Manufacturing statistics - NACE Rev. 2


Data extracted in June 2021

Planned article update: March 2022

Highlights

The manufacturing sector employed more than 29.9 million people in the EU in 2018.

More than 2 million enterprises were classified as manufacturing in the EU in 2018.

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.

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Structural profile

Around 1 in 10 (8.9 %) of all enterprises in the EU’s non-financial business economy (Sections B to J and L to N and Division 95) were classified to manufacturing (Section C) in 2018, a total of more than 2.0 million enterprises. The manufacturing sector employed 29.9 million persons in 2018 and generated EUR 1 944 billion of value added. By these two measures, manufacturing was the second largest of the NACE sections within the EU’s non-financial business economy in terms of its contribution to employment (23.1 %) and the largest contributor to non-financial business economy value added, accounting for more than one quarter of the total (29.7 %).

Table 1: Key indicators, manufacturing (NACE Section C), EU, 2018
Source: Eurostat (sbs_na_ind_r2)

In 2018, the EU’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 65 000 per person employed, some EUR 14 300 more than the non-financial business economy average (EUR 50 700 per person employed), while average personnel costs in the manufacturing sector were EUR 42 800 per employee, some EUR 7 300 above the non-financial business economy average (EUR 35 500 per employee). Combining these two ratios into the wage-adjusted labour productivity ratio shows that value added per person employed in the EU’s manufacturing sector was equivalent to 152.0 % of average personnel costs per employee, which was slightly above the average for the non-financial business economy (143.0 %).

The gross operating rate (the relation between the gross operating surplus and turnover) was 9.6 % for the EU’s manufacturing sector in 2018, below the 10.2 % 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 (5.4 %).

Sectoral analysis

At the NACE division level the manufacturing sector is composed of 24 different subsectors. The largest EU subsectors in 2018 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.

Figure 1: Sectoral analysis of manufacturing (NACE Section C), EU, 2018
(% share of sectoral total)
Source: Eurostat (sbs_na_ind_r2)

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), of leather and related products (Division 15), 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), of coke and refined petroleum products (Division 19) and the manufacture of tobacco products (Division 12)nbsp;see Table 2b.


Table 2a: Sectoral analysis of key indicators, manufacturing (NACE Section C), EU, 2018
Source: Eurostat (sbs_na_ind_r2)


Table 2b: Sectoral analysis of key indicators, manufacturing (NACE Section C), EU, 2018
Source: Eurostat (sbs_na_ind_r2)

In 2018, apparent labour productivity within the EU’s manufacturing subsectors ranged from EUR 22 000 per person employed or more for the manufacture of wearing apparel, to EUR 186 000 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’s manufacturing sector, at EUR 17 800 per employee and EUR 26 000 per employee respectively. Average personnel costs per employee were EUR 73 000 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 tobacco products and manufacture of coke and refined petroleum 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 (117.0 %) — see Table 2b.

An analysis of the EU’s gross operating surplus (value added less personnel costs) gives an idea of the operating profit before depreciation charges. The highest gross operating surplus were recorded for the manufacture of tobacco products and manufacture of beverages equivalent to 14.1 % and 13.9 % of turnover respectively. The remaining subsectors mainly recorded gross operating rates between 6.2 % for the manufacture of other transport equipment (Division 30) and 11.6 % 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 4.1 %, its low rate explained, in part, by the capital-intensive nature and relatively high turnover of this transformation activity.

Country overview

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 2018 from 11.9 % in Luxembourg and 12.6 % in Cyprus to more than 37.0 % of the total in Slovakia and Czechia, with Ireland having the highest share (45.0 %). The range in employment terms was similar, from 11.9 % in the Netherlands to 35.1 % in Czechia.

Figure 2: Relative importance of manufacturing (NACE Section C), 2018
(% share of value added and employment in the non-financial business economy total)
Source: Eurostat (sbs_na_ind_r2)

Among the five largest EU Member States, Germany stood out as its manufacturing sector contributed to one third (33.4 %) of the EU’s value added in 2018, above its 28.3 % share of value added in the EU’s non-financial business economy as a whole. Italy also recorded a larger share (12.7 %) of the value added generated in the EU’s manufacturing sector than it did for the non-financial business economy as a whole (11.5 %), while the reverse was true for France, Spain and the Netherlands.

Figure 3: Concentration of value added and employment, manufacturing (NACE Section C), 2018
(cumulative share of the five principal Member States as a % of the EU total)
Source: Eurostat (sbs_na_sca_r2)


Size class analysis

Large enterprises (employing 250 or more persons) contributed more to the EU’s manufacturing sector than is typical for the non-financial business economy as a whole — in 2018, some 64.6 % of the manufacturing sector’s value added was generated by large enterprises and these employed 47.6 % of the manufacturing employment; for comparison, the non-financial business economy average for large enterprise was a 47.2 % share of value added and a 35.1 % share of the employment.


Figure 4: Relative importance of enterprise size classes, manufacturing (NACE Section C), EU, 2018
(% share of sectoral total)
Source: Eurostat (sbs_na_sca_r2)


Figure 5: Sectoral analysis of employment by enterprise size class, manufacturing (NACE Section C), EU, 2018
(% share of sectoral employment)
Source: Eurostat (sbs_na_ind_r2)

The contribution of large enterprises (employing 250 or more persons) to EU value added in 2018 was concentrated in the manufacture of coke and refined petroleum products, of motor vehicles, trailers and semi-trailers, tobacco products and of basic pharmaceutical products and pharmaceutical preparations.

The contribution of medium-sized enterprises (employing 50 to 249 persons) to EU value added in 2018 was highest (across the manufacturing sector) in rubber and plastic products, textiles, leather and related products and fabricated metal products except machinery and equipment. In the manufacture of leather and related products, small enterprises (employing 10 to 49 persons) contributed 29.4 % of the subsectors’ value added.

Micro enterprises (employing fewer than 10 persons) contributed to the largest share of value added among the four size classes in manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials (29.4 %) and repair and installation of machinery and equipment (28.1 %) – as shown in Figure 6.

Figure 6: Sectoral analysis of value added by enterprise size class, manufacturing (NACE Section C), EU, 2018
(% share of sectoral value added)
Source: Eurostat (sbs_sc_ind_r2)

Data sources

Coverage

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.

Data sources

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.

Structural business statistics also include regional data 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. </datadetails>

Context

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.

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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)
SBS — regional data — all activities (sbs_r)
SBS data by NUTS 2 regions and NACE Rev. 2 (from 2008 onwards) (sbs_r_nuts06_r2)