Known for its heavy industry, Northwest Indiana supplies the country with steel, soap, gas, mattresses, candy and countless other projects.
Home to half the nation's blast furnace capacity, the Calumet Region helped Indiana continue to lead the nation in steel production last year. The Hoosier State made 24.3 million tons of steel, continuing its 40-year run as the nation's leading steel-producing state while single-handedly producing more than a quarter of the nation's steel, according to the Washington D.C.-based American Iron and Steel Institute.
The BP Whiting Refinery, the largest inland refinery in the United States, supplies gas and petroleum products to seven states across the Midwest. Ford's Chicago Assembly Plant, supplied by companies like Lear's seat-making factory in Hammond, makes America's best-selling sport utility vehicle, the Explorer.
Hammond's Unilever makes Dove bar soap that's distributed around the country. Merrillville-based MonoSol makes the dissolvable film used in Tide Pods and other single-serving detergents at its factories in Portage, LaPorte and AmeriPlex at the Port. Sullivan-Palatek, Sullair and Vanair in Michigan City rank among the country's leading manufacturers of air compressors.
"Northwest Indiana’s industrial sector is critical to the state, Midwest and nation," Northwest Indiana Forum President and CEO Heather Ennis said. "Not only is more than 20% of the nation's steel being produced here but we have seen commitment for some of the largest solar installations in the country over the last year."
In 2020, Lake County had a gross domestic product of $21.8 billion, the second-largest economy in the Hoosier State, according to the U.S. Bureau of Economic Analysis. Porter County ranked ninth statewide with $6.9 billion in economic output and LaPorte County 17th with $3.8 billion.
Newton County generated another $346 million in gross domestic product while Jasper County produced $258 million in economic activity in 2020, the most recent year for which data was available at the county level.
Located on a Great Lake and several major rail lines, and next to the third-largest city in the country, Northwest Indiana enjoys logistical advantages, said Lori Tubbs, partner of McColly Bennett Commercial Advantage in Schererville.
"It's location, location, location," she said. "You can be anywhere in the United States — reaching most of the population in a day's drive. We are conveniently tucked in Indiana but next to Chicago."
Making progress
The Region's industrial base continues to grow. Amazon, for instance, recently opened two new warehouses in Northwest Indiana.
"Northwest Indiana’s available land, proximity to Chicago and other major metropolitan areas, access to fresh water and ever-improving fiber assets continue to attract investment to our region," Ennis said. "We will continue to build upon these assets with the READI dollars that will be spent over the next few years, using those dollars to improve infrastructure and prepare our region and its residents for a dynamic economy. We will also continue to promote the great opportunities that exist and are growing in Northwest Indiana to external companies, site selectors and brokers around the country and the world."
Northwest Indiana hasn't always been able to fully capitalize on its assets but has been making progress, Indiana University Northwest Assistant Professor of Economics Micah Pollak said.
"With its location and history, Northwest Indiana has many features and amenities that would be the envy of other urban areas looking to develop and grow. However, despite these advantages, the Region has struggled economically," he said. "In some ways, Northwest Indiana is like an eight-cylinder engine that can’t quite get the timing right to run smoothly. However, we are making progress. Efforts like the 'Ignite the Region' initiative have brought together those in the government, non-profits, private sector as well as citizens to address these economic challenges. The expansion of the South Shore Line, the many improvement projects by the Northwestern Indiana Regional Planning Commission and the designation of the Indiana Dunes as a national park have all helped improve the quality of place in Northwest Indiana."
The Region also benefits from a friendly business climate and low taxes, Tubbs said. That's led to an influx of businesses relocating from neighboring Illinois.
"First and foremost would largely be the real estate taxes making it much more affordable than our neighboring state," she said. "We have the benefit of all the class one railroads as well as short lines running through the Region. We also have a very robust port located on Lake Michigan."
Strong market
Northwest Indiana's industrial real estate market has experienced an upward trajectory for several years.
"There are many reasons for this rapid industrial market growth, but one that stands out is Indiana becoming a haven to Illinois and Michigan business owners," Crown Point-based Latitude Commercial said in its annual report. "Due to Indiana’s low tax rates and cost of doing business, we’ve seen tremendous growth throughout Northwest Indiana."
The industrial vacancy rate in Northwest Indiana ended 2021 at a five-year low of 5.25%, according to Latitude Commercial's annual report. The market sales price per square foot reached a five-year high of $53 per square foot in 2021.
The Calumet Region's industrial real estate market has been seeing breakneck growth.
"Since 2017, we’ve seen over a 40% increase in market sale price per square foot," according to Latitude Commercial's report. "Sales volume was down compared with prior years in Northwest Indiana, with the highest levels seen in 2019 of around $180 million. The fourth quarter of 2021 finished just shy of $10 million in sales volume. Similar to other sectors, we feel this was due to a lack of supply on the market."
While industrial real estate sales slowed in Northwest Indiana during the coronavirus pandemic, the underlying fundamentals remain strong, Latitude Commerical President Aaron McDermott said in the firm's report.
"The industrial market has been on a steep vertical climb in terms of the market sales price per square foot and in terms of the market rent per square foot," he wrote. "Both numbers saw dramatic increases during 2021, growing by more than 10% for both sales and rental rates. While the vacancy rates have gone to all-time lows, the sale volume for industrial was at its lowest levels in five years. Again you can view this as a lack of inventory in the market. In 2021, we saw some significant spec buildings finished and filled within a very short timeline. We also saw two new Amazon Distribution Centers open up to accomplish the quality of their last-mile delivery goals."
Workforce challenges
Northwest Indiana's heavy industry has suffered some setbacks. Cleveland-Cliffs announced it would indefinitely idle Blast Furnace No. 4 at the old LTV mill on the west side of Indiana Harbor Works in East Chicago. BP shrunk its workforce worldwide, including at the BP Whiting Refinery, as it works to transition to a lower-carbon future with a more diversified energy generation mix. Ford repeatedly idled its plants last year as it grappled with a global semiconductor shortage that left many dealership lots half-empty across Northwest Indiana.
"One of the greatest advantages Northwest Indiana has when it comes to heavy industry is its location and extensive access to air, ground and sea transportation, which makes it a key hub into and out of the greater Midwest region. The Region was once the manufacturing powerhouse of the state, however, heavy industry in Northwest Indiana has consistently declined in the last few decades," Pollak said. "While the state of Indiana has added more than 77,000 jobs in manufacturing since 2011, over the same period Northwest Indiana lost 1,300 manufacturing jobs."
Automation, outsourcing, steel dumping and other factors have cost Northwest Indiana factory jobs over the years. Leaders, however, could take steps to shore up the Region's manufacturing sector by adopting more labor-friendly policies and ensuring Northwest Indiana is a desirable place to live and work, Pollak said.
Employers often seek out access to a highly skilled, qualified workforce, he said.
"Much of the heavy industry that was born in Northwest Indiana chose this region due to a combination of location and availability of skilled and educated workers. While the Region still maintains a skilled and educated workforce, it is a workforce that has been eroding. For the last few decades, the state and Northwest Indiana has focused on attracting industry primarily through business-friendly approaches such as lower tax rates and weaker labor laws," he said. "Unfortunately, this has come at the cost of making the state less labor-friendly and many of our best workers move away. Without a workforce that is skilled, educated and ultimately happy where they live, the types of industry that are attracted through lower taxes and weaker labor laws alone are those that are lower-skill, pay poorly and do not tend to last. While Northwest Indiana is an excellent location to attract the next generation of industrial and manufacturing firms, this will not happen unless we take steps to make the Region more labor-friendly, with better education and treatment of our workers and improved quality of place to discourage our workers from leaving."
Even with employment declines, heavy industry remains a major economic engine in the Region, providing contractors with countless jobs along the lakeshore. Cleveland-Cliffs, for instance, recently invested $100 million in upgrades to Blast Furnace No. 7 at Indiana Harbor Works in East Chicago.
"Our heavy industrial sector is still a huge economic engine for the Region," McDermott said. "Not only in terms of the direct high-paying jobs but also the impact it has on other sectors of commercial real estate. A good example to think about was when BP had the major expansion around 2007-2008. While the entire country saw significant foreclosures, layoffs and unemployment, our area was still impacted but not nearly as significantly in a lot of areas around the country."
Northwest Indiana's heavy industry has an economic ripple effect that impacts other sectors, as many manufacturing jobs tend to be better-paying.
"We were seeing industrial occupancy remain flat or increasing because of the massive influx of out-of-state contractors coming into the area. If you looked into hotel occupancy rates as well as restaurant sales nearby I would bet they would have been increasing," McDermott said. "Because of our proximity in the country to all the major coasts and a lot of the middle markets we have the ability to get products to those said markets much quicker."
The days of steel mills employing 30,000 workers are gone and unlikely to ever return.
"While some of the downsizing of the workforce has to do with outsourcing or losing out to countries like China a lot of the downsizing has to do with innovation in the industry," he said. "The employment numbers in the heavy industrial sector have been going down worldwide for years because of innovation and with the companies investing heavily into robotics those numbers could surge in the next 10 years more than ever before."
New opportunities
But companies continue to invest in new operations, just at a smaller scale than the hulking mills and refineries that line the lakefront. Companies like Corsicana Mattress, Domino's and Quality Pasta Co. have been investing in new operations in Northwest Indiana. Domino's for instance broke ground in September on a $50.3 million, 111,734-square-foot processing facility in the AmeriPlex Crossroads business park.
The LaPorte County Office of Community & Economic Development reported in its annual report it fielded more than 40 requests for information from companies collectively looking to invest more than $25.5 billion and bring more than 41,600 jobs.
The Portage-based NWI Forum has been working to bring more investment to the Region, such as with its "Ignite the Region" strategy.
"The most exciting things happening in our region is the connectivity of our market. From the expanding commuter rail system to the opportunity for quantum computing research and development, our assets are attracting people and ideas to Northwest Indiana," Ennis said. "Regional organizations are working together more today than ever in our history. The investment of the federal, state and local governments in the commuter rail infrastructure, 'Ignite the Region' and the READI dollars have given us a platform to continue to grow our economy by attracting a skilled workforce and improving quality of place in our region."
Investments in infrastructure should help lure more industry, as well as the necessary workforce, to Northwest Indiana, Tubbs said.
"The READI grant will provide much-needed funding for a number of infrastructure projects that will only enhance some of our available industrial sites," she said. "And the start of the double-track rail system, adding the additional rail line will expedite any travel to and from the city allowing for employees to move back and forth much more readily."
Northwest Indiana's industrial sector has a bright future, Tubbs said.
"The ongoing collaboration between various public and private sectors continues to help garner attraction and excitement. It’s that momentum outside companies come to the area and see and want to be a part of," she said.
In 2020, Lake County had a gross domestic product of $21.8 billion, the second-largest economy in the Hoosier State. Porter County ranked ninth statewide with $6.9 billion in economic output and LaPorte County 17th with $3.8 billion.
"Northwest Indiana’s available land, proximity to Chicago and other major metropolitan areas, access to fresh water and ever-improving fiber assets continue to attract investment to our region. We will continue to build upon these assets with the READI dollars that will be spent over the next few years, using those dollars to improve infrastructure and prepare our region and its residents for a dynamic economy."
Companies like Corsicana Mattress, Domino's and Quality Pasta Co. have been investing in new operations in Northwest Indiana. Domino's broke ground in September on a $50.3 million, 111,734-square-foot processing facility.