State Receives Top Grades in Manufacturing, Logistics, Tax Climate and Global Reach
(INDIANAPOLIS, Ind., June 14, 2013) ─ The 2013 Manufacturing and Logistics Report Card issued by Conexus Indiana, the state’s advanced manufacturing and logistics initiative, and Ball State University’s Center for Business and Economic Research (CBER) shows Indiana’s continued strength in manufacturing and logistics.
For five consecutive years, the health of Indiana’s manufacturing industry has received an “A” grade, while the logistics industry has received the same grade for three consecutive years. Indiana leads the nation with the highest share of manufacturing employment per capita and has the highest manufacturing sector income share of total income, according to the report. Since the end of the Great Recession, Indiana’s manufacturing sector has recovered faster than the national average.
“Overall, Indiana continues to do well. We are competitive in the size of our manufacturing sector and the wages we pay, as well as the growing size of the logistics sector,” said Michael Hicks, CBER director and economics professor. “Indiana continues to see the most dramatic recovery in the post-recession. We are third overall in terms of manufacturing recovery – trailing only Alaska and North Dakota, which lead the nation as a result of the growing energy industries in those states.”
Other areas in Indiana that continue to be strong are tax climate and global reach. Once again, each of these areas received an “A” grade. A top grade in tax climate is an important distinction for companies which are looking to expand or others looking to move to the Hoosier state. In global reach, Indiana is one of the leading states in the nation in foreign investment in this sector, while continuing to excel in exports, the report said.
Human capital declined for the second straight year from a “C-“ to a “D”, according to the report. There are two reasons for Indiana’s decline in this category: Indiana remains among the bottom 10 states in terms of percentage of the population with a bachelor’s degree, coupled with a decline in three-year graduation rates in associate degree programs, which fell from 24.9 percent to 21.1 percent in this year’s analysis.
“While there is a decline in the human capital grade, there is a bit of an anomaly as the decline of associate degrees is tied to the fact that there is huge growth in enrollments,” Hicks said. “It is not surprising that there would be a decline in graduation rates as the recession improved. This may be a positive in the future as Indiana leads the nation in enrollment in these important programs.”
Conexus Indiana President and CEO Steve Dwyer added, “One of the first categories I look at each year is human capital and while I am pleased to see a huge influx of students into associate degree programs, we have to make sure that students graduate,” he said. “I believe that middle skill programs will dictate the long-term health of manufacturing.” Ivy Tech Community College is the nation’s largest statewide community college with single accreditation. Ivy Tech President Thomas J. Snyder believes more can be done. “Indiana has been short changing career and vocational education for some time. The Governor has a platform to rethink this direction. We think we can help.”
In the category of productivity and innovation, Indiana saw a drop from a “B+” to a “C+” due in part to a decline in the automotive industry and other high value products during the recession. Preliminary results, however, show that Indiana is experiencing a sharp increase in total factor productivity (TFP). This bodes well for future results in this category as Indiana leads the Midwest in TFP growth.
In other categories, Indiana improved its worker benefit ranking from a “D+” to a “C-“ as health care premiums declined modestly. Expected fiscal liability gap dropped from a “B” to a “C+” and sector diversification had a slight decline from a “C+” to a “C”.
“The Indiana report card shows that our manufacturing sector has many bright spots and a few areas that need more focus. It also shows that the Great Recession has masked the transition manufacturing and logistics are going through in our state,” said Dwyer. “Commodity products (low-tech) will continue to languish as they are purely driven by cost. However, proprietary and precision goods will have a higher than ever demand and that is where we will see the return of revenue and an increase in highly skilled jobs,” added Dwyer. “But without special attention paid to human capital and making sure that we have a pipeline of trained workers, the changes may come too fast for some areas of the sector to keep up.”
He points out that the transition will require collaborative efforts between industry, education and government. As the state’s manufacturing and logistics initiative, Conexus Indiana is making strides in this area. In 2012, Conexus launched a new manufacturing and logistics high school curriculum. In less than a year, the program will be featured in 39 locations serving 85 schools statewide in the 2013-2014 school year. The program also includes 98 industry partners consisting of 80 manufacturing companies and 18 logistics companies.
“I believe the true legacy of Conexus Indiana will be the re-engagement of industry with education for workforce development within its own clusters and the strategic opportunities that can be created,” Dwyer said.
The full Indiana Report, National Report and the companion report, Manufacturing Productivity Through the Great Recession: What Does it Mean for the Future? by Michael J. Hicks can be found on www.conexus.cberdata.org.
About Conexus Indiana:
Conexus Indiana is the state’s advanced manufacturing and logistics initiative, dedicated to making Indiana a global leader. Conexus is focused on strategic priorities like workforce development, creating new industry partnerships and promoting Indiana’s advantages in manufacturing and logistics. Learn more at www.ConexusIndiana.com.
About Ball State Center for Business and Economic Research:
The Center for Business and Economic Research (CBER) is an economic policy and forecasting research center at Ball State University. CBER research includes public finance, regional economics, manufacturing, transportation, and energy sector studies. The Center produces the CBER Data Center—a suite of web-based data tools—and the Indiana Business Bulletin—a weekly newsletter with commentary on current issues and regularly updated data on dozens of economic indicators. In addition to research and data delivery, CBER serves as a business forecasting authority in Indiana’s east-central region—holding the annual Indiana Economic Outlook luncheon and quarterly meetings of the Ball State University Business Roundtable.