But it has an image problem: People think it's dead.

North Carolina's manufacturing sector has taken a beating in the past decade as cheaper competition forced restructuring that threw thousands out of work. Many still struggle to rebuild their lives. Vacant factories scar communities.

But they also mask a transformation. Furniture builders, cigarette makers and textile mills have survived and prospered by automating and innovating. And drug, aircraft and other advanced manufacturers have redefined what it means to produce in the state.

In 2005, the most recent figures available, manufacturers accounted for 19.4 percent of North Carolina's gross domestic product. Although that was down from 30 percent in 1990, it was still more than any other single sector, U.S. Bureau of Economic Analysis data show.

"It has certainly changed," said Jim Fain, secretary of the N.C. Department of Commerce. "But it remains a very important part of our economy."

This year, five of the top 10 companies on the Carolinas 100 -- a project of The News & Observer and The Charlotte Observer that ranks public companies based in North Carolina and South Carolina -- are in manufacturing.

They make steel, clothes, smokes, rocks and pumps, and, for the most part, look far different than they did 10 years ago. They are leaner, and their workers are more skilled. They have given up operations to maximize profit. Top-down structures have flattened to allow more bottom-up direction.

The companies represent a small fraction of the state's manufacturers, most of which are small and privately held, but they symbolize an overhaul reshaping the industry.

Pressure for efficiency

At R.J. Reynolds Tobacco's plant in Tobaccoville, just north of Winston-Salem, a mechanical arm stretches 10 floors to collect cartons, paper and other materials needed for production. It hands them to driverless forklifts that deliver the goods to workstations.

There, employees feed and monitor machines that spit out as many as 16,000 Camel, Kool or Winston cigarettes a minute, double the rate a decade ago.

"There's an awful lot of pressure to be more efficient," said Dan Snyder, executive vice president for operations at R.J. Reynolds.

That means fewer people. The company has about 2,500 workers in domestic production, about half as many as it did five years ago.

Productivity per employee has jumped, though, because of the automation. And that's benefiting Reynolds American, the parent of R.J. Reynolds. The Winston-Salem company squeezed more from each sale last year as profit rose five times faster than revenue.

The most successful manufacturers in the state have moved low-skill jobs offshore or, like R.J. Reynolds, replaced them with machines to save on labor. In 1990, one in four people employed in North Carolina worked in manufacturing. Today, it is about one in eight.

But workers now are more likely to have advanced degrees, and they can command higher salaries. In 2005, the most recent data available, the average annual manufacturing wage was 19 percent higher than the state average, according to the U.S. Bureau of Labor Statistics.

Martin Marietta Materials, the ninth company on the Carolinas 100, has shed about 20 percent of its work force in the past five years. During that time, average salaries rose about 5 percent per year.

"The qualifications overall in the company have gone up pretty markedly," said chief executive Stephen P. Zelnak Jr.

Next page >