The Central Indiana Corporate Partnership (CICP) is an alliance that includes the CEOs of many of our major employers and the presidents of our research universities, coming together to advance a common goal – growing our regional economy.
I’m Mark Miles, CICP’s President & CEO, and this blog will offer our thoughts and perspectives on the latest economic news and other issues that affect the future of our region. Thanks for visiting.
CNBC has released its annual Top States for Business rankings – while Indiana ranks a fairly pedestrian 21st on the overall list, the sub-category rankings are more interesting, giving several reasons for optimism and at least one looming cause for concern.
The state continues to score high in costs of doing business, ranking 9th among states (up from 13th in 2009), and we continue to rank among the top handful of states (6th) in transportation infrastructure, anchoring our strong logistics sector.
We made significant progress in access to capital, moving from the bottom third of states
(36th) in 2009 to the middle of the pack (26th) this year. This blog has covered Indiana’s progress in making venture capital available to promising start-up firms – the state has bucked national trends by growing equity investment over the last two years, even as the national venture market contracted during the recession. We made a tremendous jump from 41st to 20th in venture capital investment per capita from 2008 to 2009.
We moved up five spots in the ‘Economy’ category (mainly a measure of economic diversity and success in attracting corporate headquarters) and stayed about the same in Cost of Living (a perpetual strength) and Technology/Innovation.
Our biggest challenge continues to be found in the Workforce arena, where we slipped ten spots from last year’s rankings, from 31st to 42nd. CNBC considers the educational attainment of the workforce, union membership, available workers and the placement success of vocational training programs in arriving at this category. While the exact conglomeration of data can be argued, the broader point cannot – certainly Indiana faces a shortfall in educated workers that must be addressed.
CICP’s initiatives are working against this daunting task – Conexus Indiana is collaborating with higher education partners to create ‘industry-approved’ training programs in manufacturing and logistics, and marketing these programs to young Hoosiers as the path to high-tech careers. The BioCrossroads life sciences initiative has partnered with Purdue University, Notre Dame and others on programs like the I-STEM Network, a resource to improve math, science and technology education at the K-12 level, as well as expanding access to Advanced Placement coursework to ease the transition from high school to college.
It will take these efforts and the focused attention of policymakers, educators, corporate and civic leaders to climb the ranks of educated states. But in today’s knowledge-based economy, no other area is as important in predicting our future economic success.
Read more about the CNBC rankings and view the state listing here.
October 27th will be a hectic day for those who care about scientific and technological innovation and the future of Indiana’s economy.
On that day, CICP’s BioCrossroads initiative will host the Indiana Life Sciences Summit at the Westin Hotel in downtown Indianapolis, while our TechPoint initiative holds its annual Indiana Innovation Summit across the street at the Indiana Convention Center.
Both events highlight the bold strides Indiana has made towards a more diverse, knowledge-based economy. The nearly a decade, Indiana has added life sciences jobs faster than the national average, annually ranking among industry leaders by groups like BIO (the international life sciences trade organization).
BioCrossroads has bolstered this growth, raising more than $150 million in dedicated venture capital focused on life sciences start-ups, and providing support services to nearly 250 Hoosier biotech companies. The Life Sciences Summit provides a venue to explore new opportunities and discuss hot topics like financing scientific innovation, the impact of healthcare reform, and successful strategies in bio-focused economic development.
The Innovation Summit, formerly the Tech Summit, is now in its second decade of bringing Indiana technology executives and policymakers together for a similar purpose – sharing ideas, setting a common agenda for the industry, and building a community that encourages new business opportunities. Rebranding the event as the Innovation Summit acknowledged that new ideas are the primary fuel for growth in all high-tech industries – and the event certainly has attracted a thought-provoking keynote speaker this year, in iconoclastic author Nicholas Carr. (TechPoint President Jim Jay recently penned this piece in the Indianapolis Star on the power of innovation and Carr’s role at the Summit.)
The Innovation Summit also includes a heavy emphasis on how high-tech entrepreneurs can find venture funding in today’s market, as well as panel discussions on social media (Indiana is earning a reputation as a digital marketing leader), smart grid technologies (ditto for energy innovation), cloud computing and more.
We hope you’ll be a part of these great events – learn more about the Innovation Summit here, and about the Indiana Life Sciences Summit here.
A recent article in USA Today tracks an emerging trend among some U.S. companies – the “onshoring” of manufacturing operations from overseas back to the United States. The piece (‘Some manufacturing heads back to USA’) reports on recent moves by companies like General Electric, Ford Motor Company, Caterpillar and NCR that are moving manufacturing work back from countries like China, India and Mexico.
The companies cite a number of reasons behind the nascent onshoring trend – rising wages in China (recently reported on this blog), poor quality from suppliers, the threat of intellectual property theft and the logistical complexities that come from a global supply chain (which can limit customer responsiveness).
This trend bears watching. In June, Deloitte Consulting and the U.S. Council on Competitiveness released the annual Global Manufacturing Competitiveness Index for 2010. The study (based on a survey of 400+ manufacturing CEOs worldwide) ranked access to educated workers capable of supporting innovation as by far the biggest determinant of success. If the United States can successfully re-energize our technical education system and maintain a skilled workforce and innovation advantage, the onshoring movement should continue to gain momentum.
Indiana also stands to reap the benefits as well, with our inherent logistics advantages, strong manufacturing base, and leadership in exports and foreign direct investment. Indiana has been a winner in globalization: If foreign manufacturers find the Hoosier State such a hospitable place to locate operations (and Indiana has led the nation in manufacturing jobs created by international companies two consecutive years), then we should be well-positioned to compete for U.S. corporate investment as companies look to relocate closer to home.
See this update from Conexus Indiana, as recent economic reports mark a full year of positive economic growth for U.S. manufacturing - good news for Indiana, as the nation's leader in per capita manufacturing employment.
Via the Conexus Indiana blog (read the original post here):
U.S. manufacturing is leading the nation out of recession with a full year of positive growth, even as the construction and housing markets continue to struggle.
The latest report from the Institute for Supply Chain Management showed July marked the 12th straight month of expansion for the manufacturing sector. Manufacturing employment has also grown faster than many analysts expected, good news that helped spark a modest Wall Street rally on Monday. (See this story in the Indianapolis Star for more analysis.)
This data dovetails with the Indiana-specific economic forecast included in the Conexus Manufacturing and Logistics Report Card, which predicts that the state’s total manufacturing compensation will grow by nearly $2.5 billion over the second half of 2010 and 2011.
The future looks bright for manufacturing nationally and especially here in Indiana, the most manufacturing-intensive state in the union, as we focus on fast-growing markets like electric vehicles and medical devices.
The question that Conexus Indiana is focused on is this – as Hoosier manufacturers seek to expand, will they be able to find the skilled workers they need to grow and remain competitive?
J.K. Wall reports in the Indianapolis Business Journal that the flow of venture capital deals in Indiana’s life sciences industry has picked up considerably from this point in 2009: Through the first 6 months of this year, nine Hoosier bioscience firms have attracted venture investment, up from just four venture-backed companies during the first half of 2009.
Wall notes that while the number of deals has increased, the amount invested per deal has dropped somewhat. We are confident that total venture dollars invested in promising life sciences opportunities will continue to grow as dollars from BioCrossroads’ $58 million INext Fund are distributed to its partner venture funds to be leveraged into investments in specific companies.
The overall venture market in Indiana continues to be a bright spot in the general economic picture, and we hope a leading indicator of an entrepreneur- and innovation-fueled recovery. From 2007 to 2008, total venture investment in Indiana grew 40%, and from 2008 to 2009 increased another 70%, while national VC totals decreased over the last two years. From 2008 to 2009, the Hoosier State leapt from 41st to 20th among states in venture investment per capita.
Putting these trends together, it seems fair to predict that as more promising life sciences start-ups choose to seek private equity financing, the funds will be available to capitalize on our homegrown scientific breakthroughs and lifesaving innovations. And for a state that’s already seen life sciences employment grow by more than 17% (outpacing the national average) since 2001, it’s a promising sign for continued success.
Yesterday’s Evansville Courier & Press carries an interesting feature on city-county consolidation discussions that would merge Evansville – Indiana’s third-largest city – with Vanderburgh County – the state’s seventh most-populous county – in a ‘UniGov’-esque system. A 12-member Evansville-Vanderburgh County Reorganization Committee was formed as a result of a petition drive led by the League of Women Voters of Southwestern Indiana.
The article acknowledges the political difficulties inherent in consolidation (this will be the fourth attempt since the mid-1970s to initiate local government merger in Evansville-Vanderburgh County), but emphasizes the potential payoffs in economic development and budgetary savings.
Such discussions are becoming more and more common around the state as communities grapple with the aftershocks of the economic recession coupled with the implementation of property tax caps limiting local revenues. It’s become obvious to all but the most entrenched defenders of the status quo that local government reforms – like consolidation – are the only alternative to continued rounds of drastic budget cuts or local option tax increases.
Though the Evansville story doesn’t mention it, township government continues to be a prime target for reform efforts – the more than 1,000 townships across Indiana have overtaxed their way to hundreds of millions of dollars in unused surpluses as the fiscal crunch continues to plague city and county governments, while performing services that could be absorbed in county offices with greater efficiency and effectiveness.
Unfortunately, local government reform proposals based on the Kernan-Shepard Commission report have continued to stall before Indiana General Assembly (as chronicled ad nauseum on this blog), victim of political posturing and the furious lobbying of local officeholders defending their own fiefdoms. The Central Indiana Corporate Partnership and our partners in the MySmartGov coalition remain committed to the cause of reform, and are prepared to push for progress again during the 2010 legislative session.
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.
Today's Indianapolis Star featured this thoughtful editorial by Conexus Indiana President & CEO Steve Dwyer - the piece celebrates Indiana's top ranking in 2010 job growth (driven in large part by a boost in manufacturing jobs), but warns that we need to focus on long-term strategic issues like human capital if we're to maintain our advantage.
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 41st to 20th 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.
This excellent piece from Forbes.com is worth a read - reporter G.E. Anderson traveled to Indianapolis last week for the U.S.-China Advanced Technology Vehicle Summit, and comes away with an appreciation for Indiana's penchant for industry-academic collaboration, our aggressive economic development approach, and our impressive collection of leading firms in the vehicle electrification field (part of the state's General Motors legacy, most specifically the EV1 project engineered here in the mid-80s).
A China-Indiana Connection for New Energy Vehicles
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.)
The Energy Systems Network's U.S.-China Advanced Technology Vehicle Summit (held last Thursday and Friday) was a rousing success: The largest-ever delegation of Chinese auto executives to visit the United States met with leading Hoosier manufacturers of high-tech components for plug-in electric vehicles, building or renewing relationships that will result in great business opportunities for Indiana in the world's fastest-growing automotive market. In fact, several new deals and strategic agreements were announced at the Summit, and plans are being made to continue the dialogue at a second conference in Beijing.
Following is the press release detailing the event:
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
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“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. “
“This is the largest delegation of Chinese automotive company executives and officials to travel to the
Assistant Minister Wang Chao’s confidence was shared by
“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
Finally, an agreement between the
“The
The U.S.-China Advanced Technology Vehicle Summit was co-presented by the
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.
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