Advanced industries take flight, may lead metro revival
A slice of Metro Detroit's economic recovery is relying largely on the marrying of its industrial past to a digital future, according to recent studies by the Brookings Institution.
Relative to the size of its economy, Detroit has the fourth largest "advanced industries" sector among the country's 100 largest metropolitan areas. It is the only market in the East that breaks into the top five. This matters because advanced industries are the critical drivers of broadly shared prosperity in regions for today and the future.
We define the sector by 50 individual industries that range from automotive and aerospace manufacturing to software development, and share a commitment to research and development and employ disproportionately large number of science, technology, engineering, and math workers. These are the industries at the forefront of technological and economic development in the world today.
Detroit embodies a particular trend that defines the advanced industries sector: an onrushing convergence between manufacturing and digital services.
As the Motor City's lifeline of cars become platforms for all sorts of new technologies, Detroit is cultivating expertise in electronics, computing and R&D services. The result: advanced industries are powering Detroit's climb back from the recession. The sector grew by 7.4 percent annually from 2010 to 2013 — the third fastest advanced industry growth rate among major metro areas nationally.
That growth was broad-based as four out of five of Detroit's 25 largest advanced industries grew during that period, led by motor vehicle manufacturing, engineering and computer systems design. In fact, Detroit's advanced industry jobs are now split evenly between manufacturing and services.
A growing cluster of globally oriented information technology service providers and Internet-of-things companies are joining more established players such as TRW in auto electronics, FANUC Americas in robotics, and the auto companies as core players in the region's innovation ecosystem.
Advanced industries do not only matter for the direct jobs they provide and the output they generate. They matter for a plethora of other consequential reasons, too. Advanced industries play a huge role in the nation's innovation system, for instance. Likewise, they represent our best shot at offsetting trade deficits through exports.
And they are a sizable source of good-paying, quality jobs for workers with limited educations. Indeed, advanced industries' role in sustaining an opportunity economy is one of the most compelling reasons to commit to its expansion.
Average wages in the sector rose five times faster from 1975 to 2013 than they did outside the sector. Even today, one-half of all advanced industry jobs are held by workers without a bachelor's degree. For its part, Detroit's 280,000 advanced industry jobs pay an average of $86,000 per year — a 60 percent premium in a region where annual earnings average $53,000.
And yet, despite the importance and the promise of advanced industries, only a limited number of U.S. metropolitan areas — Detroit among them — possess exceptionally dense advanced industry bases. And even those areas of advanced industries powerhouses have work to do to deliver on the vision they hold of broadly shared prosperity for all.
For example, the high wages in booming advanced industries in San Francisco contribute to the city's widening inequality. Closer to home, advanced industry growth in Auburn Hills or Farmington Hills can feel far removed from the struggles of Detroit city and its residents.
Nevertheless, a few characteristics of the places that show considerable promise stand out. They for the most part combine depth with breadth and claim special expertise in several different individual industries. In some places, local advanced industry clusters push the frontiers of advanced manufacturing. In others, they focus on energy or information technology. The strongest locations do it all.
Our chart lists the country's top 20 metro areas for advanced industries, defined as the places where advanced industries employ the largest share of the workforce.
Two-thirds of the top metro areas for advanced industrial growth are west of the Mississippi River. The preponderance of younger, largely Western metro areas in the top rankings suggests that advanced industries — with their large economic multipliers, significant knowledge spillovers, and long supply chains — have helped pull the country's economic gravity westward. Add in the "wet" Sun Belt of the Southeast, and only three of the country's densest concentrations of advanced industry activity — Boston, Detroit and Bridgeport, Conn. — can be found in the traditional industrial heartlands of the Northeast and Midwest. Relatively few metro areas in this part of the country, in other words, have fully reinvented themselves for the next era of industrial growth.
At the same time, many of the nation's top advanced industry centers are also the country's traditional knowledge hubs, home to large pools of highly skilled workers and strong research universities. Boston, Denver, San Diego, San Francisco, San Jose, Seattle, Washington, Raleigh, N.C., Austin, Texas, and Provo, Utah, fall into this category: All are metro areas with reputations for technology prowess and STEM workers. Rounding out the list, Houston, Wichita, Kan., and the Palm Bay, Fla., region rose to the top on formidable specializations in particular industries: Houston in energy, Wichita in aerospace, and Palm Bay in defense.
And yet for all of the promise and dynamism of theses hubs, they remain the exception. The number of vibrant technological ecosystems in this country — such as those listed above — has dwindled steadily. In 1980, 59 of the country's 100 largest metro areas had at least 10 percent of their workforce in advanced industries. By 2013, that number had fallen to 23. After decades of off-shoring, outsourcing, and a national preoccupation with finance and consumption, the country now contends with a dangerously hollowed out foundation for its future prosperity.
For the United States and its regions to achieve inclusive and sustainable growth, leaders across the country, particularly in metro areas, must commit to innovation, build the talent base and cultivate the local ecosystems for advanced industries to thrive.
Rank (Intensity) Metro Area Advanced Industry Employment (thousands) Advanced Industry Intensity (Share of Total Employment)
1 San Jose-Sunnyvale-Santa Clara, CA 291,700 30.0%
2 Seattle-Tacoma-Bellevue, WA 295,000 16.0%
3 Wichita, KS 46,800 15.5%
4 Detroit-Warren-Dearborn, MI 279,400 14.8%
5 San Francisco-Oakland-Hayward, CA 297,200 14.0%
6 Washington-Arlington-Alexandria, DC-VA-MD-WV 503,500 13.7%
7 Palm Bay-Melbourne-Titusville, FL 26,600 13.4%
8 Boston-Cambridge-Newton, MA-NH 338,900 13.3%
9 Houston-The Woodlands-Sugar Land, TX 361,000 12.8%
10 San Diego-Carlsbad, CA 176,300 12.3%
11 Austin-Round Rock, TX 106,300 12.1%
12 Provo-Orem, UT 25,100 12.0%
13 Raleigh, NC 64,400 11.7%
14 Ogden-Clearfield, UT 26,500 11.3%
15 Salt Lake City, UT 71,600 11.1%
16 Bridgeport-Stamford-Norwalk, CT 47,300 10.9%
17 Portland-Vancouver-Hillsboro, OR-WA 115,900 10.8%
18 Charleston-North Charleston, SC 34,200 10.5%
19 Dallas-Fort Worth-Arlington, TX 329,100 10.4%
20 Denver-Aurora-Lakewood, CO 134,800 10.3%
Advanced Industries Jobs and Output (Gross Product)
Jobs (2013) 279,350 Rank: 11th of 100 metro areas
Share of All Jobs (2013) 14.8 percent Rank: 4th of 100
Change in Jobs, 2010–2013 (%, Ann.) 7.4 percent Rank: 3rd of 100. (Total employment changed by +2.4% during the same time period.)
Jobs Indirectly Supported by Advanced Industries (2013*) 223,480
Output, 2013 ($B) $48.0 Rank: 12th of 100 metro areas
Share of Total Output (2013) 24.8 percent Rank: 9th of 100
Change in Output, 2010–2013 (%, Ann.) +7 percent Rank: 13th of 100. (Total output changed by +2.5% during the same time period.)
Source: Brookings Institution
About the authors
Mark Muro is a senior fellow and policy director, and Kenan Fikri is a senior policy analyst with the Metropolitan Policy Program at the Brookings Institution in Washington, D.C.
By the numbers
Here are the Top 5 metro areas by market share
1. San Jose - Sunnyvale - Santa Clara, Calif.
2. Seattle - Tacoma - Bellevue, Wash.
3. Wichita, Kan.
4. Detroit - Warren - Dearborn
5. San Francisco - Oakland - Hayward, Calif.
*The advanced industry sector encompasses 50 industries from manufacturing to energy to high-tech services. The researchers identified the percentage of workers in the sector per market.