New Hampshire adds manufacturing jobs

By Michael Carroll | Watchdog.org

Manufacturing jobs are rebounding in New Hampshire, at least in the short term, but the Granite State remains well short of the more than 77,000 such jobs it produced prior to the onset of the 2008 recession.

Even so, economists remain hopeful about the manufacturing industry in New Hampshire. The top two manufacturing sectors are computer and electronic products, followed by fabricated metal products, according to 2014 data from the National Manufacturers Association.

“The job growth in manufacturing is recent, so it’s hard to tell how durable it is,” Russ Thibeault, the president of Applied Economic Research Inc. in Laconia, N.H., told Watchdog.org.

Employment numbers from both New Hampshire Employment Security, a state agency, and the federal Bureau of Labor Statistics, show a steady uptick in manufacturing jobs in recent years, but the numbers do fluctuate from month to month.

From July 2016 to July 2017, the number of manufacturing jobs in New Hampshire increased by nearly 1,000, according to BLS numbers. As of September, manufacturing jobs in the state numbered 68,700, the state jobs agency reported.

Short-term projections from the agency also show a gain of nearly 300 manufacturing jobs from the fourth quarter of 2016 through the fourth quarter of 2018. But longer-term projections are more pessimistic. New Hampshire Employment Security expects a decline of more than 900 manufacturing jobs between 2014 and 2024.

Though a sizable number of manufacturing jobs were lost over the past decade, the companies that survived are stronger, according to Thibeault.

“It’s a case of survival of the fittest in the first instance,” Thibeault said. “We’re now adding jobs in high-tech sectors that share the most promise going forward.”

The recent expansion in manufacturing jobs is positive because for a period after the recession, the state economy was adding mostly lower-paying retail jobs, he said.

In comparison, though, New Hampshire boasted 104,000 manufacturing jobs in early 1990, and by 2007, that number had dropped to 77,000, according to Thibeault. Despite such slides, the state’s unemployment rate stood at 2.7 percent in September compared to the national average of 4.2 percent.

Currently, the biggest constraint on state economic growth is the lack of labor, he said, adding that state leaders are now working with community colleges to ensure that those coming into the labor force have the needed skills employers are looking for.

New Hampshire also needs to do a better job at retaining residents who graduate from universities, Thibeault said, since many of them tend to leave the state to work elsewhere.

Scott Moody, the CEO of the Granite Institute, said the story of manufacturing in New Hampshire goes beyond employment, however. Through technology, manufacturers are churning out more products with fewer people as the industry becomes more efficient.

“[U.S.] manufacturing lives a dual life,” Moody told Watchdog.org. “Employment is not growing, but output from manufacturing has continued to grow.”

Data from the National Association of Manufacturers backs that up. Manufacturing output in New Hampshire in 2009 stood at about $7 billion, but by 2015 it reached $8 billion, an increase of about 14 percent, according to NAM.

State tax cuts during the 1990s led to an economic boom in New Hampshire, Moody said, and following the same policies today could produce similar effects, including the addition of more manufacturing jobs.

Between 2010 and 2016, New Hampshire’s manufacturing employment grew by 5 percent – making it the top performer in New England – but the state still lagged behind the overall U.S. manufacturing job gain of 8.3 percent, he said.

Among the reasons for this is that New Hampshire is not a right-to-work state, which can be a disincentive for manufacturing companies, Moody said, adding that the state’s business profit tax (BPT) remains high at 8.2 percent. The Granite Institute has come out in favor of a flat tax proposal for businesses that would eliminate the BPT.

The state’s relatively strong growth in manufacturing jobs compared to other New England states can be attributed to the lack of an individual income tax or sales tax, according to Moody.

“No individual income tax helps lower the cost of labor, while not having a sales tax helps lower the cost of capital, meaning businesses don’t have to pay sales taxes on equipment,” he said.

A report issued by the New Hampshire Fiscal Policy Report last year puts the number of manufacturing jobs in historical perspective and raises concerns how the long-term loss of these higher-paying positions tend to depress wages overall.

“In 1990, the manufacturing industry was responsible for nearly one in five jobs, by far the largest sector in New Hampshire, with many such jobs paying above-average wages …” the report states. “By 2015, manufacturing accounted for just 10.2 percent of employment in New Hampshire, almost half the share it comprised 25 years ago.”