U.S. Chemical Manufacturers Grew Despite Manufacturing Challenges
Most people may not realize the close connection they have with the Chemical Manufacturing industry, but it’s a subsector that helps create commonplace products we all use, from ink and soap to plastics and medicine.
And it’s a portion of American manufacturing that has grown in recent years, running counter to the overall decline in manufacturing establishments and firms from 2017 to 2022, according to the most recent Economic Census.
The North American Industry Classification System (NAICS) defines chemical manufacturing as the transformation of raw materials by a chemical process into everyday products. Businesses that manufacture chemicals run the gamut from refining oil into margarine to synthesizing willow bark into aspirin.
The number of U.S. Chemical Manufacturing establishments (NAICS 325) increased 10.2% from 13,571 in 2017 to 14,961 in 2022 while the number of Manufacturing sector establishments as a whole decreased 1.7% during the same period, from 291,586 to 286,626, according to 2022 Economic Census data.
Chemical Manufacturing value of shipments also increased by 22.4% during that period, rising from about $735.9 billion to $901.0 billion (the data are not adjusted for price changes).
Industries with Chemistry
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.