State of the State Mid-Year 2024: Arkansas’ manufacturing sector producing more ‘with fewer workers’

Arkansas’ manufacturing sector accounts for 12% of the state’s total payroll jobs and could add more than 1,000 jobs if recent growth rates continue, according to economist Greg Kaza. Job numbers in the sector remain well below peak employment in February 1995.

Kaza, executive director of the Little Rock-based Arkansas Policy Foundation, said the sector, once the largest jobs sector in the state, still is a big job generator.

“The manufacturing private industry sector continues to make a significant contribution to Arkansas’ economy. One might say, ‘It’s firing on four cylinders with the potential for six.’ In terms of jobs, manufacturing adds nearly one in eight jobs, or 12% of total Arkansas payroll employment, according to U.S. Bureau of Labor Statistics records,” Kaza noted in a brief analysis provided to Talk Business & Politics before July numbers were available.

He noted that manufacturing jobs, estimated at 161,800, are well above the 151,900 when the current U.S. economic expansion began in May 2020. However, he also noted that Arkansas’ manufacturing job growth since May 2020 is up 6.3%, below the U.S. average of 11.2%.

“The growth of Arkansas manufacturing jobs this expansion represents a reversal from two previous 21st-century expansions (2001-07, 2009-20) when employment declined,” Kaza wrote.

June’s estimated 161,800 manufacturing job numbers were below the 163,800 in June 2023. The June numbers are also down 34.6% compared with peak manufacturing employment in Arkansas of 247,600 in February 1995.

Roughly 48% of the state’s manufacturing jobs are in durable goods, with the remaining number in non-durable goods manufacturing — primarily the food processing sector. Key industries in the state’s overall manufacturing sector include poultry production, timber, transportation equipment, plastic and rubber products, and fabricated and primary metals, according to Kaza’s report.

“A final positive: The sector’s contribution to real GDP has increased since 2020, according to the Federal Reserve Bank of St. Louis,” Kaza noted. “Arkansas’ manufacturing sector is producing more goods with fewer workers than at the turn of the century.”

According to the National Association of Manufacturers (NAM), Arkansas’ manufacturing sector generates $24.1 billion in value, or 14.5% of the state’s gross domestic product (GDP).

Manufacturing in Arkansas produced $5.2 billion in exports in 2022, the latest year data is available through NAM, with Canada being the top export country at $1.4 billion. Following close is Mexico, with $830.4 million, and the United Kingdom, a distant third at $243.9 million.

Based on the June job numbers, 44% of Arkansas’ manufacturing jobs are located in just a handful of the state’s 75 counties.

The Northwest Arkansas metro, known for being a corporate hub region, has the most manufacturing jobs of metro areas located primarily in the state. The region had 31,200 jobs in the June report, up from 30,800 in June 2023. Manufacturing jobs in the sector are also up 4.3% compared to May 2020, when the U.S. expansion began.

The central Arkansas metro had 20,500 jobs in June, above the 20,000 in June 2023 and 7.9% above May 2020 job numbers. The Fort Smith metro had 19,500 manufacturing jobs in June, above the 19,000 in June 2023 and 19% more than the 16,400 jobs in May 2020.

According to the U.S. Department of Commerce, the U.S. is the second largest manufacturing nation — in terms of value added — with China ranking first. Following are some other notes on the manufacturing sector from the Department of Commerce report:
• Manufacturing contributed $2.3 trillion to the U.S. GDP in 2022, or 11.4 % of total U.S. GDP, measured in chained 2012 dollars.
• Average U.S. manufacturing compensation is 6.3% higher than that for total private industry.
• When including direct and indirect value added, manufacturing contributed an estimated 24% of U.S. GDP.
• There were 15.2 million employees in U.S. manufacturing in 2022, which was 9.6% of total U.S. employment.
• Manufacturing accounted for 76.6% of total U.S. environmental impact.

Editor’s note: The State of the State series provides reports twice a year on Arkansas’ key economic sectors. The series publishes stories to begin a year and around mid-year to provide an update on the state’s economy. Link here for the State of the State page and previous stories.