Manufacturing statistics - NACE Rev. 2
Data extracted in March 2020
Planned article update: March 2021
The manufacturing sector employed more than 28.5 million people in the EU in 2017.
Almost 2 million enterprises were classified as manufacturing in the EU in 2017.
This article presents an overview of statistics for the European Union’s (EU) manufacturing sector, as covered by NACE Rev. 2 Section C. It belongs to a set of statistical articles on 'Business economy by sector' .
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 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.
Around 1 in 10 (8.8 %) 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 2017, a total of almost 2.0 million enterprises. The manufacturing sector employed 28.5 million persons in 2017 and generated EUR 1 820 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 (22.8 %) and the largest contributor to non-financial business economy value added, accounting for more than one quarter of the total (29.3 %).
In 2017, 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 64 000 per person employed, some EUR 14 500 more than the non-financial business economy average (EUR 49 500 per person employed), while average personnel costs in the manufacturing sector were EUR 41 000 per employee, some EUR 6 300 above the non-financial business economy average (EUR 34 700 per employee). Combining 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 154.0 % of average personnel costs per employee, which was slightly above the average for the non-financial business economy (142.7 %).
The gross operating rate (the relation between the gross operating surplus and turnover) was 9.8 % for the EU-27’s manufacturing sector in 2017, 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 (5.1 %).
At the NACE division level the manufacturing sector is composed of 24 different subsectors. The largest EU-27 subsectors in 2017 in terms of value added were the manufacture of machinery and equipment (Division 28) and manufacture of motor vehicles, trailers and semi-trailers (Division 29), while in terms of employment manufacture of food products (Division 10) and the manufacture of fabricated metal products, except machinery and equipment (Division 25) were the largest — 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 wearing apparel (Division 14), wood and of products of wood and cork (Division 16), furniture (Division 31), and textiles (Division 13), with other activities that have considerably higher values for the same indicators, such as manufacture of basic pharmaceutical products and pharmaceutical preparations (Division 21), manufacture of other transport equipment (Division 30) and the manufacture of motor vehicles, trailers and semi-trailers (Division 29)— see Table 2b.
In 2017, apparent labour productivity within the EU-27’s manufacturing subsectors ranged from EUR 22 000 per person employed or more for the manufacture of wearing apparel, to EUR 179 000 per person employed for the manufacture of basic pharmaceutical products and pharmaceutical preparations. In line with their very low apparent labour productivity, the manufacture of wearing apparel and of furniture recorded the lowest average personnel costs in the EU-27’s manufacturing sector, at EUR 17 100 per employee and EUR 25 500 per employee respectively. Average personnel costs per employee were EUR 68 200 per employee for the manufacture of basic pharmaceutical products and pharmaceutical preparations, the highest among the manufacturing subsectors and second highest subsector within all of the non-financial economy subsectors. This subsector also recorded second highest apparent labour productivity among NACE divisions within the whole of the non-financial business economy and together with manufacture of chemicals and chemical products recorded the highest wage-adjusted labour productivity ratio among manufacturing subsectors. On the other side, repair and installation of machinery and equipment (Division 33) recorded the lowest (116.0 %) — see Table 2b.
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 22.7 % of turnover, substantially above the 15.3 % recorded for second best in subsector, the other manufacturing (Division 32). The remaining subsectors mainly recorded gross operating rates between 6.9 % for the manufacture of food products (Division 10) and 11.4 % 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 5.2 %, its low rate explained, in part, by the capital-intensive nature and relatively 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 2017 from 12.3 % in Cyprus and 12.4 % in Luxembourg to more than 37.0 % of the total in Slovenia, Slovakia, Hungary and Czechia, with Ireland having the highest share (47.0 %). The range in employment terms was similar, from 11.3 % in the Netherlands to 35.4 % in Czechia.
Among the five largest EU Member States, Germany stood out as its manufacturing sector contributed almost one third (32.5 %) of the EU-27’s value added in 2017, above its 28.0 % share of value added in the EU-27’s non-financial business economy as a whole. Italy also recorded a larger share (13.3 %) of the value added generated in the EU-27’s manufacturing sector than it did for the non-financial business economy as a whole (11.7 %), while the reverse was true for France, Spain and the Netherlands.
In value added terms, Germany was the largest EU Member State in 19 of the 24 manufacturing subsectors (see Table 3) in 2017; Italy was largest in three (the textiles, wearing apparel, and leather and related products manufacturing subsectors); France was the largest for the manufacture of beverages and the manufacture of other transport equipment. In Slovakia, the specialisation rate for the manufacture of motor vehicles, trailers and semi-trailers was very high and amounted to 8.2 % of non-financial business economy value added. Equally remarkable was the Greek specialisation rate for the manufacture of food products which contributed 5.6 % of non-financial business economy value added. Other high specialisation ratios were recorded in Slovenia for the manufacture of fabricated metal products (Division 25), in Germany for the manufacture of machinery and equipment n.e.c. (Division 28) and in Latvia for manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials (Division 16).
Among the EU Member States, the highest apparent labour productivity in manufacturing in 2017 was recorded in Ireland, where this measure reached EUR 442 600 per person employed. This was quite ahead of the next highest level of apparent labour productivity, namely EUR 114 800 per person employed recorded in Denmark. In Iceland, Norway and Switzerland the apparent labour productivity in manufacturing was above the EU-27 average. Iceland and Norway also recorded average personnel costs higher than in any EU Member State. Denmark recorded the next highest level of average personnel costs within the manufacturing sector in 2017, EUR 66 000 per employee, just above the value of EUR 65 000 per employee in Sweden. Average personnel costs were also greater than or equal to EUR 50 000 per employee in Belgium, the Netherlands, Luxembourg, Austria, Germany, France, Ireland and Finland. On the other hand, average personnel costs were below EUR 10 000 per employee in Romania and Bulgaria where the lowest levels were recorded (EUR 6 900 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 (821.4 %), Hungary (205.3 %), Bulgaria (201.3 %), Poland (189.4 %) and Denmark (173.9 %). The lowest wage-adjusted labour productivity ratios in manufacturing were registered in France (133.3 %), Sweden (138.9 %), Germany (140.1 %), and Italy (146.4 %).
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 2017, some 61.5 % of the manufacturing sector’s value added was generated by 15 400 large enterprises and these employed 44.5 % of the manufacturing employment; for comparison, the non-financial business economy average for large enterprise was a 44.1 % share of value added and a 33.0 % share of the employment.
The contribution of large enterprises (employing 250 or more persons) to EU-27 value added in 2017 was concentrated in the manufacture of coke and refined petroleum products, of motor vehicles, trailers and semi-trailers, of basic pharmaceutical products and pharmaceutical preparations, and of other transport equipment.
The contribution of medium-sized enterprises (employing 50 to 249 persons) to EU-27 value added in 2017 was highest (across the manufacturing sector) in textiles, rubber and plastic products, fabricated metal products except machinery and equipment and manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials.
In the manufacture of fabricated metal products except machinery and equipment, small enterprises (employing 10 to 49 persons) contributed 28.5 % 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 16.9 % of the value added generated in the manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials and 15.2 % manufacture of furniture.
Among the EU Member States the relative significance of large enterprises was at its greatest in Ireland in 2017, as these enterprises contributed to 86.9 % of the large enterprises total value added generated in the manufacturing sector. Value added for large enterprises recorded on EU-27 level (61.5 %) indicates high significance of large enterprises in the sector.
Medium-sized enterprises made a considerable contribution to manufacturing value added in Estonia with 42.6 % of the total value added for this size-class; while this contribution was only around 4.9 % in Ireland and 13.5 % in France.
The French capital city region of the Île de France and northern Italian region of Lombardia (including the city of Milan) recorded the highest number of persons employed in 2017 in manufacturing, across NUTS level 2 regions within the EU-27. In Lombardia, the manufacturing employment was 890 800 strong, while in the Île de France it numbered 1073 500 persons; this represented 3.8 % of the EU-27 total employment in the manufacturing sector in both cases.
The regions with the next largest employment in manufacturing were Stuttgart (Germany) and Veneto (Italy), both with employments of over half a million persons.
Overall, the top 20 list of regions with the highest numbers of persons employed within the manufacturing sector in 2017 was dominated by German regions of which there were nine, accompanied by five regions from Italy, two regions from Poland, two from France, and one from Spain and Portugal each. Île de France was the only capital city region in the top 20.
These top 20 regions together accounted for 29.7 % of the EU-27’s persons employed in manufacturing 2017. The relative significance of the manufacturing sector can be analysed by comparing the employment of this sector with the non-financial business economy employment.
Among the 171 NUTS level 2 regions for which data are available in 2017, the median share of the manufacturing sector in the non-financial business economy employment was 22.0 %. 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 Polish region of Mazowiecki regionalny, the Czech region of Severovýchod and the Slovakian region of Západné Slovensko recorded manufacturing shares of 50.5 %, 47.8 % and 46.3 % respectively, over double the median share for all EU regions. In 45 regions, manufacturing contributed more than 30.0 % of the non-financial business economy employment and these were largely concentrated in central Europe but also across the European Union: eight regions in Poland, seven in Czechia, five in Hungary, Italy, and Romania, four regions in Bulgaria, two regions in Slovakia, Spain and France and one region in Germany, Croatia, Portugal, Slovenia and Sweden. At the other end of the scale, there were 14 regions with a share of 10.0 % or less of the non-financial business economy employment, with the lowest share (2.0 %) recorded in the Spanish region Ciudad Autónoma de Melilla.
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, Iceland and Norway, 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 (DG) for Internal Market, Industry, Entrepreneurship and SMEs (GROW) 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; 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.
- 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)
- SMEs — Annual enterprise statistics by size class — industry and construction (sbs_sc_ind)
- Industry by employment size class (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)