INDUSTRIAL ECONOMICS, INCORPORATED
2067 Massachusetts Avenue Cambridge, Massachusetts 02140 Telephone 617/354-0074 Facsimile 617/354-0463
MEMORANDUM °£ peo/7?'c°<%;
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August 8, 1995
TO: Catherine Tunis (EPA/OPPE)
FROM: Suzette Apis, James Cummings-Saxton, Daphne McMurrer
SUBJECT: Initial Profile of the New Jersey Chemical Industry
Five major sources were utilized to construct a broad picture of the New Jersey chemical
manufacturing industry. These included: (1) 1987 Census of Manufactures, Industry Series; (2) 1991
Annual Survey of Manufactures, Statistics for Industry Groups and Industries; (3) 1991 Annual
Survey of Manufactures, Geographic Area Series; (4) New Jersey Department of Labor; and, (5)
Chemical Manufacturers Association. The latter sources provided either national or regional
industry information. Unfortunately, the census data cannot be consistently compared from year to
year because of different publication dates.
In the context used within this memorandum, the New Jersey chemical industry includes the
chemical manufacturing industry and excludes the chemical wholesale trade industry. Within
publications by the U.S. Census Bureau, manufacturing industries are classified in the two-digit
Standard Industrial Classification (SIC) codes ranging from 20 to 39. Included within this SIC range
are establishments producing such items as tobacco products, transportation equipment, and
chemicals and allied products. The word establishments denotes actual "work sites," not employers.
For instance, Dow Chemical, an employer, may have seven Dow plants located within a particular
region. These individual plants are termed "establishments."
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GENERAL OVERVIEW
In 1992,12,564 manufacturing establishments (SIC codes 20 to 39) operated within the state
of New Jersey.1 The majority of these facilities are located within the northern portion of the state,
i.e., from Middlesex County north. Nearly seven percent of the manufacturing facilities (875
establishments) were classified as producers of chemicals and allied .products (SIC code 28).2 In
1992, the following five counties contained 62 percent of the New Jersey SIC 28 establishments:
Bergen (140), Middlesex (135), Essex (116), Passaic (90), and Union (64).3
Most activities of New Jersey chemical firms fall within seven three-digit SIC sectors, with
minor activity in an eighth sector. The seven sectors with greatest activity are:
281 Industrial inorganic chemicals
282 Plastics materials and synthetics
283 Drugs
284 Soaps, cleaners, and toilet goods
285 Paints and allied products
286 Industrial organic chemicals
289 Miscellaneous chemical products
In 1987, establishments involved in the eighth sector, agricultural chemicals (SIC 287), employed
a work force of less than 150 employees (see Table 2-A). Excluding agricultural chemicals, the New
Jersey payroll within the other seven chemical industry groups totaled $2.8 billion dollars in 1991.4
1 Personal communication with Ron Thatcher (New Jersey Department of Labor, Division
of Labor Market and Demographic Research, ES202 Unit); August 4,1995. This number is based
on the number of manufacturing establishments that applied for unemployment insurance in 1992.
Self-employed or family-owned establishments, which are not required to carry unemployment
insurance under New Jersey \aw, may not be included.
2 Personal communication with Bill Saley (New Jersey Department of Labor, Division of
Labor Market and Demographic Research, ES202 Unit); July 26, 1995.
3 Personal communication with Ron Thatcher.
4 U.S. Department of Commerce, Bureau of the Census. 1991 Annual Survey of
Manufactures: Geographic Area Statistics (Washington, D.C.: GPO, 1993), p. 3-82.
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Historically, New Jersey has ranked with Texas, Louisiana, and California as one of the four
largest chemical manufacturing states.5 In the 1987 Census of Manufactures, New Jersey ranked
second to California in total number of chemical manufacturing establishments California having
1,423 chemical establishments and New Jersey 912.6 These numbers show that 7.6% of U.S.
chemical establishments were located in New Jersey in 1987. With regard to a second metric of
industry size, total number of employees, New Jersey ranked number one (in 1992)7 Employing
111,800 chemical industry workers, New Jersey utilized 10.3% of the U.S. chemical work force.8
Like the rest of the U.S. chemical industry, New Jersey chemical manufacturers have had to
respond to evolving mandates for environmental regulation and policy. Regulations, such as the
Clean Air Act (CAA), Resource Conservation and Recovery Act (RCRA), and Superfimd
Amendments and Reauthorization Act (SARA), required a reduction in chemical plant
environmental releases and led to renewed emphasis on strategic environmental planning. In 1992,
the total U.S. chemical industry spent $4.4 billion dollars on pollution abatement and control.9
Among this, $1.03 billion dollars were allocated to air programs, $1.95 billion to water, and $1.45
billion to solid wastes.10 In comparison, New Jersey firms have spent an average of $310 million
dollars annually on pollution abatement and control in recent years, representing a 7.1% share of the
1992 U.S. expenditure."
MORE ACTIVE CHEMICAL SECTORS IN NEW JERSEY
Within New Jersey, the pharmaceutical industry (SIC 283) accounts for the largest individual
share of chemical activity. In fact, for many years the Chemical Manufacturers Association
classified New Jersey as a pharmaceutical and specialty chemical region. In 1991, the New Jersey
pharmaceutical industry payroll totaled $1.2 billion, representing 43.6% of the entire New Jersey
chemical industry payroll.12 Likewise, this portion of the industry employed the most employees
5 Personal communication with Keith Christman (Chemical Manufacturers Association); July
26,1995.
6 Ibid.
7 Ibid.
8 Ibid.
9 Ibid.
10 Ibid.
"Ibid.
12 Ibid.
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(28,500 individuals), representing 39.6% of New Jersey's chemical work force (see Table 1 A). The
pattern in New Jersey is similar to that in the United States as a whole. U.S. Pharmaceuticals
employed 21.8% of all chemical industry labor in 1991, and 21.4% in 1990.13
The New Jersey pharmaceutical industry group also is predominant in manufacturing
shipments, based on the 1987 Census of Manufactures. In value of product shipments (1987), New
Jersey ranked as the largest producer of pharmaceuticals in the U.S. in six of 12 five-digit sectors
within SIC 283 (see Table 2B). In addition, New Jersey ranked second to the following three states
in five other five-digit sectors: Pennsylvania (SIC 28342, 28345, and 28348), New York (SIC
28341), and California (SIC 28347).14
In addition to pharmaceuticals, New Jersey chemical manufacturers also are active in
production of soaps, cleaners, and toilet goods (SIC 284) (see Tables 1A and IB). This sector ranked
second to the drug industry in number of employees and payroll for 1991 and 1990. In 1991,
establishments within SIC 284 employed 23.0% of New Jersey chemical workers, and accounted for
18.7% of the 1991 payroll (see Table 1A). From a national standpoint, SIC 284 firms were the
fourth largest chemical manufacturing employer, accounting for 12.1% of the entire U.S. chemical I
manufacturing payroll.15
CLARIFYING NOTES REGARDING ATTACHED TABLES
The six attached tables provide information that augments material covered within this
memorandum. Tables 1 A, IB, and 1C present economic data by three-digit SIC code for New Jersey
and the U.S. for 1990 and 1991. Table 2A compares number of chemical facilities in New Jersey
vis-a-vis number in the entire U.S., broken out by four-digit SIC code. Table 2B compares value of
chemical shipments in New Jersey vis-a-vis value of chemical shipments in the entire U.S., broken
out by five-digit SIC code.
In terminology, "Value Added by Manufacture," the third column in tables 1A and IB, is a
measure of the manufacturing activity within a sector, adjusted to exclude the value of economic
inputs obtained from other sectors, e.g., raw materials and electric power. It is derived by
13 U.S. Department of Commerce, Bureau of the Census. 1991 Annual Survey of
Manufactures: Statistics for Industry Groups and Industries (Washington. D.C.: GPO. 1992), p. 1-31.
14 U.S. Department of Commerce, Bureau of the Census. 1987 Census of Manufactures.
Industry Series: Drugs. Industries 2833. 2834. 2835. and 2836 (Washington, D.C.: GPO; 1990), p.
28C-18.
15 Idem, 1991 Annual Survey of Manufactures: Statistics for Industry Groups and Industries.
p. 1-31.
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subtracting from sector value of shipments the cost of materials, supplies, containers, fuel, purchased
electricity, and contract work. "Value of Shipments," the sixth column in tables 1A and IB, is the
received or receivable net selling value of all products shipped.l6
For tables 2A and 2B, the word "facilities" is used instead of "establishments" to avoid a
larger column width. In table 2A, the sixth column, "Number of States Reporting," includes only
the states having at least 150 employees in each industry group. In table 2B, the fourth column,
"Number of States Reporting", includes only states having at least $2 million dollars in product
shipments. If a state has only one employer for all establishments in a product class, information for
that state is omitted to avoid releasing individual company information.
16
Ibid, p. A-2.
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