#556 – Indiana Leading Manufacturing Rebound

The strong dollar, slowing global economy, and an increasing regulatory burden have resulted in a recent slowdown in manufacturing activity.  However, there are pockets of increasing activity around the USA.  The State of Indiana is one of those places…

Indiana leading manufacturing rebound
Kris Turner, kris.turner@indystar.com, October 23, 2015

The manufacturing investments have rolled in to Indiana this year: $600 million at Rolls-Royce, $140 million at Subaru and $1.2 billion at General Motors, to name a few. Almost $2 billion has been invested to overhaul production facilities or expand corporate footprints — a trend that economic experts say puts Indiana at the forefront of states with manufacturing-heavy economies.

Indiana leads the nation in manufacturing employment — almost 17 percent of the state’s workforce is employed by manufacturers. More than 30 percent of the state’s gross product is manufacturing, again placing Indiana ahead of all other states. Indiana’s long tradition of manufacturing, as well as its business climate, makes it one of the most viable states for production, said Chad Moutray, chief economist at the National Association of Manufacturers. Indiana has thrived since the Great Recession, he added.

“Indiana is doing a lot of things right,” he said. “When you look at the overall business environment in Indiana, it’s pretty clear the policies are geared toward attracting business. When you set the right climate for business, you’re going to see economic development as a result.”

“When Rolls-Royce was considering where to invest for the future, we looked at two primary factors — the experience of our workforce coupled with their desire to put the customer first, and the support from our elected leaders, especially Governor Pence and Mayor Ballard,” Phil Burkholder, president of defense aerospace for Rolls-Royce North America, said. “As we marked a century of aerospace innovation in Indianapolis, it made business sense to reinvest and improve our local operations.”

Rolls-Royce employs 4,000 people in Indianapolis. About 1,050 of those people work in production, and 1,400 are engineers.

For Cummins Inc., a company that has been in Indiana for almost 100 years, staying in Indiana makes financial, as well as social, sense, spokesman Jon Mills said. The company has invested in the communities in which it does business, he added. Cummins employs about 9,000 people across the state. It opened the $70 million Seymour Technical Center in Seymour this month and is constructing a $30 million global distribution business headquarters in Downtown Indianapolis.

“If you look at where we’re located in the heart of the Midwest, it works well,” Mills said. “The transportation infrastructure is there. We’re home to 100-plus trucking companies. We have quick access, which is important to our supply chain.”

One reason companies are investing in their U.S. holdings is to boost their competitiveness around the globe, Moutray said. It’s easier to control quality at a U.S. facility than halfway around the world, he added.

Places such as Indiana also offer a skilled manufacturing workforce, Moutray said, adding that those workers are a boon for businesses.

Allison Transmission, whose history is tied to the founding of the Indianapolis Speedway Team Co. in 1915, said its longtime Indiana roots aren’t the only reason the company has stayed put. The workers in Indiana make all the difference, spokeswoman Melissa Sauer said.

“For some time now, high school and community college students across the state are learning the skill sets and obtaining the certifications that will qualify them for high-paying manufacturing jobs,” she said. “These are jobs that are available at Allison Transmission.”

Toyota, which pumped $100 million into its Southern Indiana assembly plant, just announced it is hiring 180 people by the end of the year. Kelly Dillon, general manager for external affairs for North America, said Toyota has spent $4.2 billion on its Indiana facility to date.

Indiana’s manufacturing jobs dipped to 425,200 in June 2008, but the sector has gained almost 100,000 jobs since then, coming in at 520,400 in September. Michael Hicks, an economic expert at Ball State University, said Indiana is one of the most robust manufacturing states in the country.

“The recession clobbered us, as it did everyone who was manufacturing intense, but we’re above trend now,” he said, adding that most manufacturing jobs have been added in the past four years.

Indiana is among the top tier of U.S. manufacturers, and it should be poised to do well in the coming years despite the fluctuations in global markets, Moutray said. Manufacturers have become leaner and more aggressive about competing around the world, he added.