Report: Indiana Continues A-Level Performance in Manufacturing, Logistics

INDIANAPOLIS, June 11, 2014 /PRNewswire/ -- Six years after the official end of the Great Recession Indiana's economy continues to grow, thanks in large part to robust expansion in the manufacturing sector. The 2014 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.

For six consecutive years, Indiana has boasted A-level performance in manufacturing health and four consecutive years of earned 'A's in logistics industry health. Indiana continues to lead the nation with the highest share of manufacturing employment per capita and highest manufacturing sector income share of total income.

"Indiana's growth in economic activity continues to be relatively robust," said Michael J. Hicks, CBER director and Ball State economics professor. "The data are conclusive evidence of Indiana's competitive edge in the post-recession economy, both in comparison with surrounding states and on the national stage."

Indiana also maintained an 'A' grade for tax climate and is among the top 20 percent relative to other states for income tax, sales tax, unemployment insurance and property tax for fiscal year 2014. Global reach also earned an 'A' grade for the sixth consecutive year, although Indiana saw a slight decrease in export growth compared to 2013.

Indiana improved grades in human capital ('D' to 'C-') and worker benefits costs ('C-' to 'C'). Indiana improved its first-year retention rate for first-time degree/certificate-seeking students, but is still among the bottom 10 percent of states in terms of percentage population with a bachelor's degree.

"While our human capital grade showed some improvement this year, Conexus Indiana and our industry and education partners continue to concentrate considerable effort in shifting our statewide focus to developing a workforce equipped with the middle-skills necessary to succeed in today's advanced manufacturing and logistics industries," said Steven Dwyer, president and CEO of Conexus Indiana. "The workforce component is essential not only to our continued success in these sectors, but to an even stronger and more stable statewide economy."

This year's annual report came with a companion policy brief addressing some of the most pressing workforce issues facing Indiana manufacturing businesses. Manufacturing and Labor Market Frictions examined the effects on Indiana's labor market of the long-anticipated "baby boom" generation retirement.

"The most significant factor facing Indiana's manufacturing employers is the aging of the workforce," Hicks said. "The share of the workforce aged 55 to 64 has increased 71 percent since 1998 – from 9.8 percent to 16.8 percent. The entire economy is experiencing that transition, but it is much larger and more rapid in manufacturing."

The report points out that a one percent increase in older workers in Indiana translates to a more than four percent increase in job turnover in less than three years. And, more than one in six Indiana workers will near or reach retirement age in the next decade, raising the specter of job turnover rates in manufacturing exceeding 30 percent by 2020.

"We recognize, too, that tomorrow's manufacturing jobs will be far different from the jobs in which these retiring workers began their careers," said Dwyer. "We must redouble our efforts in preparing students for careers in manufacturing. While we're moving in the right direction, there's no doubt we must continue building the educational resources to create a pipeline of trained workers ready to step into not only newly-created middle-skill jobs, but those that will soon be vacated by the retiring 'baby boom' generation.

"Indiana is leading the Midwest and most of the nation in the 21^st century manufacturing and logistics sectors. We don't want to rest on our past achievements," he added.

Scores remained respectably stable in two additional categories:  sector diversification ('C'), and productivity and innovations ('C+'). Only in one area did the state show a slight decline, from 'C+' to 'C' in expected fiscal liability gap, but even there Indiana scored significantly higher than surrounding states Illinois ('F'), Kentucky ('F'), and Michigan ('D+'), and was on a par with Ohio and Iowa.

"There are bright spots even in the fiscal liability gap," said Hicks. "The state maintains its first place in bond ratings, and the numbers do not include 2013 payments to the state's pension funds."

The nine categories measured for the annual report are those most likely to be considered by companies considering expanding or relocating operations. "Global reach becomes increasingly important in these decisions," Hicks said. "International investment and trade – specifically the production, movement, and distribution of consumer goods – are keen predictors of the future health of the state's manufacturing and logistics sectors. And, of course, the local and state tax climate is a compelling factor. Companies look not just at business taxes, but individual income taxes, and sales, unemployment, insurance and property taxes when assessing regions as potential expansion sites."

Full Reports:

The full Indiana report, national report, and the companion policy brief, Manufacturing and Labor Market Frictions," 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 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.

SOURCE Conexus Indiana