Colorado in Bottom Third of States for Output Manufacturing Location Quotient

Manufacturing is critical to the state of Colorado; however, the state’s manufacturing output lags other states.

One way to evaluate the Bureau of Economic Analysis state output data is to compare the industry specialization index or the location quotient (LQ) to show which states have a higher concentration of manufacturing relative to the other industries. A LQ > 100.0 means there is a higher concentration and a L.0  < 100.0 means there is a lower concentration.

In the first group of states (17 states) the manufacturing sector has a LQ is greater than 118.0. In other words, manufacturing is a significant export industry for these states.

Rank State LQ
1 Indiana 234.98
2 Oregon 231.48
3 Louisiana 188.87
4 North Carolina 161.40
5 Wisconsin 159.35
6 Kentucky 142.99
7 Ohio 142.70
8 Iowa 138.98
9 Michigan 137.90
10 Alabama 136.30
11 South Carolina 135.85
12 Texas 125.90
13 Mississippi 125.33
14 Tennessee 124.65
15 Kansas 123.04
16 Utah 122.60
17 Arkansas 118.77

In the second group of states (15 states) the LQ is greater than 85.0 and less than 115.0. In these states manufacturing is an important industry. Because Minnesota, Illinois, and Idaho have LQs greater than 110.0 it is likely that manufacturing is a significant export industry.

Rank State LQ
18 Minnesota 114.42
19 Illinois 110.81
20 Idaho 108.18
21 Nebraska 104.57
22 Missouri 103.98
23 Washington 103.22
24 New Hampshire 98.69
25 Pennsylvania 98.02
26 Vermont 96.23
27 Georgia 93.47
28 Oklahoma 90.65
29 California 88.76
30 Connecticut 87.56
31 Massachusetts 85.96
32 Maine 85.43

The LQ for the final group of states (18 states + District of Columbia) is less than 85.0. In these states manufacturing may be an important part of the economy and there may be pockets where there are high concentrations of exports. Manufacturing does not drive the fortunes of the state in the same way it does in the states with higher LQs.

Colorado is a perfect example. Manufacturing has a LQ of 60.1 and the industry accounts for 8.4% of private sector output. The state has competencies in food and beverage and computer and other high-tech manufacturing. By contrast, Oregon has substantially fewer manufacturing workers and appreciably greater manufacturing output. (The Portland-Vancouver MSA manufacturing output is $47.3 billion vs. almost $20 billion for the entire state of Colorado). In Oregon manufacturing accounted for 31.3% of total private sector GDP in 2012.

Rank State LQ
33 South Dakota 78.71
34 Virginia 75.03
35 West Virginia 74.79
36 Arizona 68.53
37 Rhode Island 64.13
38 New Jersey 62.70
39 Colorado 60.83
40 New Mexico 60.06
41 Montana 59.00
42 Delaware 55.52
43 North Dakota 55.04
44 Wyoming 49.24
45 Maryland 48.97
46 New York 43.62
47 Florida 39.72
48 Nevada 34.36
49 Alaska 26.87
50 Hawaii 14.67
51 District of Columbia 1.94

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