(February 2013) Beebe administration officials are asking the state General Assembly to approve a $125 million bond deal for a steel production facility at Osceola in east Arkansas that promises 525 new jobs. But the state of Arkansas manufacturing is so weak, compared to historical levels that the proposed mill is likely to have minimal impact on employment and GDP.
Employment
Postwar Arkansas Manufacturing employment peaked in February 1995 at 247,300, and was 155,500 in December 2012, a loss of 91,800 in 18 years.1 Arkansas Manufacturing, including primary and secondary metals has shed 5,900 jobs since the recession ended in mid-2009.2 Mill proponents cite a multiplier effect but Manufacturing is so weak by historical standards that a 10-fold increase would not return the sector to mid-2009 levels.
State GDP
Manufacturing can record productivity gains from capital investment to increase output with fewer workers. This has not occurred in Arkansas. Manufacturing GDP as a percentage of state GDP declined from 21 percent (1997) to 15 percent (2011),3 though it has increased from 13 percent (2009).
Conclusion
Arkansas Manufacturing, in terms of employment and output, remains weak and is unlikely to change whether or not a new steel mill is built.
–Greg Kaza
1 U.S. Bureau of Labor Statistics
2 Arkansas’ Manufacturing sector would have to add 32,600 jobs to return to the pre-recession level of November 2007.
3U.S. Bureau of Economic Analysis. Arkansas Total GDP, all industries (1997) 71,547; Manufacturing, 14,739; (2011) 91,496, 13,324. “Real GDP by State, Millions of Chained 2005 Dollars, Arkansas.” Manufacturing employment as a percentage of total Arkansas employment also fell from 22 percent (1997) to 13 percent (2011).
