Oil-related downturn in manufacturing

Published:

2015 was a tough year for Norwegian manufacturing. Most oil-related industries experienced a decrease in value added. At the same time, the exchange rate was favourable to exporting industries, for which value added went up. In total, Norwegian manufacturing grew by 0.5 per cent from 2014 to 2015.

The value added at factor prices in Norwegian manufacturing is closely linked to the development in the investments in the oil and gas industry. From 2014 to 2015, the oil price dropped by about 30 per cent, causing investments in oil and gas to drop drastically. This had a negative effect on the activity in petroleum-related manufacturing. Gross investments in manufacturing dropped by 12.6 per cent from 2014 to 2015.

Figure 1. Value added at factor prices by industry division. Local kind of activity units

2007 2008 2009 2010 2011 2012 2013 2014 2015
Mining 4285 5274 4041 4388 5009 5129 5305 4755 5381
Manufacture of food products, beverages and tobacco 31439 30690 30334 33412 33894 35171 37359 39583 40765
Manufacture of textiles, wearing apparel and leather products 2549 2602 2192 2373 2595 2450 2458 2586 2625
Wood and wood products 8675 7476 6474 6891 7521 7573 7170 7364 8061
Paper and paper products 4151 3432 2423 2622 1308 2624 2258 2233 2427
Printing and reproduction 4719 4782 4088 4361 4315 4266 4113 3775 3811
Refined petro., chemicals, pharmac. 23643 23081 18237 21557 19228 17199 19143 19526 25575
Rubber, plastic and mineral prod. 11831 12179 10633 10422 11520 12026 12288 13386 13249
Basic metals 15046 16378 3648 9939 10030 9435 7915 10737 12026
Fabricated metal prod. 15097 15872 15353 14936 16002 18086 18049 17856 16460
Computer and electrical equipment 14436 14622 13621 14435 14207 14759 16021 17002 15465
Machinery and equipment 16450 20351 23678 21377 22595 23985 23792 26705 25006
Transport equipment n.e.c. (Does not include 30.1) 2757 3019 2170 2583 2631 2648 3056 3088 3246
Building of ships and oilriggs 16919 18531 16399 16047 16926 17484 19381 19245 16074
Furniture and manufacturing n.e.c. 6899 5812 5394 5433 5352 5391 5454 5207 5034
Repair and installation of machinery and equipment 11366 11646 11790 12866 12722 14649 16830 17486 16996

Downturn in petroleum-related manufacturing

The consequence of the fall in the price of oil can best be seen in building of ships and oil platforms. The drop in value added was 16.5 per cent compared to the year before. Other oil-related industries affected were machinery and equipment, and fabricated metal products. The latter had a drop in value added of 7.8 per cent, while the first dropped by 6.4 per cent. The explanation being that these industries supply capital goods dependent on investments in the oil and gas industry.

Growth in refined petroleum, chemical and pharmaceutical products

Not all oil-related industries had a rough year in 2015. The grouping refined petroleum products, chemicals and pharmaceutical products increased value added by 31 per cent. Part of the reason was that the price of oil as an input decreased by more than the price of refined oil products as output.

Industries that are less dependent on the oil industry, such as basic metals and the food and beverage industry, also had a good year in 2015. Basic metals increased value added by 12 per cent compared to 2014. The positive growth can largely be explained by favourable prices in the world metal market and the aforementioned exchange rate.

Slight decrease in number of employees

A total of 240 465 people were employed in manufacturing, mining and quarrying in 2015. This amounts to a 0.1 per cent decrease in employment compared to 2014. For building of ships and oil platforms, employment fell by 9.7 per cent. Fabricated metal products and other transport equipment also decreased by 3.3 and 6.6 per cent. For food and beverages, employment rose by 3.5 per cent and was up 4.6 per cent for basic metals.

Figure 2. Employment by industry division. Local kind of activity units

2007 2008 2009 2010 2011 2012 2013 2014 2015
Mining 4590 4959 4680 4775 5078 5314 5204 5142 5179
Manufacture of food products, beverages and tobacco 49337 49595 48694 47852 48128 48545 49104 49672 51394
Manufacture of textiles, wearing apparel and leather products 5592 5430 4772 4599 4585 4462 4305 4229 4415
Wood and wood products 16526 15972 14248 14308 14241 13752 13412 13249 13167
Paper and paper products 6223 5916 5475 5201 4885 3734 3252 2905 2989
Printing and reproduction 8149 7986 7461 7015 6614 6331 6086 5599 5790
Refined petro., chemicals, pharmac. 14870 13754 13443 13934 13956 12991 12846 12959 12905
Rubber, plastic and mineral prod. 16695 17113 15887 15205 15146 15307 15146 14993 15108
Basic metals 11936 12462 10515 9850 9655 9506 9231 9478 9912
Fabricated metal prod. 23774 25602 25225 23485 23672 24566 25272 25297 24462
Computer and electrical equipment 16884 17190 16841 16328 15999 16181 16105 16343 16525
Machinery and equipment 18319 19577 20872 19453 19512 20762 22391 23309 23334
Transport equipment n.e.c. (Does not include 30.1) 5474 5529 4085 3868 4069 4140 4076 3713 3469
Building of ships and oilriggs 24105 24578 22761 20701 20008 21179 22862 23458 21179
Furniture and manufacturing n.e.c. 13308 12510 11335 10310 9828 9688 9292 8953 9027
Repair and installation of machinery and equipment 18350 18678 17307 17571 17647 18653 20665 21304 21610

Value added in Hordaland surpassed Rogaland

Value added in the county of Rogaland declined by 3.5 per cent and in Hordaland it increased by 4.6 per cent, making the latter the county with the highest value added in 2015. Finnmark was still the county with the lowest value added, down 1.7 per cent from the year before.

New data source for employment

From 2015, the Structural Business Statistics are based on a new data basis for wage earners. The main source in the period to 2014 was the NAV Employee Register (State Register). In 2015, the reporting to this registry was coordinated with the reporting of payroll and personnel data to the Tax Administration Authority and Statistics Norway. The common reporting system is called “A-ordning”. “A-ordning” generally provides data with higher quality and accuracy at the individual level, and covers more wage earner conditions than the State Register. In the State Register, employees who work less than four hours per week on average were not included.

Contact