Indiana continues to boast the strongest manufacturing economy in the nation, and is a leader in attracting foreign manufacturing investment – but long-term weaknesses in its workforce will undermine these advantages unless bold action is taken.
These are among the observations made in the second-annual Indiana Manufacturing & Logistics Report Card, released by the Conexus Indiana initiative. The report card was discussed at a breakfast event hosted by Conexus in Indianapolis, which also featured a program focused on Indiana’s “clean technology” sector, which offers manufacturing opportunities in areas like hybrid-electric vehicles and advanced battery technologies.
“Manufacturing has been the primary source of economic growth and jobs in Indiana for generations,” said Steve Dwyer, president and CEO of Conexus Indiana. “This report card helps tell us in an empirical way how vital manufacturing still is here – and most importantly, the issues we need to focus on to keep it that way.”
The Report Card, created by a team of economists at the Ball State Center for Business and Economic Research, gives Indiana “A” grades in overall Manufacturing Industry (ranking first among states in share its economy focused on manufacturing), Global Position (measuring indicators like manufacturing exports and foreign investment) and Tax Climate. The state also earned a “B” for its Logistics Industry, which ranked among the top 10 in statewide employment per capita; sustained infrastructure investment was identified as a priority to maintain and improve this position.
“There’s probably more upside potential in logistics than almost any other industry in Indiana,” noted Dwyer. “In today’s ‘just in time’ world, our geography gives us a competitive advantage in getting goods into the hands of consumers quickly and efficiently. As our manufacturing output and exports bounce back, and if we can keep up with infrastructure demands, we can keep moving up the logistics rankings.”
“Manufacturing continues to be the foundation of Indiana’s economy; the manufacturing supply chain along with our central location give the state a strong logistics sector as well,” said Dr. Michael Hicks, director of the Ball State Center for Business and Economic Research. “Even though the recession has taken its toll on employment today, Indiana’s business climate and ability to attract foreign investment leaves us well-positioned for future growth.”
Indiana ranked in the middle of the pack in areas like Benefit Costs and Productivity/Innovation, both earning ‘C’ grades. The most negative score was a ‘D’ in Human Capital, which saw Indiana rank in the bottom tier of states in percentages of college-educated workers in the labor pool and student retention rates in the community college system.
“Workers represent the largest single cost of doing business, and more importantly are the dominant source of innovation and productivity improvements for manufacturing and logistics firms,” said Hicks. “Long-term success in these industries demands a reliable pipeline of skilled labor to accommodate new business opportunities or replace workers who retire or otherwise leave the workplace.”
These findings mesh with the mission of Conexus Indiana, which is focused on strengthening the workforce and training Hoosiers for emerging manufacturing and logistics careers, such as those in clean technologies.
“The average age of Indiana’s manufacturing worker is around 50 – Baby Boomer retirements are quickly eroding our workforce,” continued Dwyer. “At the same time, we see growth potential in areas like clean technologies and aerospace. It adds up to thousands and thousands of open positions – but we need to prepare Hoosiers for these jobs.”
Other key findings from the 2009 Indiana Manufacturing and Logistics Report Card:
· Indiana ranks first among states in per capita manufacturing employment and ninth in logistics employment per capita;
· The state ranks first in income derived from foreign-owned manufacturers and fifth in reach of foreign investment, reflecting strong success in attracting global manufacturing capital;
· While Indiana ranks second among states in workers compensation rates, the state places 28th and 33rd, respectively, in healthcare premiums and long-term healthcare costs, making healthcare an issue of concern going forward;
· With rankings of 29th in percentage of the workforce with a high school diploma and 42nd in college-educated workers, human capital remains Indiana’s biggest long-term hurdle to future manufacturing and logistics growth.
“The Report Card is a road map for organizations like Conexus as well as educators, policymakers and economic developers to follow,” Dwyer finished. “It’s what we do with these results in the years to come that will determine how serious we are about maintaining a vibrant manufacturing and logistics sector for future generations versus a service economy of lower wages and fewer opportunities.”
The full 2009 Manufacturing and Logistics Report Card can be accessed online at www.conexusindiana.com or www.bsu.edu/cber.
Launched by the Central Indiana Corporate Partnership, Conexus Indiana is the state’s advanced manufacturing and logistics initiative, dedicated to making Indiana a global leader in these high-growth, high-tech industries. Conexus is focused on strategic priorities like workforce development, creating new industry partnerships and marketing Indiana’s competitive advantages in manufacturing and logistics, which already make up more than a third of the state’s economy.