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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 TexasAn Overview

Statewide Manufacturing Snapshot |Printable (PDF)

Texas has an unusually diverse manufacturing economy. Its resources make it a natural leader in petroleum and chemical manufacturing; its research institutions have fostered computer and other high-tech manufacturing; and its business-friendly environment and skilled labor have nurtured a burgeoning automotive manufacturing sector. In all, Texas manufacturing contributed $218 billion to the Texas’ gross domestic product (GDP) in 2016, an amount larger than the entire economy of Portugal.

Technological improvements and efficient business processes have transformed much manufacturing from basic, labor-intensive activities to more advanced and highly skilled operations. Although direct manufacturing employment has declined, the industry stimulates employment in related sectors and services and remains a vital spark to innovation; many advanced manufacturing industries invest heavily in scientific and technological research and development (R&D).

Today, Texas has 845,000 direct manufacturing jobs, as well as another 2.2 million indirect jobs. Average annual Texas wages in manufacturing approached $73,000 in 2016, much higher than the statewide average of $53,500.

Diverging Paths: Employment and GDP

While Texas’ manufacturing employment has diminished, its economic output has increased. From 1997 through 2016, Texas’ manufacturing job count fell by 19 percent, but its real GDP rose by 94 percent, more than double the U.S. manufacturing gains of 40 percent. This divergence is largely due to productivity gains. Notably, U.S. manufacturing’s GDP has yet to reach its pre-recessionary levels (Exhibit 1).

Exhibit 1: Cumulative Percent Change in Real Gross Domestic Product, 1997 to 2016, Texas vs. U.S.

Percent Change in Real Gross Domestic Product, 1997 to 2016
Year US Total US Manufacturing Texas Total Texas Manufacturing
1997 0.0% 0.0% 0.0% 0.0%
1998 4.3% 4.8% 6.2% 8.3%
1999 9.2% 10.6% 10.3% 6.6%
2000 13.5% 17.4% 14.0% 13.5%
2001 14.5% 12.7% 16.9% 16.7%
2002 16.6% 13.8% 18.6% 20.1%
2003 19.6% 19.6% 19.6% 24.5%
2004 23.8% 27.3% 25.3% 59.4%
2005 27.7% 30.2% 28.2% 54.5%
2006 31.2% 36.6% 36.2% 72.7%
2007 33.1% 41.0% 42.9% 86.7%
2008 32.4% 36.9% 43.7% 67.5%
2009 28.8% 26.5% 42.9% 59.5%
2010 31.6% 33.2% 46.6% 77.5%
2011 33.4% 33.6% 51.9% 85.7%
2012 36.0% 34.0% 60.5% 83.9%
2013 38.0% 36.6% 68.6% 103.1%
2014 41.1% 37.9% 74.9% 88.6%
2015 44.8% 40.1% 82.8% 98.7%
2016 47.0% 39.9% 83.6% 98.4%

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


Texas’ manufacturing GDP growth is largely led by three subsectors – computer and electronic products, motor vehicles and parts and machinery manufacturing. The computer and electronic products subsector’s contribution to Texas GDP rose by a staggering 585 percent from 1997 through 2015 (though the U.S. increase was even larger, at 679 percent). The state’s motor vehicles and parts manufacturing subsector GDP rose by 352 percent, followed by a 123 percent rise in machinery manufacturing (Exhibit 2). The U.S. GDP changes during this period, by contrast, were a 71 percent rise in motor vehicle and parts manufacturing and a rise of just 4 percent for machinery manufacturing.

Exhibit 2: Texas Manufacturing Subsectors: Largest Percent Changes in Real GDP* from 1997 to 2015(GDP in Millions)

Subsector 1997 Real GDP 2015 Real GDP Percent Change in GDP
Computer and electronic products manufacturing $4.441 $30.403 585%
Motor vehicles, bodies and trailers, and parts manufacturing $2.752 $12.451 352%
Machinery manufacturing $7.504 $16.709 123%
Aerospace and other transportation equipment manufacturing $5.381 $9.939 85%
Primary metals manufacturing $1.639 $3.026 85%
Petroleum and coal products manufacturing $18.211 $28.913 59%

*GDP values inflation-adjusted to 2009 dollars.
Note: GDP data for subsectors are only available through 2015

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


Texas Manufacturing Subsectors

Texas’ chemical manufacturing GDP reached $56.1 billion in 2015, the highest among the state’s manufacturing subsectors, followed by petroleum and coal products manufacturing at $43.4 billion. Computer and electronic products had the third-highest GDP value, at $28.7 billion (values are current dollars). These three subsectors also offer the highest average wages, reaching well above $100,000 annually (Exhibit 3).

Manufacturing employment in Texas is less concentrated 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. Employment concentration can indicate a regional “industry cluster,” a group of interrelated firms that provide related products or services and share similar needs for workers and suppliers. A high LQ also helps identify inherent industrial strengths.

Subsectors in energy-related manufacturing are highly concentrated in Texas, led by petroleum and coal products manufacturing and followed by chemical products manufacturing.

A regional assessment of employment concentration is often necessary, as the size of Texas’ economy and workforce can obscure regional industry strengths. For example, Texas’ motor vehicle and parts employment share is just half its share nationally (as measured by its 0.49 LQ). But a regional analysis of this subsector in the San Antonio-New Braunfels metro area shows a burgeoning industry, with a regional employment share 33 percent above the U.S. share.

Exhibit 3: Texas Manufacturing Subsectors – Jobs, Average Annual Wages and Gross Domestic Product and Location Quotient

Industry NAICS Code 2016 Jobs 2016 Average Wages Gross Domestic Product, 2015 (Millions) 2016 Location Quotient
Food and beverage and tobacco products manufacturing 311-312 105,439 $44,430 $15.116 0.71
Textile products, apparel and leather and allied products manufacturing 313-316 17,119 $36,228 $1.036 0.53
Wood products manufacturing 321 23,038 $41,025 $1.408 0.71
Paper products manufacturing 322 17,207 $62,783 $2.082 0.56
Printing and related support activities 323 25,239 $47,474 $1.968 0.68
Petroleum and coal products manufacturing 324 22,967 $131,454 $43.436 2.49
Chemical products manufacturing 325 78,910 $106,865 $56.093 1.17
Plastics and rubber products manufacturing 326 37,764 $51,731 $5.573 0.65
Nonmetallic mineral products manufacturing 327 37,820 $57,710 $5.645 1.12
Primary metals manufacturing 331 20,065 $57,800 $3.126 0.65
Fabricated metal products 332 118,060 $58,662 $14.022 1
Machinery manufacturing 333 88,044 $83,275 $19.086 0.99
Computer and electronic products manufacturing 334 90,450 $121,210 $28.707 1.04
Electrical equipment, appliance and components manufacturing 335 18,749 $69,453 $2.458 0.59
Motor vehicles, bodies and trailers, and parts manufacturing 3361-3363 38,836 $60,669 $13.172 0.49
Other transportation equipment manufacturing 3361-3363 51,825 $97,832 $11.336 0.92
Furniture and related products manufacturing 337 23,142 $41,559 $1.402 0.72
Miscellaneous manufacturing (Includes medical devices) 339 30,490 $52,953 $2.961 0.62
Manufacturing Total 31-33 845,164 $73,124 $228.626 0.83

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

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