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Chemical Products ManufacturingNAICS 325 Overview
Subsector Snapshot | Printable (PDF)
Fast Facts
- In 2016, chemical products manufacturing provided about 78,850 direct jobs as well as another 242,200 indirect jobs.
- The subsector’s GDP totaled $55.5 billion in 2015, the greatest GDP value among manufacturing subsectors.
- Average annual wages in the subsector averaged more than $108,000 in 2016, far exceeding the average wage for all Texas manufacturing jobs of about $74,000.
- Subsector exports totaled $36.6 billion in 2016 and were second only to computer and electronic products in export sales.
Long-Term Employment Trends
Employment in Texas’ chemical products manufacturing subsector rose by about 12 percent from 2010 to 2016, following years of job losses in the 2000s. Texas employment in this subsector remains 5 percent below its 1990 level. U.S. employment in this subsector, by contrast, is 22 percent below the 1990 level (Exhibit 1).
Subsector Economic Output Trends
Texas’ chemical products subsector GDP totaled $55.5 billion in 2015, the highest amount among Texas’ manufacturing subsectors. The state’s inflation-adjusted GDP in this subsector rose by nearly 60 percent from 1997 to 2015, outpacing U.S. subsector GDP growth of 20 percent (Exhibit 2).
Exhibit 1: Chemical Products Manufacturing, Percent Change in Employment, U.S. vs. Texas, 1990-2016 (Indexed to 1990)
| Year | U.S. | Texas |
|---|---|---|
| 1990 | 0% | 0% |
| 1991 | 2% | -1% |
| 1992 | 3% | -1% |
| 1993 | 3% | -1% |
| 1994 | 5% | -3% |
| 1995 | 4% | -5% |
| 1996 | 3% | -5% |
| 1997 | 4% | -5% |
| 1998 | 5% | -4% |
| 1999 | 3% | -5% |
| 2000 | 3% | -5% |
| 2001 | 0% | -7% |
| 2002 | -6% | -10% |
| 2003 | -9% | -13% |
| 2004 | -11% | -14% |
| 2005 | -12% | -16% |
| 2006 | -12% | -16% |
| 2007 | -11% | -17% |
| 2008 | -9% | -18% |
| 2009 | -13% | -22% |
| 2010 | -16% | -24% |
| 2011 | -15% | -24% |
| 2012 | -12% | -24% |
| 2013 | -10% | -23% |
| 2014 | -7% | -22% |
| 2015 | -6% | -22% |
| 2016 | -5% | -22% |
Sources: Texas Workforce Commission and Texas Comptroller of Public Accounts
Chemical Products Manufacturing, Percent Change in Real GDP, U.S. vs. Texas, 1997-2015 (Indexed to 1997)
| Year | U.S. | Texas |
|---|---|---|
| 1997 | 0.0% | 0.0% |
| 1998 | -0.7% | -7.7% |
| 1999 | 5.7% | -22.5% |
| 2000 | 5.0% | -23.9% |
| 2001 | 3.9% | -37.3% |
| 2002 | 10.5% | -19.4% |
| 2003 | 10.6% | -11.4% |
| 2004 | 19.8% | 23.6% |
| 2005 | 13.5% | 34.2% |
| 2006 | 25.7% | 61.9% |
| 2007 | 33.0% | 50.6% |
| 2008 | 21.6% | 25.1% |
| 2009 | 23.7% | 18.9% |
| 2010 | 31.7% | 61.6% |
| 2011 | 24.1% | 46.3% |
| 2012 | 18.1% | 54.0% |
| 2013 | 19.7% | 57.8% |
| 2014 | 18.4% | 56.9% |
| 2015 | 20.4% | 59.3% |
Sources: U.S. Bureau of Economic Analysis and Texas Comptroller of Public Accounts
Industries in Chemical Products Manufacturing
Most industries within the chemical manufacturing subsector are “advanced industries” as defined by the Brookings Institution. Such industries have research and development (R&D) spending per worker that ranks in the top 20 percent of all industries, and a share of workers with high levels of scientific and technical knowledge exceeding the national average. In 2015, advanced industries accounted for just 8.7 percent of total U.S. jobs yet generated 60 percent of exports, 81 percent of patents and 89 percent of private-sector R&D. Their emphasis on innovation and highly skilled workers makes the advanced industries essential to prosperity and rising standards of living.
Industry Concentration in Texas
Several industries in this subsector have a higher share of employment in Texas than nationally, as gauged by location quotient (LQ), a measure of employment concentration in a given area; the higher the LQ value, the more “concentrated” the industry.
The basic chemical manufacturing industry (petrochemicals, industrial gas and ethyl alcohol) had the highest LQ in 2016 at 2.87, meaning the industry’s share of total employment is 187 percent higher in Texas than the U.S. Such employment concentration can indicate a regional “industry cluster,” a group of interrelated firms in an area that provide related products or services and share similar needs for workers and suppliers. Other industries with a high concentration in Texas include resin and synthetic rubber manufacturing, paint and adhesive manufacturing and “other” chemical products and preparation.
Texas pharmaceutical and medicine manufacturing employment rose by 20 percent from 2010 to 2016; it was only industry in the subsector to add Texas jobs in the 2000s. Despite these gains, this industry remains less concentrated in Texas than in the U.S. overall. In 2016, Texas’ share of jobs in this industry was 51 percent less than the U.S. share (Exhibit 3).
Exhibit 3: Chemical Products Manufacturing in Texas: Industries
| Description | NAICS Code | 2016 Jobs | 2001 to 2010 % Change |
2010 to 2016 % Change |
2016 Average Salaries | 2001 Location Quotient | 2016 Location Quotient |
|---|---|---|---|---|---|---|---|
| Basic Chemical Manufacturing * | 3251 | 35,376 | -21% | 14% | $123,588 | 3.06 | 2.87 |
| Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing * | 3252 | 10,242 | -29% | 22% | $119,391 | 1.31 | 1.32 |
| Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing * | 3253 | 2,872 | -8% | -4% | $85,120 | 0.98 | 0.97 |
| Pharmaceutical and Medicine Manufacturing* | 3254 | 11,502 | 7% | 20% | $103,186 | 0.44 | 0.49 |
| Paint, Coating, and Adhesive Manufacturing | 3255 | 5,765 | -8% | 8% | $77,775 | 1.09 | 1.13 |
| Soap, Cleaning Compound, and Toilet Preparation Manufacturing | 3256 | 4,272 | -6% | -15% | $67,282 | 0.59 | 0.49 |
| Other Chemical Product and Preparation Manufacturing* | 3259 | 8,817 | -11% | 11% | $89,002 | 1.02 | 1.31 |
| Chemical Products Subsector Total | 325 | 78,845 | -16% | 12% | $108,397 | 1.22 | 1.17 |
* Indicates advanced industry as defined by Brookings Institution.
Sources: Emsi and Texas Comptroller of Public Accounts
Conclusion
Manufacturing is an important part of the Texas economy, driving innovation and providing thousands of jobs with high wages. While the sector’s employment has declined in the last 20 years, its contribution to Texas GDP rose more than twice as much as in the U.S. as a whole, and exceeded the growth in Texas’ total GDP by 15 percent.
Chemical product manufacturing contributes $55.5 billion to Texas’ GDP, the greatest amount of any manufacturing subsector. Industries in chemical manufacturing have experienced increased production, profits and employment in recent years, fueled by lower costs of natural gas, the main feedstock for Texas chemical plants. Chemical manufacturing employment has remained stable since early 2015, alleviating the effects of job losses in other manufacturing subsectors caused by declining crude oil prices.