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Business
AN EIGHTH DISTRICT PERSPECTIVE
FALL 1988

What Does High-Tech Mean to St. Louis?
manufacturing workers nationally. St. Louis’ higher
proportion stems from its heavy concentration in the
aerospace industry, which includes aircraft, guided missiles
and space vehicles. This category alone includes 17.4 percent
of the area’s 221.7 thousand manufacturing workers and
almost half of the high-tech workers found in St. Louis.
Nationally, aerospace accounts for just 6 percent of the 19
million manufacturing workers. McDonnell Douglas
Corporation, which employs the vast majority of these
workers, primarily produces military aircraft and missiles
in its St. Louis plants.
Besides aerospace, the table lists St. Louis’ nine largest
What is High-Tech?
high-tech industries. Notably, computers and office
The concept of high-tech industry conjures up images of
machinery—which many think of when high-tech is
robots building computers and white-coated genetic
mentioned—are absent from this list. Although employing
engineers peering through microscopes. High-tech must be
almost
a half a million people nationally, this high-tech
more precisely defined, however, to evaluate its size and
industry
is virtually nonexistent in St. Louis.
growth. High-tech industries, according to one definition
The importance of biotechnology in St. Louis is reflected
developed by the U.S. Bureau of Labor Statistics, are those
in the inclusion of industrial organic chemicals, drugs and
26 manufacturing industries with a proportion of technologymedical instruments among the list of the largest high-tech
oriented workers (scientists, engineers, computer specialists
sectors. Monsanto Corporation, the largest local producer
and technicians) greater than the average for all
of chemicals, is a leader in biotechnical research. Monsanto
manufacturing industries and having an above-average ratio
researchers have successfully developed genetically
of research and development expenditures to sales.
engineered crops designed to withstand certain diseases,
insects and pesticides. Biotechnical research in St. Louis’
An Overview of High-Tech in St. Louis
universities, although not necessarily reflected in the
In 1987, high-tech industries accounted for approximately
employment data, represents a major feature of the area’s
84,000 workers or 7.5 percent of the 1.1 m illion
high-tech activity and includes a variety of biomedical and
nonagricultural workers in the St. Louis area. In comparison,
biochemical research. Washington University medical
5.4 percent of the nation’s workers were employed by highresearchers, for example, are refining technology to map
tech industries. Thus, despite their wellthe human brain.
publicized expansion, high-tech industries
Despite differences in composition, St.
employ a rather narrow slice of the
Louis and national job growth in high-tech
employment pie.
sectors has been similar (see table). Since
1979, when both St. Louis and national
The table on the next page shows that highTHE
FEDERAL
manufacturing jobs reached a cyclical peak,
tech industries employed a substantial portion
KISEKM
employment in high-tech industries rose at
(37.9 percent) of St. Louis’ manufacturing
IIANK of
ST. IX>1 IS
a 0.1 percent annual rate in St. Louis and at
workers in 1987. In comparison, high-tech
a 0.2 percent annual rate nationally. Although
industries employed just 29.2 percent of
The success of high-tech industries during the second half
of the 1970s and early 1980s in areas such as the Silicon
Valley and Boston led many communities to target high-tech
industries as their most likely source of growth in a time
when many traditional manufacturing jobs were eliminated.
As the nation’s economic growth is increasingly fueled by
the expansion of manufacturing, the development of hightech activity continues to be an important goal for many states
and cities, including St. Louis. This article examines the
nature of high-tech activity in the St. Louis metropolitan area.




FALL 1988

FEDERAL RESERVE BANK OF ST. LOUIS

P e rc e n t o f S t. Louis
m a n u fa c tu rin g e m p lo y m e n t
1987
T otal n o n a g ric u ltu ra l e m p lo y m e n t
T otal m a n u fa c tu rin g
N on -h ig h -te ch m a n u fa c tu rin g
H igh-tech m a n u fa c tu rin g
S e le c te d h ig h -te c h in d u stries
A e ro sp a ce
In d u stria l o rg a n ic ch e m ic a ls
E n g in e e rin g , s c ie n tific and m is ce lla n e o u s
in stru m e n ts
C o m m u n ic a tio n e q u ip m e n t
Soaps, c le a n e rs and to ile t p re p a ra tio n s
D rugs
E le ctrica l in d u stria l a p p a ra tu s
P e tro le u m re fin in g
S u rg ica l, m e d ica l and d e n ta l in stru m e n ts
E le ctro n ic c o m p o n e n ts and a cce sso rie s

C o m p o u n d e d an nu al g ro w th rate
1 9 7 9 -8 7
S t. L ouis

U .S .

1.1%
-1 .9
-3 .0
0.1

1.6%
-1 .2
-1 .8
0.2

17.4
3.8

2.2
-2 .5

1.8
-1 .6

2.2
1.9
1.3
1.3
1.2
1.1
1.1
1.1

-0 .8
5.2
-0 .6
0.2
3.7
-2 .6
7.0
-0 .2

-1 .7
1.9
1.2
1.4
-3 .9
-3 .3
3.3
2.2

—

1 0 0 .0 %
62.1
37.9

Note: Percentages and growth rates are based on data from the Missouri Division of Employment Security. Data are adjusted for changes in industrial
categories.

modest, this performance is quite strong relative to the
decline of the rest of the manufacturing sector: non-hightech manufacturing declined at a 3 percent rate in St. Louis;
1.8 percent rate nationally.
During manufacturing’s last major cyclical downturn,
between 1979 and 1983, the stability of high-tech employment
contrasted sharply with the decline in the rest of the
manufacturing sector. St. Louis’ high-tech employment
declined at a mild 0.3 percent rate during the period, while
jobs in non-high-tech manufacturing plummeted 6.8 percent
per year. A similar contrast is evident in the national figures:
employment in high-tech industries declined at a 0.6 percent
rate while non-high-tech manufacturing jobs fell at a 4.2
percent rate. During manufacturing’s upturn since 1983,
however, there has been little difference between growth in
high-tech and non-high-tech manufacturing either in St.
Louis or the nation.
High-tech’s stability in St. Louis has stemmed from
specialization in aerospace. M cDonnell Douglas
Corporation, which employs the vast majority of these
workers in the research and production of defense-related
goods, benefited from the rapid defense build-up of the
1980s. While employment in high-tech industries outpaced
the rest of the manufacturing sector, the table shows that
nonmanufacturing sectors have been the main source of St.
Louis’ job growth.

Looking Ahead
The recent establishment of two institutions in St. Louis
attest to the area’s commitment to high-tech development.
The St. Louis Technology Center, supported by Missouri
assists new high-tech firms by providing managerial support,
developing strategic plans, obtaining financing and generally
lowering operating costs. The center has helped form 16 new
firms, with 170 employees, since its start three years ago.
The Missouri Research Park, sponsored by Missouri and
the University of Missouri, is currently under construction.
It will offer research-intensive firms a campus-like
environment for their operations and access to University
resources. Ideally, the park will attract governmental and
private enterprises from outside the region as well as hightech activities of indigenous firms. The feasibility of
establishing a research institute in the Research park,
affiliated with the region’s universities, is currently being
investigated. While the early successes of the Technology
Center and the establishment of the Research Park are
encouraging, it is still too early to know whether these
institutions will be successful in facilitating widespread hightech growth in the St. Louis area.
—Thomas B. Mandelbaum

Business—An Eighth District Perspective is a quarterly summary of business conditions in the area served by the Federal Reserve
Bank of St. Louis. Single subscriptions are available free of charge by writing: Research and Public Information Department,
Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166. Views expressed are not necessarily official
positions of the Federal Reserve System.
2



FEDERAL RESERVE BANK OF ST. LOUIS

FALL 1988

EIGHTH DISTRICT BUSINESS DATA
Rates of Change1
Current Quarter
G en e ra l B usiness In d e x e s 2
A rka n sa s
K e n tu cky
M isso u ri
T e n n e sse e

P ayro ll E m p lo y m e n t
U n ite d S tates
D istrict
A rka n sa s
L ittle R ock
K e n tu cky
L o u isville
M issouri
St. Louis
T e n n e sse e
M e m p h is
M a n u fa c tu rin g E m p lo y m e n t
U n ite d S tates
D istrict
A rka n sa s
K e n tu cky
M isso u ri
T e n n e sse e
R etail S a le s 3

1986

2 .3 %
-1 .8
1.6
1.3

4 .4 %
3.0
3.0
4.0

-0 .2 %
2.7
2.4
4.8

1 .5 %
0 .7
3.0
3.5

3 .3 %
3.4
3.6
2.6
3.6
4.4
2.1
1.8
4.4
5.2

2 .0 %
2.5
2.2
1.1
1.8
2.7
2.4
2.7
3.3
3.6

2 .7 %
2.4
1.6
2.9
2.2
2.3
2.1
2.2
3.2
3.1

2 .1 %
2.3
5.5
3.5
0.3
2.2

- 1 .2 %
-0 .2
2.1
0.2
-2 .3
0.4

- 1 .8 %
-1 .7
-1 .8
-2 .1
-1 .4
-1 .7

4 .2 %
3.8
3.5
4.0
8.5

5 .9 %
2.0
-2 .2
2.1
6.2

6 .2 %
2.1
12.9
3.3
9 .2

7 .4 %
7.2
4.3
7.8
6.5
8.8

5 .6 %
5.5
5.4
4.4
5.3
6.5

6 .9 %
6.1
6.4
4 .3
6.3
7.1

11/1988
3 .6 %
-1 .1
-0 .4
1.2
-1 .2
0.5
-0 .7
-0 .3
-1 .7
-2 .5
11/1988
2 .3 %
-2 .7
-2 .3
1.3
-3 .9
-4 .1
11/1988
7 .1 %
-1 3 .3
-1 6 .3
-1 3 .0
2.0

P erso nal In co m e

1/1988
3 .1 %
3.6
4.4
4.0
1.8
5.1

District Employment1
K ey In d u s trie s
F a b ric a te d M etal P ro d u cts
E le c tric a l and E le c tro n ic E q u ip m e n t
N o n e le c tric a l M a c h in e ry
T ra n s p o rta tio n E q u ip m e n t
Food a nd K in d re d P ro d u cts
T e x tile and A p p a re l
P rin tin g and P u b lis h in g
C h e m ic a ls and A llie d P ro d u cts
C o n s tru c tio n




1985

11/1988

U nited S tates
A rka n sa s
K e n tu cky
M isso u ri
T e n n e sse e

U nited S tates
D istrict
A rka n sa s
K e n tu cky
M isso u ri
T e n n e sse e

1987

Prices1

C urrent Quarter

Current Year

C urrent Q uarter

Current Year

11/1988

11/1987 - 11/1988

11/1988

11/1987 - 11/1988

3 .7 %
2.1
6.4
3.9
2.4
-4 .4
2.7
3.9
39.2

2 .9 %
2.5
3.3
-2 .1
1.1
0.7
1.3
1.3
4.3

1 1 .7 %
2.1
2.9
1.8
9.9
3.8
3.4
10.4
3.9

9 .0 %
2.0
2.5
1.0
3.2
4.3
4.9
7.9
6.2

3

EIGHTH DISTRICT BUSINESS DATA

U n e m p lo y m e n t R ate
U n ite d S ta te s
D istrict
A rk a n s a s
L ittle R ock
K e n tu c k y
L o u is v ille
M isso u ri
St. Louis
Tennessee
M e m p h is

C o n s tru c tio n C o n tra c ts 4
(m illio n s of d o lla rs)

Current
Quarter

Previous
Quarter

Average
1987

Average
1986

11/1988

1/1988

5 .4 %
6.3
7.9
6.5
8.3
6.1
5.0
5.9
5.4
4.7

5 .7 %
6.5
7.6
6.8
8.3
6.2
5.4
6.3
5.9
5.0

6 .2 %
7.2
8.1
7.1
8.8
6.9
6.3
7.0
6.6
5.7

7 .0 %
7.8
8.8
6.9
9.3
7.1
6.1
7.0
8.0
6.8

Current
Quarter

Previous
Quarter

Same Period
1987

Same Period
1986

11/1988

1/1988

11/1987

11/1986

$502.1
47.0
102.1
153.0
199.9

$ 512.8
38.5
113.7
185.9
174.8

$ 5 3 3 .2
53.8
113.9
165.2
200.3

$4 9 6 .0
56.1
105.2
148.8
185.9

$381.9
31.5
75.3
124.1
151.0

$ 385.3
42.6
83.2
125.6
133.8

$ 4 5 7 .2
56.8
102.1
156.2
142.1

$333.1
35.1
70.8
109.8
117.4

R e s id e n tia l C o n s tru c tio n
D istrict
A rka n sa s
K e n tu cky
M isso u ri
T e n n e sse e
N o n re s id e n tia l C o n s tru c tio n
D is tric t
A rka n sa s
K e n tu cky
M isso u ri
T e n n e sse e

NOTE: With the exception of employment and prices in key industries, all data are seasonally adjusted. Data for Arkansas,
Kentucky, Missouri and Tennessee are used to represent the District.
1 All growth rates are compounded annual rates of change. The 1985 through 1987 growth rates compare the fourth quarter of
the year listed with the fourth quarter of the previous year.
2Although each index is a comprehensive measure of economic activity, the Arkansas and Missouri indexes, computed by Southwestern
Bell, are not strictly comparable to the Kentucky and Tennessee indexes, which are computed by South Central Bell.
3Sources: Arkansas from Southwestern Bell, Kentucky from the Kentucky Revenue Department, Missouri and Tennessee from the U.S.
Department of Commerce.
4Excludes nonbuilding construction. Source: F. W. Dodge Construction Potentials, proprietary data provided by special permission.




Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102