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.

 

Let us know what you think!