Baton Rouge metro area manufacturers paid workers an average of $68,522 per year in 2010, good for the No. 20 ranking in a new Brookings Institution report on trends in manufacturing in the United States’ 100 largest cities.
The San Jose-Sunnyvale-Santa Clara, Calif., area ranked first, with average pay of $144,899 a year.
U.S. manufacturing remains a source of good-paying jobs mainly located in large metropolitan areas, according to the report. Manufacturing falls into six broad patterns of industry clustering: computers and electronics; transportation equipment; low-wage industries such as textile mills; chemicals; machinery; and food.
“What Baton Rouge has going for it is it sits at the northern end of what is essentially a sprawling, industrial megasite,” said Dan Borné, president of the Louisiana Chemical Association.
The area contains a complex of oil refineries, chemical manufacturing plants, power-generating plants, and a grid of underground pipelines that connect all of the facilities, Borné said. The area is poised on the cusp of a renaissance powered by a huge increase in the supply of low-cost natural gas, he said.
For example, those prices played a major part in a number of manufacturing developments, including Nucor Corp.’s decision to build a steel mill in St. James Parish, Methanex Corp’s plan to move a methanol plant from Chile to Geismar, and Trafigura Beheer BV reopening a bauxite refinery in Burnside.
“We hear every couple of days of a new project coming in, not only in the Baton Rouge-New Orleans corridor but Lake Charles. That’s our other megasite,” Borné said.
The petrochemical’s existing manufacturing capability, the competitive advantage created by plentiful supplies of cheap natural gas, transportation on the Mississippi River and exports through the Port of New Orleans are a recipe for continued economic growth, Borné said.
The Brookings report says there is room for optimism, that metro areas create the conditions that provide manufacturers with a competitive advantage.
“We have an opportunity, a ‘manufacturing moment,’ if we get this right,” Howard Wial, a Brookings fellow and co-author of the report, said in a news release.
There’s a widely held view that manufacturing is basically the same nationwide, and that the sector no longer matters much, he said. But Brookings’ research shows that’s not true, that manufacturing is a major source of innovation and good-paying jobs.
But the United States needs a national policy that encourages the kind of advanced manufacturing that employs skilled and well-paid workers and creates innovative products and processes, the report says.
The report recommends that federal assistance should be provided only if states agree not to poach each other’s manufacturers. States should also restrict business-attraction subsidies, which is a major part of Louisiana’s recruitment efforts. Instead of getting manufacturers to relocate, state incentives should foster new firms and support the growth and improve the performance of existing firms, the report said.
Borné said the people who think competition should be restricted don’t know the difference between a white, hard hat and a hard-boiled egg.
“These are people who want to control economic growth by ensuring that the marketplace equally allots winners and losers,” Borné said, “and the marketplace doesn’t work that way.”
Connie Fabré, executive director of the Greater Baton Rouge Industry Alliance, said having the government limit competition might violate the Interstate Commerce Clause.
However, Fabré said, one of the report’s recommendations, changing the federal Workforce Investment Act so that it supports cluster-based training efforts, could help.
The report found clustering is important in manufacturing. When firms locate near each other, they can reap a number of benefits, including better access to specialized workers, suppliers and customers.
Still, the clustered firms also face common problems, such as training enough workers, that they can’t solve individually, the report says. Government grants could help those firms, along with colleges and technical schools, identify and solve those sorts of problems.