Manufacturing statistics - NACE Rev. 2

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Data from June 2011, most recent data: Further Eurostat information, Main tables and Database

This article presents an overview of statistics for European Union (EU) manufacturing, covering NACE Rev. 2 Section C.

The manufacturing sector covers 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 one within the non-financial business economy.

Table 1: Key indicators, manufacturing (NACE Section C), EU-27, 2008
Source: Eurostat (sbs_na_ind_r2)

Figure 1: Sectoral breakdown of activity, EU-27, 2008 (1)
(% share of value added and employment within manufacturing (NACE Section C))
Source: Eurostat (sbs_na_ind_r2)

Table 2: Sectoral breakdown of expenditure, productivity and profitability, manufacturing (NACE Section C), EU-27, 2008
Source: Eurostat (sbs_na_ind_r2)

Figure 2: Relative importance of manufacturing (NACE Section C), 2008 (1)
(% share of value added and employment in the non-financial business economy total)
Source: Eurostat (sbs_na_ind_r2)

Figure 3: Concentration of value added and employment, manufacturing (NACE Section C), 2008
(cumulative share of the five principal Member States as a % of the EU-27 total)
Source: Eurostat (sbs_na_ind_r2)

Table 3: Principal Member States and most specialised Member States, manufacturing (NACE Section C), 2008 (1)
Source: Eurostat (sbs_na_ind_r2)

Table 4: Key indicators, manufacturing (NACE Section C), 2008
Source: Eurostat (sbs_na_ind_r2)

Table 5: Key regional indicators, manufacturing (NACE Section C), 2008 (1)
(top 20 NUTS 2 regions, based on % share of non-financial business economy workforce)
Source: Eurostat (sbs_r_nuts06_r2)

Figure 4: Degree of regional employment specialisation, manufacturing (NACE Section C), 2008 (1)
(% share of non-financial business economy workforce by NUTS 2 region)
Source: Eurostat (sbs_r_nuts06_r2)

Table 6: Sectoral breakdown of regional employment, manufacturing (NACE Section C), 2008 (1)
Source: Eurostat (sbs_r_nuts06_r2)

Figure 5: Relative importance of enterprise size classes, manufacturing (NACE Section C), EU-27, 2008 (size of bubble is proportional to the % share of size class in sectoral value added)
Source: Eurostat (sbs_sc_ind_r2)

Table 7: Key size class indicators, manufacturing (NACE Section C), EU-27, 2008
Source: Eurostat (sbs_sc_ind_r2)

Figure 6: Sectoral breakdown of value added by enterprise size class, manufacturing (NACE Section C), EU-27, 2008 (1)
(% share of sectoral value added)
Source: Eurostat (sbs_sc_ind_r2)

Figure 7: Sectoral breakdown of employment by enterprise size class, manufacturing (NACE Section C), EU-27, 2008 (1)
(% share of sectoral employment)
Source: Eurostat (sbs_sc_ind_r2)

Table 8: Number of enterprises by enterprise size class, manufacturing (NACE Section C), 2008
Source: Eurostat (sbs_sc_ind_r2)

Main statistical findings

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, sub-contract a part of the processing of their own materials, own legal rights and concepts of the product but sub-contract the whole processing, or carry out the aforementioned sub-contracted processes. Assembly of the component parts (whether self-produced or purchased) of manufactured products is 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 in Section G (distributive trades).

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 in construction (Section F) ; activities of breaking bulk and redistribution (including for example packaging, bottling or sorting) which is classified to distributive trades .

Structural profile

Around one in ten (10.1 %) 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 2008, a total of 2.1 million enterprises. The manufacturing sector employed 33 million persons in 2008 and generated EUR 1 700 billion of value added. By these two measures manufacturing was the largest of the NACE sections within the EU-27’s non-financial business economy and the sector accounted for 24.2 % of non-financial business economy employment and 27.1 % of non-financial business economy value added, far greater shares than when based simply on the number of enterprises.

The level of tangible investment made by the manufacturing sector in 2008 reached EUR 240 100 million in the EU-27, equivalent to 24.0 % of all tangible investment made in the non-financial business economy; this was a similar share to the sector’s contribution to the non-financial business economy total for employment and therefore less than the sector’s share of value added. This can be seen from the investment rate (the ratio between investment and value added) which was 14.4 % in the EU-27‘s manufacturing sector in 2008, just under the non-financial business economy average of 16.3 %.

In 2008 the EU-27’s manufacturing sector recorded apparent labour productivity and average personnel costs above the non-financial business economy average: the apparent labour productivity of the manufacturing sector was EUR 51 thousand per person employed, around EUR 6 thousand more than the non-financial business economy average, while average personnel costs in the manufacturing sector were EUR 34.9 thousand per employee, EUR 4.0 thousand above the non-financial business economy average. Combing these two ratios into the wage-adjusted labour productivity ratio shows that value added per person employed was equivalent to 145.3 % of the average personnel costs per employee in manufacturing, which was slightly below the average for the non-financial business economy (146.3 %).

The gross operating rate (the relation between the gross operating surplus and turnover) was 8.3 % for the EU-27’s manufacturing sector in 2008, below the 10.2 % average for the non-financial business economy average, and as such this sector had one of the lowest levels of profitability (using this measure) among any of the NACE sections within the non-financial business economy.

Sectoral analysis

At the NACE division level the manufacturing sector is composed on 24 subsectors. The largest subsectors in terms of value added and employment were the manufacture of fabricated metal products (Division 25) and food manufacturing (Division 10) – see Figure 1.

Manufacturing subsectors are very diverse, combining activities with low apparent labour productivity, average personnel costs and rates of investment, such as the manufacture of textiles, leather products, wearing apparel and furniture, with those with considerably higher values for the same indicators, such as the processing of coke and petroleum – see Table 2.

In 2008 apparent labour productivity within the EU-27’s manufacturing subsectors ranged from EUR 18 thousand per person employed in the manufacture of wearing apparel (Division 14) and EUR 25 thousand per person employed in the leather and related products manufacturing subsector (Division 15) to more than EUR 100 thousand per person employed in the manufacture of tobacco products, coke and refined petroleum products, and basic pharmaceutical products and pharmaceutical preparations (Divisions 12, 19 and 21). 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, EUR 14.0 thousand per employee and EUR 18.4 thousand per employee respectively. Personnel costs per employee were EUR 68.5 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. The 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 (309.8 %) among manufacturing subsectors, indicating that value added per person employed was just over 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 coke and refined petroleum products as well as basic pharmaceutical products and pharmaceutical preparations, recorded wage adjusted labour productivity ratios above 200 %. The repair and installation of machinery and equipment (Division 33) recorded the lowest wage adjusted labour productivity ratio, 119 %.

An analysis of the gross operating surplus (value added less personnel costs) gives an idea of the operating profit before depreciation charges. The gross operating surplus in the manufacture of basic pharmaceutical products and pharmaceutical preparations was equivalent to 20.7 % of the subsector’s turnover, substantially above the 14.3 % recorded for other manufacturing (Division 32) which had the next highest gross operating rate and approximately two and a half times the manufacturing average. The remaining subsectors recorded rates between 6.8 % in textiles (Division 13) and 12.2 % in printing and the reproduction of recorded media (Division 18); the manufacture of coke and refined petroleum products recorded a gross operating rate well below this range with a rate of just 1.8 %, particularly low given the capital intensive nature of this subsector and the related high levels of depreciation.

The level of investment in tangible goods was highest in the EU-27’s motor vehicles, trailers and semi-trailers subsector (Division 29) in 2008, at EUR 26 000 million, equivalent to just under 11 % of the manufacturing total. In the coke and refined petroleum products subsector investment was EUR 7 880 million, equivalent to 40.2 % of the subsector’s value added, which was an investment rate more than two and a half times the manufacturing average (14.4 %) and well above the next highest rate of 22.1 % recorded for the manufacture of beverages (Division 11). Most other subsectors recorded investment rates between 9 % and 21 %, the exceptions being the manufacture of wearing apparel and the repair and installation of machinery and equipment where the rate was under 8 %.

Country analysis

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 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 2008 from 13.2 % in Cyprus to 37.6 % in Hungary. The range in employment terms was similar, from 13.5 % in the Netherlands to 40.0 % in Slovakia. The difference between the employment and value added shares was particularly large in Ireland, with the value added share much higher indicating a particularly high apparent labour productivity in this country, in turn reflecting a high Irish specialisation in a number of high-technology subsectors.

Among the five largest Member States Germany stands out as it alone contributed more than one quarter (27.2 %) of manufacturing value added in the EU-27 in 2008, well above its one fifth (20.3 %) share of value added in the non-financial business economy as a whole. Italy also recorded a larger share of the EU-27 total in manufacturing than it did for the non-financial business economy as a whole, while the reverse was true for France, Spain and in particular the United Kingdom.

In value added terms Germany was the largest Member State in 18 or the 24 subsectors; Italy was largest in four of the subsectors (the textiles, wearing apparel, and leather and related products manufacturing subsectors as well as the manufacture of coke and refined petroleum products); France was the largest Member State in the manufacture of beverages and other transport equipment. Table 3 shows which Member States were most specialised in each of the subsectors. The Irish specialisation in the manufacture of basic pharmaceutical products and pharmaceutical preparations was particularly strong, as this single subsector accounts for 32.0 % of Irish manufacturing value added and more than one tenth of the whole non-financial business economy value added in Ireland; for the EU-27 as a whole this sub sector accounted for just 1.2 % of non-financial business economy value added. Equally remarkable was the Hungarian specialisation in the manufacture of coke and refined petroleum products which accounted for 3.0 % of Hungarian non-financial business economy value added compared with an EU-27 average of 0.3 %. Other high specialisations were noted in Bulgaria for the manufacture of wearing apparel, in Estonia for wood and wood products (Division 16), and in Finland for computer, electronic and optical products (Division 26).

Among the Member States the highest apparent labour productivity in manufacturing in 2008 was recorded in Ireland, where it reached EUR 155.9 thousand per person employed, reflecting this country’s specialisation in pharmaceutical manufacturing. In Luxembourg the value of this ratio was only slightly lower at EUR 149.8 thousand per person employed and this was far ahead of the next highest, namely EUR 83.9 thousand per person employed recorded in Belgium. These three Member States recorded the highest average personnel costs which peaked at EUR 54.6 thousand per employee in Belgium. Average personnel costs were below EUR 10.0 thousand per employee in Latvia, Lithuania, Romania and Bulgaria. Combining these two indicators give the wage adjusted labour productivity ratio, which is a measure of labour productivity that takes into account the very different levels of pay between Member States. The highest such ratios were recorded in Ireland and Luxembourg where the average labour productivity was around three times the average personnel costs. The lowest wage adjusted labour productivity ratio in manufacturing was in Sweden (126.1 %), while Germany, Lithuania and Italy also recorded wage adjusted labour productivity ratios for manufacturing below 140 %.

Regional analysis

A regional analysis of the manufacturing share of non-financial business economy employment shows a relatively wide range: manufacturing accounted for 40 % or more of non-financial business economy employment in at least a dozen regions and reached 54.7 % in Západné Slovensko (Slovakia); in contrast it accounted for less than 10 % of non-financial business economy employment in at least six regions. Lombardia in Italy was the region within the EU with the largest number of persons employed in manufacturing in 2008 (1.1 million persons), far more than in Veneto also in Italy which had the second largest number (592 600). Some of the higher values are elevated by a very marked specialisation in one or several particular types of manufacturing. Factors that can play a key role in driving regional specialisation include weather, landscape and the location of resources – some manufacturing activities involve first processing stages of agricultural, fishing and forestry products or minerals, and these may also often be located close to the source of the raw material.

Food manufacturing is a specialisation in Dél-Alföld (Hungary), Alentejo (Portugal and Severen tsentralen (Bulgaria). Several heavily forested Nordic and Baltic regions are specialised in the manufacture of wood and wood products, for example Latvia, Småland med öarna (Sweden) and Estonia. Some manufacturing activities that involve processing or consuming minerals may be located close to mineral deposits, such as Norra Mellansverige (Sweden) which is specialised in basic metals manufacturing as well as upstream mining and quarrying activities. Equally, the concentration of the manufacture of textiles as well as wearing apparel, and leather and related products in Norte (Portugal) is made possible by a plentiful supply of water from local rivers. The concentration of enterprises within a particular region can also result from strategic clusters that provide upstream/downstream products and services to another activity – for example, manufacturers of rubber and plastics products, computers, electronics, and optical products, and electrical equipment around motor vehicle manufacturers in several regions, most notably Západné Slovensko in Slovakia.

Size class analysis

Large enterprises (with 250 or more persons employed) contributed more to the EU-27’s manufacturing sector than is typical for the non-financial business economy as a whole – in 2008 just over half (53.9 %) of the sector’s value added was generated by the approximately 17 400 large enterprises and these employed 40.7 % of the workforce; for comparison, the non-financial business economy average for large enterprise was a 41.4 % share of value added and a 33.3 % share of the workforce.

Among the manufacturing subsectors three were dominated by large enterprises such that more than four fifths of the subsectors’ value added came from enterprises with at least 250 persons employed; these were the same activities that reported the highest apparent labour productivity and average personnel costs, namely the manufacture of tobacco products, coke and refined petroleum products and basic pharmaceutical products and pharmaceutical preparations.

The contribution of medium-sized enterprises (50-249 persons employed) to value added was highest in the textiles and 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 did large enterprises. In the manufacture of leather and related products, printing and reproduction of recorded media, manufacture of wood and wood products, and of wearing apparel small enterprises (with 10 to 49 persons employed) contributed around 30 % or more of the subsectors’ value added. In none of the subsectors did micro enterprises (with less than 10 persons employed) contribute the largest share of value added among the four size classes shown in Figure 6, but their greatest contribution was around 20 % of the value added in the wood and wood products manufacturing and printing and reproduction of recorded media subsectors.

Among the Member States the relative importance of large enterprises in value added terms was at its greatest in Hungary where these enterprises contributed more than two thirds of manufacturing value added. High shares of value added for large enterprises were also recorded in Ireland, Germany and Finland. Medium-sized enterprises were dominant in all of the Baltic Member States, particularly in Estonia and Latvia where they had a greater contribution to manufacturing value added than did large enterprises. Cyprus was the only Member State where large enterprises contributed less to manufacturing value added (16.9 %) than any of the other size classes and as a consequence it was in Cyprus that both small and micro enterprises had the greatest shares (36.2 % and 23.4 % respectively) of manufacturing value added.

Data sources and availability

The analysis presented in this article is based on the main datasets for structural business statistics (SBS) which are disseminated annually. The three data sets used are:

the national series which have the most detailed analysis by activity according to the activity classification NACE and the widest range of variables;
the regional series which provide an analysis at 2-digit level of the regional classification NUTS;
the size class series which provide an analysis based on five size classes reflecting the number of persons employed.

Context

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 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; addressing the challenges of energy-intensive activities through actions to improve framework conditions and support innovation.

Further Eurostat information

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)

SBS - regional data - all activities (sbs_r)

Regional data (NACE Rev.2) (sbs_r_nuts06_r2)

Dedicated section

Structural business statistics

Other information

Regulation 58/1997 of 20 December 1996 concerning structural business statistics
Decision 2367/2002/EC of 16 December 2002 on the Community statistical programme 2003 to 2007
Regulation 295/2008 of 11 March 2008 concerning structural business statistics