North Carolina’s manufacturing sector has experienced a slowdown in growth compared to the national average over the past decade, according to a recent analysis. While the United States saw its overall manufacturing output increase by about 30% since 2004, North Carolina’s manufacturing output has stagnated, with particular declines in nondurable goods.
Between 2012 and 2024, North Carolina’s share of national manufacturing output dropped from 4.58% to 3.53%. The analysis focused on this period to better understand the state’s performance after major structural changes that affected key industries such as textiles and furniture prior to 2012.
The study explored two possible reasons for this decline: shifts in the mix of industries present in North Carolina versus the nation (the industry mix effect), and how well North Carolina’s manufacturers performed within their respective industries (the competitiveness effect). The findings indicate that nearly all of the decline can be attributed to weaker performance within specific industries rather than an unfavorable industry mix.
A counterfactual scenario was constructed to estimate what would have happened if North Carolina had maintained its 2012 market share in each industry while national industry composition changed through 2024. The results showed that changes in industry mix had almost no impact on North Carolina’s declining share; instead, the entire decrease was due to other states outperforming North Carolina within similar sectors.
Specific subsectors such as Computer and Electronic Product Manufacturing experienced significant contractions, losing about $2.1 billion in real GDP. Other areas like Chemical, Electrical Equipment, and Food, Beverage, and Tobacco Goods Manufacturing also saw notable declines. Although there were gains in Other Transportation Equipment and Machinery, these were not enough to offset losses elsewhere.
Comparisons between state and national growth rates further highlighted this trend. For example, U.S. Computer and Electronic Product Manufacturing grew by 40%, while North Carolina’s output shrank by 30%. In Chemical Manufacturing, national growth reached 37%, but North Carolina declined by 8%. Only a few sectors outperformed the national average.
The analysis suggests that North Carolina’s challenges may be related both to product mix—such as being concentrated in lower-value or declining segments—and productivity issues. For instance, tobacco remains a leading export for the state despite its long-term decline nationally. Similarly, in chemical and computer manufacturing sectors, stagnation may reflect focus on less lucrative products.
Productivity growth also slowed after the Great Recession. While North Carolina ranked fourth nationally for real GDP per manufacturing worker before 2010, it fell to twelfth place by 2021. Employment levels also decreased more rapidly than the national average.
The report concludes that “North Carolina’s manufacturing challenge stems from losing competitiveness within industries, not from being concentrated in the wrong ones.” It notes that addressing gaps in product mix or productivity could help improve performance without necessarily shifting focus toward entirely new industries.
