by Josh Bays, on Apr 22, 2020 10:07:32 AM
Over the course of the last six weeks since the COVID-19 pandemic started significantly impacting domestic manufacturers, companies have been overwhelmed with crisis-management as they react to this latest disruption. There are a few segments of the U.S. manufacturing industry that are finding it difficult to keep up with demand but most are experiencing a drastic drop in orders.
In addition to changes in market demand, many manufacturing plants are also disrupted by non-essential business mandates, social-distancing practices, and in some cases, widespread COVID-19 infections within their facilities.
Unfortunately, it is still too early to understand the real impact this pandemic is going to have on the manufacturing industry. However, the effects of disrupted supply chains, business shutdowns and mass layoffs will start to be revealed in industry data in the coming weeks. Therefore, at this moment, the wide range of potential outcomes is merely conjecture.
In an effort to speculate on which communities will be impacted the most by the pandemic, Site Selection Group, a full-service location advisory, real estate and economic incentive services firm, has ranked every metro-area based on its potential risk exposure to disruption in manufacturing.
The methodology for determining risk in manufacturing
First, Site Selection Group assigned a risk index to each of the 3-digit NAICS codes that make up the overall manufacturing industry. The assignment of risk indices by our experts were based on the perceived impact COVID-19 would have on each sub-industry classification. For example, “Transportation Equipment” is viewed as a high-risk category since consumer spending habits on large purchases have largely halted, while “Food” is viewed as a lower-risk category since the public is still buying groceries. The table below shows all 21 3-digit manufacturing NAICS codes.
| Apparel | Furniture and Related Product | Plastics and Rubber Products |
| Beverage and Tobacco Product | Leather and Allied Product | Primary Metal |
| Chemical | Machinery | Printing and Related Support Activities |
| Computer and Electronic Product | Miscellaneous | Textile Mills |
| Electrical Equipment, Appliance, and Component | Nonmetallic Mineral Product | Textile Product Mills |
| Fabricated Metal Product | Paper | Transportation Equipment |
| Food | Petroleum and Coal Products | Wood Product |
Next, Site Selection Group determined for each metro-area in the United States the concentration of manufacturing industry working in each sub-industry classification. We then multiplied the risk index times the employment concentration and summed the total to calculate a “Total Risk Index.” Building on the previous example, a metro area with a high concentration of food production relative to other manufacturing sectors would see a lower risk index, but one with a high percentage of manufacturing in the transportation sector would be much higher.
Higher risk metro-areas are largely east of the Mississippi River
The Total Risk Index is meant to answer the question of “Which metro-areas have the greatest potential of having their local manufacturing employment disrupted?” The following table shows the top 20 higher risk and lower risk metro areas, only including metro areas with a population in excess of 250,000.
Top 20 Higher-Risk
| METRO-AREA | TOTAL RISK INDEX | TOTAL EMPLOYMENT IN MANUFACTURING |
|---|---|---|
| Norwich-New London, CT | 4.5 | 17,202 |
| Gulfport-Biloxi, MS | 4.5 | 17,827 |
| Wichita, KS | 4.3 | 54,690 |
| Tucson, AZ | 4.2 | 27,281 |
| Detroit-Warren-Dearborn, MI | 4.2 | 259,670 |
| Charleston-North Charleston, SC | 4.2 | 29,753 |
| Virginia Beach-Norfolk, VA-NC | 4.1 | 58,723 |
| Rockford, IL | 4.1 | 32,923 |
| Savannah, GA | 4.1 | 18,673 |
| Flint, MI | 4.1 | 12,948 |
| Lansing-East Lansing, MI | 4.1 | 21,629 |
| Hartford-East Hartford, CT | 4.1 | 69,033 |
| Huntsville, AL | 4.1 | 25,846 |
| Seattle-Tacoma-Bellevue, WA | 4.1 | 184,764 |
| Toledo, OH | 4.0 | 48,154 |
| Peoria, IL | 4.0 | 23,941 |
| Tulsa, OK | 4.0 | 56,135 |
| Lexington-Fayette, KY | 4.0 | 30,875 |
| Spartanburg, SC | 4.0 | 33,892 |
| Clarksville, TN-KY | 3.9 | 13,407 |
Bottom 20 Lower-Risk
| METRO AREA | TOTAL INDEX | TOTAL EMPLOYMENT IN MANUFACTURING |
|---|---|---|
| Merced, CA | 2.2 | 9,959 |
| Kennewick-Richland, WA | 2.2 | 8,419 |
| Salisbury, MD-DE | 2.3 | 14,724 |
| Modesto, CA | 2.4 | 22,071 |
| Visalia, CA | 2.4 | 13,178 |
| Fayetteville-Springdale, AR | 2.5 | 27,372 |
| Salinas, CA | 2.6 | 5,838 |
| Fresno, CA | 2.6 | 26,619 |
| Fort Smith, AR-OK | 2.6 | 17,670 |
| Santa Rosa-Petaluma, CA | 2.7 | 24,308 |
| Urban Honolulu, HI | 2.7 | 11,998 |
| Yakima, WA | 2.8 | 8,955 |
| Omaha-Council Bluffs, NE-IA | 2.8 | 34,384 |
| Bakersfield, CA | 2.9 | 13,702 |
| Salem, OR | 2.9 | 13,698 |
| Amarillo, TX | 2.9 | 13,655 |
| Stockton, CA | 2.9 | 20,197 |
| San Luis Obispo, CA | 2.9 | 8,410 |
| Atlantic City-Hammonton, NJ | 2.9 | 2,377 |
| College Station-Bryan, TX | 2.9 | 6,016 |
The interactive map below shows all 384 metro areas in the United States with a population over 100,000 shaded by their Total Risk Index for the manufacturing industry.
Whether growing or consolidating, local market dynamics are critical
As previously acknowledged, the range of outcomes being discussed in the midst of the pandemic is only speculation at this point. Over the next few months, Site Selection Group will track how closely actual industry data correlates to this preliminary analysis.
