overview
The manufacturing industry, and increasingly, the leisure and recreation industries, have become mainstays of the U.S. rural economy in the 2000s. The growth in the service and retail industry in rural areas since the 1980s has received considerable attention, but manufacturing has now moved to the forefront, directly accounting for nearly a quarter of rural private-sector earnings in 2001. In some areas of the United States, the more traditional sectors—agriculture, forestry, and mining—remain important parts of the economy.

During the 1990s, globalization and the spread of new information technologies transformed what and how industries produced, and where they were located. Would rural manufacturers be able to remain competitive with their suburban and urban counterparts as this transformation occurred? More overview...

contents

• Manufacturing declines leveling off?
• Which industries are most important in rural america?
• What do earnings trends tell us about the rural economy?
• How important is agriculture to the rural economy?
• What are the finding from the ERS rural manufacturing study?

features
Understanding Rural Population Loss—One in four rural counties lost population between 1990 and 2000. Declining farm employment is often cited as the reason. But ERS research suggests that the drawback for such counties is less their agriculture than their remoteness and thin settlement, coupled with their lack of natural amenities. Labor pools are too small for manufacturers to find the type of labor they need and areas without varied topography, lakes or ponds, and a pleasant climate attract few retirees or outdoor recreation enthusiasts.

Local Context and Advanced Technology Use by Small, Independent Manufacturers in Rural Areas—Research and policy literature suggests that small manufacturing plants that are imbedded in local clusters of similar and closely related firms are more competitive than more isolated plants. This study, based on the ERS Rural Manufacturing Survey, finds that the adoption of new technologies and management practices by small rural plants is associated with workforce education, location in the West, and location in counties high in manufacturing diversity. However, adoption is not associated with the presence of local supplier and customer linkages. The results may reflect the relative attractiveness of areas to skillful entrepreneurs as much as the influence of location on adoption of advanced technologies and practices.

Skills, Fexible Manufacturing Technology, and Work Organization—The modernization of manufacturing has included much greater use of computers; increased interaction among and between production workers, professional staff and management; and greater reliance on the problem-solving ability of all workers at a plant. An analysis using the Rural Manufacturing Survey confirms that rural manufacturing plants using advanced technology and high-performance management practices have greater demand for workers with computer, problem-solving and interpersonal communication skills. The analysis also identified increased demand for traditional academic skills (e.g., math and reading). Developing this complement of “new basic skills” in the rural workforce will likely be a requirement for retaining modern manufacturing jobs.

recommended readings
Issues in Rural Manufacturing (Includes summary report as well as reports on various related issues)—This series of reports based on the ERS Rural Manufacturing Survey examines the adoption of new computer technologies and management practices, increases in skill requirements, barriers to competitiveness and use of business assistance. Access to skilled labor is the primary problem reported by rural (and urban) manufacturers, far outranking problems of access to technological knowledge, capital, or customers and suppliers.

Value-Added Industries—This collection of articles from Rural Conditions and Trends covers trends in employment, earnings, local linkages, capital investment, and exports of industries that add value to farm and forest products beyond the farm gate by processing, refining, manufacturing, transporting, grading, assembling, packaging, and delivering products in a form that satisfies consumers' wants.

See all recommended readings...

recent research developments
New Economy Manufacturing Meets Old Economy Education Policies in the Rural South—Historically, manufacturers shifting to the rural South have sought low cost labor and low taxes. Labor skills have not been an issue. Rural manufacturers in located in Southern counties with substantial manufacturing are less likely than other manufacturers to cite State and local taxes as a major problem. But taxes help pay for schools, and expenditures per pupil are much lower in these manufacturing counties. New manufacturing technologies are tending to raise labor skill requirements, which may make these same counties less attractive to manufacturers in the years ahead.

questions and answers

• How competitive are rural businesses compared with urban businesses?
• Can value-added agriculture create jobs in rural communities?
• What can a rural community do to retain and attract businesses?

• Food market structures
• Infrastructure and rural development policy
• Measuring rurality
• Rural income, poverty, and welfare
• Rural labor and education
• Rural population and migration

related links
American Factfinder—Statistical information from the 1997 Economic Census about businesses in all nonfarm industries.

USDA Rural Business and Industry Programs—Learn about USDA loans and grants for rural business development.

See all related links...

for more information, contact: David McGranahan
web administration: webadmin@ers.usda.gov
page updated: December 18, 2003