CICP

Many corporate and community leaders have noticed a disturbing tendency lately from Indiana’s education establishment – an inclination to make excuses rather than aim higher when it comes to student achievement.

Earlier this year, a simple but compelling reform was proposed in the Indiana General Assembly – Hoosier schools should focus more resources and attention on early reading education, and be required to teach every student to read by the end of third grade. 

Volumes of academic research showed that if students aren’t reading proficiently by the end of third grade, their chances of ever catching up to their peers plummet.  The odds of graduating high school, much less going on to college, drop dramatically as well – their futures are put in jeopardy.

The premise of reform was simple: Make reading education the top priority of the early grades, and if students aren’t reading at grade level at the end of third grade, get them special help and make sure they can read before promoting them to the fourth. 

We were dismayed by the reaction from the teachers unions and many administrators.  Some protested, incredibly, that holding students back hurt them more than being illiterate.  They demanded more funding, arguing that it was unfair to expect schools to teach kids to read within their existing budgets (more than $10,000 per pupil on average, statewide).

Eventually, the Indiana Department of Education was authorized to study the need for reading reform, and is crafting a plan to end social promotion without reading proficiency.  But the reflexive opposition against such a common-sense approach to improving accountability and learning was disturbing.

We had a similar feeling reading the reactions to the Indiana Department of Education’s recently-expressed goal that at least 25% of Hoosier high schoolers should pass at least one Advanced Placement exam, better preparing them for college studies.  The DOE asserts that the 25% goal, while ambitious, is based on PSAT tests that show at least a third of students have the ability to excel in AP coursework if they apply themselves. 

Instead of embracing the goal, some educators again turned to excuses.  Editorials arguing that AP curricula would have to be watered down in order to allow one of every four students to pass were published by the Indianapolis Star.  Others said that only higher-income students in suburban schools could hope to pass AP exams in such numbers – an especially unconscionable message, since education is the surest route out of poverty for underprivileged students.  (CICP Board member Steve Burns responded to these arguments with his own editorial.)

Taking in these arguments while recalling the third grade reading debate could evoke only one response – “Here we go again.”

In business, you motivate employees by setting high standards and challenging them to succeed.  You don’t embrace a philosophy of pessimism by setting the bar continually lower.  Schools aren’t businesses, but the same principle applies:  Students will live up to – or down to – the expectations we set for them.

Indiana ranks among the least-educated states in the nation, with fewer college graduates per capita than most states and a high school graduate rate mired in the middle of the pack.  In today’s knowledge-based economy, this is the most daunting challenge faced by Hoosiers.

To confront it, we first need a common understanding between educators, policymakers, families, civic and corporate leaders alike – we have to set our sights higher if we want to inspire real progress.  On issues like reading and Advanced Placement exams, we have a choice between making excuses and demanding excellence .  We must speak with one voice for the latter.

There is the occasional sign of progress.  The Indiana State Teachers Association recently embraced performance-based teacher compensation as part of the Department of Education’s application for a federal Teacher Incentive Fund grant.

But it still seems as if we have a long way to go towards making Indiana’s educational culture one that embraces accountability, higher standards and student learning above all.  Good teachers embrace this approach – we need more of them speaking out, and policies that empower them.

I hope you’ll take a moment to visit and subscribe to the recently-launched blog from our Conexus Indiana manufacturing and logistics initiative – it’s a thoughtful source of news and commentary on two of the state’s largest industries and the challenges they face.

The latest post shares a feature from the New York Times last week on the national shortage of skilled workers for high-tech positions in today’s factories.  In manufacturing, jobs are being created, and Americans are looking for work – but the connection isn’t that simple.  Our workforce hasn’t evolved to keep pace with the advanced technical skills demanded in today’s manufacturing careers. 

It’s a challenge that similarly confronts us here in Indiana, the most manufacturing-intensive state in the union; Conexus has seized this issue as its primary strategic priority.

The jobs keep coming, but we need qualified workers

Steve Dwyer, Conexus Indiana

Indiana’s manufacturing sector has gotten better at churning out an important product recently – new jobs for Hoosiers.

Last week, the Wall Street Journal reported that Indiana leads the nation in job creation this year, buoyed by  industrial growth.  A closer look at data provided by the state’s Department of Workforce Development shows that we’ve added nearly 12,000 new manufacturing jobs in 2010 (only the broad ‘professional business services’ category has added more positions).

This trend is consistent with the economic forecast released by Conexus Indiana as part of our annual Manufacturing and Logistics Report Card – economists from the Ball State Bureau of Business and Economic Research predicted a sharp manufacturing recovery during the second half of 2010 and 2011.  The state’s total manufacturing compensation is projected to grow by nearly $2.5 billion during this period, after falling or staying flat since mid-2007.

Once again, reports of manufacturing’s demise were greatly exaggerated:  The recession took its toll, but every downturn brings a recovery.  The domestic auto industry suffered plummeting sales, bankruptcies and bailouts – but Indiana has attracted international auto plants and seized high-tech opportunities in electric vehicles.  Global competition has challenged U.S. manufacturers – but Indiana has led the nation in attracting foreign manufacturing jobs.  Traditional jobs have disappeared – but high-skill manufacturing careers have emerged.

In short, every challenge is also an opportunity, and Indiana’s heritage of manufacturing strength and innovation prepared us to take advantage.

Recent positive stories like Chrysler’s $300 million investment in its Kokomo plants, EnerDel’s plans to double job creation in Central Indiana, and the recent acquisition of the vacant Delco Remy factory in Anderson by S&S Steel aren’t just isolated announcements, but part of a broader growth trend.  And it’s even more remarkable because we’re starting from a higher plateau – Indiana already has the most manufacturing jobs per capita of any state in the union.

But we can’t afford to be lulled into complacency by good news.  Long-term prosperity is achievable only if we’re willing to outwork and outthink the global competitors eager to challenge our success.

This means making the most of this recovery, maintaining a competitive tax climate and continuing an aggressive economic development effort to make Indiana an attractive destination for manufacturing investment.  We also have to look beyond the next business cycle and concentrate on the strategic issues that will determine our competitiveness for the long-term.

Human capital is clearly one of these issues.  Indiana’s high school graduation rate ranks in the middle of the pack, and we’re among the least-educated states in terms of college graduates in our workforce.  In all, just a third of Hoosier adults hold at least a two-year degree.   At a time when new manufacturing jobs demand high-tech skills and problem-solving capabilities, workers with a high school diploma (or less) just can’t make the grade.  And with Baby Boomer workers retiring in greater numbers (and the average age of the Indiana manufacturing worker hovering around 50), the state faces a looming shortage of qualified employees.

We can’t have sustainable job growth without a parallel focus on education.  Ultimately, trying to grow our economy without training our workforce only frustrates the ambitions of both the companies that can’t find skilled workers and the Hoosiers who continue to find themselves unqualified for better jobs.

Conexus Indiana is working with our industry and educational partners to create new training programs appropriate to emerging careers in manufacturing and logistics, while encouraging young Hoosiers to enroll in these programs through the ‘Dream It. Do It.’ marketing outreach campaign – learn more at dreamitdoitindiana.com. 

In any business you’re always either gaining or losing momentum – for the moment, Indiana is moving forward.  But to keep it up, we still need to make the education connection:  Filling manufacturing jobs doesn’t mean just matching workers with empty spots on an assembly line.  It means sending our workforce back to school – that’s how Indiana will keep our manufacturing edge. 

Steve Dwyer is President & CEO of the Conexus Indiana advanced manufacturing and logistics initiative.

Check out this thoughtful editorial (appearing in today’s Indianapolis Star) by Chairman of Wheaton Worldwide Moving and CICP Board member Steve Burns – Steve addresses criticisms of the Indiana Department of Education’s goal of having 25% of Hoosier students pass at least one Advanced Placement exam during their high school careers.

When education is inextricably linked with higher incomes and career opportunities and Indiana is struggling to improve the number of our high school grads who pursue and complete higher education, the AP focus is clearly on target – and we need to aim higher, not make excuses. 

TO THE EDITOR:

A recent letter to the editor from Lynette Enz Liberge about high school Advanced Placement exams (‘AP classes don’t always equal upward mobility,’ June 13) has a strange and disturbing message for Hoosier students, educators and policymakers: “Aim lower – maybe you won’t be disappointed.”

Indiana’s Department of Education asserts that a quarter of all the state’s students should pass at least one AP exam during their high school careers.  This assertion is based on a statewide analysis of PSAT exams which show that 33% of Indiana’s 2008 graduates had the potential (based on proven expectancy tables) to pass an AP exam.  

Liberge calls this “unreasonable,” and seems to suggest that only students from upper-income families are equipped to succeed in Advanced Placement classes and get a head start on their college studies.  Affluent communities like Carmel, Fishers and Zionsville may be able to reach such a lofty goal, but others need not apply.  (She fails to mention that North Central High School, with 37% of its students on free or reduced lunch programs, is among the top dozen AP performing schools in the state.)

At a time when we must push every student to do better and hold every teacher and administrator accountable for learning achievement, we need to set higher goals – not settle for excuses. 

For disadvantaged students especially, enrolling in AP classes is a first step towards a better life; indeed, towards upward mobility.  The data isn’t up for debate:  Americans with more education have higher incomes and lower unemployment. 

A college graduate – on average – earns nearly twice as much as someone with just a high school diploma, and almost three times as much as a high school dropout.  Recent studies from IU tell us that jobs requiring a college degree are expected to grow at a double-digit clip over the next five years in Indiana.  Jobs that don’t require education beyond high school will see sluggish growth, below 10%.  Education equals more career opportunities and bigger paychecks.

AP coursework sets the stage for success in college, and therefore success in the job market.  Students who successfully pass one AP exam are four times more likely to complete a four-year degree as those who don’t.

Of course it may be harder for children from more difficult socioeconomic circumstances to excel in advanced placement programs.  But  these students certainly have the potential to excel – common sense and the PSAT analysis I mentioned earlier tell us that.  But somewhere along the line, they aren’t being inspired to live up to their natural abilities.

Students of all backgrounds need to be encouraged to do their best, to graduate high school and go on to pursue higher education.  Their economic futures depend on it.  Advanced Placement classes challenge students and get them on the right path to tackling college coursework. 

Telling students that it’s OK not to pursue AP credits because their parents don’t make enough money or the classes might be too hard is a message that only helps perpetuate poverty.  Reasonable people can argue about the right strategies or resources necessary to get more students through AP classes –but it’s destructive to simply project one’s own pessimism onto a whole generation of Indiana students.  By lowering expectations, we lower their chances for success in school and in life.

Stephen Burns

Burns is Chairman of Indianapolis-based Wheaton Worldwide Moving, and serves on the Board of Directors of the Central Indiana Corporate Partnership.

Recent reports seem to indicate that Indiana has weathered the recession and is near the vanguard of the economic recovery – while too many Hoosiers are still unemployed or underemployed, and facing other financial hardships, we’re further along than many of our neighbors.

Most recently, the Wall Street Journal reports that Indiana leads the nation in private sector job creation in 2010.  Department of Workforce Development data confirms that the state has added nearly 50,000 new jobs since December – one of every ten positions created in the U.S. happened here, with manufacturing and ‘professional services’ leading the way.

At the regional level, the Brookings Institute places the Indianapolis metropolitan area in its “second-strongest” tier in its ongoing measurement of the economic performance of the 100 largest metros in the U.S.  Our relatively low unemployment, stable housing prices and strong Gross Metropolitan Product growth put us in good stead, ahead of most of Midwestern areas.  While St. Louis and Columbus (OH) joined Indianapolis in the ‘second strongest’ category, Louisville, Cincinnati, Milwaukee and Nashville found themselves in the middle tier.  Chicago, Detroit and Dayton slipped into the bottom levels.

The numbers are heartening, and there’s also cause for optimism ahead.  Indiana continues to boast the most business-friendly tax climate in the Midwest – as the recovery gathers steam, we’ll be among the most attractive destinations for new investment.  Indiana also made an impressive jump in venture capital investment over the past year, climbing from 41^st to 20^th in VC investment per capita.  This says great things about our ability to grow our own new companies and diversify our economy moving forward. 

Clearly, Indiana still has many hurdles to overcome – strengthening our workforce and closing the income gap that continues to plague Hoosiers, to name just two – but we seem to have positioned ourselves to take advantage of the economic comeback that’s starting to take hold across the country.

Conexus Indiana released its 2010 annual Manufacturing and Logistics Report Card last week, concluding that the state remains strong in two of our largest industries but must make significant progress in areas like human capital to preserve future competitiveness.  The Report Card also predicts a strong manufacturing recovery in Indiana for 2010-11.  Here’s how Conexus describes the report in on its new blog:

Everyone knows that Indiana’s economy is heavily focused on manufacturing, and that our location makes us a natural logistics hub as well. 

But how do we really stack up against other states in these industries in terms of jobs and economic output?  What’s the outlook for Indiana manufacturing and logistics in 2010-2011 as the economy continues to recover?  And how can the state better position itself to take advantage of high-tech manufacturing and supply chain opportunities?

All of these answers can be found in Conexus Indiana’s annual Manufacturing and Logistics Report Card, which ‘grades’ the state in areas like global competitiveness, human capital, tax climate, productivity/innovation and more.  The Report Card is created by Dr. Michael Hicks and a team of economists at the Ball State Center for Business and Economic Research; the 2010 edition is being released by Conexus this morning.

Manufacturing and logistics combined employ more than one of every five working Hoosiers – Conexus believes it’s critical to monitor the health of these industries and anticipate the challenges we need to tackle to keep them as growing cornerstones of our economy.

Download the Report Card here, and see the accompanying press release here.

Inside Indiana Business reported this morning that Smart USA has chosen Indianapolis as a test market for its new Smart fortwo electric drive vehicle.  Executives from Smart say the Indianapolis region is an ideal test market for the new electric model because of plans for investment in charging infrastructure for plug-in vehicles, part of the Project Plug-IN effort being coordinated by CICP’s Energy Systems Network (ESN) initiative.

Project Plug-IN will place more than 100 plug-in vehicles in service with commuters as well as government and corporate fleets across the Indianapolis metropolitan area with the goal of anticipating and solving the challenges that come with the use of plug-in cars and trucks.  These include the deployment of residential and public charging stations, enabling off-peak charging, and resolving billing issues.

In addition to EnerDel, Project Plug-IN partners include Duke Energy, Indianapolis Power & Light, Think Global, Nissan, Smart USA, Navistar, Cummins, Delphi Corporation, Bright Automotive, ITOCHU Corporation, IBM, Simon Property Group, Midwest ISO, Purdue University, the City of Indianapolis, the State of Indiana, and the Rocky Mountain Institute.  Collectively, these partners have received nearly half a billion dollars ($490.4 million) in federal stimulus grant funding.

Through milestones like the recent U.S.-China Advanced Technology Vehicle Summit and commercialization activities like Project Plug-IN and the Hoosier Heavy Hybrid Partnership (a partnership geared towards the production of medium- and heavy-duty electric trucks), ESN has made real progress in its first year towards making Indiana a recognized leader in vehicle electrification – we’re proud of their efforts.

Francesca Jarosz’s feature in today’s Indianapolis Star ("Caps cut services along with taxes") details the budgetary struggles being faced by Indianapolis/Marion County as property tax caps place new limits on revenues, exacerbated by the lingering effects of the national recession.

Communities across Indiana are facing similar issues, as the ‘perfect storm’ created by the economic downturn and the implementation of the caps have left local governments hundreds of millions of dollars in the red.  It’s led to police and firefighter layoffs, roadwork deferred, hikes in local taxes and user fees, libraries and parks closed.  (The American Library Association says that Indiana reported more library branches closed last year than any other state.)  Cuts in public education have been well-chronicled.

However, it’s important that Indiana protect homeowners from skyrocketing property taxes, and ensure a fair and predictable tax system for business.  And economic downturns are inevitable – no economic strategy has yet conquered the business cycle.

The real culprit here is our stubborn resistance of local government reform, fixing a broken system that supports thousands of township governments, turns administrative offices into political fiefdoms and codifies a patchwork of overlapping bureaucracies that breeds inefficiency and ineffectiveness.  Until we are willing to restructure local government to allow it to do more with less, knee-jerk austerity measures or higher taxes are our only two options.

(Get a refresher on the common-sense government reforms recommended by the Kernan-Shepard Commission here.)

First U.S.-China Advanced Vehicle Summit pays off in productive dialogue, new deals between Chinese and Indiana companies

ESN hosts delegation of Chinese officials and auto executives, sharing the state’s expertise in electric vehicle technology development and manufacturing

(INDIANAPOLIS, Ind., May 28, 2010) Nearly 100 Chinese government officials, trade association leaders and auto executives visited Indiana on Thursday and Friday for the first U.S.-China Advanced Technology Vehicle Summit, organized by the Energy Systems Network (ESN) on behalf of Indiana’s leading manufacturers of components and technologies for hybrid electric vehicles.  The event featured several signed deals, substantive dialogue between the two groups, and the promise of more business opportunities for Hoosier companies in the world’s fastest-growing automotive market.

“It’s appropriate that we hold the Advanced Vehicle Summit on the eve of the Indy 500 here in the racing capitol of the world,” noted Joe Loughrey, ESN chairman and retired president of Cummins.  “Indiana is also in a race to attract new jobs and investment in the electric vehicle industry, and this Summit presents us with a historic opportunity.”

Indiana participants in the Summit included Allison Transmission, Cummins, Delphi, EnerDel, and Remy International.  The lengthy list of Chinese companies included BYD, Chery, Dongfeng Electric Vehicle, Shanghai GM, FAW Group, Geely and others.  All of China’s major state-owned, joint venture and private auto manufacturers are producing or have announced plans for hybrid and electric models; the country is projected to grow its global share of the electric vehicle market from 3% to 35% over the next decade.

“This is the largest delegation of Chinese automotive company executives and officials to travel to the United States to visit with American automotive parts manufacturers,” noted Assistant Minister of Commerce Wang Chao. “We are confident the visit will result in stronger business relationships between the Chinese and American automotive companies, especially for hybrid and electric vehicles.”

Assistant Minister Wang Chao’s confidence was shared by Indiana officials, and quickly proved to be well-founded.  On Thursday, Indianapolis-based EnerDel signed a joint venture agreement with Wanxiang Group, the largest auto parts producer in China, to provide advanced lithium-ion battery systems.   The deal between the two Summit participants could more than double EnerDel’s job creation plans for Central Indiana, to 3,000 new green jobs.

“We’re excited about our new partnership with Wanxiang and we look forward to the many other opportunities for collaboration this ESN summit has presented,” said Charles Gassenheimer, Chairman of Ener1, the corporate parent of EnerDel, and a Board member of ESN.  “Meetings like this one set the stage for companies like EnerDel to build new mutually beneficial relationships with Chinese businesses looking west for strategic partners.”

Along with the EnerDel-Wanxiang deal, the China Investment Promotion Agency and the Indiana Economic Development Corporation signed a Memorandum of Understanding to strengthen future trade and economic development opportunities on Friday morning.  Strategic cooperation agreements between Cummins and two Chinese companies, Guangxi Liugong Machinery and Zhengzhou Yutong Group, were also signed. 

Finally, an agreement between the Energy Systems Network, the China Chamber of Commerce for Import and Export of Machinery and Electronics, and the China Association of Automotive Manufacturers set the stage for future meetings.  “We’re pleased to announce that our organizations have agreed to explore another Summit, this time in Beijing, focused on the broader new energy technologies market,” said ESN President Paul Mitchell.

“The Summit is paying off in new jobs and investment,” Mitchell continued.  “These Indiana manufacturers have attracted more than $300 million in federal stimulus grants for advanced batteries and vehicle electrification, and we’re pleased to help them leverage these investments into global business opportunities.”

The U.S.-China Advanced Technology Vehicle Summit was co-presented by the Energy Systems Network, the China Chamber of Commerce for Import and Export of Machinery and Electronics, and the China Association of Automotive Manufacturers.  In addition to presentations by U.S. and Chinese companies during the day-long Summit, events included a welcome dinner hosted by Indiana Governor Mitch Daniels and a Friday evening dinner reception hosted by Indianapolis Mayor Gregory Ballard featuring keynote remarks by David Sandalow, Assistant Secretary for Policy and International Affairs for the U.S. Department of Energy.

Later this week, our Energy Systems Network initiative will be hosting a historic meeting between the largest delegation of Chinese automakers ever to visit the U.S. and the growing cluster of Indiana firms that are manufacturing components for electric cars and trucks.  The U.S.-China Advanced Technology Vehicle Summit is a first-of-its-kind forum that represents a global opportunity for Hoosier companies.

China is the world’s fastest-growing market for electric cars, and this Summit will set the stage for stronger relationships and new business opportunities among the participants while showcasing Indiana as a potential site for future investment.

Indiana participants in the Summit include EnerDel, Remy, Allison Transmission, Cummins and Delphi.  EnerDel is one of the region’s brightest economic development success stories of the last few years, and the other firms are mainstays of our manufacturing economy that have positioned themselves on the cutting-edge of the hybrid electric market.  Visiting Chinese companies include such powerhouses as Chery, Geely, Dongfeng and BYD (recently ranked #1 on Bloomberg BusinessWeek’s Tech 100 list).

We’re optimistic that the Summit will pay off relatively quickly in new business opportunities for Indiana firms, supplying more components to the booming Chinese market (China is already the fastest-growing market for Hoosier exports).  The longer-term prospects for Chinese investment in Indiana are also intriguing.  I’d like to excerpt a piece I wrote back in 2008 after a trip to Shanghai:

Back in the 1980s, Americans watched with growing concern as Japanese manufacturers captured a growing share of our markets – in cars, consumer electronics and steel.  There was an outcry against ‘unfair competition;’ publicity-seeking congressmen went so far as to smash Japanese-made TVs and radios on the Capitol lawn.  Here in Indiana, Japan even became an issue in the 1988 campaign for Governor, with barbs about “giveaways” to Japanese companies. 

Fast forward twenty years, and the landscape has completely changed:  Japanese investment is universally recognized as a fundamental strength of Indiana’s economy.  Foreign firms employ more than 90,000 Hoosier manufacturing workers, with companies like Toyota, Honda and Subaru leading the way.  The attraction of the Greensburg Honda plant is recognized as the signature economic development victory of Governor Daniels’ first term. 

Japan has turned from economic villain to valued partner.  It’s an experience we should learn from as we look towards China, another Asian powerhouse that’s stirring protectionist fears.  How can Indiana anticipate and take advantage of future investment from China, as its economy reaches the tipping point that Japan started to reach 20 years ago?  I recently read an interesting report from Deloitte Consulting (“The Coming Investment Wave from China”) that starts providing some of the answers.

To be certain, with the country’s massive population and resources, Chinese companies are still focused on domestic growth, serving international customers through exports.  But this is changing – in 2007, Chinese firms invested a record $37 billion in foreign countries, a 76% increase over 2006.  In Zhejiang Province in eastern China, an epicenter of private development, nearly 900 private companies invested overseas in 2006.

According to the Deloitte report, the list of industries that will experience the first wave of Chinese foreign investment will be topped by the automotive sector, one of Indiana’s strong suits.  Other key industries for overseas investment include pharmaceuticals and electrical equipment – other areas where Indiana has a significant base, existing workforce and fast-growing exports to China. 

The driving forces behind Chinese foreign investment are also likely to mirror the Japanese overseas wave, including the desire to get closer to customers and integrate distribution and supply chain functions.  Indiana’s central geography and strong transportation infrastructure can serve us well in meeting these needs, just as with Japanese automakers and other international firms.

All of China’s major automotive companies have released or announced plans for electric models, and international partnerships and joint ventures are very much a part of their plans.  This Summit could mark the beginning of significant and long-term economic benefits for Indiana.  Read more here and here.

Please take a moment to read this excellent editorial by Eli Lilly & Company Chairman (and CICP Board member) John Lechleiter on Lilly’s drive for innovation, keeping new medicines in the pipeline.

Central Indiana is fortunate to be home to global corporations like Eli Lilly that are so focused on innovation, and willing to invest in it.  Looking at the issue macro-economically, the most innovative regions are also the most prosperous.  Study after study shows that the places with the most patent activity, R&D investment and educated, creative workers also have the highest per capita incomes and strongest economic growth.

Unfortunately, the innovation advantage that the U.S. has traditionally enjoyed over the rest of the world seems to have eroded in recent years.  New ideas simply aren’t coming to market the way they used to – initial public offerings (IPOs) were down 70% from 2007 to 2008, and even though they bounced back to some degree in 2009, last year was also the worst year in more than a decade for venture capital investment.

Smaller entrepreneurial firms are often (and rightfully) seen as the major engine of innovation in today’s economy.  But large corporations like Eli Lilly can also recognize the innovation imperative, and lead the way – to the overall benefit of our regional economy.

A recent report released by the major global life sciences trade organization provides further validation of our state and regional strength in the bio-economy.

The Battelle Institute and the Biotechnology Industry Organization (BIO) released their annual “State BioSciences Initiatives” report at the BIO International Conference in Chicago earlier this week.  The results show that the major life sciences firms headquartered in Central Indiana and across the state continue to thrive, and that the efforts of BioCrossroads and others are paying off in encouraging new opportunities and entrepreneurial growth.

Among the highlights – Indiana has outpaced the nation in life sciences job growth over the last decade.  Indianapolis ranks second in the nation in metropolitan employment in pharmaceuticals, leading other Central Indiana metros like Lafayette, Bloomington, and Columbus that also ranked among the leaders (adjusted for size) in this sector. 

The Bloomington MSA also ranked number one among smaller metros in the Medical Device and Equipment sector.  (The BIO report did not include Warsaw, Indiana, home to nearly a third of the global orthopedic device industry, because it did not rank among the metros ranked due to population.)

The report overall shows that Indiana’s life sciences sector demonstrates strength across a number of industry sub-sectors, displaying a healthy economic diversity and potential for continued growth.  It echoes a comment from the June 4, 2009 edition of The Economist that our colleagues at BioCrossroads are fond of quoting: “Though every state wants to be a hub for life sciences, Indiana really is one...”

Learn more about the BIO/Battelle report here.

Last Wednesday’s Indianapolis Star printed a version of this excellent editorial by Central Indiana Transit Task Force co-chair John Neighbours, reacting to news of the fiscal uncertainties swirling around the IndyGo bus system.  The dismal state of IndyGo burdens both its users, who find it difficult to get to work or other daily errands due to long delays and inconvenient routes, and also local companies that depend on the bus to bring employees and customers to their places of business.

A more secure source of local funding for the system is certainly necessary;  the best solution is a more comprehensive regional system that provides reliable service across the metro area, and is financed and governed accordingly.  We believe the Central Indiana Transit Task Force has presented such a plan, summarized here.

(As a side note, I’ll be addressing the need for regional mass transit in my remarks to the Economic Club of Indiana this afternoon.)

Lack of reliable transit impedes economic growth

Erika Smith’s recent reporting on the fiscal plight of IndyGo paints a picture of a woefully under-funded public transit system in crisis.  It’s a picture that’s all-too familiar for those who rely on IndyGo on a daily basis.

IndyGo ranks 100^th among the top 100 U.S. metropolitan areas in transit funding, to serve the 26^th-largest metro population, leading to inconvenience and delay.  Let’s say you live near 10^th and Rural, and want to get to work near the Pyramids (96^th Street and Michigan Road) by 8:00am – you’d need to walk to the bus stop around 6am, to begin a one-and-a-half hour trip.  The employee of a company at Park 100 on the northwest side who has the misfortunate to live near 46^th Street and Arlington would suffer through a two-and-a-half hour commute (each way). 

These aren’t unusual scenarios.  For those who are dependent on transit, the current system effectively shuts the door on job opportunities and turns simple trips to the grocery store or doctor’s office into painfully-long  journeys.  For businesses dependent on public transit to connect them to a reliable workforce, IndyGo is a barrier to growth, a drag on economic competitiveness.

There is a better way.  In February, the private sector-led Central Indiana Transit Task Force released a comprehensive regional transportation plan that includes a light and commuter rail network, new highway investment and an expanded regional bus system. 

While the rail lines capture much of the public attention, it’s the bus system that actually receives the majority of new operating funds in the plan.  We don’t just envision fixing IndyGo, but transforming it into a regional system that allows commuters to move easily around Indianapolis and the surrounding counties.  The bus network would include more cross-town routes and higher levels of service, cutting wait times and connecting with rail to provide more transportation options for all.

The urgent need to provide adequate bus service is also reflected in the Task Force’s recommendations for public consideration.  While rail infrastructure is built over several years, bus improvements would begin immediately – offering tangible benefits right away.

A comprehensive and convenient bus system is the backbone of any successful transit system, and the private sector blueprint prioritizes and invests accordingly.  The plan is currently on the table for public comment through the ‘Indy Connect’ campaign of the Metropolitan Planning Organization (offer your own feedback at www.indyconnect.org).  Because buses are the closest and most relevant form of transit to much of the region’s population, we expect the agency to receive a large amount of input on how to better serve their riders.

The other major issue is funding.  Financing IndyGo through property taxes is a recipe for failure.  No one wants higher property taxes; indeed, we believe that mass transit investments can help keep property taxes under control by spurring more residential and commercial development. 

The transportation system should be funded by other local options, like small increases in sales or income taxes – funding the entire proposed regional rail and bus system would cost the average family between $10 and $20 a month in new sales taxes, for example.  That’s the price of a large pizza in exchange for greater mobility, a more convenient commute, and the other economic and environmental benefits of transit.

The sorry state of IndyGo lends urgency to the broader issue:  We need a regional, comprehensive transportation system that includes new mass transit options, like the plan envisioned by the Central Indiana Transit Task Force.  It’s time to agree on the approach, find the best way to pay for it, and make it happen.

John Neighbours

Neighbours is a partner at Baker & Daniels, serves on the Board of the Greater Indianapolis Chamber of Commerce, and was co-chair of the Central Indiana Transit Task Force.

Another local call for consolidation, this time from Madison County-Anderson in the Herald Bulletin.  Local communities, facing the realities of declining revenues and property tax caps, are actively exploring government reform options, while media like the Indianapolis Star and Herald Bulletin editorialize in favor of these common sense reforms.

They are helping fill a vacuum of leadership demonstrated by many state lawmakers, who would prefer to remain complicit in a system of inefficiency and cronyism that’s wasting taxpayer dollars when we can least afford to do so.

Read the full Herald Bulletin editorial here:

As detailed previously in this space, Indiana’s township offices have hoarded large surpluses, overtaxing homeowners and diverting revenues from city and county governments that face increasingly dire budget conditions.  Townships provide haphazard poor relief assistance, while in some cases administering fire protection and maintaining public cemeteries – duties that can be provided more effectively and efficiently at the municipal or county levels.

Today’s editorial from the Indianapolis Star confirms that Indiana townships continue to pad their coffers at taxpayer expense, as surpluses have actually grown.  Juxtapose this with another article in today’s Star assessing the fiscal impact of property tax caps on local governments (slashing $79 million from city-county budgets in Marion County alone) – can the state truly afford a Civil War-era layer of bureaucracy given today’s economic climate?

Anyone who cares about the future of Central Indiana should care passionately about the fate of the Indianapolis Public Schools, Indiana’s largest school system, where half of all students fail I-STEP reading and math tests and graduation rates rank alongside Detroit as the Midwest’s worst. 

A recent piece by Matt Tully of the Indianapolis Star (‘A state takeover of Manual?’) details a meeting between IPS Superintendent Eugene White, Indiana Superintendent of Public Instruction Tony Bennett, and representatives of the local teachers union that illustrates much of what’s wrong with IPS and other failing urban school systems – a stubborn resistance to change and fidelity to process over performance.  It’s a philosophy that leads to issues like the retention of underperforming teachers while failing to reward gifted educators.  Students are the ultimate victims.

I’m reminded of the work of Clayton Christensen, the Harvard professor and creator of the theory of ‘disruptive innovation.’  Christensen asserts that large organizations are often blindsided by innovation because they’re too focused on incremental change and not the dramatic breakthroughs that redefine the market.

Of course, when you apply Christensen’s theories to the corporate world, firms that shun innovation are simply overtaken by their more agile competitors.  But public schools where students don’t learn are largely a monopoly trapping families without the financial wherewithal to afford their private counterparts or the good fortune to qualify for charter public schools. 

Can IPS and other urban districts prove Christensen wrong and embrace radical change, or will the path be chosen for them by the state?  I submitted this editorial to the Star, published today, with more thoughts:

For failing public schools, takeover seems good solution

Mark Miles

Posted: April 6, 2010

Thanks to The Star and Matthew Tully, we're all aware of the struggles of our Indianapolis Public Schools. At least we thought we were; in fact, the situation is much worse. Tully's report March 28 ("A state takeover of Manual?") provided the most important and dramatic insight to date into the quagmire that victimizes kids who have no choice but to attend IPS schools.

Tully's work in education, and this piece in particular, deserves Pulitzer recognition and should cause outrage and dramatic change in Indianapolis and other urban school systems across the state that are failing our kids.

Tully chronicles a recent meeting between IPS Superintendent Eugene White, Indiana Superintendent of Public Instruction Tony Bennett and representatives of the teachers union on the looming prospect of a state takeover of several failing schools within IPS.

When asked to estimate the percentage of teachers performing at "questionable" levels, White candidly estimated the number at 60 percent in every IPS high school (with the notable exception of Broad Ripple).

According to Tully, IPS administrators say that contractual requirements and tedious rules have blunted their efforts to rid the district of poor teachers, putting teacher seniority ahead of student learning and pushing any serious progress on this issue three to five years into the future.

These shocking observations were followed by the union defending the process used to evaluate teacher performance. These are the children of Indianapolis, and it could not be clearer that well-intended, plodding, incremental changes cannot address this catastrophe.

The situation demands radical change and fundamental restructuring. Perhaps the threat of a state takeover of failing schools is the catalyst that can finally reverse the organizational inertia that plagues IPS and districts like it across Indiana. But notwithstanding my respect and empathy for White and the dedicated educators who work in IPS every day, I doubt it.

A look at the failed state of urban education in the United States, exemplified here by the plight of IPS, suggests that it's time for a fundamentally redefined model for educating our kids.

We've come to a fork in the road. If IPS high schools and other urban districts across Indiana continue to fail their students, dramatic changes can by law be implemented by the Indiana Department of Education; for example, replacing the leadership and at least half the staff of each school, closing the schools altogether and reopening them as charters, or terminating the principals and implementing a comprehensive teacher effectiveness plan.

To avoid having one of these paths chosen for it, IPS must implement radical and rapid change on its own. As Tully's reporting makes perfectly clear, the status quo -- a culture that puts process ahead of performance -- cannot be an option.

An excellent editorial in the Indianapolis Star (reprinted below) making the case for a truly regional, integrated mass transit system along the lines of what’s been proposed by the Central Indiana Transit Task Force.  (The plan is discussed on this blog here and here, specific details on the plan and the Indy Connect public input campaign can be found here.)

The key to moving on mass transit

It's easy to be cynical about yet another proposal to construct a mass transit system in Central Indiana. As The Star's Erika Smith documented on Tuesday, plans to build rail lines or improve the city's abysmal bus service have arrived one after another, and then quietly departed, for three decades.

Now, however, a new pitch -- the most comprehensive one to date -- to build not only rail and bus lines but also expand roads and bike trails appears to have a better chance for success than any of the earlier proposals.

That's because residents appear ready to embrace mass transit in sufficient numbers to make it feasible and because powerful business leaders, rather than bureaucrats, are helping to push the idea.

Both factors are key to persuading legislators in the General Assembly and members of local city and county councils to approve a funding mechanism, whether it's through a sales tax increase or another method to raise money.

Central Indiana is far behind most metropolitan areas when it comes to public transportation. Indianapolis' bus system is the worst in the nation, not only in regard to size but also service. It's simply not possible for most residents in the region to use IndyGo, the only form of mass transit now available, to commute to work, school or play.

Central Indiana's elected leaders and the residents they represent have repeatedly refused to face up to the need for mass transit. As a result, while Charlotte, Minneapolis, Portland, Salt Lake City and St. Louis moved forward by building attractive and practical transportation systems, Indianapolis stood still.

Some residents may believe they've been frugal in avoiding the expense of rail and bus lines, but the lack of public transportation comes with multiple costs. It's one of the reasons why Indianapolis' air quality is among the worst in the nation. An inability to commute to and from work separates potential employees, especially those with few resources, from prospective employers. And young urban professionals are less likely to live and work in Indianapolis given the lack of transportation options.

The region has one more chance -- perhaps its last in decades if this new effort fails -- to build an asset it should have acquired years ago. Central Indiana can't afford to miss this train.

Today’s Indianapolis Star includes an interesting article on the latest antics from the world of township government – the Washington Township (Marion County) trustee racking up $20,000 in legal bills in a dispute over $758 in poor relief aid sought by a township resident for help with her rent and water bills.

Of the many troubling issues this story raises, two stand out.  First, the idea that these sorts of fiscally imprudent decisions are being made with little or no oversight by 1,008 separately-elected township officials is disheartening given the dire financial straits of state and local governments. 

Across Indiana, local officials are debating cuts in education, infrastructure, public safety and more.  Counties and municipalities are making tough choices.  Our legislature has made these choices even tougher by not stepping to the plate and making its own difficult political decision to reform local government, at least by demanding more oversight and streamlining of township offices.  And so we continue to be burdened by another layer of government bureaucracy that consumes and squanders tax dollars.

As to the circumstances of the Washington Township case itself, it’s difficult to argue the merits of either side on the basis of any statewide or even countywide guidelines.  That’s the second issue – there are no common rules for the provision of poor relief in Indiana.  Each township sets its own, leading to a patchwork approach that’s unfair and inefficient.  More than half the state’s townships provide relief to 20 households or less, and spend three dollars in overhead for every one that actually reaches a disadvantaged family.   It’s no surprise that disputes such as the one in Washington Township arise.

While the General Assembly again failed to take action on local government reform this session, more and more communities are exploring consolidation themselves out of financial necessity.  As these efforts multiply across the state and the fiscal climate continues to worsen, let’s hope that common sense reform – starting with township government – begins to gain more converts among lawmakers.

Plotting a post-Rust Belt future for the Midwest

Carol D’Amico

What is the future of Midwest cities that have been heavily dependent on the automotive industry?  That was the issue we discussed at a White House symposium last week held at the U.S. Department of Labor in conjunction with the Brookings Institution, a Washington DC think tank.  Representatives from Ohio, Michigan and Indiana attended to discuss our common challenges as we seek to revitalize an economic base that’s traditionally reliant on automotive manufacturing.

A few observations from the day:  First of all, we should be very proud that our region still makes things for a living.  As one participant remarked, we have been and still are innovators.  Things we can't live without were invented in the Midwest - cars, refrigeration, air conditioning, and the bar code among countless others.  The Midwestern work ethic combined with our propensity to “tinker” and seek continuous improvement have helped us build a rich manufacturing heritage.  These traits can  continue to serve us well if we are smart about it.

What also struck me is we have common aspirations to diversify our dependence on the automotive industry and to be the leader in life sciences, alternative energy, logistics and bio agriculture.  We discussed common problems like difficulty in funding of start-up companies and the bias lenders have against manufacturing (too often dismissed as an industry stuck in the past, even as it invests more than any other U.S. economic sector in R&D innovation).  And perhaps the biggest issue of all, the challenge of up-skilling an older, entrenched workforce and shaking off our “rust belt” image to attract young talent to our landlocked states.

For that day we were in solidarity, confronting these common challenges and brainstorming solutions.  But outside the DC conference room,  we are fierce competitors when it comes to attracting new jobs and investment to our states.  It isn’t realistic to think that each of us can  be the leader of the new industries.  One of us is going to be better at it than the others.  So what will it take to stand out in this crowded field and how competitive is Indiana in the race?

First, the basics.  Indiana boasts a pro-growth tax climate.  Central geography and strong infrastructure.  Aggressive and well thought-out economic development efforts.  Enlightened and energized leadership.  All areas in which we excel.

We’ve also already made significant progress towards diversifying our manufacturing sector.  According to an analysis by Ball State University’s Bureau of Business Research, Indiana’s automotive and auto parts manufacturing industry employs more than 110,000 Hoosiers.  This is a tremendous number, but it represents just 16% of the state’s total manufacturing jobs.  Indiana also boasts strength in high-growth areas like pharma and medical device manufacturing, aerospace, HVAC and others.  And even within the automotive sector, we’re positioning ourselves as leaders in more cutting-edge areas like vehicle electrification.

Our Achilles heel in this race is the quality of our workforce.  A recent report that was done showed that we have 108,812 adults of workforce age who have less than a ninth grade education; another 273, 086 have less than a high school diploma.  This year over half the recipients of unemployment insurance lacked a high school diploma.  Unlike the old days, there are no good paying jobs for those adults.  Another 1,125,166 adults have only a high school diploma and no college.  These adults too have limited opportunities in the new economy we aspire to build. 

Until we get serious about addressing this issue our ability as a state to be the economic development leader among the Midwest states is problematic.  And it isn’t just the Midwest states that we compete with – it is all other states and the industrialized world. 

There are no easy fixes – this was the primary takeaway from  our event last week.  We need a more robust adult education system; a more effective K-12 system; colleges focused on graduating more adults within a reasonable period of time; and a modern, government-supported workforce development system instead of the antique we operate under today built in 1945 for a very different economy and era.  Indiana’s progress towards these goals will define our competitive advantage in manufacturing for generations to come. 

D’Amico is Senior Advisor to Conexus Indiana, the state’s advanced manufacturing and logistics initiative.