%).
Rural Oregon had a large share of statewide employment in some of these subsectors in 2009. Food manufacturing in rural Oregon accounted for 49 percent of the state’s employment in that subsector. Paper manufacturing (41%), food manufacturing (32%), primary metal manufacturing (26%), and nonmetallic mining product manufacturing (23%) also had significant shares of statewide employment in rural Oregon.
The average size of a manufacturing firm in rural Oregon was 26 employees in 2009. Paper manufacturing (255 employees) and primary metal manufacturing (129 employees) had significantly higher employee-per-firm ratios than the industry as a whole. Wood product manufacturing (53 employees), food manufacturing (46 employees), and transportation equipment manufacturing (27 employees) also had an average number of employees per firm greater than the industry average.
The average earnings per employee came in just shy of $41,000 per year for manufacturing in rural Oregon. Again, paper manufacturing ($73,899) and primary metal manufacturing ($61,695) had a much higher average wage than the industry-wide average. Chemical manufacturing ($48,066), computer and electronic product manufacturing ($46,101), and machinery manufacturing ($44,148) also had average earnings per employee greater than the industry-wide average.
Recovering From Recession
The Oregon Office of Economic Analysis has published employment projections by industry through 2021 for the state of Oregon. While this does not provide a level of detail specifically for rural Oregon, one can look at the industries of importance and use them as a rough proxy for rural Oregon.
Using 2007 as the base year, Graph 2 displays how much each sector has changed since the beginning of the recession, as well as the anticipated path forward. Total manufacturing employment dropped by one-fifth from 2007 through 2010 in rural Oregon. It is predicted to have hit its low in 2010 and will reach 97 percent of the 2007 employment level by 2021. Wood product manufacturing was hit significantly harder than the industry average, dropping 34 percent from 2007 through 2010. It is predicted to reach its low in 2011 and reach 86 percent of the 2007 employment level by 2021. Food manufacturing was the only manufacturing subsector that grew from 2007 through 2010, gaining 4 percent. It is projected to gain 14 percent between 2007 and 2021.
Projected manufacturing employment
Though employment in the rural manufacturing industry decreased more than total nonfarm payroll employment over the last decade, it still remains a vital part of rural Oregon’s economy. In 2010, 11 percent of all employees in rural Oregon were employed within the manufacturing industry. More than $1.3 billion in earnings were distributed in 2009 to manufacturing employees. More than half of all employees in manufacturing work in either wood product manufacturing or food manufacturing and just less than half of all earnings in manufacturing are paid to employees working in those two sectors. Both of these key manufacturing sectors in rural Oregon are projected to grow over the next 10 years, with wood product manufacturing reversing the trend of job loss and food manufacturing employment continuing to expand.
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