Indiana Retains A-Level Performance in Advanced Manufacturing and Logistics – And Why That Matters

The 2015 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), places Indiana among the nation’s elite in four important categories: manufacturing health, logistics health, tax climate and global reach. A companion study, The Myth and the Reality of Manufacturing in America, explains why that bodes well for Hoosier workers and the Indiana economy.

“There are major misunderstandings among the public and the media about the manufacturing sector,” said Michael J. Hicks, PhD, director of CBER and an economics professor at Ball State. “The U.S. manufacturing base is not in decline, and we have recovered from the recession. Nor are jobs being outsourced because American manufacturing can’t compete internationally.  Moreover new jobs in manufacturing pay well above the average wage.”

Manufacturing, The Myth and the Reality explains, is a large, resilient and growing sector of the U.S. economy, and production remains robust. And, as the 2015 Manufacturing and Logistics Report Card makes clear, both industries continue to flourish in Indiana, leading the state’s growing economy in the post-Great Recession era.

The study clarifies that national manufacturing production in the U.S. has seen long-term growth since before the Great Depression.  And the Great Recession – painful as it was – had completely lost its stranglehold by 2014, when U.S. manufacturers attained record levels of production. The report also demonstrates that one of the most important changes in the past decade has been the impact of an 87% increase in employee productivity, which has resulted in enormous changes to today’s workforce – both in the employment levels and in the skills needed to succeed in a changing environment.

“Overall, only 13 percent of lost jobs over the past decade, which are less than 4 percent of all manufacturing jobs, can be linked to international trade,” Hicks said, “and most of trade-related job losses are in low productivity sectors.

“Changes in productivity, domestic demand and foreign trade all impact manufacturing employment in the U.S., and it’s important to clarify those impacts in order to understand what is happening in the manufacturing and logistics industries,” Hicks continued.

For the seventh consecutive year, Indiana’s manufacturing health has earned an ‘A’, and for five consecutive years, the state has rated an ‘A’ in logistics health. Both Indiana’s global reach and its tax climate maintained ‘A’ grades for the seventh consecutive year. All four categories are key components for businesses seeking to relocate or expand.

“Indiana benefits from business operations and employment in a diverse range of sectors, from biosciences to communications,” said Steven Dwyer, president and CEO of Conexus Indiana. “The data convincingly demonstrate our competitive edge, both in the Midwest and nationally.

“Conexus Indiana, Ivy Tech Community College, along with our industry and education partners recognize that the workforce component is an essential piece of Indiana’s continued success in advanced manufacturing and logistics,” he continued. “Our innovative programming at the high school and post-secondary levels are achieving positive results teaching the middle skills necessary to succeed in advanced manufacturing careers.”

Graduates are already emerging from these targeted programs armed with industry-recognized credentials that enable them to move directly into skilled positions with some of the state’s most sought-after employers in automotives, aerospace, biosciences, pharmaceuticals and other high-tech sectors.

That’s good news, since baby boom generation retirees are leaving behind good, well-paying jobs in those sectors, and younger workers are filling those jobs at an unprecedented rate. Recent new hire salaries averaged $20.06 per hour – almost $42,000 a year. As millennials move into the workforce, wage gaps between new and existing jobs are primarily age- and tenure-related.

“The Myth and the Reality points out that sustainable manufacturing employment growth requires high levels of human capital with the appropriate educational skills,” said Dwyer. “Our programs such as Hire Tech are preparing students by focusing on the STEM (science, technology, engineering and mathematics) skills that are needed in the advanced manufacturing environment. Indiana’s second year of improvement (‘C-‘ to ‘C’) in the Human Capital category indicates that those initiatives in workforce development are the right approach to growing a job-ready talent pool required by Indiana’s booming advanced manufacturing and logistics companies.”

The nine categories in the national report card are those considered most likely to be among the issues site selection experts for manufacturing and logistics firms scrutinize, and Indiana maintained or improved its scores in all but one. Worker benefit costs are slightly lower and remain higher than the national average. Both benefits and human capital categories are likely topics for debate and policy development in the next General Assembly.

Indiana’s scores in both Expected Fiscal Gap and Productivity & Innovation continued their three-year improvement, with slightly better than average ‘B-‘ grades in each. Still, the state outscored its Midwest neighbors Illinois, Kentucky, Michigan, Ohio and Wisconsin in the fiscal category, and only Michigan managed to reach the ‘A’ category in Productivity & Innovation.

“We are proud that Indiana continues to lead the Midwest and most of the nation in the 21st century manufacturing and logistics sectors,” Dwyer said. “Conexus Indiana’s vision of Indiana as the recognized global leader in advanced manufacturing and logistics grows closer each year, as we catalyze the efforts of industry partners and promote better understanding of these sectors to the state’s economic future.”

Full Reports:

The full Indiana report, national report, and the companion study, The Myth and the Reality of Manufacturing in America, are available at www.conexus.cberdata.org.

About Conexus Indiana

Conexus is the state’s advanced manufacturing and logistics initiative, dedicated to making Indiana a global leader. Conexus is focused on strategic priorities such as 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.