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Exhibit 4: Total Employment, Computer and Electronic Product Manufacturing vs. Computer Systems Design and Related Services,
Computer and Electronic Products NAICS 334 Overview
Subsector Snapshot | Printable (PDF)
Fast Facts
- Computer and electronic product manufacturing provided nearly 91,500 direct Texas jobs in 2016, as well as another 218,000 indirect jobs.
- The subsector’s GDP totaled $28.6 billion in 2015.
- Average annual wages in the subsector were $120,000 in 2016, more than double the statewide average of $54,000.
- This subsector’s exports rose from $35.2 billion in 2008 to $47.1 billion in 2016, a 34 percent increase. Exports to Mexico alone nearly doubled during this period, from $13.5 billion to $26.0 billion, and accounted for more than half of this subsector’s exports in 2016.
Performance
Computer and electronic product manufacturing is by far the fastest-growing Texas manufacturing subsector in terms of economic activity. Its GDP increased by a staggering 584 percent from 1997 to 2015, for 11.3 percent average annual growth (the subsector experienced even greater economic expansion in the U.S. as a whole, with GDP rising by 680 percent). During this period, total Texas subsector employment declined by 38 percent (Exhibit 1).
Exhibit 1: Computer and Electronic Product Manufacturing – Real GDP and Employment Index in Texas, 1997-2015
| Year | Real GDP | Employment |
|---|---|---|
| 1997 | 0% | 0% |
| 1998 | 43% | 12% |
| 1999 | 42% | 12% |
| 2000 | 97% | 16% |
| 2001 | 96% | 8% |
| 2002 | 139% | -10% |
| 2003 | 170% | -20% |
| 2004 | 266% | -21% |
| 2005 | 309% | -22% |
| 2006 | 441% | -23% |
| 2007 | 392% | -22% |
| 2008 | 481% | -23% |
| 2009 | 439% | -30% |
| 2010 | 510% | -33% |
| 2011 | 532% | -31% |
| 2012 | 514% | -31% |
| 2013 | 541% | -33% |
| 2014 | 534% | -36% |
| 2015 | 584% | -38% |
Sources: Emsi, U.S. Bureau of Economic Analysis and Texas Comptroller of Public Accounts
Exhibit 2: Percent Employment Change in Computer and Electronic Product Manufacturing, U.S. vs. Texas, 1990-2016 (Indexed to 1990)
| Year | U.S. | Texas |
|---|---|---|
| 1990 | 0% | 0% |
| 1991 | -5% | -2% |
| 1992 | -10% | -8% |
| 1993 | -13% | -8% |
| 1994 | -13% | -4% |
| 1995 | -11% | 3% |
| 1996 | -8% | 12% |
| 1997 | -5% | 19% |
| 1998 | -4% | 33% |
| 1999 | -6% | 32% |
| 2000 | -4% | 38% |
| 2001 | -8% | 28% |
| 2002 | -21% | 7% |
| 2003 | -29% | -5% |
| 2004 | -30% | -6% |
| 2005 | -31% | -8% |
| 2006 | -31% | -9% |
| 2007 | -33% | -7% |
| 2008 | -35% | -9% |
| 2009 | -40% | -17% |
| 2010 | -42% | -20% |
| 2011 | -42% | -18% |
| 2012 | -43% | -19% |
| 2013 | -44% | -21% |
| 2014 | -45% | -24% |
| 2015 | -45% | -26% |
| 2016 | -45% | -28% |
Sources: Texas Workforce Commission and Texas Comptroller of Public Accounts
Long-Term Employment Trends
Computer and electronic product manufacturing jobs in Texas rose by 38 percent in the 1990s, peaking at nearly 174,000 jobs in 2000. Today Texas and U.S. employment in the subsector are down by 28 and 45 percent, respectively, from 1990 levels (Exhibit 2).
Several factors beyond the general productivity increases seen throughout manufacturing have contributed to this downturn. The electronics industry — and specifically semiconductor production — is very capital intensive and expensive. A new fabrication plant can cost more than $10 billion. Many nations offer tax incentives to lure such businesses; unfortunately, high corporate tax rates and low R&D tax credits prevent the U.S. from receiving more of these projects and, consequently, more manufacturing jobs. In addition, ever-changing technology requires companies to invest heavily in R&D — from 15 to 20 percent of gross sales on average. This combination of high upfront costs, lack of incentives and required R&D investments has compounded the decline in manufacturing employment.
Computer and Electronic Product Manufacturing Industries
Computer and electronic product manufacturing includes six industries, including manufacturers of computers and peripherals, semiconductors, audio and visual equipment and navigation equipment (Exhibit 3).
All six sectors are considered “advanced industries,” as defined by the Brookings Institution. Such industries have two distinguishing criteria: R&D spending per worker ranks in the top 20 percent of industries, and their share of workers with high levels of scientific and technical knowledge exceeds 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. Its emphasis on innovation and highly skilled workers makes advanced industries essential to growing prosperity and rising standards of living.
Industry Concentration in Texas
A common way to measure industry concentration is with location quotient (LQ), a measure of industry concentration in a given area in terms of employment: the higher the LQ value, the more concentrated the industry.
Texas’ computer and electronic product manufacturing LQ was 1.05 in 2016, meaning its share of the industry’s employment is 5 percent greater in Texas than in the U.S. (Exhibit 3). The computer and peripheral equipment manufacturing industry had the highest LQ of 1.52, indicating the industry’s employment share is 50 percent higher in Texas. The LQ values of communications equipment and semiconductor component manufacturing also are relatively high in Texas, despite a decline indicating the state lost some market share.
Exhibit 3: Industries Within Computer and Electronic Product Manufacturing
| Description | NAICS Code | 2016 Jobs | 2001 to 2010 % Change |
2010 to 2016 % Change |
2016 Average Salaries | 2001 Location Quotient | 2016 Location Quotient |
|---|---|---|---|---|---|---|---|
| Computer and Peripheral Equipment | 3341 | 20,824 | -45% | 27% | $133,936 | 1.43 | 1.52 |
| Communications Equipment | 3342 | 10,342 | -62% | -12% | $130,557 | 1.86 | 1.44 |
| Audio and Video Equipment | 3343 | 732 | -50% | 20% | $86,977 | 0.36 | 0.45 |
| Semiconductor and Other Electronic Components | 3344 | 38,721 | -42% | -7% | $125,092 | 1.56 | 1.27 |
| Navigational, Measuring, Electromedical and Control Instruments | 3345 | 20,020 | 5% | -13% | $93,411 | 0.64 | 0.61 |
| Manufacturing and Reproducing Magnetic and Optical Media | 3346 | 833 | -47% | -32% | $114,609 | 0.52 | 0.65 |
| Computer and Electronic Product Total | 334 | 91,472 | -40% | -3% | $120,389 | 1.26 | 1.05 |
Sources: Emsi and Texas Comptroller of Public Accounts
Service-Related Industries
As computer and electronic manufacturing employment has declined, high-paying service-related jobs in high tech and information technology have taken their place. The computer systems design and related services industry, for instance, added about 64,000 Texas jobs between 2010 and 2016, a gain of 63 percent (Exhibit 4).
Exhibit 4: Total Employment, Computer and Electronic Product Manufacturing vs. Computer Systems Design and Related Services,
1990-2016
| Year | Product Manufacturing | Systems Design and Related Services |
|---|---|---|
| 1990 | 126,200 | 19,600 |
| 1991 | 123,800 | 21,200 |
| 1992 | 116,200 | 22,600 |
| 1993 | 116,500 | 26,000 |
| 1994 | 121,200 | 29,900 |
| 1995 | 130,000 | 35,000 |
| 1996 | 140,800 | 42,800 |
| 1997 | 149,900 | 51,500 |
| 1998 | 167,400 | 62,800 |
| 1999 | 167,200 | 73,200 |
| 2000 | 173,900 | 84,900 |
| 2001 | 162,000 | 84,700 |
| 2002 | 134,500 | 74,300 |
| 2003 | 120,200 | 70,300 |
| 2004 | 118,000 | 73,600 |
| 2005 | 116,300 | 77,600 |
| 2006 | 115,000 | 84,100 |
| 2007 | 117,300 | 92,700 |
| 2008 | 114,800 | 101,500 |
| 2009 | 104,600 | 98,000 |
| 2010 | 100,600 | 101,400 |
| 2011 | 103,300 | 110,200 |
| 2012 | 102,800 | 123,400 |
| 2013 | 100,100 | 133,800 |
| 2014 | 96,000 | 147,400 |
| 2015 | 92,800 | 159,800 |
| 2016 | 90,700 | 165,400 |
Sources: Texas Workforce Commission 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 industry’s employment has declined over the last 20 years, its contribution to Texas GDP has increased — nearly double the industry’s contribution to U.S. GDP and exceeding growth in Texas’ total GDP by 15 percent. In 2015, Texas accounted for 10.2 percent of the nation’s manufacturing GDP.
Computer and electronic products accounted for $47.1 billion in exports in 2016, second only to chemical manufacturing. The subsector supports 91,472 direct Texas jobs with average annual wages of $120,389.
Computer and peripheral equipment, communications equipment and semiconductor and other electronic components (NAICS codes 3341, 3342 and 3344, respectively) have a high Texas LQ for both manufacturing and services. The subsector is concentrated in Texas compared to other states, yet Texas may be losing market share, considering that LQ values declined from 2001 through 2016. Computer and electronic products (334) is a cornerstone of Texas manufacturing, particularly in the Austin-Round Rock and Dallas-Fort Worth-Arlington metro areas.