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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

economy

Manufacturing in the South Texas Region

The South Texas Region of Texas includes 28 counties stretching along the Mexico border from Del Rio to Brownsville and up the Gulf Coast past Rockport to Aransas Pass and San Antonio Bay. The region includes four metropolitan statistical areas (MSAs): the Brownsville-Harlingen MSA, comprising Cameron County; the Corpus Christi MSA, which includes Aransas, Nueces and San Patricio counties; the Laredo MSA, comprising Webb County; and the McAllen-Edinburg-Mission MSA, comprising Hidalgo County. Counties in the region not associated with an MSA include Bee, Brooks, Dimmit, Duval, Edwards, Jim Hogg, Jim Wells, Kenedy, Kinney, Kleberg, La Salle, Live Oak, Maverick, McMullen, Real, Refugio, Starr, Uvalde, Val Verde, Willacy, Zapata and Zavala counties.

In 2019, the South Texas Region had an estimated population of more than 2.4 million, or 8.4 percent of Texas’ total population. The region’s total employment of 837,223 accounted for 6.7 percent of the state’s total.

The region included nearly 30,000 manufacturing jobs in 2019, or 3.6 percent of its total employment (Texas manufacturing, by contrast, comprised 7.2 percent of total state employment). Manufacturing’s regional gross domestic product (GDP) of $7.1 billion accounted for 8.3 percent of the total regional GDP of $85.4 billion. The South Texas Region’s manufacturers paid more than $1.8 billion in wages in 2019, or 5.5 percent of total regional wages of $33.1 billion. Annual wages for its manufacturing jobs averaged nearly $61,000 in 2019 (Exhibit 1), far exceeding the average wages of about $39,500 for all regional jobs.

Exhibit 1: Manufacturing Overview by County, South Texas Region, 2019

County Employment Gross Domestic Product Wages
Total Share Total
(millions)
Share Total
(millions)
Share Average
Annual Wages
Aransas 42 0.8% $8 1.3% $2 0.7% $36,944
Bee 302 3.4% $11 1.4% $14 4.0% $44,678
Brooks 0 0.0% $0 0.0% 0.0%
Cameron 5,927 4.2% $1,010 8.4% $311 6.3% $52,483
Dimmit 68 1.0% (D) (D) $2 0.5% $26,381
Duval 24 0.7% (D) (D) $1 0.7% $41,384
Edwards 17 3.4% (D) (D) $1 3.7% $44,538
Hidalgo 6,970 2.6% $816 3.7% $296 3.2% $42,487
Jim Hogg 50 2.9% $8 4.0% $2 2.8% $38,868
Jim Wells 406 2.4% $50 2.8% $26 3.2% $63,653
Kenedy 208 40.1% (D) (D) $17 45.3% $82,156
Kinney 136 13.2% (D) (D) $9 18.6% $67,479
Kleberg 355 3.0% $60 4.9% $25 5.1% $69,812
La Salle 0 0.0% $1 0.0% 0.0%
Live Oak 346 8.4% (D) (D) $27 10.7% $77,909
Maverick 583 3.2% $166 9.1% $25 4.0% $43,488
McMullen 35 5.4% (D) (D) $2 6.0% $63,682
Nueces 10,350 6.3% $4,218 20.3% $856 10.6% $82,660
Real 27 3.5% $7 9.2% $1 4.9% $38,212
Refugio 15 0.6% (D) (D) $1 0.7% $48,292
San Patricio 822 4.4% $423 14.8% $83 9.1% $100,561
Starr 57 0.4% $4 0.3% $1 0.3% $21,987
Uvalde 395 4.0% $47 5.0% $14 3.9% $34,434
Val Verde 1,846 10.0% $155 7.9% $66 9.3% $35,806
Webb 718 0.7% $89 0.8% $30 0.8% $41,120
Willacy 63 1.7% $7 1.4% $3 2.1% $47,243
Zapata 31 0.9% $7 1.1% $3 1.9% $113,522
Zavala 102 4.2% (D) (D) $7 7.5% $69,703
South Texas Region Total 29,893 3.6% $7,088 8.3% $1,823 5.5% $60,987
Texas 908,801 7.2% $241,005 13.1% $72,473 9.6% $79,746

(D): data not shown to avoid disclosure of confidential information.

Sources: JobsEQ, U.S. Bureau of Economic Analysis and Texas Comptroller of Public Accounts

In 2019, most of the region’s manufacturing activity was concentrated in three counties: Nueces (Corpus Christi), Hidalgo (McAllen) and Cameron (Brownsville). Combined, they accounted for 78 percent of the region’s manufacturing jobs, 85 percent of its manufacturing GDP and 80 percent of its manufacturing wages.

Manufacturing in the South Texas Region comprises a variety of industrial sectors. For example:

  • Companies such as United Launch Alliance (ULA) in Harlingen are leaders in aerospace manufacturing.
  • The presence of the Eagle Ford Shale formation underlying 25 counties, many of which are in the South Texas Region, ensures that the petroleum products manufacturing industry continues to see growth in the region.
  • Texas has been a leader in leather product manufacturing since the mid-1800s; a strong industry concentration remains today in the South Texas Region.

Long-Term Regional Trends

Between 2001 and 2019, manufacturing employment in the South Texas Region fell by more than 31 percent, or about 13,500 jobs. Manufacturing’s share of total regional employment fell from 7.0 percent to 3.6 percent in this period (Exhibit 2).

Exhibit 2: Manufacturing Employment and Manufacturing Share of Total Employment, 2001 to 2019, South Texas Region

Manufacturing Employment and Manufacturing Share of Total Employment, 2001 to 2019, South Texas Region
Year Total Industry Jobs Manufacturing Jobs Manufacturing Share of Total Industry Jobs
2001 621,235 43,441 7.0%
2002 632,795 39,341 6.2%
2003 646,496 37,182 5.8%
2004 661,433 35,045 5.3%
2005 680,161 35,505 5.2%
2006 702,239 36,730 5.2%
2007 722,802 36,256 5.0%
2008 738,429 35,307 4.8%
2009 723,779 31,743 4.4%
2010 729,673 30,194 4.1%
2011 748,564 30,557 4.1%
2012 767,468 31,809 4.1%
2013 784,209 32,064 4.1%
2014 799,882 31,817 4.0%
2015 805,927 31,368 3.9%
2016 805,409 29,255 3.6%
2017 813,290 28,408 3.5%
2018 824,934 28,937 3.5%
2019 837,223 29,893 3.6%

Sources: JobsEQ and Texas Comptroller of Public Accounts

The region lost manufacturing jobs between 2009 and 2019, even as sector employment rose in Texas and the U.S. The region lost 1,850 jobs in this period, a decline of 5.8 percent. By comparison, Texas and U.S. manufacturing jobs rose by 8.0 percent and 8.2 percent, respectively (Exhibit 3).

The largest job losses were in transportation equipment industries, specifically ship and boat building and aerospace parts manufacturing. These two industries lost more than 1,600 and 900 jobs, respectively, during this period.

Regional manufacturing employment rose between 2017 and 2019, led by gains in chemical manufacturing and machinery manufacturing.

Exhibit 3: Percentage Change in Manufacturing Jobs, 2009 to 2019 (Indexed to 2009)

Total Manufacturing Jobs, 2009-2019 (Indexed to 2009)
Year South Texas Region Jobs South Texas Region Percent Change Texas Jobs Texas Percent Change USA Jobs USA Percent Change
2009 31,743 0.0% 841,353 0.0% 11,854,159 0.0%
2010 30,194 -4.9% 814,265 -3.2% 11,532,264 -2.7%
2011 30,557 -3.7% 840,195 -0.1% 11,748,311 -0.9%
2012 31,809 0.2% 867,771 3.1% 11,950,974 0.8%
2013 32,064 1.0% 877,534 4.3% 12,040,273 1.6%
2014 31,817 0.2% 890,468 5.8% 12,202,119 2.9%
2015 31,368 -1.2% 881,291 4.7% 12,339,571 4.1%
2016 29,255 -7.8% 848,235 0.8% 12,345,948 4.1%
2017 28,408 -10.5% 854,385 1.5% 12,456,179 5.1%
2018 28,937 -8.8% 882,339 4.9% 12,696,998 7.1%
2019 29,893 -5.8% 908,801 8.0% 12,828,307 8.2%

Sources: JobsEQ and Texas Comptroller of Public Accounts

Between 2009 and 2019, the South Texas Region lost 14 manufacturing establishments, a 1.3 percent decrease, compared to gains of 9 percent in Texas and 1 percent in the U.S. (Exhibit 4).

Exhibit 4: Total Manufacturing Establishments in South Texas Region, 2009 to 2019

Total Manufacturing Establishments in South Texas Region, 2009 to 2019
Year South Texas Region (total) South Texas Region Texas USA
2009 1,112 0.0% 0.0% 0.0%
2010 1,114 0.2% -1.4% -2.5%
2011 1,102 -0.9% -1.6% -4.0%
2012 1,077 -3.1% -1.9% -4.7%
2013 1,066 -4.1% -2.0% -4.7%
2014 1,052 -5.4% -1.4% -3.9%
2015 1,060 -4.7% 0.4% -3.0%
2016 1,085 -2.4% 1.7% -2.2%
2017 1,070 -3.8% 3.8% -1.3%
2018 1,082 -2.7% 5.7% 0.0%
2019 1,098 -1.3% 9.4% 1.1%

Sources: JobsEQ and Texas Comptroller of Public Accounts

The South Texas Region’s manufacturing jobs paid average wages of nearly $61,000 in 2019. Between 2009 and 2019, its average wages rose by 30 percent, versus 32 percent in Texas and 27 percent in the U.S. (Exhibit 5).

Exhibit 5: Average Wages in Manufacturing Jobs, 2009 to 2019

Average Annual Wages, Manufacturing Jobs, 2009-2019
Year South Texas Region Texas USA
2009 $46,820 $60,401 $54,939
2010 $48,360 $63,310 $57,595
2011 $51,274 $66,075 $59,277
2012 $52,476 $68,491 $60,553
2013 $51,971 $68,838 $61,143
2014 $54,025 $71,171 $63,024
2015 $55,607 $72,815 $64,352
2016 $56,539 $73,125 $64,922
2017 $58,523 $75,806 $66,898
2018 $60,311 $77,647 $68,585
2019 $60,987 $79,746 $69,976

Sources: JobsEQ and Texas Comptroller of Public Accounts

The manufacturing sector’s GDP value for the South Texas Region rose by an inflation-adjusted 45.1 percent between 2009 and 2019, greater than Texas’ and the U.S.’ gains of 29.7 percent and 20.8 percent, respectively (Exhibit 6).

Regional manufacturing GDP has risen sharply since 2014, led by strong growth in Nueces County.

Exhibit 6: Percentage Change in Real Gross Domestic Product, Manufacturing, 2009 to 2019 (Indexed to 2009)

Percentage Change in Real Gross Domestic Product, Manufacturing, 2009 to 2019 (Indexed to 2009)
Year South Texas Region Texas USA
2009 0.0% 0.0% 0.0%
2010 13.6% 10.8% 5.4%
2011 21.9% 15.0% 5.8%
2012 14.4% 10.9% 5.1%
2013 21.8% 23.3% 8.3%
2014 -6.9% 11.3% 10.2%
2015 0.9% 15.0% 11.7%
2016 7.8% 11.7% 10.9%
2017 22.5% 18.2% 13.7%
2018 37.3% 24.4% 18.5%
2019 45.1% 29.7% 20.8%

Note: Due to GDP data withheld to avoid disclosure of confidential information, the analysis excludes the South Texas Region’s counties of Brooks, Dimmit, Duval, Edwards, Kenedy, Kinney, La Salle, Live Oak, McMullen, Real, Refugio, Willacy, Zapata and Zavala.

Sources: U.S Bureau of Economic Analysis and Texas Comptroller of Public Accounts

Pandemic Effects

All Texas industry sectors have been affected by the pandemic to some degree, and manufacturing is no exception. Monthly jobs data show that manufacturing jobs in all four South Texas MSAs suffered greater percentage losses in February 2021 compared to the previous year than in Texas or the U.S. Manufacturing losses also exceeded total job losses in all four metros during this period (Exhibit 7).

Exhibit 7: Changes in Manufacturing Jobs, February 2020 to February 2021

Metro Area Manufacturing Jobs Percent Change (Manufacturing) Percent Change (Total Employment)
Brownsville-Harlingen MSA -400 -6.5% -4.9%
Corpus Christi MSA -800 -9.3% -6.5%
Laredo MSA -100 -12.5% -7.5%
McAllen-Edinburg-Mission MSA -700 -9.3% -4.2%
Texas -54,200 -6.0% -4.6%
United States -524,000 -4.1% -6.0%

Note: Not seasonally adjusted.

Source: Texas Workforce Commission

Key Manufacturing Industries

South Texas Region manufacturing employment fell by 1,850 jobs, or 5.8 percent, between 2009 and 2019. Some regional industries did see growth, however, led by gains in machinery manufacturing (up by 1,240 jobs or 106 percent) and chemical manufacturing (up by 459 jobs or 45 percent). The largest industry employment losses were in “other transportation equipment” (down 1,717 jobs or 64 percent) and aerospace product and parts (down 915 jobs or 20 percent).

The interactive Exhibit 8 displays regional manufacturing industry strengths and weaknesses through the use of two common analytical tools that compare regional manufacturing employment trends to national averages. These tools serve as an educational resource to inform development prospects and assess industry strengths beyond simple measures of employment change.

First, the location quotient (LQ) measures state and regional industry concentration levels by comparing an industry’s share of total regional employment to its share of total national employment. If the regional industry share exceeds the national share (an LQ greater than 1.00), the industry is more “concentrated” in the region than nationally. A score above 1.00 may indicate that the regional industry is strong and self-sufficient and that it exports its products or services beyond the region. Regional industries with below-average employment concentrations (LQs of less than 1.00) often import goods or services from other areas.  

A second tool, shift-share analysis (SSA), measures regional industry job changes and assesses the role of local competitiveness on industry job gains or losses. The SSA uses national employment and industry trends to produce expected employment changes for a regional industry. If a regional industry’s actual employment changes exceed expected changes (a positive local competitiveness effect), the region may have a productive advantage in the industry. Conversely, a negative competitiveness effect indicates that the industry fell short of expected employment changes. Between 2009 and 2019, SSA shows that total manufacturing employment in the South Texas Region fell short of expected employment changes by about 3,221 jobs.

The manufacturing industries plotted in the exhibit fall into one of four quadrants based on 2019 LQ values and SSA values between 2009 and 2019:

  • Strong and growing: Industry has above-average concentration levels (2019 LQ value > 1.00) and industry job changes exceeded expected changes between 2009 and 2019 (positive competitiveness effect);
  • Strong but declining: Industry has above-average concentration levels (2019 LQ value > 1.00) and industry job changes fell below expected changes between 2009 and 2019 (negative competitiveness effect);
  • Weak but growing: Industry has below-average concentration levels (2019 LQ value < 1.00) and industry job changes exceeded expected changes between 2009 and 2019 (positive competitiveness effect); and
  • Weak and declining: Industry has below-average concentration levels (2019 LQ value < 1.00) and industry job changes fell below expected changes between 2009 and 2019 (negative competitiveness effect).

The South Texas Region does have some strong, concentrated manufacturing industries, as measured by LQ values in 2019. The region’s leather and allied product industry is its most heavily concentrated manufacturing industry, with an LQ value of 6.6. (In other words, the industry’s share of South Texas Region employment is nearly 7 times as high as the industry’s nationwide share.) Petroleum products manufacturing is also highly concentrated in the region (2019 LQ = 4.47). Moreover, SSA measurements of this industry between 2009 and 2019 show that it exceeded expected employment changes by about 400 jobs, indicating that the regional industry enjoys a competitive advantage.

Aerospace products and parts manufacturing remains a concentrated industry in the South Texas Region, but SSA measurements may indicate some competitive weaknesses in the region, as industry jobs fell short of expected changes between 2009 and 2019 by more than 1,000 jobs.

The levels of employment concentration for many of the region’s manufacturing industries remain below national averages, yet some show high levels of competitiveness, most notably machinery manufacturing. Between 2009 and 2019, the industry exceeded expected employment gains by about 1,150 jobs. Such developments could identify emerging industries and prospects for further industry growth.

A note of caution: A positive competitive effect indicates that some economic advantages exist in a region, such as access to natural resources or to a more productive labor pool, management or technologies. The sources of those advantages, however, cannot be identified through SSA.

Exhibit 8: Manufacturing Industries in the South Texas Region, Concentration Levels and Competitiveness

Manufacturing Industries in the South Texas Region, Concentration Levels and Competitiveness
Industry Title NAICS Employment, 2019 Location Quotient, 2019 Employment Changes due to Local Competitiveness, 2009-2019
Food Manufacturing 311 4,480 0.47 -681
Beverage and Tobacco Product Manufacturing 312 494 0.30 -119
Textile Mills 313 107 0.17 81
Textile Product Mills 314 223 0.34 -3
Apparel Manufacturing 315 461 0.73 189
Leather and Allied Product Manufacturing 316 1,063 6.66 -97
Wood Product Manufacturing 321 237 0.10 -150
Paper Manufacturing 322 935 0.44 98
Printing and Related Support Activities 323 346 0.14 -76
Petroleum and Coal Products Manufacturing 324 2,936 4.47 401
Chemical Manufacturing (Resource-Intensive Commodities) 3251-3253 1,489 0.91 403
Pharmaceutical and Medicine Manufacturing 3254 79 0.04 -74
Chemical Manufacturing (Locally Processed Goods) 3255-3259 195 0.13 -43
Plastics and Rubber Products Manufacturing 326 607 0.14 51
Nonmetallic Mineral Product Manufacturing 327 1,409 0.58 -375
Primary Metal Manufacturing 331 395 0.18 -153
Fabricated Metal Product Manufacturing 332 3,601 0.42 -103
Machinery Manufacturing 333 2,410 0.37 1,143
Computer and Electronic Product Manufacturing 334 890 0.14 193
Electrical Equipment, Appliance, and Component Manufacturing 335 605 0.26 135
Motor Vehicle, Body, and Parts Manufacturing 3361-3363 887 0.15 -295
Aerospace Product and Parts Manufacturing 3364 3,645 1.17 -1,060
Other Transportation Equipment Manufacturing 3365-3369 980 0.70 -1,986
Furniture and Related Product Manufacturing 337 666 0.30 -315
Medical Equipment and Supplies Manufacturing 3391 170 0.09 -76
Other Miscellaneous Manufacturing 3399 582 0.34 -309
Total - Manufacturing 29,893 0.40 -3,221

Sources: JobsEQ and Texas Comptroller of Public Accounts

Summary

Manufacturing employment in the South Texas Region fell by nearly 6 percent between 2009 and 2019, burdened by losses in transportation equipment industries including aerospace parts and ship and boat building. Despite these losses, these industries maintain a strong presence in the region and the infrastructure to manage a resurgence.

Machinery manufacturing emerged as a promising regional industry, with job gains between 2009 and 2019 that far exceeded expectations.

Petroleum products manufacturing remains a key industry, especially with the region’s proximity to the Eagle Ford Shale.