Now hiring: The Midwest's job outlook
What are the growing Midwest industries? And which one is reinventing itself?
Chicago built its commercial heft and position as a business hub on a diverse economy – with manufacturing at the top of the list. Like the rest of the nation, Chicago and manufacturers across Wisconsin, Indiana and Michigan have been slow to recover from the recession – and the sector’s employment high water mark in 2000. But that doesn’t mean the region’s manufacturers are sitting still; they are reinventing themselves by leveraging technology and advanced manufacturing techniques. And that’s hardly the only innovation-driven growth sector; technology and healthcare are now bringing jobs and adding muscle to the economy in Chicago and the Midwest.
Manufacturing by the Numbers
The nation’s statistics for the industry are telling. Twenty years ago, the manufacturing industry employed 17.2 million workers. By late 2016, that number had dropped to 12.3 million. Industry Week painted a stark picture from a different perspective: “In the first decade of this century, America lost 56,190 factories – 15 per day.” Across the Midwest, manufacturing employment numbers now paint the industry as a diminishing contributor to the region’s employment numbers.
While there have been claims that U.S. manufacturing has migrated overseas, a study conducted by Ball State University in Indiana showed that 13 percent of manufacturing jobs lost have been to global trade, the rest to enhanced productivity because of automation. World Trade Organization Director General Roberto Azevedo agrees. “As much as 90 percent of U.S. manufacturing jobs recently lost were due to new technologies, innovation or improvements in efficiency.”
Manufacturing Output is Up, but Employment is Down
Manufacturers are doing more with less, thanks to technology. As advanced manufacturing helps companies build efficiencies into the design, processes and management of their operations, two things are happening: fewer workers are needed; and those working on the factory floor are leveraging new skills as they become managers of technology.
The Midwest Leadership in Advanced Manufacturing
Chicago, Indiana, Wisconsin and Michigan have strong – and shared – leadership roles in advanced manufacturing. In each corner of the region, various partnerships are investing in and developing the technologies with the potential to be the drivers of next generation manufacturing jobs – and the economy.
One example is the Digital Manufacturing and Design Innovation Institute (DMDII) on Chicago’s Goose Island. This is a partnership among universities, nonprofits and research labs to make manufactured products better, faster and more cost-competitive. Fortune magazine called DMDII “part-incubator, part-research center … a proving ground for experimenting with and testing new digital technologies that could potentially reduce the time and costs of current manufacturing processes across a number of industries.”
DMDII manufacturing collaborations span the Midwest. A new partnership with Milwaukee-based Manpower® has been created “… to define and map the roles and skills required by organizations on the forefront of advanced digital manufacturing.” In Indiana, another DMDII team initiative with Purdue Manufacturing Extension Partnership and Illinois Manufacturing Excellence Center is the recipient of a $1.2 million award for advanced manufacturing innovation, education and collaboration.
Also fostering connections among Chicago manufacturers, researchers and “the city’s entrepreneurial community of makers and technologists, not to mention investors …” is mHUB. Its state-of-the-art 63,000 square-foot facility in the middle of the River West “Tech Triangle” offers 10 unique fabrication centers, and resources for product design and rapid prototyping including a 3D printing lab, electronics labs, a metal shop and a micro factory for onsite low-volume production runs. In addition, there are workshops and mentors to help “turn new product ideas into scalable businesses.”
Michigan organizations aimed at developing advanced manufacturing capabilities are also hard at work. Advance Michigan, including partner cities Detroit, Flint, Pontiac, Lansing and Ann Arbor and their surrounding communities, invests in creating job opportunities through advanced manufacturing. Along with other initiatives, Advance Michigan will be one of 12 nationally designated communities that will have access to $1.2 billion in federal funding to support the growth of manufacturing jobs.
Beyond manufacturing, where will job growth come from?
The Bureau of Labor Statistics, in its outlook for U.S. employment, projected that total employment will increase by 20.5 million jobs between 2010 and 2020. This points to good news for the Midwest: Among the likely top performing industries – technology and healthcare – the region is well represented and positioned for growth.
According to a recent study by the Brookings Institution, Chicago added 10,000 technology jobs between 2013 and 2015. This places it among top ten cities for an increase in tech jobs – ahead of Boston and Seattle. Milwaukee, Detroit and South Bend also have made their mark; they are on the list compiled by tech.com as “Ten Most Unexpected Cities for Tech Innovation.” The website’s former editor-in-chief Dan Blacharski said, "With the emergence of cheap, reliable, and available cloud-based infrastructure and services, the tech industry is moving towards the industrial Midwest."
Healthcare is also a bright spot for the Midwest’s economy and job seekers. In Michigan, healthcare has taken over as the state’s largest employment sector, with major cities in other Midwestern states – Chicago, Milwaukee and Indianapolis – showing a similar trend. Healthcare providers and systems dominate the lists of largest employers in each city, and the American Hospital Association lists hospitals in all four states, amongst others, on their Centers of Innovation list.
A Healthy Chicago Economy Helps the Midwest
Chicago’s health is important to the entire region. Federal Reserve Bank of Chicago data, presented at the annual Financial Forecast Forum at Northern Illinois University, shows the city of Chicago produced more than 72 percent of the state’s GDP in 2015. According to data compiled by World Business Chicago, the city’s economy has expanded by an estimated 7,234 jobs year-over-year, an improvement of 0.6 percent since January 2016. In addition to the strength of the technology and healthcare sectors, growth is driven by absolute gains in Financial Activities (+4,072 jobs), Retail Trade (+2,441) and Construction (+2,187).
These numbers begin to tell the story that Chicago is not a one-industry town. World Business Chicago called the city “the most diversified economy in the U.S.,” with no single industry accounting for more than 14 percent of the workforce. That diversification helps support a strong and stable Midwestern economy, even during downturns in certain sectors.
Expert observers agree. When Site Selection Magazine, a publication of the Industrial Asset Management Council, announced its annual ranking of the nation’s metropolitan areas that are best for corporate investment, it was good news for the Midwest. In the 2016 listing, Chicago – including southern Wisconsin and northwest Indiana – took first place for the fourth year in a row.
Midwest Employment Numbers Tell a Positive Story
Growth spurts and strengthening employment numbers are cropping up across the Midwest. Wisconsin saw a healthy first quarter, with 18,000 private sector jobs added in the first two months of the year; by the end of the first quarter, the unemployment rate was the lowest since April 2000. Indiana mirrored Chicago with upticks in construction and financial services. And in Michigan, the two-year recovery in light vehicle sales is supporting a rising GDP and lowering of unemployment numbers.
Manufacturing in Chicago and across the Midwest is experiencing a tectonic shift as it refits itself to the digital age and leverages new productivity strategies. But manufacturing is not alone. Growth is being spurred by technology in the industries that make the Midwest one of the most vital economic sectors of the country. Manufacturers and decision makers in the region’s other industries are considering the investment required to harness the power of new technologies. As you plan for the future of your business, it is wise to work with advisors who can help you balance the challenges and the opportunities, and to make sound business decisions.