Manufacturing solid in Indiana, Ball State study shows

Peter Schnitzler, The IBJ

pschnitzler@ibj.com

Thanks to its improved efficiency, manufacturing is in much better shape in Indiana than conventional wisdom suggests, a new study says.

The state is holding its own in workers employed in the sector, said the study, sponsored by Conexus Indiana, an Indianapolis-based not-for-profit that promotes manufacturing and logistics.

Moreover, Indiana manufacturing workers are among the most productive in the Midwest. And foreign investment is pouring into the state.

"We can't allow public misconceptions and random headlines to drive our approach to these critical sectors, so we decided to create an annual report card that could provide Indiana citizens with the big picture by measuring our progress," said Conexus Chairman Joe Loughrey, president of Columbus-based diesel engine maker Cummins Inc.

The Indiana Manufacturing & Logistics Report Card was unveiled this morning as part of Conexus' Manufacturing at the Crossroads breakfast downtown. The event was co-sponsored by Indianapolis Business Journal.

Managed by the Central Indiana Corporate Partnership along with sister initiatives BioCrossroads and Techpoint, Conexus is trying to increase enrollments in manufacturing training programs by 55 percent over the next five years.

Ball State University conducted the research.

The report contrasts with news headlines that regularly tell stories about mass layoffs from aging industrial plants. Many people blame manufacturing job losses on overseas outsourcing, since labor is cheaper in emerging nations like China and India.

But the Conexus report argues that vast U.S. productivity gains and innovation improvements are at the heart of the manufacturing industry's continued evolution.

Also, some internal positions once considered part of the manufacturing sector, such as marketing, finance and customer relations, have been shifted to other parts of the U.S. services economy, the report says. Thus they're no longer counted in the manufacturing tally.

Rather than bemoaning losses of direct manufacturing jobs, the report emphasizes a series of other manufacturing measures that underscore U.S. efficiency improvements.

For example, 2007 was a record year for U.S. industrial output. Indiana alone produced $249 billion worth of manufactured goods, and its 25 top manufacturing companies outperformed the Dow Jones Industrial Average for the second year in a row.

Indiana also ranks first among its neighbors for value added per manufacturing worker. Meanwhile, foreign companies are investing heavily in the state, and Indiana employment losses have leveled off.

"Our findings show a manufacturing sector that has evolved, becoming more high-tech, more productive," said Michael Hicks, who directs Ball State's Bureau of Business Research and led research on the report card. "This has caused some job displacement, but also higher pay. Manufacturing and logistics continue to provide a stable foundation for the state's economy, and we see new jobs and continued growth ahead."

Since today's - and, increasingly, tomorrow's - manufacturing jobs require far greater skills and training than yesterday's, Conexus called for increased workforce education.

"The findings of the report card reflect our own conversations with employers," said Conexus CEO Carol D'Amico. "We need to get more qualified workers in the pipeline for these companies and make sure the right education and training programs are available for them."