MUNCIE — For the 10th year in a row, Indiana received an “A” grade for the health of its manufacturing industry, one of only five states in the U.S. to make the grade this year.
According to the 2019 Manufacturing Scorecard from Ball State’s Center for Business and Economic Research, Indiana received the high mark overall, although ranks for individual categories such as diversification, human capital and productivity and innovation were more middling.
Each year, Ball State analyzes how each state ranks among its peers in several areas of the economy that underlie the success of manufacturing and logistics. Specific metrics include manufacturing and logistics industry health, human capital, cost of worker benefits, diversification of the industries, state-level productivity and innovation, expected fiscal liability, tax climate and global reach.
Indiana was joined by other Midwest states Michigan, Kentucky and Iowa, as well as South Carolina as the only five to receive an A. Ohio and Wisconsin scored a “B,” while Illinois received a “C” grade.
Only three states — Nevada, New Mexico and Alaska — were ranked an “F.”
“The strong relative performance of Indiana’s manufacturing sector is good news as the national manufacturing picture in 2019 has turned negative with the sector experiencing two quarters of decline,” said CBER director Michael Hicks. “The Midwest is manufacturing and logistics dependent, and continues to lead in productivity and innovation. However, as the world’s manufacturing outlook cools, there is growing risk to our region.”
Among the individual categories, Indiana scored an A for logistics — a grade the Crossroads of America has held since 2011 — as well as A’s for global reach and tax climate, both of which have been top-rated for 10 years. Indiana also received a B for worker cost benefits, a sharp improvement from a D+ score as recently as 2015.
Indiana maintains an A grade in its global reach, exporting a full 10.5 percent of its GDP to global trading partners in the Americas, Europe, Asia, and Australia.
The areas where the state is showing less adequacy is in the expected fiscal liability gap (C+), human capital (C), sector diversification (C) and productivity and innovation (C).
The state was dinged in the fiscal liability because it, like 35 other states, has unfunded pension liabilities, although not at a level that is concerning to the state’s fiscal health. Neighboring states Illinois and Kentucky both received F’s in that metric.
“Though Indiana has more than half its durable goods sector in advanced manufacturing, the state is only about average in that diversification,” the 2019 scorecard said. “Indiana has slipped in innovation and productivity from a B+ in 2016 to a C in 2019. This is connected to the human capital ranking of C, which remains the state’s most worrisome metric.”
About 543,000 Hoosiers are employed in manufacturing, according to the Indiana Department of Workforce Development. Manufacturing employment has been increasing since a significant crash during The Great Recession, when employment began sliding in mid 2016 from 570,000 workers to as low as 424,500 by May 2009.
Northeast Indiana counties had among some of the state’s highest unemployment during that time as manufacturers sharply cut back labor in the weak economy.
As of Aug. 1, 15% of Allen County’s jobs and 41.7% of Whitley County’s are in the manufacturing sector, according to StatsAmerica, a service of the Indiana Business Research Center at Indiana University’s Kelley School of Business.
Farther north, about 45% of jobs in Noble, DeKalb, LaGrange and Steuben counties are in the manufacturing sector. Those individual rates range from 51.4% in LaGrange County, 49.3% in Noble County, 44.6% in DeKalb County and 35.2% in Steuben County.