Regional Competitive Industry Analysis
Baker, Union, and Wallowa Counties
May 2014
Wallowa
Union
Baker
Michael Meyers, Economist
(503) 229-6179
[email protected]
Global Strategies Section
One World Trade Center
121 SW Salmon Street, Suite 205
Portland, OR 97204
Table of Contents
EXECUTIVE SUMMARY ..................................................................................................................... 3
INTRODUCTION...................................................................................................................................... 4
SECTION 1: SOURCES AND METHODOLOGY ................................................................................. 4
Regional Indicators ............................................................................................................................................ 4
Competitive Industry Indicators ...................................................................................................................... 5
Employment Growth Projections ................................................................................................................... 5
Caveats and Limitations .................................................................................................................................... 5
SECTION 2: OVERVIEW OF THE REGIONAL ECONOMY ............................................................. 6
Employment, Total Payroll and Average Wage per Job .............................................................................. 6
Employment Growth ........................................................................................................................................ 6
Manufacturing Employment and Wages ........................................................................................................ 7
Unemployment Rate.......................................................................................................................................... 8
SECTION 3: REGIONAL COMPETITIVE INDUSTRIES................................................................... 9
Location Quotient Analysis .............................................................................................................................. 9
Shift-Share Analysis .........................................................................................................................................10
Regional Employment Projections by Industry ..........................................................................................11
Page 2 of 12
Regional Competitive Industry Analysis
Baker, Union, and Wallowa Counties
Executive Summary
This region in the northeast corner of the state is made up of Baker, Union, and Wallowa counties.
Framed by the Elkhorn and Wallowa mountains, most of the employment in this region lies in the
Grande Ronde and Baker valleys. Natural resource industries in agriculture and forestry are the
economic base of the region. Tourism and recreation are also important to the region’s economy.
Private sector employment in the region grew by 0.2 percent between 2002 and 2012, much slower
than the statewide growth rate of 4.1 percent. The region’s average annual wage is 32 percent lower
than the statewide average annual wage, due in part to lower paying jobs in agriculture, tourism, and
recreation.
Manufacturing was 14 percent of the region’s private sector employment in 2012, higher than the
statewide average of 12 percent. With a location quotient of 1.26, manufacturing is very important to
the region and its competitive advantages. Only 7 percent of manufacturing employment is
published by subsectors in this region due to confidentiality restrictions. Fabricated metal products,
food, and nonmetallic mineral product manufacturing are the largest, published manufacturing
subsectors in the region. Based on the limited data available, other large manufacturing subsectors in
the region include wood products, transportation equipment, and primary metals. The region has a
much higher percentage of very small manufacturers compared to the statewide average, and a much
lower percentage of large manufacturers.
Agricultural industries, including vegetable and melon farming, other crop farming (hay, sugar beets,
etc.), and cattle ranching experienced some of the highest competitive advantage gains amongst
competitive traded sector industries in the region between 2002 and 2012. Other competitive traded
sector industries in the region to experience competitive advantage gains were professional,
scientific, and technical services, newspaper, periodical, book, and directory publishers, and
industries related to tourism and recreation. Support activities for crop production, along with
logging and support activities for forestry, had the largest competitive advantage losses amongst
competitive traded sector industries in the region between 2002 and 2012. Emerging traded sector
industries (location quotient less than 1.0) in the region that experienced competitive advantage
gains between 2002 and 2012 included wholesale electronic markets and agents and brokers and
professional, scientific, and technical services.
Employment in the region is projected to grow 10 percent between 2012 and 2022, well below the
projected statewide rate of 15 percent. Natural resources and mining, construction, professional and
business services, and health care are projected to grow the fastest between 2012 and 2022. Health
care, leisure and hospitality, manufacturing, and wholesale and retail trade are projected to add the
most jobs of all major industries in the region over the ten year period. Manufacturing is projected
to grow 10 percent, a little slower than the projected statewide rate of 11 percent.
Page 3 of 12
Introduction
The purpose of this report is to present a competitive industry analysis of the regional economy
consisting of Baker, Union, and Wallowa counties. Regional trends in employment and wages are
analyzed and compared to trends in Oregon and the U.S. This report provides data and analysis to
help economic development practitioners, policy makers, and businesses identify strengths,
weaknesses, opportunities, and threats that pertain to their regional economy. The information in
this report can be used to help guide strategic economic development efforts in the region.
This report is composed of four sections. Section one outlines the data sources and methodology
behind the creation of this report. The second section provides an overview of the regional
economy by analyzing employment and wage trends over time. Section three supplies a framework
to identify industries in the region that may have a competitive advantage in developing or
expanding regional industry specialization. Section four analyzes ten year employment projections of
the region’s main industries and identifies industries with above average growth potential.
Section 1: Sources and Methodology
This report is based on analysis of statistical data from the Oregon Employment Department, U.S.
Census Bureau, Bureau of Economic Analysis, and Bureau of Labor Statistics.
The methodology for this report uses a series of indicators to provide a framework for evaluating
the competitive strengths and growth opportunities of the regional economy. The following
indicators are used for this report.
Regional Indicators
Section two begins with a comparative analysis of the regional economy focusing on private sector
business establishments, employment, total payroll, and average wage to show the geographic
distribution and characteristics of employment in each region. Recent employment and wage trends
are also analyzed and compared to the state.
This analysis is followed by analysis of manufacturing employment and wages. Employment and
average annual wages of leading manufacturing subsectors are presented, along with their location
quotients. A location quotient measures the employment concentration of a given industry in a
region compared to that industry’s employment concentration in the nation as a whole. Location
quotients above 1.0 indicate that an industry’s share of employment in the region was greater than its
share of employment nationwide. For example, an industry with a location quotient of 2.0 has twice
as much employment locally as the national average for that industry. Location quotients are a
simple way to help identify industries in the region that have a competitive advantage as
demonstrated by a greater than average employment concentration. An analysis of manufacturing
establishments by size class follows, which shows the distribution of manufacturers in the region
amongst four different size classes. This analysis shows how much a region may be dependent on
small, medium, or large-size manufacturers.
Page 4 of 12
The unemployment rate analysis reveals how well the region has done at creating and retaining jobs
for its working-age population. The analysis compares the regional unemployment rate to rates from
Oregon and the U.S., which shows whether the region has performed better or worse than average.
This comparative analysis also provides insight into how autonomous the region’s economy is from
Oregon and the U.S.
Competitive Industry Indicators
Section three begins with two detailed analyses that attempt to identify industries that have a
competitive advantage in the region. A detailed location quotient analysis by four digit NAICS codes
shows industries in the region that appear to have a competitive advantage based on high location
quotients. This analysis includes all sectors of the economy, not just manufacturing. Industries with
high location quotients and higher than average wages are highlighted.
Following the location quotient analysis is a shift-share analysis. Shift-share analysis, like location
quotient analysis, is useful in identifying industries with a competitive advantage in the region.
Unlike a location quotient analysis that is a point-in-time analysis, shift-share analysis looks at
industry performance over time to measure how employment in an industry changed in relation to
national and industrial trends. If a region’s industry consistently outperforms its peers nationwide
over a period of time this indicates a growing competitive advantage for that industry. The shiftshare analysis examines the ten-year growth rates for regional and nationwide industry employment.
Employment change over the past ten years for each industry is broken out by change due to
national total employment trends, change due to national industry employment trends, and change
due to competitive advantage. Tables 6, 7, and 8 present competitive share percent changes and
competitive share job gains and losses for industries in the region that had the largest gains and
losses in competitive advantage.
Employment Growth Projections
Section four examines employment growth projections for the major industries in each region.
Growth projections are a good way to identify industries where employment growth is projected to
occur. Current projections cover the period from 2012 to 2022.
Caveats and Limitations
Employment and wage data throughout the report comes from Quarterly Census of Employment
and Wage data from the Bureau of Labor Statistics and Oregon Employment Department. This data
is limited to employment and wages that are covered under unemployment insurance in Oregon.
The Employment Department estimates that about 90 percent of jobs in Oregon are covered by
unemployment insurance. Employment data presented in the Table 9 is total non-farm employment
and not limited to covered employment in Oregon.
The manufacturing establishments by size data in Table 3 is a combination of two data sets. The
total number of manufacturing establishments comes from Quarterly Census of Employment and
Wage (QCEW) data from the Oregon Employment Department. The percent of manufacturing
establishments by employment size-class data comes from County Business Patterns (CBP) data
from the U.S. Census Bureau. The two data sets are combined in this table because the QCEW data
Page 5 of 12
is more accurate in its total count of establishments, but it does not include size class data for
counties. The CBP data does have size class data for counties, but its overall number of
establishments by county is not as accurate as the QCEW. Combined, one can estimate the number
of establishments by employment-size class.
Section 2: Overview of the Regional Economy
Employment, Total Payroll, and Average Wage per Job
•
Private sector employment in this region accounted for 0.9 percent of Oregon’s total private
sector employment in 2012.
•
Over half of the region’s employment is in Union County. Baker County has about one-third
of the region’s employment.
•
The 2012 private sector average annual wage in the region was $29,769, 31.8 percent lower
than the statewide average annual wage.
•
The private sector average annual wage is highest in Union County and lowest in Wallowa
County.
Table 1: Employment, Total Wages, and Average Wage per Job, Private Sector, 2012
Area
Baker
Union
Wallowa
Region
Oregon
Employment
3,930
7,222
1,686
12,838
1,373,607
Total Payroll
$113,255,229
$224,768,491
$44,146,879
$382,170,599
$59,948,736,635
Average
Wage
$28,818
$31,123
$26,184
$29,769
$43,643
% of Region
Employment
30.6%
56.3%
13.1%
100.0%
N/A
% of Statewide
Ave. Wage
66.0%
71.3%
60.0%
68.2%
100.0%
Source: Oregon Employment Depart ment , Quart erly Census of Employment & Wages.
Employment Growth
•
The region’s ten year private sector employment growth ranked 10th in the state.
•
Private sector employment in the region only grew by 0.2 percent between 2002 and 2012,
much slower than the statewide rate of 4.1 percent over that time.
•
Private sector employment grew in Wallowa County and Baker County between 2002 and
2012, but was offset by employment losses in Union County.
Page 6 of 12
Table 2: Change in Private Sector Employment, 2002-2012
Area
Baker
Union
Wallowa
Region
Oregon
2002
Employment
3,858
7,310
1,645
12,813
1,320,125
2012
Employment
3,930
7,222
1,686
12,838
1,373,607
Employment
Change
1.9%
-1.2%
2.5%
0.2%
4.1%
Employment
Change Rank
17
24
16
10
N/A
Source: Oregon Employment Depart ment , Quart erly Census of Employment & Wages.
Manufacturing Employment and Wages
•
Manufacturing was 13.5 percent of the region’s private sector employment in 2012.
•
With a location quotient of 1.26, manufacturing is very important to the region’s economy
and competitive advantages.
•
Only 7 percent of manufacturing employment is published by subsectors in this region due
to confidentiality restrictions. Fabricated metal products, food, and nonmetallic mineral
product manufacturing are the largest, published manufacturing subsectors in the region.
•
Based on limited data from the Oregon Employment Department and employment
information from Hoover’s, other large manufacturing subsectors in the region include
wood products, transportation equipment, and primary metals.
•
The region has a much higher percentage of very small manufacturers compared to the
statewide average, and a much lower percentage of large manufacturers.
Table 3: Manufacturing Employment and Wages, 2012
NAICS
31-33
332
311
327
337
Industry
Manufacturing
Fabricat ed Metal Product Manufacturing
Food Manufacturing
Nonmet allic Mineral Product Manufact uring
Furnit ure and Relat ed Product Manufact uring
Employment
1,735
71
20
11
11
Total Pay
$67,847,264
$2,514,773
$262,730
$218,400
$238,751
Location
Quotient
1.26
0.44
0.12
0.26
0.27
Average
Wage
$39,105
$35,419
$13,137
$19,855
$21,705
Source: Business Oregon; data from Bureau of Labor Statistics, Quarterly Census of Employment & Wages.
Page 7 of 12
Table 4: Manufacturing Establishments by Size, 2012
Area
Baker
Union
Wallowa
Region
Oregon
Total Manufacturing
Establishments
29
29
19
77
5,608
Percent of Manufacturing Establishments by
Employment-Size Class
250 or
1-19
20-99
100-249
More
82.1%
10.7%
7.1%
0.0%
72.4%
13.8%
13.8%
0.0%
100.0%
0.0%
0.0%
0.0%
82.9%
9.2%
7.9%
0.0%
75.8%
18.2%
4.2%
1.8%
Source: Tot al est ablishment s from Oregon Employment Depart ment , Quart erly Census of
Employment & Wages; employment -size class dat a from U.S. Census Bureau, Count y Business
Pat t erns, 2011.
Unemployment Rate
•
The region’s unemployment rate was a little higher than the state’s rate from 2003 to 2008,
but equaled the Oregon rate in 2009 and 2010. Since then, the region’s unemployment has
not declined as fast as the state’s and is now above both the Oregon and U.S. rates.
•
The region reached its highest unemployment rate over the ten year period, 11.1 percent, in
2009 and has since declined at a slower rate than Oregon and the U.S.
•
The region’s lowest unemployment rate over the ten year period, 5.7 percent, occurred in
2007.
Page 8 of 12
Section 3: Regional Competitive Industries
Location Quotient Analysis
•
Natural resources, namely agriculture and forestry, is the dominant industry group in the
region with very high location quotients. Jobs in agriculture tend to pay below average
wages, while jobs in forestry pay above average wages.
•
Based on limited data from the Oregon Employment Department and employment
information from Hoover’s, it is estimated that high location quotients also exist in wood
product, transportation equipment, and primary metal manufacturing.
•
Industries related to tourism and recreation, such as RV parks, campgrounds, and other
accommodations, also have high location quotients in the region.
Table 5: Industries with Highest Location Quotients
Private Sector, 2012, U.S. Base Area, Industries with Employment Greater than 25, Industries with Average Wage above
Region Average Shaded
NAICS
1153
1119
1133
8131
1121
7212
1112
4471
6213
4842
6233
1113
1151
4451
8133
2373
4532
5313
8134
2389
5111
7211
6212
6241
7225
4441
5221
EmployLocation
Industry
ment
Total Pay Quotient
Support Act ivit ies for Forest ry
49
$1,598,024
29.83
Ot her Crop Farming
98
$2,518,162
13.41
Logging
67
$2,901,557
11.83
Religious Organizations
184
$3,076,139
8.68
Cat tle Ranching and Farming
101
$2,541,544
6.16
RV (Recreat ional Vehicle) Parks and Recreat ional Camps
34
$639,066
5.27
Vegetable and Melon Farming
43
$1,076,466
3.82
Gasoline St at ions
315
$5,615,020
3.23
Offices of Ot her Healt h Pract it ioners
258
$6,671,280
3.07
Specialized Freight Trucking
147
$5,715,032
3.04
Continuing Care Ret irement Communit ies and Assist ed Living
210
Facilit$3,565,736
ies for t he Elderly2.29
Fruit and Tree Nut Farming
47
$550,636
2.13
Support Act ivit ies for Crop Production
66
$1,640,296
1.86
Grocery St ores
536 $11,227,913
1.85
Social Advocacy Organizat ions
37
$1,109,660
1.63
Highway, Street , and Bridge Const ruct ion
52
$3,117,250
1.57
Office Supplies, St at ionery, and Gift St ores
54
$665,024
1.54
Act ivit ies Relat ed to Real Est at e
100
$2,515,413
1.50
Civic and Social Organizat ions
64
$600,447
1.41
Ot her Specialt y Trade Cont ract ors
85
$2,746,100
1.39
Newspaper, Periodical, Book, and Direct ory Publishers
72
$1,602,981
1.38
Traveler Accommodat ion
264
$3,536,133
1.30
Offices of Dent ists
120
$4,666,489
1.22
Individual and Family Services
177
$4,711,131
1.16
Rest aurant s and Ot her Eat ing Places
1,123 $14,334,890
1.07
Building Mat erial and Supplies Dealers
127
$3,358,627
1.07
Deposit ory Credit Int ermediat ion
210
$7,399,723
1.04
Average
Wage
$32,613
$25,696
$43,307
$16,718
$25,164
$18,796
$25,034
$17,825
$25,858
$38,878
$16,980
$11,716
$24,853
$20,948
$29,991
$59,947
$12,315
$25,154
$9,382
$32,307
$22,264
$13,394
$38,887
$26,617
$12,765
$26,446
$35,237
Source: Business Oregon; data from Bureau of Labor Statistics, Quarterly Census of Employment & Wages.
Page 9 of 12
Shift-Share Analysis
•
Agricultural industries, including vegetable and melon farming, other crop farming (hay,
sugar beets, etc.), and cattle ranching experienced some of the highest competitive advantage
gains amongst competitive traded sector industries in the region between 2002 and 2012.
•
Other competitive traded sector industries in the region to experience competitive advantage
gains were professional, scientific, and technical services, newspaper, periodical, book, and
directory publishers, and industries related to tourism and recreation.
•
Support activities for crop production, along with logging and support activities for forestry,
had the largest competitive advantage losses amongst competitive traded sector industries in
the region between 2002 and 2012.
•
Emerging traded sector industries (location quotient less than 1.0) in the region that
experienced competitive advantage gains between 2002 and 2012 included wholesale
electronic markets and agents and brokers and professional, scientific, and technical services.
Table 6: Competitive Industries with Highest Competitive Advantage Percent Gains,
2002-2012
Shift-Share Analysis, Private Sector, U.S. Base Area, Industries with LQ Greater than 1.0 and Employment Greater than 25
NAICS
6213
5313
5419
1112
5111
1119
8134
1121
7212
4532
2389
4842
4471
2361
1113
4451
8133
Employment Location
Competitive Competitive
Industry
2012 Quotient Share Percent Share Jobs
Offices of Other Health Pract itioners
258
3.07
609.1%
207
Act ivities Relat ed t o Real Est at e
100
1.50
538.8%
81
Ot her Professional, Scientific, and Technical Services
72
1.02
163.5%
41
Vegetable and Melon Farming
43
3.82
117.5%
23
Newspaper, Periodical, Book, and Directory Publishers
72
1.38
112.1%
46
Ot her Crop Farming
98
13.41
109.4%
61
Civic and Social Organizations
64
1.41
106.4%
34
Cat t le Ranching and Farming
101
6.16
48.8%
28
RV (Recreat ional Vehicle) Parks and Recreational Camps
34
5.27
44.0%
10
Office Supplies, St ationery, and Gift St ores
54
1.54
28.7%
16
Ot her Specialt y Trade Cont ractors
85
1.39
23.6%
17
Specialized Freight Trucking
147
3.04
20.6%
24
Gasoline St at ions
315
3.23
19.8%
55
Residential Building Construction
68
1.02
16.7%
13
Fruit and Tree Nut Farming
47
2.13
14.2%
5
Grocery Stores
536
1.85
9.0%
44
Social Advocacy Organizat ions
37
1.63
8.3%
2
Source: Business Oregon; data from Bureau of Labor Statistics, Quarterly Census of Employment & Wages.
Page 10 of 12
Table 7: Competitive Industries with Highest Competitive Advantage Percent Losses,
2002-2012
Shift-Share Analysis, Private Sector, U.S. Base Area, Industries with LQ Greater than 1.0 and Employment Greater than 25
NAICS
1151
1133
6212
8131
1153
7211
5221
Industry
Support Act ivities for Crop Product ion
Logging
Offices of Dentist s
Religious Organizat ions
Support Act ivities for Forestry
Traveler Accommodat ion
Depository Credit Int ermediation
Employment Location
Competitive Competitive
2012 Quotient Share Percent Share Jobs
66
1.86
-36.0%
-30
67
11.83
-18.8%
-24
120
1.22
-16.6%
-20
184
8.68
-14.8%
-29
49
29.83
-8.3%
-5
264
1.30
-2.6%
-7
210
1.04
-1.6%
-3
Source: Business Oregon; data from Bureau of Labor Statistics, Quarterly Census of Employment & Wages.
Table 8: Emerging Industries with Highest Competitive Advantage Percent Gains, 2002-2012
Shift-Share Analysis, Private Sector, U.S. Base Area, Industries with LQ Less than 1.0 and Employment Greater than 25
NAICS
4251
2362
2383
8139
4461
5413
5411
2381
4431
5617
8141
Employment Location
Competitive Competitive
Industry
2012 Quotient Share Percent Share Jobs
Wholesale Elect ronic Markets and Agents and Brokers
52
0.51
232.4%
33
Nonresident ial Building Const ruct ion
59
0.78
82.7%
29
Building Finishing Contract ors
70
0.96
67.8%
34
Business, Professional, Labor, Polit ical, and Similar Organizat ions
36
0.73
44.4%
11
Healt h and Personal Care St ores
71
0.61
34.7%
17
Archit ectural, Engineering, and Related Services
71
0.46
27.8%
15
Legal Services
102
0.78
22.3%
18
Foundation, St ructure, and Building Exterior Cont ractors
47
0.60
19.8%
10
Elect ronics and Appliance Stores
33
0.56
17.5%
5
Services t o Buildings and Dwellings
144
0.68
16.2%
18
Private Households
67
0.80
7.8%
3
Source: Business Oregon; data from Bureau of Labor Statistics, Quarterly Census of Employment & Wages.
Employment Projections by Industry
•
Total regional employment is projected to grow by 1,720 jobs between 2012 and 2022, a 10
percent increase, well below the projected statewide rate of 15 percent.
•
Natural resources and mining, construction, professional and business services, and health
care are projected to experience the greatest percent increases in employment between 2012
and 2022 in the region.
•
Health care, leisure and hospitality, manufacturing, and wholesale and retail trade are
projected to add the most jobs of all major industries in the region between 2012 and 2022.
•
Manufacturing employment is projected to increase 10 percent between 2012 and 2022, a
little less than the statewide projection of 11 percent.
Page 11 of 12
•
Two industries – information and federal government – are projected to lose jobs in the
region between 2012 and 2022.
Table 9: Regional Industry Employment Forecast, 2012-2022
Baker, Union, and Wallowa Counties
2012
Tot al payroll employment
18,080
Tot al privat e
13,550
Nat ural resources and mining
900
Mining and logging
160
Const ruct ion
740
Manufacturing
1,750
Trade, transport at ion, and ut ilit ies
3,520
Wholesale and ret ail t rade
2,740
Transportation, warehousing, and ut ilities
780
Informat ion
210
Financial act ivit ies
700
Professional and business services
860
Privat e educational and healt h services
2,580
Leisure and hospit alit y
1,670
Ot her services
620
Government
4,530
Federal government
550
State government
1,690
Local government
2,290
2022 Change
% Change
19,800
1,720
10%
15,020
1,470
11%
1,050
150
17%
170
10
6%
860
120
16%
1,920
170
10%
3,750
230
7%
2,910
170
6%
840
60
8%
200
-10
-5%
750
50
7%
1,000
140
16%
2,970
390
15%
1,850
180
11%
670
50
8%
4,780
250
6%
520
-30
-5%
1,820
130
8%
2,440
150
7%
Source: Oregon Employment Department
Page 12 of 12