The Importance of Manufacturing in Austin and Other Tech Markets

This article was written by Josh Wright at Emsi.

The Importance of Manufacturing in Austin and Other Tech Markets

Austin, Texas, is a tech-driven metro. There’s no getting around that fact. Of the major tech markets in the US, only San Jose has a higher share of tech jobs than Austin. But as our friend Brian Kelsey showed in new research, manufacturing is also a huge player in the central Texas economy.

Really, though, it’s tech-driven manufacturing that’s leading the way in Austin … and in other prominent tech economies.

Austin Manufacturing Infographic

Kelsey’s study, commissioned by the Austin Regional Manufacturing Association, used Emsi data to show that manufacturing is the largest contributor to regional GDP in Austin among non-government industries, comprising 10.3% of total regional gross domestic product. And productivity—as measured by value-added per worker—is more than $193,000 in manufacturing, 73% higher than productivity across all industries in Austin.

Austin Manufacturing OverviewBut here’s the kicker: Nearly 60% of manufacturing’s contribution to regional GDP in Austin comes from the information technology and analytical instruments cluster. The large sub-industry groups in this cluster are semiconductors ($3.1B), computers/peripherals ($2.1B), and electronic components ($721M).

So, yes, Austin is a mecca for tech-centered manufacturing. But we were curious if the same thing was true for other big tech markets, so we looked at our regional GDP numbers by detailed industry to check.

Manufacturing GRP for Large Tech Metros

Regional gross domestic product (or GRP) looks at the value-add a particularly industry brings. It includes earnings, profits generated, and tax revenue generated. And it’s a great metric to assess when analyzing basic industries (i.e., those that export products and services and thereby generate income from outside the region).

Manufacturing is a classic example of a basic industry, and for a sampling of well-known tech markets—the same nine metro areas used by Kelsey in his Austin tech talent study—the sector (mostly) plays a critical role.

While manufacturing is important to Austin’s economy, five of these top metros get a higher share of value-added from the sector. Manufacturing accounts for 27% of San Jose’s GRP and 25% of Durham-Chapel Hill’s.

(Note: We used 2014 GRP data while Kelsey’s report used 2013 data.)

San Jose’s Largest Contributors to Value-Added

San Jose is the center of Silicon Valley, so that large of a contribution from manufacturing might surprise you. However, like Austin, the bulk of value-added from manufacturing is tech-focused. Below is the top five detailed industries (6-digit NAICS) based on their share of San Jose’s total 2014 GRP.

  • Internet publishing and broadcasting and web search portals (10.1% of total GRP)
  • Electronic computer manufacturing (8.9%)
  • Semiconductor and related computer manufacturing (7.4%)
  • Software publishers (4.5%)
  • Custom computer programming services (3.7%)

Only two of five largest GRP-contributing industries in San Jose–electronic computer and semiconductor and related–are in the manufacturing sector. But when paired with semiconductor machinery manufacturing, they make up 17.6% of San Jose’s gross regional product.

Durham-Chapel Hill vs. Raleigh

Just 24 miles separate Durham from Raleigh. They form a core part of the Research Triangle and share a lot of the same industry traits, but Durham-Chapel Hill is far more reliant on manufacturing.

While manufacturing jobs in Durham-Chapel Hill declined 16% from 2009-2015, the sector still employs about 10% of the metro area’s workforce and contributes a quarter of regional GDP. By comparison, manufacturing only makes up 5% of employment and 10% of GRP in Raleigh.

Durham-Chapel Hill’s five leading GRP industries give a good glimpse on what’s driving its economy:

  • Pharmaceutical preparation manufacturing (10% of total GRP)
  • General medical and surgical hospitals (5.6%)
  • Computer terminal and other computer peripheral equipment manufacturing (5%)
  • Biological product (except diagnostic) manufacturing (5%)
  • Colleges, universities, and professional schools (state government) (4.4%)

Durham-Chapel Hill, home to Duke University and University of North Carolina, has a heavy biotech focus, with pharmaceutical preparation manufacturing and biological product manufacturing in the top five. Large biopharma companies in Durham-Chapel Hill include GlaxoSmithKline and Merck.

Computer and semiconductor manufacturing have a presence in Durham-Chapel Hill, but not nearly as much as in San Jose or Austin.

Raleigh, on the other hand, has some biotech (biological product manufacturing is in the top 10 in GRP), but it’s driven more by software publishers, wholesale trade, and wired telecommunications carriers.

Manufacturing’s Role in Workforce Development

Austin Manufacturing Occupations

Manufacturing not only makes an big dent in regional GDP, it also plays a significant role in regional workforce development. Kelsey’s report concludes with the key occupations that staff manufacturing firms in Austin and a nice section on regional workforce strategies that is applicable to almost every community and region.

With the rising cost of housing in Austin, providing as many living-wage employment opportunities as possible to local residents is an important goal for economic and workforce development, especially in areas of the region where educational attainment rates are lower compared to the population as a whole. Manufacturing should be viewed as a critical piece of the solution to many of the challenges—economic segregation and educational attainment inequality—facing Austin, and ARMA can play a pivotal role in driving public-private partnerships to address those challenges.

Which tech jobs pay the most in Austin?

This article was written by Lilly Rockwell and appeared in 512 Tech at the Austin American-Statesman.

Which tech jobs pay the most in Austin?

We’ve obtained a fresh batch of data on tech salary wages in Austin, thanks to the helpful folks at Idaho-based Economic Modeling Specialists International.

Their data looks at all the tech-based industry job codes in Austin. This is different from breaking jobs out by title — for instance, managers versus engineers — and it can include non-tech jobs, such as marketing.

In the 10 highest-paid tech industries, the average annual wages exceed six figures.

The highest-paying industry, on average, is classified as “computer storage device manufacturing.” That industry pays an average annual salary of $216,470, and with benefits included it rises to $252,783.

But the people who work in that field are fairly specialized – there are only 96 people within this industry in the Austin area, according to EMSI.

Other highly-paid tech industries in Austin fall under the chip or computer manufacturing and “software publishers.” The most common tech industry in Austin – software programming, which employs more than 20,000 people  – pays an annual average of $102,035 or $116,644 with benefits included.

Some of the lowest-paid industries include tech manufacturing, such as “electronic circuit manufacturing,” which basically means manufacturing electronic cables.

These employers pay an average salary of $41,623, which rises to $48,583 with benefits included.

EMSI compiled this salary information from sources such as the U.S. Bureau of Labor Statistics, American Community Survey and the U.S. Bureau of Economic Analysis.

The industry categories included in this data were culled as part of a study done by Austin economist Brian Kelsey last year for the Austin Technology Council.

Below is the full list of tech wages compiled by EMSI, excluding industries that had no workers or “insufficient data.”

Industry Description Number of Positions in Austin Average Current Wages & Salaries Average Current Total Earnings (Including Benefits)
Computer Storage Device Manufacturing 96 $216,470 $252,783
Telephone Apparatus Manufacturing 428 $185,364 $216,371
Electronic Computer Manufacturing 8,697 $172,727 $201,702
Semiconductor and Related Device Manufacturing 9,723 $135,057 $157,665
Software Publishers 5,306 $125,847 $150,009
Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing 383 $123,380 $143,988
Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing 36 $117,952 $135,519
Semiconductor Machinery Manufacturing 330 $109,148 $128,544
Satellite Telecommunications 17 $104,350 $125,849
Audio and Video Equipment Manufacturing 36 $108,069 $125,603
Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables 502 $107,298 $125,179
Data Processing, Hosting, and Related Services 4,415 $103,141 $124,321
Computer Systems Design Services 13,049 $104,912 $119,918
Other Communications Equipment Manufacturing 336 $100,544 $117,374
Engineering Services 10,550 $102,309 $117,056
Custom Computer Programming Services 20,722 $102,035 $116,644
Other Electronic Component Manufacturing 730 $98,529 $114,891
Computer Terminal and Other Computer Peripheral Equipment Manufacturing 2,503 $96,524 $112,715
Other Computer Related Services 1,291 $94,620 $107,964
All Other Miscellaneous Electrical Equipment and Component Manufacturing 247 $80,448 $107,464
Research and Development in Biotechnology 990 $93,743 $107,234
Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology) 2,637 $93,476 $106,673
Analytical Laboratory Instrument Manufacturing 86 $91,900 $106,631
Optical Instrument and Lens Manufacturing 219 $90,389 $106,604
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 18,976 $89,464 $102,160
Bare Printed Circuit Board Manufacturing 42 $87,222 $99,904
Wired Telecommunications Carriers 5,530 $80,418 $98,116
Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals 892 $83,679 $97,583
Computer Training 211 $77,352 $93,677
Wireless Telecommunications Carriers (except Satellite) 1,389 $75,671 $92,142
All Other Telecommunications 160 $74,398 $89,212
Telecommunications Resellers 580 $70,387 $85,730
Testing Laboratories 781 $74,585 $85,473
Computer Facilities Management Services 268 $76,302 $85,421
Internet Publishing and Broadcasting and Web Search Portals 1,851 $73,484 $82,594
Electromedical and Electrotherapeutic Apparatus Manufacturing 20 $71,049 $79,053
Totalizing Fluid Meter and Counting Device Manufacturing 369 $66,720 $77,802
Other Measuring and Controlling Device Manufacturing 164 $60,374 $69,788
Printed Circuit Assembly (Electronic Assembly) Manufacturing 2,560 $54,070 $63,106
Electronic Connector Manufacturing 467 $41,623 $48,583

All wage data is from 2016.

Have we become too data-driven?

I anticipated the question, but I wasn’t sure in what form it would come. Turns out it was about the extent to which high school and postsecondary curriculum should be aligned with what employers say they need, assuming they (1) know what they need; and (2) can communicate needs in terms educators can translate into curriculum design and operationalize. My response struck a somewhat philosophical tone:

“The goal of education is not to get a good job. It’s one of the goals. It’s not the goal.”

Such started a thoroughly enjoyable and thought-provoking stay in Coeur d’Alene last week for EMSI’s 2015 National Conference, where I served as the keynote presenter. EMSI posted a rundown of the conference and a selection of memorable quotes from participants. You can find my keynote slides posted on the CA website. Presentations were not recorded, but the slides should give you an idea of the key points – all things covered during the semester in my class at UT-Austin, but never assembled as a single talk in a partially autobiographical format. Thanks again to EMSI for giving me an opportunity to try that out.

So, have we become too data-driven? Given the nature of most of our projects at Civic Analytics, it’s something that is always on my mind when working with clients, as well as with students in my class. Examples include:

What is the appropriate role of data in planning, and how best should it be incorporated into a planning process?

How much insight can we really glean from imperfect data, such as job postings, about supply and demand conditions in the labor market?

Further, to what extent should we rely on labor market information at all to drive curriculum choices in K-12 and postsecondary education? We insist on “aligning” education and workforce development to employer needs in an employer-driven system based on labor market insight, but what good does alignment do if newly minted graduates don’t have the three to five years of work experience required to get a foot in the door for an “entry-level” job interview?

Do we have too much faith in data?

Answering that question depends on how you view data. For me, this is where the line is drawn that separates academic research from applied research. Most academic researchers would, I think, say that the goal of research is knowledge creation. That knowledge may be applied to improve the world in some way, but creation is the primary goal, and, hopefully, we are all smarter as a result.

Most applied researchers, at least in the economic and workforce development context, view data as a means of communication. Applied researchers are responsible for using data to tell compelling stories, create a sense of urgency about needed improvements, and inspire people to act. We are judged not so much on our ability to make sense of the world, but on our track record of inspiring public and private sector leaders to make tough and often unpopular decisions to act to improve it. That requires quite a bit of faith in data, but even more confidence in the ability of practitioner storytellers.

Teaching applied data analysis for planning in an environment dominated by infographics, lofty claims about the power of “big data,” and a growing spotlight on open data in the public sector is increasingly difficult. The gains we’ve made in data accessibility are unbelievable, and planning is better off because of them. Yet, when confronted with such a vast amount of data, it’s easy for early-career planners and students to focus only on the mechanics of dealing with data–methods, statistics, dashboards–and less on the power of good storytelling. Knowing your audience. Avoiding jargon. Creating data-driven calls to action and goals that connect with community priorities. Inspiring people to want to act, and then empowering them with the insight and tools to do so.

Teaching methods is relatively easy. Helping people learn how to use data to ask good questions and inspire action is much more difficult.

But based on the expertise in the room and quality of discussion at the EMSI conference, I think our profession has a bright future.

Photo: Peter Røise Photography