U.S. Chemical Manufacturers Grew Despite Overall Manufacturing Decline

What were the catalysts for growth?

Expanded industrial production

by pharmaceutical companies was a big contributor to the boost in Chemical Manufacturing.

Production workers’ annual hours in the Pharmaceutical and Medicine Manufacturing industry (

NAICS 32541

),

increased

from 270.1 million to 341.6 million from 2017 to 2022, according to

2022 Economic Census data

.

Until recently, chemical manufacturer numbers loosely followed the trends in the broader Manufacturing sector.

The

1978 to 2023 Business Dynamics Statistics

(BDS) show that the manufacturing sector in general had a double-digit annual rate of new establishments until the early 1990s, when the number that shut down began to outstrip the newcomers (Figure 1).

The highest-ever rate of

Chemical Manufacturing establishment “births"

— newly created establishments — occurred in 2022. “Exit” rates — the share of establishments that closed — peaked decades earlier and have been rising, with 2022 and 2023 marking the highest level in 20 years (Figure 2).

Despite growth in the Chemical Manufacturing industry, job numbers in industries downstream from these firms were in flux (Figure 3).

Between

2017

and

2022

, the number of pharmacists, chemical engineers, and chemists and material scientists increased about 28.1%, 54.5% and 24.8%, respectively. Chemical technicians, however, experienced a 2.2% decrease over the same period.

The number of Pharmacies and Drug Stores establishments

declined

along with employment in the industry between

2017 and 2022

.

Overall, employment in Pharmacies and Drug Stores decreased by about 5.6%.

Chemical Manufacturing firms and revenues weren’t spread evenly across the nation. In 2023, a significant portion of the industry’s workforce was concentrated in the South and Midwest, with 334,398 and 242,706 employees, respectively, according to the 2023 Annual Integrated Economic Survey (Table 1).

How competitive was the Chemical Manufacturing subsector?

A look at “concentration ratio,” or the market share held by an industry’s largest companies, can provide information about that industry’s competitiveness.

A high concentration ratio indicates that the biggest companies own a large portion of a given industry, which can stifle competition, increase prices and hamper innovation.

For example, the

four largest firms

in the

Petrochemical Manufacturing

industry (

NAICS 325110

) illustrate a much higher level of concentration, accounting for approximately 74.2% of the industry’s $77.6 billion in value of shipments for 2022.

In contrast, an industry like Medicinal and Botanical Manufacturing (

NAICS 325411

) is relatively less concentrated. The

top four firms

accounted for about 24.7% of the industry’s $13.9 billion in

value of shipments

in 2022.

To learn more about Chemical Manufacturing workforce statistics, including earnings, hours and workplace trends, visit the

Bureau of Labor Statistics “Industries at a Glance”

.

For additional resources to the latest manufacturing data, visit the Census Bureau’s

Economic Briefing Room

.