- As a whole, the CPG industry is the largest manufacturing job provider in the U.S., directly leading to 2.3 million jobs, $151 billion in labor income and a $361.3 billion contribution to the U.S. gross domestic product, according to a new report from the Grocery Manufacturers Association.
Indirectly, the CPG industry is responsible for 10.4% of total U.S. employment with bread and bakery, poultry and animal processing, packaged soft drinks and water, and alcohol contributing the most to overall employment.
California and Texas are the two states where CPG jobs contribute the most to overall employment and the nation’s gross domestic product. Nebraska and Iowa have the greatest share of their state employment supported by the industry.
While it isn't the nation's largest industry when compared to areas including health, oil and gas, information technology and insurance, CPG manufacturing is near the top. This high ranking is not a surprising discovery since everyone has to eat, making this industry a necessary component of the U.S. economy. While the study takes a look at the full CPG industry, including home and personal care items, the bulk of the jobs and economic activity comes from food and beverage.
Although CPG contributes indirectly and directly to a tenth of the country’s employment, it comprises a large industry with a variety of sectors that are not always obviously connected. From bakery and poultry to animal food manufacturing, some components of the CPG space are only loosely related to human food consumption. When Geoff Freeman took the helm of the 111-year-old GMA last summer, his top priority was “getting the industry aligned,” he told Food Dive in an interview.
Part of that was performing this study, the likes of which had not previously been done by GMA. This shows the scope, importance and depth of CPGs, and gives the trade group a point from which to lobby for common goals and target specific issues.
Alignment of the industry is especially important in the context of supply chain. From trucker shortages to demands for more transparency, supply chain logistics are a top priority both for manufacturers and consumers. Although logistics are a common issue between all portions of the CPG space, each type of manufacturing has its own particular issues, including refrigerated transportation for ice cream and traceability of vegetable origins for products like lettuce that have recently suffered from E.coli outbreaks.
Still, one looming concern along the supply chain for all CPG members is tariffs. Any change in current levels could spell disaster for manufacturers. According to A.T. Kearney, U.S. businesses are currently paying nearly $70 billion a year in import tariffs. If further retaliatory tariffs are added, it could be unsustainable for some businesses. Agricultural — and therefore the majority of the CPG space — is disproportionately affected. Recently, exported U.S. pork products were hit with a 25% duty by China. U.S. wine, fresh and dried fruit and nuts were charged a 15% tariff.
With animal processing and wine being some of the largest contributors in the CPG space to the U.S. economy, these tariffs have rattled the industry and caused manufacturers to reconsider their strategies. However, supply chains and industry protection laws cannot be changed overnight.
The GMA study suggests that by looking at states and congressional districts that rely heavily on these industries, there is a way to craft legislation to protect CPG manufacturers.
“The number of jobs directly attributable to the CPG industry was no less than 500 in any district and exceeded 5,000 in 174 congressional districts in 2017,” according to the report.
With so many jobs relying on this industry, Congress should consider how to offer aid packages and subsidiaries to this industry to keep workers employed and contributing to the nation’s economic engine.