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.

The nation's second-largest producer of gravel and other construction aggregates has created the position of "automation technician" to maintain new technology. Automation gives plant managers almost daily profit and loss statements, allowing for fast tweaks to improve operations.

Ideas bubble up

Sometimes, though, a microscope is better than a telescope for navigating business. And the best ideas can come from the factory floor, not the corner office.

Executives increasingly are asking line-level employees to weigh in on ways to boost the bottom line.

"The employee is the asset," Jay Reardon, chief executive of Hickory Chair, told 350 attendees of a manufacturing summit in Greensboro last week. Managers need to "let go, and let the employees contribute."

The private company last year received 700 ideas from workers and implemented almost 600. Unlike many furniture makers in the state, Hickory Chair not only is surviving, "I would say we're prospering," Reardon said.

Timco Aviation Services in Greensboro, a private company which services jetliners, urges employees to send suggestions by e-mail straight to the top.

Chief executive John Cawthron got a message from a long-time employee who suggested a change that saved a client $900,000. The employee in March got 10 percent of the savings -- $90,000 -- for eliminating waste.

"We call it the fanatical pursuit of common sense," Cawthron said.

Such efforts sustain companies, which must fight harder every day to survive.

To thrive, some take bold steps.

VF Corp., the No. 2 company on our list, has re-engineered itself into a manager and marketer of brands such as Nautica and The North Face. It no longer manufactures in North Carolina and has handed some production to contractors.

Glen Raven Mills near Burlington, another private company, abandoned the product that made it famous. It invented pantyhose but hasn't made them in more than a decade. Today, it focuses on advanced textiles such as fade-proof, stain-resistant Sunbrella fabric.

"We have walked away from those markets" that have become commodities, said Allen E. Gant Jr., the president. "In a commodity business, the cheapest guy wins every time. ... We're dedicated to innovation, innovation, innovation."

"If you stop doing that, you're finished," said Marc No'l, chairman of privately held No'l Group, an industrial holding company. "That was the case long before China came on the map."

His portfolio companies -- foam maker Nomaco, Nomaco Insulation and Nomacorc, which makes synthetic corks -- have grown more than four-fold since 2000, when they employed 250 in the state.

Future looks promising

Though nobody expects manufacturing to regain its former prominence, economic developers are working to ensure that it grows. In recent years, recruiters have won a Novartis vaccine plant for Holly Springs, a Honda jet plant for Greensboro and a Chris-Craft factory for Kings Mountain.

About 70 percent of recruiting projects that the state Department of Commerce is working on have a production component.

Cheap labor isn't the selling point it once was. Officials now tout North Carolina's location, universities and other qualities to win jobs that need to be on the East Coast or that demand higher skills.

These days, brains beat brawn.

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