Manufacturing statistics - NACE Rev. 2
From Statistics Explained
- Data from April 2013. Most recent data: Further Eurostat information, Main tables and Database
The manufacturing sector includes a vast range of activities and production techniques, from small-scale enterprises using traditional production techniques such as the manufacture of musical instruments to very large enterprises sitting atop a high and broad pyramid of parts and components suppliers collectively manufacturing complex products such as aircraft. An analysis of the manufacturing sector as a whole gives an idea of the scale of this sector, it should be noted however that indicators of its inputs (for example, labour or capital goods), its performance, or its size structure are effectively an average across very different activities. While this can also be said of other large and diverse sectors such as construction, distributive trades and transport services, the manufacturing sector is probably the most varied activity within the non-financial business economy at the NACE section level of detail.
Main statistical findings
Around 1 in 10 (9.8 %) of all enterprises in the EU-27’s non-financial business economy (Sections B to J and L to N and Division 95) were classified to manufacturing (Section C) in 2010, a total of 2.1 million enterprises. The manufacturing sector employed 30 million persons in 2010 and generated EUR 1 590 billion of value added. By these two measures, manufacturing was the second largest of the NACE sections within the EU-27’s non-financial business economy in terms of its contribution to employment (22.6 %) and the largest contributor to non-financial business economy value added, accounting for more than one quarter of the total (26.8 %).
In 2010, the EU-27’s manufacturing sector recorded apparent labour productivity and average personnel costs above non-financial business economy averages: the apparent labour productivity of the manufacturing sector was EUR 52.8 thousand per person employed, some EUR 8.0 thousand more than the non-financial business economy average (EUR 44.8 thousand per person employed), while average personnel costs in the manufacturing sector were EUR 35.8 thousand per employee, some EUR 4.9 thousand above the non-financial business economy average (EUR 30.9 thousand per employee). Combing these two ratios into the wage-adjusted labour productivity ratio shows that value added per person employed in the EU-27’s manufacturing sector was equivalent to 148.0 % of average personnel costs per employee, which was slightly above the average for the non-financial business economy (144.8 %).
The gross operating rate (the relation between the gross operating surplus and turnover) was 9.0 % for the EU-27’s manufacturing sector in 2010, below the 10.1 % average for the non-financial business economy, and as such this sector had the second lowest level of profitability (using this measure) among any of the NACE sections within the non-financial business economy, with only distributive trades recording a lower gross operating rate (5.0 %).
At the NACE division level the manufacturing sector is composed of 24 different subsectors. The largest EU-27 subsectors in 2010 in terms of value added and employment were food manufacturing (Division 10), the manufacture of fabricated metal products (Division 25) and the manufacture of machinery and equipment (Division 28) — see Figure 1.
Manufacturing subsectors are very diverse, combining activities with relatively low apparent labour productivity and average personnel costs, such as the manufacture of textiles (Division 13), wearing apparel (Division 14), leather products (Division 15) and furniture (Division 31), with other activities that have considerably higher values for the same indicators, such as tobacco manufacturing (Division 12), the processing of coke and petroleum (Division 19) and the manufacture of basic pharmaceutical products and pharmaceutical preparations (Division 21) — see Table 2b.
In 2010, apparent labour productivity within the EU-27’s manufacturing subsectors ranged from EUR 30.0 thousand per person employed or less for the manufacture of wearing apparel, furniture, leather and related products, and wood and products of wood (Division 16) to more than EUR 100 thousand per person employed for the manufacture of tobacco products, basic pharmaceutical products and pharmaceutical preparations, and coke and refined petroleum products.
In line with their very low apparent labour productivity, the manufacture of wearing apparel and of leather and related products recorded the lowest average personnel costs in the EU-27’s manufacturing sector, at EUR 14.6 thousand per employee and EUR 19.2 thousand per employee respectively. Average personnel costs per employee were EUR 69.5 thousand per employee for the manufacture of coke and refined petroleum products, the highest among the manufacturing subsectors and close to double the manufacturing average.
Particularly high apparent labour productivity and relatively less elevated average personnel costs resulted in the tobacco manufacturing subsector recording the highest wage-adjusted labour productivity ratio (297.0 %) among manufacturing subsectors, indicating that value added per person employed was nearly three times as high as the average personnel costs per employee in this subsector. The two other subsectors with high apparent labour productivity, namely the manufacture of basic pharmaceutical products and pharmaceutical preparations and coke and refined petroleum products recorded the second and third highest wage-adjusted labour productivity ratios among manufacturing subsectors (264.4 % and 261.6 %) while the manufacture of beverages (Division 11) was the only other manufacturing subsector with a ratio above 200 %. The repair and installation of machinery and equipment (Division 33) recorded the lowest wage-adjusted labour productivity ratio (118.6 %).
An analysis of the EU-27’s gross operating surplus (value added less personnel costs) gives an idea of the operating profit before depreciation charges. The gross operating surplus for the manufacture of basic pharmaceutical products and pharmaceutical preparations was equivalent to 23.2 % of turnover, substantially above the 15.2 % recorded for other manufacturing (Division 32) and the 15.0 % for the manufacture of beverages — which had the next highest gross operating rates — and more than two and a half times the manufacturing average (9.0 %). The remaining subsectors mainly recorded gross operating rates between 5.8 % for the manufacture of basic metals (Division 24) and 10.6 % for the manufacture of other non-metallic mineral products (Division 23). The one exception was the manufacture of coke and refined petroleum products which had a gross operating rate of 2.9 %, its low rate explained, in part, by the capital-intensive nature and high turnover of this transformation activity.
Because of the tradable (export and import) nature of manufactured goods it follows that the relative importance of manufacturing within the non-financial business economy varies greatly between EU Member States and also that specialisations at the subsector level are sometimes very pronounced. Figure 2 shows that the share of manufacturing within the non-financial business economy’s value added varied in 2010 from 13.2 % in Cyprus and 13.3 % in Luxembourg to more than 35.0 % of the total in Slovenia, the Czech Republic, Ireland and Hungary, with the latter having the highest share (37.9 %). The range in employment terms was similar, from 13.1 % in the Netherlands to 34.6 % in the Czech Republic. The difference between employment and value added shares was particularly large in Ireland, where the value added share was 21.1 percentage points above that for employment, indicating particularly high apparent labour productivity in this country, and in turn reflecting a high Irish specialisation in a number of high-technology subsectors.
Among the five largest EU Member States, Germany stood out as its manufacturing sector contributed more than one quarter (28.7 %) of the EU-27’s value added in 2010, well above its 21.9 % share of value added in the EU-27’s non-financial business economy as a whole. Italy also recorded a larger share (12.9 %) of the value added generated in the EU-27’s manufacturing sector than it did for the non-financial business economy as a whole (11.3 %), while the reverse was true for France, Spain and, in particular, the United Kingdom.
In value added terms, Germany was the largest EU Member State in 18 of the 24 manufacturing subsectors (see Table 3) in 2010; Italy was largest in three (the textiles, wearing apparel, and leather and related products manufacturing subsectors); the United Kingdom was the largest for the manufacture of beverages and for the manufacture of tobacco products; and France recorded the highest level of added value for the manufacture of other transport equipment. Table 3 also shows which Member States were the most specialised in each of the subsectors in 2010. The Irish specialisation in the manufacture of basic pharmaceutical products and pharmaceutical preparations was particularly high, as this single subsector accounted for 43.4 % of Irish manufacturing value added and for 15.8 % of non-financial business economy value added in Ireland; for the EU-27 as a whole this subsector accounted for just 1.4 % of non-financial business economy value added. Equally remarkable were the Latvian and Estonian specialisation rates for the manufacture of wood and wood products, as this subsector contributed 5.0 % and 4.0 % respectively of non-financial business economy value added, compared with an EU-27 average of 0.5 %. The Hungarian specialisation rate for the manufacture of coke and refined petroleum products was also high, with 2.9 % of non-financial business economy value added in this subsector, compared with an EU-27 average of 0.4 %. Other high specialisation ratios were recorded in Bulgaria for the manufacture of wearing apparel, Ireland for other manufacturing (Division 32) and Finland for paper and paper products manufacturing (Division 17).
Among the EU Member States, the highest apparent labour productivity in manufacturing in 2010 was recorded in Ireland, where this measure reached EUR 179.0 thousand per person employed, reflecting this country’s specialisation in pharmaceutical manufacturing. This was far ahead of the next highest level of apparent labour productivity, namely EUR 89.3 thousand per person employed recorded in Belgium. Belgium also recorded the second highest level of average personnel costs within the manufacturing sector in 2010, EUR 56.4 thousand per employee, behind the peak value of EUR 59.0 thousand per employee in Denmark. Average personnel costs were also greater than or equal to EUR 50.0 thousand per employee in Sweden and Luxembourg. On the other hand, average personnel costs were below EUR 10.0 thousand per employee in Lithuania, Latvia and Romania, as well as Bulgaria where the lowest levels were recorded (EUR 4.0 thousand per employee). Combining these two indicators gives the wage-adjusted labour productivity ratio, which is a measure of labour productivity that takes into account the very different levels of pay and social charges between Member States and activities. The highest such ratios were recorded in Ireland (362.1 %), Hungary (216.7 %) and Latvia (202.9 %). The lowest wage-adjusted labour productivity ratios in manufacturing were registered in France (127.9 %), Italy (134.8 %), Luxembourg (135.8 %) and Germany (137.9 %).
Size class analysis
Large enterprises (employing 250 or more persons) contributed more to the EU-27’s manufacturing sector than is typical for the non-financial business economy as a whole — in 2010, just over half (55.5 %) of the manufacturing sector’s value added was generated by 15 700 large enterprises and these employed 40.0 % of the manufacturing workforce; for comparison, the non-financial business economy average for large enterprise was a 42.3 % share of value added and a 32.5 % share of the workforce.
Among the manufacturing subsectors in 2010, five were dominated by large enterprises, such that more than four fifths of EU-27 value added came from enterprises with at least 250 persons employed. These five subsectors were all activities that reported apparent labour productivity and average personnel costs above the non-financial business economy averages, namely: the manufacture of: tobacco products; coke and refined petroleum products; motor vehicles, trailers and semi-trailers; basic pharmaceutical products and pharmaceutical preparations; and other transport equipment.
The contribution of medium-sized enterprises (employing 50 to 249 persons) to EU-27 value added in 2010 was highest (across the manufacturing sector) in the textiles and the rubber and plastics products manufacturing subsectors, and in the case of textiles such enterprises contributed a higher share of the subsector’s value added than large enterprises did. In the printing and reproduction of recorded media, the manufacture of fabricated metal products, and the manufacture of wood and wood products, small enterprises (employing 10 to 49 persons) contributed more than 30.0 % of the subsectors’ value added. In none of the manufacturing subsectors did micro enterprises (employing fewer than 10 persons) contribute the largest share of value added among the four size classes shown in Figure 6; their greatest contribution was just over 20.0 % of the value added generated in the wood and wood products manufacturing subsector and the printing and reproduction of recorded media subsector.
Among the EU Member States the relative importance of large enterprises was at its greatest in Ireland and Hungary in 2010, as these enterprises contributed more than two thirds of the total value added generated in the manufacturing sector; high shares of value added for large enterprises were also recorded in Germany, Sweden and Finland. Medium-sized enterprises made a considerable contribution to manufacturing value added in all of the Baltic Member States, particularly in Estonia and Latvia, where the relative weight of medium-sized enterprises in manufacturing value added was higher than the contribution made by large enterprises. Cyprus was the only Member State where large enterprises contributed less to manufacturing value added (17.4 %) than any of the other size classes and as a consequence both small and micro enterprises had high shares (34.0 % and 22.8 % respectively) of manufacturing value added.
The northern Italian region of Lombardia (including the city of Milan) and the French capital city region of the Île de France recorded the highest number of persons employed in 2010 in manufacturing, across NUTS level 2 regions within the EU-27. In Lombardia, the manufacturing workforce was 989.7 thousand strong, while in the Île de France it numbered 873.5 thousand persons; this represented around 3 % of the EU-27 total in both cases. The regions with the next largest manufacturing workforces were Veneto (Italy) and Stuttgart (Germany), both with workforces of just over half a million persons. Overall, the top 20 list of regions with the highest numbers of persons employed within the manufacturing sector in 2010 was dominated by German regions of which there were eight, accompanied by five regions from Italy, three regions from Spain, two from France, and one each from Spain and Portugal. Apart from the Île de France the only capital city region in the top 20 was the region of Mazowieckie (Poland). These top 20 regions together accounted for 28 % of the EU-27’s manufacturing workforce in 2010.
The relative importance of the manufacturing sector can be analysed by comparing the employment of this sector with the non-financial business economy workforce. Among the 188 NUTS level 2 regions for which data are available in 2010, the median share of the manufacturing sector in the non-financial business economy workforce was 21.9 %. Employment within the manufacturing sector was quite concentrated, with some regions recording very low shares of manufacturing employment in the non-financial business economy total.
At the top end of the scale, the two Czech regions of Severovýchod and Střední Morava recorded manufacturing shares of 44.4 % and 44.0 % respectively, just over double the median share for all EU regions. In a total of 47 regions, manufacturing contributed more than 30.0 % of the non-financial business economy workforce and these were largely concentrated in central Europe and northern Italy: seven regions each in the Czech Republic and Poland, six regions each in Italy and Romania, five regions in Hungary, and three regions in Slovakia, as well as one or two regions each in Germany, Spain, France, Austria, Portugal, Slovenia, Finland and Sweden.
At the other end of the scale, the regions with the lowest share (10.0 % or less) of the non-financial business economy workforce in the manufacturing sector were in Spain, the Netherlands and Portugal (three regions each), the United Kingdom (two regions) and France. The lowest share (2.3 %) was recorded in the British capital city region of Inner London.
Data sources and availability
Manufacturing includes the physical or chemical transformation of materials, substances, or components into new products. The raw materials are products of agriculture, forestry, fishing, mining or quarrying as well as products of other manufacturing activities. Substantial alteration, renovation or reconstruction of goods is generally considered to be manufacturing. Selling to the general public products that have been made on the same premises from which they are sold, such as bakeries and custom tailors, is also included in manufacturing rather than retailing.
Manufacturing units may process their own materials, subcontract a part of the processing of their own materials, own legal rights and concepts of the product but subcontract the whole processing, or carry out the aforementioned subcontracted processes. Assembly of the component parts (whether self-produced or purchased) of manufactured products is also considered manufacturing. The output of a manufacturing process may be finished in the sense that it is ready for use or consumption, or it may be semi-finished in the sense that it is to become an input for further manufacturing.
Specialised installation, maintenance and repair of industrial, commercial and similar machinery and equipment is considered as part of manufacturing, however the repair of computers and personal and household goods is classified as a service (Division 95), while the repair of motor vehicles is classified as part of distributive trades (Section G).
Some transformation processes are not classified as manufacturing: logging is classified in forestry (Section A); materials recovery is considered as primarily waste processing (Section E); on-site construction of structures which is classified as part of construction (Section F); activities of breaking bulk and redistribution (including, for example, packaging, bottling or sorting) are classified to distributive trades.
The analysis presented in this article is based on the main dataset for structural business statistics (SBS), size class data and regional data, all of which are published annually.
The main series provides information for each EU Member State as well as a number of non-member countries at a detailed level according to the activity classification NACE. Data are available for a wide range of variables.
In structural business statistics, size classes are generally defined by the number of persons employed. A limited set of the standard structural business statistics variables (for example, the number of enterprises, turnover, persons employed and value added) are analysed by size class, mostly down to the three-digit (group) level of NACE. The main size classes used in this article for presenting the results are:
- small and medium-sized enterprises (SMEs): with 1 to 249 persons employed, further divided into;
- micro enterprises: with less than 10 persons employed;
- small enterprises: with 10 to 49 persons employed;
- medium-sized enterprises: with 50 to 249 persons employed;
- large enterprises: with 250 or more persons employed.
Regional SBS data are available at NUTS levels 1 and 2 for most of the EU Member States, Norway and Croatia, mostly down to the two-digit (division) level of NACE. The main variable analysed in this article is the number of persons employed. The type of statistical unit used for regional SBS data is normally the local unit, which is an enterprise or part of an enterprise situated in a geographically identified place. Local units are classified into sectors (by NACE) normally according to their own main activity, but in some EU Member States the activity code is assigned on the basis of the principal activity of the enterprise to which the local unit belongs. The main SBS data series are presented at national level only, and for this national data the statistical unit is the enterprise. It is possible for the principal activity of a local unit to differ from that of the enterprise to which it belongs. Hence, national SBS data from the main series are not necessarily directly comparable with national aggregates compiled from regional SBS.
European enterprise policy is conducted by the Directorate-General for Enterprise and Industry. The European Commission’s enterprise policies aim to create a favourable environment for business to thrive within the EU, creating higher productivity, economic growth, jobs and wealth. Policies are aimed at reducing administrative burden, stimulating innovation, encouraging sustainable production, and ensuring the smooth functioning of the EU’s internal market.
In March 2010, the Europe 2020 strategy was adopted: this is the EU’s strategy for smart, sustainable and inclusive growth. It is a strategy to enhance the competitiveness of the EU and to create more growth and jobs. The latest revision of the IntegratedGuidelines.pdf integrated economic and employment guidelines (revised as part of the Europe 2020 strategy) includes a guideline to improve the business and consumer environment and modernise Europe’s industrial base. An integrated industrial policy for the globalisation era was subsequently adopted by the European Commission in October 2010. As a flagship initiative of the Europe 2020 strategy, this policy sets out a strategy that aims to boost growth and jobs by maintaining and supporting a strong, diversified and competitive industrial base offering well-paid jobs while becoming less carbon intensive. The strategy puts forward a wide range of actions mixing broad cross-sectoral measures and actions for specific activities. Among the proposed actions are: the creation of framework conditions for sustainable supply and management of domestic primary raw materials; improving resource efficiency by addressing sector-specific innovation performance, for example in advanced manufacturing technologies; and addressing the challenges of energy-intensive activities through actions to improve framework conditions and support innovation.
Building on and updating the integrated industrial policy, in October 2012 the European Commission adopted a Communication titled ‘A Stronger European Industry for Growth and Economic Recovery — Industrial Policy Communication Update‘ (COM(2012) 582 final), which put forward policies to lay the foundations for Europe’s industry of the future. In part this focused on investment in innovation, with the proposal to establish task forces to establish road maps for: markets for advanced manufacturing technologies for clean production; markets for key enabling technologies; bio-based product markets; sustainable industrial policy and construction and raw materials; clean vehicles; and smart grids. Furthermore, the communication looked at issues related to access to the internal and international markets, as well as access to finance and capital and also the role of human capital and skills, in particular developing skills in the labour force for industrial transformation.
Further Eurostat information
- European business - facts and figures (online publication)
- Key figures on European Business – with a special feature section on SMEs – 2011 edition
- SBS - industry and construction (sbs_ind_co)
- Annual detailed enterprise statistics - industry and construction (sbs_na_ind)
- Annual detailed enterprise statistics for industry (NACE Rev.2 B-E) (sbs_na_ind_r2)
- Preliminary results on industry and construction, main indicators (NACE Rev.2) (sbs_na_r2preli)
- SMEs - Annual enterprise statistics broken down by size classes - industry and construction (sbs_sc_ind)
- Industry broken down by employment size classes (NACE Rev.2 B-E) (sbs_sc_ind_r2)
- Annual detailed enterprise statistics - industry and construction (sbs_na_ind)
- SBS - regional data - all activities (sbs_r)
- SBS data by NUTS 2 regions and NACE Rev.2, from 2008 onwards (sbs_r_nuts06_r2)
Source data for tables and figures (MS Excel)
- Decision 1578/2007/EC of 11 December 2007 on the Community Statistical Programme 2008 to 2012
- Regulation 295/2008 of 11 March 2008 concerning structural business statistics
More detailed analysis of manufacturing activities:
- Manufacture of basic metals
- Manufacture of beverages
- Manufacture of chemicals and chemical products
- Manufacture of coke and refined petroleum products
- Manufacture of computer, electronic and optical products
- Manufacture of electrical equipment
- Manufacture of fabricated metal products
- Manufacture of food products
- Manufacture of furniture
- Manufacture of leather and related products
- Manufacture of machinery and equipment
- Manufacture of motor vehicles, trailers and semi-trailers
- Manufacture of other non-metallic mineral products
- Manufacture of other transport equipment
- Manufacture of paper and paper products
- Manufacture of pharmaceuticals
- Manufacture of rubber and plastic products
- Manufacture of textiles
- Manufacture of tobacco products
- Manufacture of wearing apparel
- Manufacture of wood and wood products
- Other manufacturing
- Printing and reproduction of recorded media
- Repair and installation of machinery and equipment