Editor's note
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Manufacturing is not disappearing in the United States nor in Indiana. It continues to grow, but more slowly than other sectors of the economy.

Manufacturing went from 15.8% of the nation’s GDP in 1998 to 10.2% by 2023. This relative decline in Indiana was from 30.8% to 25.9%. We did out-perform the nation in our rate of growth for manufacturing (3.3% vs 2.8%).

In 2023, the biggest manufacturing sector in Indiana was Chemicals (which includes Pharmaceuticals) with 6.9% of the state’s GDP, followed by motor vehicles, bodies, trailers and parts at 4.5% of GDP, and then primary metals (steel and aluminum) at 2.5%.

Together these three industries (the Big 3), accounted for 49.6% of Indiana’s manufacturing GDP in 1998 and 54.1% in 2023. While the Big 3 nationally accounted for 31% of manufacturing growth in that quarter century, they were 58% of the advances for Indiana’s manufacturing.

Many Hoosiers know something of another industry that once defined their town and our state, Electronics. They know about RCA, Franklin Electric, Western Electric, Delco and Magnavox, plus dozens of others that made computers and electronic products as well as electrical equipment, appliances and components.

With such names, Hoosiers thought we were big time in the Electronics industry. Despite industry closing and movements to other nations, in 1998, Electronics in the United States accounted for 16.2% of manufacturing’s GDP, larger than any one of the Big 3. By 2023, however, Chemicals surpassed Electronics nationally and Electronics was down to 13.5% of the U.S. GDP. Similarly, in Indiana, Electronics fell from 5.1% of manufacturing output in 1998 to 2.6% in 2023.

Electronics across the nation was expanding by 4.5% annually, close to the 4.7% average expansion of GDP itself. But Indiana saw only a 1.1% average annual growth rate for Electronics where total GDP grew by 4.0%.

Electronics lagged the nation’s growth by just 0.2%, but fell behind Indiana’s GDP growth by 2.9%. What explains the difference? Were Hoosier electronics firms bought out by firms from outside our borders? Were our establishments mainly branch production facilities without the home office loyalties so important in corporate life?

Those would be internal factors, not subject to state policies. Or were state tax and regulatory policies of consequence? Did we retard automation by failing to give tax credits for capital investments? Were we too much the purists in our environmental considerations?

Or were other factors at play? Did Big Labor put down the hammer on Electronics firms with excessive wage and working condition demands? Were the owners of our companies too slow to recognize the shifts in product demand, not keeping pace with their competitors’ designs and pricing?

But whatever the reasons, Indiana is now trying to catch up with data centers and chip makers. Communities are asking, “Is this the right place for such investments?”
Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers, and his views can be followed his podcast.

© 2025 Morton J. Marcus

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