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Primary Metals ManufacturingNAICS 331 Overview
Subsector Snapshot | Printable (PDF)
Introduction
Primary metals manufacturing includes mills and foundries that make a variety of upstream metal products such as closures, castings, pipes, tubes, wires and springs. Demand for primary metals stems from the industries that rely on them, including the automotive, energy, machinery and transportation industries.
Production facilities primarily serve local demand, and access to raw materials is a major factor for location considerations, as raw materials comprise 70 to 80 percent of the cost of steel. Metal manufacturers also tend to locate near major waterways, such as the Great Lakes in the U.S., to reduce their transportation costs.
Fast Facts
- In 2016, primary metals manufacturing provided about 20,200 direct jobs in Texas, as well as another 49,300 indirect jobs.
- The subsector contributed $3.1 billion to the Texas GDP in 2015.
- Average annual wages were about $57,500 in 2016.
- Texas exports in primary metal products were $4.6 billion in 2016.
Long-Term Employment Trends
Employment in this subsector has declined in Texas and the U.S. since 1990, especially during recessionary periods in 2001 and 2008. Between 1990 and 2016, subsector employment fell by 26 percent in Texas and 45 percent in the U.S. (Exhibit 1).
Exhibit 1: Primary Metals Manufacturing Percent Change in Employment, U.S. vs. Texas, 1990-2016 (Indexed to 1990)
| Year | U.S. | Texas |
|---|---|---|
| 1990 | 0.0% | 0.0% |
| 1991 | -4.7% | 1.1% |
| 1992 | -8.5% | -1.1% |
| 1993 | -10.2% | -1.1% |
| 1994 | -8.5% | -0.4% |
| 1995 | -6.8% | 3.6% |
| 1996 | -7.2% | 4.3% |
| 1997 | -7.2% | 6.9% |
| 1998 | -6.8% | 5.8% |
| 1999 | -9.2% | 1.1% |
| 2000 | -9.7% | 3.6% |
| 2001 | -17.1% | 1.8% |
| 2002 | -26.0% | -5.1% |
| 2003 | -30.7% | -10.9% |
| 2004 | -32.2% | -11.6% |
| 2005 | -32.3% | -11.2% |
| 2006 | -32.6% | -6.2% |
| 2007 | -33.8% | -6.5% |
| 2008 | -35.8% | -7.2% |
| 2009 | -47.4% | -27.2% |
| 2010 | -47.4% | -29.0% |
| 2011 | -43.6% | -23.9% |
| 2012 | -41.6% | -19.2% |
| 2013 | -42.6% | -17.8% |
| 2014 | -42.1% | -17.0% |
| 2015 | -42.8% | -20.3% |
| 2016 | -45.1% | -26.4% |
Sources: Texas Workforce Commission and Texas Comptroller of Public Accounts
Exhibit 2: Primary Metals Manufacturing, Percent Change in Real GDP, U.S. vs. Texas, 1997-2015 (Indexed to 1997)
| Year | U.S. | Texas |
|---|---|---|
| 1997 | 0% | 0% |
| 1998 | 7% | 11% |
| 1999 | 14% | 12% |
| 2000 | 14% | 26% |
| 2001 | 7% | 43% |
| 2002 | 11% | 30% |
| 2003 | 7% | 21% |
| 2004 | 17% | 73% |
| 2005 | 8% | 35% |
| 2006 | -2% | 42% |
| 2007 | -4% | 37% |
| 2008 | -2% | 61% |
| 2009 | -3% | 76% |
| 2010 | -7% | 52% |
| 2011 | -2% | 62% |
| 2012 | 14% | 80% |
| 2013 | 22% | 85% |
| 2014 | 16% | 74% |
| 2015 | 33% | 87% |
Sources: U.S. Bureau of Economic Analysis and Texas Comptroller of Public Accounts
Subsector Economic Output Trends
The subsector’s contribution to Texas and national GDP has risen despite falling employment. The state’s primary metals manufacturing GDP rose by an inflation-adjusted 87 percent from 1997 through 2015, compared to 33 percent nationwide (Exhibit 2).
Industries in Primary Metals Manufacturing
The subsector’s employment in Texas rose by a slight 2.1 percent from 2010 through 2016, led by gains nonferrous metal production. The nonferrous metal production industry led job gains during this period, increasing employment by nearly 30 percent.
The primary metals manufacturing industries have a lower share of employment in Texas than nationally, as gauged by location quotient (LQ), a measure of employment concentration in a given area: the higher the LQ value, the more “concentrated” the industry. Texas’ subsector LQ value in 2016 was 0.65, meaning the subsector’s share of jobs in Texas is just 65 percent of its national average share. (Exhibit 3).
The pattern varies within Texas, however. The state’s Northwest, Upper East and Upper Rio Grande regions have higher concentrations of primary metals employment. In the Northwest region, the subsector’s share of employment is about 70 percent higher than in the U.S. as a whole, indicating the presence of a regional “industry cluster.”
Some industries in the primary metals subsector are considered “advanced” as defined by the Brookings Institution — their research and development spending per worker ranks in the top 20 percent of industries and their share of workers with high levels of scientific and technical knowledge exceeds the national average.
Exhibit 3: Primary Metals Manufacturing Industries
| Description | NAICS Code | 2016 Jobs | 2001 to 2010 % Change |
2010 to 2016 % Change |
2016 Average Salaries | 2001 Location Quotient | 2016 Location Quotient |
|---|---|---|---|---|---|---|---|
| Iron and Steel Mills and Ferroalloy Manufacturing* | 3311 | 4,777 | -17.10% | 14.90% | $60,262 | 0.57 | 0.7 |
| Steel Product Manufacturing from Purchased Steel | 3312 | 4,140 | 45.10% | 10.30% | $61,114 | 0.53 | 0.89 |
| Alumina and Aluminum Production and Processing* | 3313 | 3,529 | -37.50% | -15.40% | $57,925 | 1.02 | 0.73 |
| Nonferrous Metal (except Aluminum) Production and Processing | 3314 | 3,791 | -24.70% | 29.60% | $59,787 | 0.6 | 0.76 |
| Foundries* | 3315 | 3,922 | -51.80% | -17.30% | $47,891 | 0.69 | 0.4 |
| Subsector Total | 331 | 20,159 | -29.50% | 2.10% | $57,532 | 0.68 | 0.65 |
*Indicates “advanced industries” identified by the Brookings Institution
Sources: Emsi and Texas Comptroller of Public Accounts
Conclusion
Manufacturing continues to drive output and productivity in the Texas economy, creating jobs paying well above the statewide average. It also contributes significantly to job creation in other industries, particularly in design operations and services.
The primary metals subsector faces economic transitions that will affect demand levels, including reduced use of steel in the automotive market as carmakers strive to produce lighter, more fuel-efficient vehicles and a shift toward increased recycling and reuse of steel. More than 60 million tons of steel are recycled or exported for recycling each year in North America alone.