The manufacturing industry in the United States has undergone fundamental changes in recent decades. The changes are important for the communities that rely on manufacturing firms for employment and local economic growth and for the banks that offer financial services in communities where manufacturing firms have an important presence. This article highlights areas in the United States where manufacturing is most concentrated, discusses some of the long-term trends in manufacturing, and analyzes the performance of community banks in manufacturing-concentrated areas relative to community banks more broadly. The transition to advanced manufacturing has contributed to output growth even as manufacturing employment has fallen in recent decades. Community banks in manufacturing-concentrated states have provided more commercial loans than other community banks, reported higher net interest margins, and exhibited more cyclical sensitivity to economic downturns. While the manufacturing industry was negatively affected by the COVID-19 pandemic, the industry recovered much more quickly than in previous recessions, potentially brightening the outlook for community banks that support those businesses.
Last Updated: January 1, 2022