Leading industry sectors in the North Carolina economy : a criteria based approach to industry targeting

Employment Location Quotient Potential IndustryTarget 2010 Jobs 29,293 2010 National LQ 10 year Employment Growth Projected Growth 7,090 Wages or Salary Aerospace 0.83 0.64 2010 Average $73,205 $64,650 Automotive Transportation Business Headquarters* Chemicals, Rubber and Plastics Commercial Agriculture Datacenters I Financial Services* Furnishings Trucks and Construction Equipment Household Appliances Hydroelectric and Tidal Insurance Marine Trades Motors ports Nuclear Pharmaceuticals 25,428 1.12 84,426 1.19 0.94 3,918 4,880 17,579 $48,496 $77,358 $64,635 $33,944 $55,480 $60,478 $46,864 $77,945 $60,709 $87,275 Smart Grid 14,396 0.86 3,155 $94,613 Software Development and Personal Communication Technology 85,578 0.86 12.392 $80,604 Solar 10,418 0.83 2,450 $63,999 Textiles 47,946 3.87 -6,268 $33,376 Wind 3,011 1.88 186 $56,611 Elimination Factors * indicates exclusion after additional considerations Under 12,500 Under 0.5 Under 3,000 Under S 35k Conclusion Software Development and Personal Communication Technology, Smart Grid, Automotive Transporation Manufacturing, and Aerospace are promising sectors for a targeting strategy in North Carolina. This study estimates the current size, potential for growth, existing concentration and job quality (by wages) of the core functions within these industry sectors and they perform “best" by these measures. The list of potential target sectors could be further reduced with asset mapping — identifying existing strengths and weaknesses in the sector. In addition, the "clustering" potential of these sectors could be analyzed. Clustering analysis looks at the relationships core firms have to other firms along their value chains. Economic development theory suggests regions with clustered firms have a distinct competitive advantage because firms that spatially cluster enjoy cost savings from proximity that can lead to higher productivity and profits. Identifying leading sectors is common practice in economic development, but there is no best approach to determine why certain industries are "better" for North Carolina than any other. Across the State, many regions are thriving with high paying jobs, while other areas struggle to attract jobs and remain less developed. An industry targeting strategy would not necessarily be the right approach to stimulating these underdeveloped areas. But information in this report should nonetheless become useful in the Department's broad economic development strategies. Prepared by: Policy ^Research CX-S Iratcgic Planning The North Carolina Department of Commerce On behalf of the North Carolina Economic Development Board NORTH CAROLINA DEPARTMENT OF COMMERCE Leading Industry Sectors in the North Carolina Economy A Criteria Based Approach to Industry Targeting In 2010, the North Carolina Department of Commerce's Economic Development Board identified Industry SectorTargeting as an important strategic pursuit. To initiate this targeting strategy, the Board formed a Targeting Task Force to identify North Carolina's most promising industry sectors. Initially the Task Force, made up of Board members and supported by Commerce staff, segmented the State's total economy into Categories and then into more discrete and measurable Industry Sectors as a means to evaluate performance within existing and emerging industry types (see graphic below). To make the Board's work useful to a wider audience, Commerce staff was asked to prepare this document. North Carolina is a vibrant state with a rapidly growing population and a diverse economy. There are over four million people in the State's civilian labor force; approximately 20 percent of the workforce contributes to the twenty-four industry sectors analyzed in this report. Industries such as Retail and Wholesale Trade, Government, and cross-cutting sectors such as Advanced Manufacturing and Defense — which make up the other 80 percent of the workforce — are important parts of the State's economy, but are either not measurable by established industry definitions or are not appropriate as targets for this type of strategy. Note: Chemicals, Rubber and Plastics overlaps with multiple industry sectors; therefore, there is double-counting when overlap could not be avoided.