State tops in advanced manufacturing

June 6th, 2016

News Coverage:

June 4, 2016

State tops in advanced manufacturing

Half of jobs in field qualify, Ball State survey calculates

Sherry Slater | The Journal Gazette

Indiana, the state with the largest manufacturing sector, also leads the nation in advanced manufacturing, according to a new Ball State study.

More than half of Indiana’s manufacturing jobs fall within the 35 industries that The Brookings Institution has classified as advanced, including drug, steel, vehicle and medical device manufacturing. Only six other states crossed the 50 percent threshold.

In 2013, that translated to 243,597 advanced manufacturing jobs in 2,548 Indiana workplaces. Statewide, 8.4 percent of the workforce was employed in advanced manufacturing.

The state also ranked in the Top 10 for establishment diversification, which is important. By employing people in various sectors, Indiana’s economy is less vulnerable when any one of those sectors suffers a cyclical downturn. 

Ball State University’s Center for Business and Economic Research conducted the study for Conexus Indiana, which supports and advances the state’s advanced manufacturing and logistics sectors. Advanced manufacturing jobs are often considered safer than low skill, assembly line jobs that can easily be shipped overseas. Advanced manufacturing jobs include engineering, welding and mechanical design.

Indiana’s relative strength in advanced manufacturing shouldn’t lead state officials to become complacent, however, a local labor educator said.

Jerry Paar, a contractor who works for various unions, said that production doesn’t necessarily equal prosperity for workers or profitability for employers. 

From 1973 to 2013, production workers’ average hourly pay rose only 9 percent while factory productivity increased 74 percent, according to the Economic Policy Institute. The nonprofit, nonpartisan think tank was created to include the needs of low- and middle-income workers in economic policy discussions.

Paar doesn’t think all employers are getting rich either. Companies need to reinvest in the business to remain competitive, he said.

The study, conducted by Srikant Devaraj and Michael Hicks, also found a national correlation between advanced manufacturing growth and an increase in higher education.

“This is yet another clear piece of evidence pointing to the important role that an educated workforce plays in long-term prospects for advanced manufacturing,” the authors wrote. 

“While other factors such as tax and regulatory climate, availability of research universities surely matter; over the long run, a well-educated and ready workforce matters more than any other single factor in the health of advanced manufacturing firm,” they said.

The findings seem to validate work being done by the Northeast Indiana Regional Partnership, which has been working to increase the percentage of the region’s residents with high-quality degrees or credentials from 35 percent to 60 percent by 2025.

The authors noted that Indiana’s ranking in educational attainment is average. Continued growth in advanced manufacturing employment, they said, will depend on strong schools that can prepare students to be effective employees.

Despite the report’s overall optimistic tone, Paar doesn’t discount the possibility that some of Indiana’s advanced manufacturing jobs could be outsourced to lower-cost countries in the future.

“One can’t feel entirely comfortable because you have to look at the products and take it on a case-by-case basis,” he said. “Some advanced manufacturing can quickly be shifted with the (key) stroke of a computer.”