Indiana Advanced Manufacturing

Congratulations to David Johnson, President & CEO of the BioCrossroads life sciences initiative, who was appointed by the Central Indiana Corporate Partnership Board of Directors as CICP's new President & CEO this afternoon:

BioCrossroads President David Johnson is named President & CEO of Central Indiana Corporate Partnership

Johnson will succeed Mark Miles at helm of regional CEO alliance; will continue to lead CICP’s BioCrossroads life sciences initiative

(INDIANAPOLIS, Ind., December 18, 2012) The Central Indiana Corporate Partnership (CICP) announced today that BioCrossroads CEO David Johnson will succeed Mark Miles as its President & CEO.  CICP is a coalition of the CEOs of major private employers and university presidents focused on the long-term economic vitality of the region and state.  Johnson was an original organizer of BioCrossroads, the life sciences initiative founded by CICP in 2002, and has served as its President & CEO since 2005; in this role, he also serves as a member of the CICP Executive Committee.

The CICP Board of Directors selected Johnson by acclamation at its meeting this afternoon to succeed Mark Miles, who recently ended his five-year tenure with the influential economic development group to take on the post of CEO of Hulman & Company.

“We didn’t have to look far afield to find there is no better prepared or qualified candidate to take the reins at CICP than David Johnson,” said Denny Oklak, Chairman of Duke Realty and co-chair of CICP.  “David helped create and has led CICP’s first industry initiative [BioCrossroads], knows the organization intimately through his participation on our Executive Committee, and is well-respected by the business community, policymakers and opinion leaders alike for his tenure at BioCrossroads as well as an illustrious legal career and many civic endeavors.”

At BioCrossroads, Johnson has been responsible for raising more than $140 million in dedicated venture capital for Indiana life sciences start-up companies and roughly $100 million in philanthropic funding focused on strategic initiatives in science and technology education, health informatics, and most recently OrthoWorx, a regional partnership to grow the orthopedics sector in and around Warsaw, Indiana.  He will continue in his role as President & CEO of BioCrossroads along with his new duties at CICP.

“David has made BioCrossroads a national model for how private industry, academia, research institutions and the public sector can work together to capitalize on an industry cluster and promote real economic growth,” noted Jo Ann Gora, President of Ball State University and co-chair of CICP.  “BioCrossroads paved the way for the many successes of CICP’s other initiatives – Conexus Indiana, TechPoint, and the Energy Systems Network – and David has been there every step of the way. 

“He has been a valuable partner to Mark [Miles] and the rest of the CICP team, and he is uniquely qualified to follow him as President & CEO.”

In taking the helm at CICP, Johnson will oversee a growing portfolio of initiatives focused on workforce development, entrepreneurship, innovation and business climate with a continued emphasis on key economic sectors – the life sciences, advanced manufacturing and logistics, information technology and energy.  CICP is also a leading advocate for regional mass transit and an increasingly active voice on issues like K-12 education reform.

“The collective influence and insight of CICP’s members make it a real catalyst for economic progress,” said Johnson.  “I’m honored to be chosen to lead the group and welcome the challenge of building on the momentum generated by Mark Miles, who brought so much energy and an innovative spirit to the role.”

According to Johnson, the need for a CEO-led group like CICP has only grown since the organization was founded in 1998.

“In 2001, CICP put forward a blueprint for economic development that still guides policymakers today, and over the last decade built the infrastructure for initiatives like BioCrossroads, Conexus, TechPoint and the Energy Systems Network to energize our major industries,” Johnson continued.  “Today we still face major challenges – educating Hoosiers for tomorrow’s careers, creating more high-skill jobs in Indiana, building an entrepreneurial business climate – and we need an organization with the credibility and clout to tackle our most daunting issues.”

Prior to his time as President of BioCrossroads, Johnson was a partner with the Indianapolis-based law firm Baker & Daniels (now Faegre Baker Daniels) with a practice that included public finance, major public-private investment projects and economic development transactions.  He serves on the Purdue Research Foundation board, the IU Research & Technology Corporation External Advisory Committee, and the Notre Dame Graduate Studies and Research Council.  He is also a member of the Indianapolis Charter School Board.

He is a graduate of Harvard University (where he was a Rhodes Scholar) and Harvard Law; he served on the staff of the U.S. Senate Foreign Relations Committee before embarking on his legal career.

Johnson will assume his new responsibilities with CICP effective immediately.

Last week, CICP’s advanced manufacturing and logistics initiative, Conexus Indiana, released its 2012 Manufacturing & Logistics Report Card, an annual analysis of where we stand with our largest economic cluster, inter-connected industries that have led Indiana out of the last recession as our largest source of new jobs and job commitments.  Along with the life sciences, information technology, and clean energy technologies, manufacturing and logistics are the primary wealth-creating, high-skill employment-generating sectors.  Their vitality is critical to our overall economic health. 

The Report Card, developed by economists at the Ball State University Center for Business & Economic Research, ‘grades’ Indiana on a number of categories related to the present and future of these industries. Indiana is one of only two states to earn an ‘A’ for the overall vitality of both our manufacturing and logistics industries – we continue to rank #1 in manufacturing employment per capita, ninth in logistics jobs.

Indiana also earns an ‘A’ for competitiveness in the global economy, ranking among the leaders in manufacturing exports and income for Hoosiers generated by foreign-owned manufacturers.

The study gives significant credit for Indiana’s growing manufacturing and logistics sector to the state’s pro-growth business climate, and sound fiscal policies that have limited state government’s exposure to unfunded debts (like public pensions and bonds) – this allows companies to invest in Indiana with confidence that large tax hikes or drastic budget cuts lurk around the corner.

Unfortunately, not all news is good news. The Ball State economic team predicts that manufacturing and logistics growth is stay positive but slow down for the rest of 2012, as the national economy continues to falter (and could slip into recession). A poorly-educated population also jeopardizes the future health of these industries as employers demand a highly-skilled workforce to drive productivity and innovation.

The press release summarizing the Report Card is below, and the full study can be downloaded here.  You’ll also find interesting commentary by Conexus CEO Steve Dwyer on what the Report Card tells us here and here.

2012 Manufacturing & Logistics Report Card:

Indiana’s business climate helps the state thrive in the global economy – but workforce challenges continue to threaten future growth

(INDIANAPOLIS, Ind., June 19, 2012) Conexus Indiana and the Ball State Center for Business and Economic Research today released the 2012 Indiana Manufacturing and Logistics Report Card, the 5th annual assessment of the strengths, challenges and opportunities impacting two industries that collectively employ nearly one of every four Hoosiers.

According to the report, manufacturing and logistics continue to drive Indiana’s recovery and employment – the state again ranks as the most manufacturing-intensive economy in the nation, and first among states in manufacturing employment per capita. Indiana ranks 9^th in logistics employment and 10^th in freight shipments by tonnage. The strength of these and other data earned Indiana ‘A’ grades in the strength of both its manufacturing and logistics sectors (Ohio is the only other state to earn an A in both categories).

Indiana also thrives in the global economy, receiving an A in Global Position; the state ranks 10^th in manufacturing exports per capita and first in income derived from foreign manufacturing investment.

According to Ball State economist Michael Hicks, Indiana’s solid tax and fiscal policies have kept the state’s historically-strong manufacturing and logistics industries competitive. The state earned another A grade for its tax climate, and a B for a new category – Expected Liability Gap – that assesses the state’s exposure to future liabilities such as unfunded pension costs and bond obligations.

“Growing businesses are looking for a business climate that’s pro-growth and predictable,” noted Hicks. “Indiana’s tax code is favorable for investment today, and the policies that have kept us on solid fiscal footing lowers the risk of abrupt tax hikes or drastic budget cuts in the future based on unmanageable public debt.”

Indiana earned an improved B+ grade in the Report Card’s Productivity and Innovation category, based on improvements in manufacturing productivity and patent production, a testament to the incumbent Hoosier worker.

“The current manufacturing and logistics workforce is driving growth,” said Conexus Indiana President and CEO Steve Dwyer. “But these workers are getting older – the average age for manufacturing and logistics employees is over 50 – and the pipeline for the next generation is weak. That’s where our challenge lies.

As Dwyer notes, not all of the news is positive in the Manufacturing and Logistics Report Card. Indiana continues to be dogged by weak educational attainment, a critical challenge for industries that are increasingly high-tech and demand a highly-skilled workforce.

“The majority of U.S. manufacturing workers now have some college education,” Dwyer added. “With Indiana in the bottom half of states for adults with a two- or four-year degree, we’re at a competitive disadvantage for manufacturing and logistics companies looking to hire educated workers with advanced skills.”

The state’s C- grade in Human Capital is attributable to disappointing rankings in the adult population with a high school diploma (31^st among states), adults with a four-year college degree (42^nd), and associate’s degrees awarded per capita (32^nd). While older workers have acquired skills through years of experience, the demands of industry have evolved beyond the educational abilities of future employees, according to Dwyer.

“We have to introduce young Hoosiers to manufacturing and logistics careers early on, and give them opportunities to acquire the skills they need to succeed in 21^st century factories and high-tech supply chain operations,” he said.

As the state’s manufacturing and logistics initiative, Conexus Indiana is working with its corporate and academic partners to develop industry-endorsed educational programs, and marketing the careers to young people through its ‘Dream It. Do It.’ marketing campaign (at www.DreamItDoItIndiana.com). The organization is currently focused on a pilot launch of its new manufacturing and logistics high school curriculum, which will be available to school districts statewide next year.

“We value this annual Report Card as a way to mark our progress and get an objective read on the vitality of these industries, which make up almost a third of our economy,” finished Dwyer. “But we’ve made the strategic decision to focus most of our attention on Human Capital – the story of manufacturing and logistics over the last few decades is the transformation of the workforce, and Indiana still has some catching up to do.”

Other findings in this year’s Report Card include a C- in Benefit Costs driven by healthcare expenditures, and a C+ in Diversification (an improvement from last year’s C grade, demonstrating a breadth of growth across 22 industry sub-sectors identified by Ball State).

Around 2008, the U.S. manufacturing sector crossed an important rubicon – the percentage of its workforce with a college degree or some post-high school education exceeded the percentage with only a high school diploma or less.  When these high-skill workers became the majority, manufacturing had undeniably evolved – hence, the rise of the term ‘advanced manufacturing.’  Unfortunately, our education/workforce system has not evolved along with industry demands - hence Conexus' critical work in this arena.

Millions of Americans are looking for work, and thousands of U.S. manufacturers are looking for workers.

The numbers are startling. While unemployment and underemployment remain stuck near 20 percent, more than 600,000 good manufacturing jobs have gone unfilled, according to the National Association of Manufacturers. While personal income has stagnated, these jobs pay wages much higher than the national average.

Where's the disconnect?

There's a simple answer to a complex problem: The majority of manufacturing jobs now require education beyond high school, and our workforce doesn't make the grade.

As manufacturers have raced to be more productive and innovative over the last several decades, they've demanded more out of their workers -- the skills to operate advanced computerized equipment and robotic systems, teamwork and troubleshooting capabilities.

The manufacturing workforce got smarter, but it also got older. Back in 1980, 70 percent of the nation's manufacturing workers were younger than 45. Today, half the workers are older than 45, and the percentage age 25 to 34 has dropped by more than a third.

As the baby boomer generation retires, jobs open up. But young workers are ill-prepared to step into the shoes of their parents and grandparents. According to the Organization of Economic Cooperation and Development, the U.S. is the only industrialized country where educational attainment among those just entering the labor market (25 to 34 year olds) is less than those about to leave the labor market (55 to 64 year olds).

Even in Indiana, the most manufacturing-intensive state in the nation, we haven't changed our academic approach since the rise of the assembly line. Post-high school training will be mandatory for 60 percent of all new jobs in manufacturing and logistics over the next decade, but we remain stuck in a bygone era when a basic high school diploma was sufficient to earn long-term employment at the local factory.

Conexus Indiana represents companies in the automotive industry, aerospace and defense firms, logistics businesses -- a wide spectrum of high-tech manufacturing and supply chain fields. We convene groups of them regularly to discuss critical business issues. The consistent message is that they all need skilled workers, but that despite high unemployment, the right kind of labor is scarce.

That's why we act as a bridge between private industry and higher education partners such as Ivy Tech, Vincennes University and Harrison College to ensure that quality post-secondary programs are available to prepare young Hoosiers for these challenging (and high-paying) careers. But we must do more, catching the next generation of manufacturing and logistics workers even earlier -- in high school.

It's clear that students begin seriously thinking about their career choices while still in school. Research by the ACT confirms that high schoolers who were fairly certain about their occupational choices by their junior/senior years are more likely to succeed in college and ultimately earn positions in their chosen field.

Conexus is now working with Indiana employers and the state Department of Education to develop an advanced manufacturing and logistics (AML) high school-level curriculum, a mixture of online and hands-on courses that will expose students to these industries and give them a solid foundation of knowledge to carry on after they earn their diplomas.

The AML curriculum was created in alignment with state standards and with broad-based feedback from industry, ensuring that it carries real value for students. It has been endorsed and is eagerly anticipated by school superintendents and technical education directors across the state who see the need to prepare their students to participate in a sector that today employs one of every four Hoosiers.

Conexus is completing private fundraising to finalize the curriculum and provide it to school districts at no additional cost. The private sector has embraced the opportunity to invest in this effort, a concrete demonstration of the demand that exists for a revitalized workforce pipeline. For too long, employers have been disengaged from the educational system; now, companies are realizing that they must push for relevant programs, work with local schools and put money into training efforts to develop the human capital they need.

Without qualified employees, advanced manufacturing and logistics companies can't grow; without good job opportunities, young people can't become productive taxpayers. The process of closing our skills gap will begin in classrooms and technical education centers across Indiana -- and it has to start now. It's up to us to make sure local high schools have the tools to engage and educate our future workforce.

Dwyer is president and CEO of Conexus Indiana, the state's industry-led manufacturing and logistics initiative; he formerly served as chief operating officer of Rolls-Royce North America.

Conexus President & CEO Steve Dwyer authored this piece on Inside Indiana Business last week on the need to upskill Indiana’s manufacturing and logistics workforce. A recent study from the Georgetown University Center on Education and the Workforce asserts that 60% of all U.S. jobs within the next decade will require some sort of post-secondary education – this trend certainly applies to manufacturing and logistics, an increasingly high-tech sector where advanced robotics and sophisticated supply chain management systems are now the norm. 

If Indiana fails to upgrade our educational pipeline to train the next generation of manufacturing and logistics employees, we’ll quickly find our position as the most manufacturing-intensive state, and the ‘Crossroads of America’ logistics hub, in serious jeopardy.

Indiana’s grade on manufacturing and logistics workforce: Incomplete.

Steve Dwyer – President & CEO, Conexus Indiana

Last month, Conexus Indiana and the Ball State Center for Business and Economic Research released our 2011 Manufacturing and Logistics Report Card. Each year, economists at Ball State pull together relevant economic data to ‘grade’ the vitality of Indiana’s manufacturing and logistics industries, analyzing a sector that collectively employ one of every four Hoosiers.

Manufacturing is leading Indiana’s economic recovery, and we score several A’s on this Report Card. We rank among the national leaders in per capita employment in both sectors. We benefit from a pro-growth tax climate, and are a winner in the global marketplace as measured by foreign investment and strong exports.

We’re barely average, however, in a critical area – Human Capital. The state’s ‘C’ grade is a step forward from last year’s C-, based on strong enrollment in community college programs and improved high school graduation rates. But Indiana’s adult population continues to rank among the least-educated in the nation, leaving Hoosier manufacturing and logistics firms struggling to find qualified applicants for available jobs as Baby Boomer workers leave the workforce in growing numbers.

This is especially troubling given the transition of manufacturing and logistics into the information-based economy. Once upon a time, employers grew their operations based on the availability of natural resources, proximity to other industrial centers and customers, and access to transportation infrastructure, with competitive tax and regulatory policies sweetening the pot. Indiana was well-positioned on all these, and prospered accordingly.

But global competition and market demands accelerated the push for productivity and innovation. The traditional assembly line (once a bold innovation in its own right) was gradually transformed by computerized equipment and robotic systems. Distribution centers evolved into modern supply chain operations, meeting the ‘just in time’ needs of customers around the world with track and trace technologies and enterprise management software.

As the industries changed, so did the jobs. And while location, infrastructure and business climate continue to be important factors, workforce readiness emerged as a top priority for growing companies. 

Manufacturing and logistics careers now demand advanced technical skills, technology savvy, troubleshooting and teamwork abilities. This means some education beyond high school – within the next decade, 60% of all jobs will require post-secondary education. The same trend holds true for manufacturing and logistics. Yet a recent study by Indiana University estimates that 60% of current Midwestern manufacturing workers have only a high school diploma, and Indiana’s plight is likely even worse.

So our ‘C’ grade in Human Capital does more than keep Indiana off the honor roll – it poses a direct threat to our competitiveness. We can (and do) have a great position as Crossroads of America, unparalleled access to highways, rail and maritime shipping, a strong manufacturing heritage, low taxes and an unprecedented hot streak on international investment. But if we aren’t preparing the next generation of Hoosier workers for high-tech manufacturing and logistics jobs, we’ll quickly lose our edge.

There’s a lot of good news in this year’s report. Indiana continues to rank among the most manufacturing and logistics-intensive states in the nation, helping us find our footing more quickly than many in this post-housing bubble, post-financial crisis economy. But it isn’t an exercise in self-congratulation – it’s a confirmation of the challenges we face in continuing to make and move products in the global knowledge economy.

The bottom line of this Report Card is clear – for Indiana’s younger workers, it’s time to head back to school and try to raise our manufacturing and logistics GPA.

(View the entire 2011 Manufacturing and Logistics Report Card at www.ConexusIndiana.com.)

Steve Dwyer is President & CEO of Conexus Indiana, an initiative focused on the workforce and other needs of the state’s manufacturing and logistics industries. He formerly served as Chief Operating Officer of Rolls-Royce North America.

While economists worry about a ‘jobless recovery’ nationally, here in Indiana manufacturing employment has risen nearly 5% since the end of the recession – but how do we keep this momentum going?

On Friday, CICP's Conexus Indiana initiative and the Ball State Center for Business and Economic Research released the 2011 Manufacturing and Logistics Report Card, an annual analysis of the strengths, challenges and opportunities from two of the state’s most critical industries.

The Report Card predicts a ‘record year’ for Indiana manufacturing, noting that the state ranks among the national leaders in per capita employment in both manufacturing (2^nd among states) and logistics (9^th).  It credits strong export growth and foreign investment, a competitive tax climate and big productivity gains, but warns that our weakness in education/workforce readiness along with rising healthcare costs could jeopardize future success.

Download the 2011 Report Card here, and check out the press release below:

Indiana scores ‘A’s on 2011 Manufacturing & Logistics Report Card, but poor showing on workforce threatens future growth

(INDIANAPOLIS, Ind., June 10, 2011)  Conexus Indiana and the Ball State Center for Business and Economic Research today released the 2011 Indiana Manufacturing and Logistics Report Card, an annual “grading” of the strengths, challenges and opportunities impacting the two industries that collectively employ nearly one of every four Hoosiers.

This year’s Report Card confirms that Indiana’s strengths in ‘making and moving’ products have buoyed the state’s economic recovery.  Indiana continues to rank among the top tier of states in manufacturing and logistics employment, and Ball State economists predict that the next 12 months will be a “record year” for manufacturing in the state.  Indiana's manufacturing employment has risen by 4.6% since the end of the recession.

The Report Card gives Indiana overall ‘A’ grades in Manufacturing Industry (ranking first among states in share of the economy focused on manufacturing), Logistics Industry, Global Position (measuring manufacturing exports and foreign investment) and Tax Climate.  The educational attainment of the Hoosier workforce, however, continues to be a long-term concern.

The state’s ‘C’ grade in Human Capital is a step forward from last year’s C-, based on strong enrollment in community college programs and improved high school graduation rates.  But Indiana’s adult population continues to rank among the least-educated in the nation, leaving Hoosier manufacturing and logistics firms struggling to find qualified applicants for jobs that demand increasingly advanced skills.

“This year’s Report Card reiterates that Indiana must do a better preparing the next generation of manufacturing and logistics workers,” said Steve Dwyer, Conexus Indiana’s President & CEO.  “Today’s jobs aren’t about standing at assembly lines – they’re about running computerized equipment and robotic systems, about teamwork and problem-solving.

“We have to give introduce young Hoosiers to these careers early on, and give them opportunities to acquire the skills they need at all levels to create the pipeline of talent that manufacturing and logistics employers need to grow.”

As the state’s manufacturing and logistics initiative, Conexus Indiana is working with its corporate and academic partners to develop industry-endorsed educational programs, and marketing the careers to young people through its ‘Dream It. Do It.’ marketing campaign (at www.DreamItDoItIndiana.com).

The state’s ‘A’ in Logistics Industry was a first in the four-year history of the Report Card, up from a B+ in 2010 based on stronger infrastructure investment relative to other states.  Conexus Indiana has prioritized and advocated for critical investments through its Indiana Logistics Council, an industry forum that gathers input from logistics employers across the state.

“Indiana starts with a competitive advantage in logistics based on our position as the ‘Crossroads of America,’” Dwyer noted.  “But we have to keep making smart choices to keep our edge.”

Other key findings from the 2011 Indiana Manufacturing and Logistics Report Card:

·         Indiana ranks second among states in per capita manufacturing employment and 9^th in logistics employment;

·         Indiana ranks first in per capita income derived from foreign-owned manufacturing operations, 9^th in manufacturing exports per capita and 13^th in export growth;

·         Indiana scored a ‘C-’ in Benefit Costs, based on poor rankings in healthcare and fringe benefit costs;

·         Indiana generally ranks in the top tier of states in terms of tax rates – and the recently-enacted corporate income tax cut should bolster the state’s current ranking of 21^st in corporate taxes;

·         The state’s ‘C’ grade in Productivity and Innovation represents a mixed-bag of indicators, with strong rankings in manufacturing productivity (9^th) and R&D investment (15^th) offset by poor performance in patents-per-capita (32^nd);

·         With rankings of 31^st in percentage of the workforce with a high school diploma or greater, 42^nd in college-educated workers, and 26^th in younger workers with a two-year degree, human capital remains Indiana’s biggest long-term hurdle to future manufacturing and logistics growth.

“This year’s analysis shows that Indiana is clearly still a manufacturing state that is taking advantage of its central location and pro-growth business climate,” said Michael Hicks, Director of the Ball State Center for Business and Economic Research and primary author of the Report Card.  “But I’d echo the warning that every investor has heard – ‘Past performance is no guarantee of future results.’ Policymakers need to focus on areas like workforce development and healthcare costs to maintain our competitiveness.”

Launched by the Central Indiana Corporate Partnership, Conexus Indiana is the state’s advanced manufacturing and logistics initiative, dedicated to making Indiana a global leader.  Conexus is focused on strategic priorities like workforce development, creating new industry partnerships and promoting Indiana’s advantages in manufacturing and logistics.  Learn more at www.ConexusIndiana.com.

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CNBC has released its annual Top States for Business rankings – while Indiana ranks a fairly pedestrian 21^st 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 9^th among states (up from 13^th in 2009), and we continue to rank among the top handful of states (6^th) in transportation infrastructure, anchoring our strong logistics sector.

We made significant progress in access to capital, moving from the bottom third of states (36^th) in 2009 to the middle of the pack (26^th) 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 41^st to 20^th 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 31^st to 42^nd.  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.

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.

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.

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.

Featured today on Inside Indiana Business:

Hoosier students must graduate high school ready to succeed

Mark Miles

Last week, the Indiana Commission for Higher Education began providing a valuable new tool for Indiana high schools – specific reports that show how many of each school’s graduating class went on to college, where they enrolled, and how many required remedial math or English classes once they made it to campus.

I’m guessing that many, if not most, school districts are in for a rude awakening when they receive these reports.  Statewide data show that more than a quarter of all recent Hoosier high school graduates needed at least one remedial class as college freshmen.  Two-thirds of all community college students needed remediation.  We aren’t preparing our students at the K-12 level to succeed in higher education.

This creates a domino effect that eventually takes a steep toll on our economic competitiveness.  It places another burden on our higher education system, forcing these institutions to teach material that should have been mastered in high school.  The students who receive remediation start out behind and struggle to catch up – less than ten percent graduate from a four-year college program in six years or achieve a two-year degree within three.

These trends contribute to our generally dismal educational track record.  Just a third of Hoosier adults hold at least a two-year degree.  Indiana is mired in the middle of the pack in associates degrees awarded per capita, and we’re one of the least-educated states in the nation as measured by four-year college graduates in our adult population.

 In today’s economy, failing to complete some education beyond high school is tantamount to surrendering to a life of low wages, high unemployment and missed opportunities.  The days when a high school diploma served as a ticket to a good job at the local factory are long gone.  Indiana’s fastest-growing industries, like the life sciences and technology fields, demand a highly-skilled workforce.  In manufacturing, traditional assembly line jobs have disappeared at a dizzying pace, while new jobs (in areas like electric vehicles and aerospace) require advanced training.

At the macro level, a weakening workforce discourages new business investment in Indiana, as growing companies look to states and regions with strong human capital to locate and expand.

So what are some ways that can better prepare our young people to carry on their education after high school?

Many of our strategic economic initiatives are already working to address this issue.  BioCrossroads’ I-STEM initiative provides resources for K-12 teachers to better educate their students in the STEM disciplines – science, technology, engineering and math. 

Conexus Indiana is working to develop a high school curriculum that will prepare students to take advantage of high-tech careers in advanced manufacturing and logistics, leading them seamlessly into technical training and associate’s degree programs.  Conexus is also working with ‘champions’ (teachers and counselors) in 28 area high schools to promote careers in these industries to students, emphasizing technical education and the need for training beyond high school.

TechPoint has focused on alternative school models, sponsoring the New Tech High program at Arsenal Tech through its Foundation.  The New Tech program integrates technology and 21^st century learning strategies into the state curriculum, and is getting results.  Currently, the New Tech students’ passing rate for the Indiana Graduation Qualifying Exam is twice that of any other open-entry program on Arsenal’s Tech’s campus of 2,700 students.

We also have to recognize that the issues that hinder students from graduating from high school ready for college begin long before ninth grade.  During the legislative session, CICP was part of an effort to refocus our schools on early reading education, including a policy ending social promotion from 3^rd to 4^th grade unless students can read at grade level.  This is consistent with the Indiana Department of Education and State Board of Education, both of which have made reading education the top priority. 

It’s clear that students who have serious problems with reading early on continue to struggle throughout their academic careers – many drop out before graduating from high school, and their chances of completing a college degree are nearly nonexistent.  Making sure that these students get the extra attention they need starting in the critical K-3 years is an approach that will eventually lead to graduating classes more prepared to tackle post-secondary coursework.  Ultimately, the General Assembly empowered the Indiana Department of Education to enact this critical reform as part of a broader strategy for improving reading achievement.

There’s no ‘silver bullet’ strategy that will make every high school graduate ready for college or post-secondary training on day one.  But the data being generated by the Commission for Higher Education show that this is a challenge that demands our attention, part of the ‘big picture’ effort to raise our educational attainment and build a stronger workforce.  Being ready to continue one’s education after high school means being ready to succeed in our knowledge-based economy, and to be a valuable contributor to Indiana’s economic success.

Mark Miles is the President & CEO of the Central Indiana Corporate Partnership.

I wanted to draw your attention to this insightful column by former Cummins Vice-Chairman Joe Loughrey, who chairs CICP’s Conexus Indiana and Energy Systems Network initiatives.  Loughrey emphasizes the need for a proactive focus on workforce development to maintain Indiana’s competitive edge in ‘green economy’ areas like vehicle electrification (as highlighted by the U.S. Department of Energy's visit to Indianapolis-based EnerDel last week). 

A version of this piece appeared in today’s Star, here.

Keep focus on tomorrow’s workforce

Joe Loughrey

Last week, a delegation from the U.S. Department of Energy visited Central Indiana to finalize a $118 million grant to Indianapolis-based EnerDel, the only current U.S. manufacturer of lithium ion batteries for hybrid and plug-in electric vehicles.

Leveraging this grant and private investment, EnerDel is creating more than 1,400 new jobs in Central Indiana, building a new manufacturing facility in Greenfield.  It’s a major economic success story for the region.

EnerDel is just part of a growing ‘green vehicle’ industry in the state.  Last year, Think North America chose Elkhart as the site of the first U.S. factory for its line of electric cars.  In Anderson, Bright Automotive is also engineering state-of-the-art plug-in hybrids.  Established Indiana manufacturers like Cummins, Remy, Delphi and Allison Transmission are also major producers of hybrid components.

We can be proud that Indiana is a leader in putting electric vehicles on the road, helping our environment and making the U.S. less dependent on foreign oil.  Taking advantage of the growing market for plug-ins and hybrids is also good for Indiana’s economy.  But we do face a longer-term challenge to sustaining and strengthening this leadership position in the green economy – educating the next generation of employees for this fast-growing, rapidly-evolving industry.

The factories that produce hybrids and plug-ins are increasingly high-tech, just like the cars themselves.  These vehicles feature microcontrollers and other advanced technologies, along with the standard automotive electronics – installing, testing and troubleshooting these components takes a skilled workforce, with technical training beyond high school or two-year associates degrees.

It’s not just the green automotive industry that requires more educated employees.  There are very few ‘low skill’ jobs left in manufacturing in general today.  In a study by the Federal Reserve Bank of New York (‘A Leaner, More Skilled U.S. Manufacturing Workforce’), economists divided manufacturing jobs into low-, medium- and high-skill and observed that between 1982 and 2002, high-skill manufacturing occupations grew 37% while low- and medium-skill jobs declined 24% and 18% respectively.

Indiana boasts a rich reservoir of engineering talent and a strong manufacturing workforce – it’s a key competitive advantage that allowed us to attract companies like EnerDel, and why other clean technologies firms are looking to locate and expand in the state.  But to maintain this edge, we have to ensure that our workforce pipeline stays strong, with young workers getting the right degrees and certifications to take advantage of advanced manufacturing careers in electric vehicles and other high-tech fields. 

Initiatives like Conexus Indiana are hard at work bringing private industry and higher education together to create up-to-date manufacturing training programs, and marketing these career paths to young people through its ‘Dream It. Do It.’ campaign.  Purdue and Ivy Tech Community College received a $6 million federal stimulus grant to create specific degree and technical programs for electric vehicles, and the state’s Department of Workforce Development is also focused on green job training.  At the K-12 level, it’s critical that technical education programs are spared from budget cuts to get students on the right track early on.

These efforts have to be a top priority for policymakers, educators and manufacturers alike.  Pursuing economic development without a parallel focus on education will ultimately frustrate the ambitions of both the companies that can’t find skilled workers to fulfill their growth plans and the Hoosiers who find themselves unqualified for better jobs. 

Announcements like EnerDel’s are great news for Indiana’s economy; a steady supply of talented workers has been a catalyst for this success.  But we also have to keep a proactive focus on tomorrow’s workforce to keep the momentum going.  Looking ahead, degrees and certificates awarded are economic development metrics just like jobs and investment – the path towards a green advanced manufacturing economy for Indiana starts in the classroom.

Loughrey is the retired Vice-Chairman of Cummins, and chairs the Conexus Indiana and Energy Systems Network initiatives for the Central Indiana Corporate Partnership.

The last week has brought positive stories from several areas of the Indiana economy that are represented by CICP initiatives – anecdotal evidence that these industry clusters continue to represent our best prospects for future growth.

Last week, U.S. Department of Energy (DOE) officials traveled to Indianapolis-based EnerDel to meet with company officials and representatives of Central Indiana’s clean technology industry, recognizing our region’s emerging leadership position in vehicle electrification.

EnerDel, the only U.S. manufacturer of advanced lithium-ion batteries for hybrid and plug-in electric vehicles, received a $118.5 million grant from the Department of Energy through the American Recovery and Reinvestment Act (ARRA) in August.  EnerDel and other partners have also joined in a major demonstration project of electric vehicles in the Greater Indianapolis region, dubbed Project Plug-IN, under the auspices of CICP’s Energy Systems Network (ESN) initiative.

The DOE team led by Gil Sperling, Senior Advisor to the Office of Energy Efficiency and Renewable Energy, highlighted both developments, applauding EnerDel’s role in enhancing U.S. innovation and manufacturing capacity in clean energy and recognizing Project Plug-IN as an important initiative that will help make plug-in electric vehicles a practical choice for the American driver.  Indiana’s growing ‘green vehicle’ industry represents a great opportunity for both our energy and advanced manufacturing sectors.

In logistics, s2f Worldwide, a third-party logistics and supply chain service provider, chose to locate its operations in Plainfield this week, a deal projected to create 250 new jobs by 2013.  Central Indiana continues to strengthen our position as a global distribution hub, leveraging our strong infrastructure and inherent geographic advantages into new logistics opportunities.  Our Conexus Indiana initiative is poised to release a comprehensive logistics strategic plan for the state, and is also working to expand intermodal capabilities at the Avon railyard in Hendricks County, putting the region in an even stronger position going forward. 

Indiana continues to rank among the top ten states in logistics employment per capita – these efforts are paying off in good jobs for Hoosiers.

And finally, in technology, I was struck by an interview on Inside Indiana Business with Gerry Dick with Bill Godfrey, Chairman of on-demand marketing software provider Aprimo.  Godfrey asserts that Indiana is becoming a market leader in the e-marketing arena, with companies like ExactTarget, ChaCha, Compendium, Cantaloupe and others joining Aprimo here.  Jim Jay, President of our TechPoint initiative, wrote a piece on this very topic at about this time last year – check it out here.

And speaking of TechPoint, the organization has extended the deadline for its Mira Awards, celebrating Indiana’s high-tech success stories – go here to nominate an Indiana technology innovator today.

Spring is finally right around the corner - to belabor a metaphor, stories like these appearing with greater frequency seem to foreshadow an economic thaw for Indiana to match the warming weather.

Infrastructure plan needed to avoid economic gridlock

David Holt

We’ve all been stuck in gridlocked traffic – it’s frustrating, especially when you’re rushing to make it to work or an important meeting on time.

But imagine you’re stuck while hauling more than a thousand tons of cargo, trying to make a tight delivery schedule.  And imagine if the cause of this ‘traffic jam’ wasn’t typical rush hour congestion or a minor fender bender, but a catastrophic infrastructure failure.

This was the situation that confronted dozens of barges on the Ohio River on an otherwise tranquil Sunday morning, September 27^th, when one of the doors on the Markland Locks came unhinged and stalled traffic on the river.  They waited more than 20 hours while an auxiliary channel was opened.  The Markland Locks are located near Vevay, Indiana, about 25 miles east of Madison; they accommodate more than 55 million tons of freight every year.

Even with the alternate route open, it’s taking barges three times as long to navigate through Markland as the locks are repaired.  Lockmaster Gary Birge called the incident his “worst nightmare” and “catastrophic.”  Army Corps of Engineers officials were unsure how long repairs would take; the Corps recently gave the 40-year-old Locks a ‘D’ rating during a regular assessment for corrosion and cracking.

The incident at Markland isn’t just about a temporary inconvenience to shippers.  It’s a warning about the importance of investing in our infrastructure for our broader economic health.

Indiana is a leader in the transportation of goods – our ‘Crossroads of America’ slogan is more than just marketing fluff.  We’re located within a day’s drive of 75% of the U.S. and Canadian population and businesses.  We’re ranked 1^st in the nation for interstate highway access, 9^th in rail miles and 14^th in cargo moved by water, with three quality maritime ports (two on the Ohio River and one on Lake Michigan).

This adds up to a sizable logistics industry; Indiana ranks among the top ten states in per capita logistics jobs.  Our distribution strength also supports our manufacturing industry, giving these companies the ability to quickly and efficiently get their products to customers across the country and around the world.  So preserving our status as a logistics juggernaut must be a critical economic priority.  We can’t afford to simply coast on our geographic advantages – we have to proactively invest in our infrastructure assets. 

To that end, Conexus Indiana, the state’s logistics and manufacturing initiative, has embarked on the development of a statewide logistics strategic plan. The plan is being put in place by a group of 35 statewide industry executives representing all facets of the logistics and manufacturing industries – air, rail, trucking, infrastructure, warehousing/distribution and service firms – and has already identified opportunities and challenges Indiana faces in ensuring the continued flow of goods that originate and terminate in Indiana and add value to the logistics industry. 

In fact, Conexus Indiana has identified decaying locks and dams on the Ohio River as a serious threat. With the disaster caused by the broken gate at the Markland Locks, it’s clear we need to think ahead to prevent future incidents and protect our waterways as commerce corridors for the state. 

After all, when one cog in the supply chain wheel breaks, the effects are felt broadly – not only by the producers of these goods who depend on the waterways as a means of transportation, but also by all those who touch their products in the supply chain.

Later this year, Conexus will issue this report addressing the state’s logistics strengths, opportunities and challenges; not just for waterborne freight, but rail, highway, and bringing these modes of transportation together as an integrated system.  A solid roadmap for our logistics industry is essential to avoid economic gridlock, and squandering a critical competitive advantage for Indiana.

David Holt is Vice-President of Operations and Business Development for Conexus Indiana, the state’s advanced manufacturing and logistics initiative.

Warsaw, IN, September 23, 2009 – The future of Warsaw, Indiana, the orthopedics capital of the world, received a significant boost today: the single largest private foundation grant ever awarded in the region.

“Indiana is indeed fortunate to be home to this extraordinary cluster of orthopedic companies in the Warsaw community,” said N. Clay Robbins, president of the Endowment.  “We are pleased that a promising plan and framework have been developed, after many months of deliberation and good effort, to secure and enhance the region’s competitive appeal to the orthopedic industry now and in the future.

The OrthoWorx initiative was created out of a comprehensive Endowment-funded study conducted by BioCrossroads, Indiana’s public-private collaboration for investment, development and advancement of the state’s signature life sciences strengths.  Released Sept.10, the report, "Warsaw, Indiana: The Orthopedics Capital of the World  -- An overview, analysis and blueprint for future industry and community growth", explores the sector's current assets and challenges and sets forth a series of action-oriented recommendations designed to secure and advance the community's current position as home to nearly a third of the world's orthopedic device industry.

For example, within a talent and workforce development initiative, OrthoWorx will engage the Indiana Department of Workforce Development, Ivy Tech, Grace College and other higher education institutions, to help identify gaps in training and associate and baccalaureate degree programs. They will then work to develop new educational programs through state and federal grants and other sources of funding to fill such gaps. OrthoWorx also will explore ways to enrich and expand K-12 options in the region and develop further the research collaborations among orthopedic companies and Indiana’s research universities. It also will build relationships with the human resources, management and manufacturing departments of the various Warsaw-based orthopedics companies to ensure that companies can get the specifically trained workers they need.

“Much as BioCrossroads has become the supporting brand for Indiana's broad field of life sciences assets, OrthoWorx will become the voice that promotes the presence and potential of the Warsaw-based orthopedics industry and the community that supports it,” said David Johnson, president and CEO of BioCrossroads.  “As the epicenter of the orthopedics industry, Warsaw offers both a unique industry and a unique community. OrthoWorx will bridge the two to put the best strategic opportunities into action.”

“While many have contributed to the development of this plan, we are especially impressed by the leadership and dedication of the president of Grace College, Ron Manahan; the executive director of the Kosciusko County Community Foundation, Suzie Light; and the leaders of the orthopedic industry and BioCrossroads. Without their tireless efforts we would not be here today,” Robbins added.

Check out these columns by TechPoint President Jim Jay, which highlight different facets of the growing strength and diversity of Indiana’s technology community.  One describes an exciting new market where Indiana has an emerging strength – digital media and electronic marketing.  The other describes how Indiana’s manufacturing sector has become increasingly high-tech and innovative to continue to grow in the global economy.

Both pieces mention an important upcoming event – TechPoint’s annual Innovation Summit, which is being held on September 29^th at the Indiana Convention Center in Indianapolis.  This year’s Summit focuses on how we can encourage and capitalize on innovation as a state and within our own companies, focusing on high-growth industries like information technology, advanced manufacturing, the life sciences, energy and logistics.  Visit www.techpoint.org/summit for more details.

Central Indiana: New Media Marketing Mecca?

This month, we celebrate the 40^th anniversary of the Internet, and also recognize an Indiana social media milestone – it’s projected that the number of Hoosiers using the Facebook network will reach 1.5 million in early September, nearly a quarter of our total population.

The Facebook statistic is just one indicator of our near-universal adoption of digital media, at home and in the workplace.  It’s changed the way we live, and I’d argue that no discipline has felt the impact more than marketing:  Read more…

Advanced manufacturing: Center stage in the innovation economy

It’s obvious that we live in an innovation-driven economy.  In the past, economic success was often defined by access to physical advantages (raw materials, transportation infrastructure); today the most precious resources are educated workers and new ideas.  Most economic analysis shows that the educational attainment of the workforce and its level of innovation (often measured by patents-per-employee) have the most reliable connection to rising incomes, low employment and economic output.

Read more…

A trade delegation led by Governor Daniels is scouring the Far East in search of new jobs and business opportunities this week, meeting with business and government leaders in China and Japan in hopes of adding to the historic influx of foreign investment Indiana has enjoyed over the last several years.   Today, the Hoosier State is home to more than 200 companies from Japan alone, employing as many – or more – workers than Detroit’s Big Three automakers here.

That’s the upside of the global economy: Manufacturing jobs, lured to Midwestern states like Indiana by the weak dollar, a ready workforce and proximity to the world’s biggest consumer market.  But we also have to be mindful of the threats posed by globalization, primary among them the erosion of the United States’ biggest competitive advantage, our capacity to innovate. 

It’s great that Indiana is attracting jobs based on our low business costs, the technical proficiencies of our workers and our geographic advantages.  But to create long-term prosperity in the high-tech economy, we also have to be a place where new technological advances and scientific breakthroughs are brought to life and commercialized. 

But as a nation, we’re falling behind in the race for innovation.

We aren’t encouraging innovation the way we should.  A new study by the Information Technology & Innovation Foundation shows that we now lag behind many industrialized and rapidly-developing countries in R&D tax incentives.  We were the first nation to reward innovation through the tax code, implementing the R&D credit in 1981.  But over the last decade, we’ve slipped to 17^th among OECD countries in R&D tax generosity, and developing nations like China, India, Singapore and Brazil are also employing more aggressive R&D strategies.  (China, for example, provides a 150% tax deduction on R&D expenses if companies increase investment by 10% or more over the previous year.)

Ultimately, though, tax credits don’t create innovation – people do.  But the U.S also lags in the human capital competition.  I’ve written previously about the massive investments China has made in higher education over the last decade, but a few numbers bear repeating:  More than 800 new colleges and universities built, the number of students in higher education more than tripled, and the number of graduates exploding from 8 million annually to more than 30 million.

Because of these trends, it’s widely recognized that there will be significantly more PhD engineers and scientists in China  than in the U.S. as early as next year.  A broader study by Rice University makes the startling projection that, again by 2010, 90% of all the world’s PhD-level engineers will live in Asia. 

We can’t surrender our numerical superiority in scientists, engineers, and other skilled workers without eventually seeing our innovation edge disappear.

And in fact, we’re already seeing the impact.  This thoughtful piece by TechPoint Chairman Mark Hill explores how the U.S. is slipping in our innovation-based economy relative to global competitors; for example, over the last decade, the $30 billion trade surplus that the U.S. used to enjoy in advanced technology products turned into a $53 billion deficit.

The overseas exploration that Governor Daniels and regional economic development groups like the Indy Partnership are engaged in is a critical part of succeeding in the global economy.  But it’s also essential to tend to our innovation infrastructure here at home – building an educated, creative workforce and incentivizing them to bring new ideas to market.

Back to school season has brought a flood of new students to Ivy Tech Community College campuses across Indiana; Ivy Tech is welcoming more than 110,000 students to classes this week, a nearly 30% increase from 2008’s fall semester.

The Ivy Tech enrollment boom has caused some strain on the system, with overflowing classrooms and rush to hire new teachers.  But we agree with Ivy Tech President Tom Snyder that the increase is a good sign for the state – last week, Steve Dwyer of CICP’s Conexus Indiana penned this thoughtful column on the need to reenergize the state’s technical education pipeline to prepare young people for ‘middle skill’ jobs in industries like advanced manufacturing and logistics.

Hopefully, the Ivy Tech experience shows that more and more Hoosiers are acknowledging the truth of Dwyer’s words, especially in the midst of economic turmoil: “In today’s knowledge-based economy, a high school diploma doesn’t cut it.”

Don’t forget about middle-skill job opportunities

Steve Dwyer – President & CEO, Conexus Indiana

It’s hard to believe that summer has slipped by so quickly, and ‘back to school’ season is just around the corner.  Unfortunately, too many Indiana college students are making the fateful decision to drop out of school rather than head back to class.

A  recent report from the American Enterprise Institute (AEI) shows that many Hoosier students are struggling once they enter college to pursue their bachelor’s degree – just over half (53%) eventually graduate within six years.

Dropping out of college puts these young people back at square one when it comes to their job search, far behind their peers with a diploma:  2008 data from the Bureau of Labor Statistics shows that unemployment is twice as high and average earnings just over half as much for high school graduates versus those with a bachelor’s degree.

But high school graduates who don’t choose the 4-year college path don’t have to resign themselves to a life of low wages and limited career choices.  There are a wealth of opportunities in today’s job market that demand advanced training but not a bachelor’s degree.

Let’s start with a dose of reality:  In today’s knowledge-based economy, a high school diploma doesn’t cut it.  Twenty years ago, high schoolers could look forward to making a good living at a local factory after graduation.  Manufacturing jobs are still out there – one of every five Hoosiers has one – but they’ve become high-tech, and demand more education and training beyond high school.

A 2007 report by The Urban Institute (“America’s Forgotten Middle-Skill Jobs”) defines ‘middle skill’ occupations as those that require a two-year associate’s degree or some sort of certificate training, in areas like manufacturing, logistics, computer support, sales, skilled construction trades, and some administrative/clerical work.

The report estimates that these occupations make up roughly one half (48%) of all American jobs, with 35% of the remaining positions requiring a bachelor’s or advanced degree and 15% falling to service and unskilled labor. 

It also asserts that “wage gains per year of schooling for those with associate’s degrees are comparable to those with bachelor’s degrees.”  Paychecks don’t lie – these degrees in high demand, a trend that  should continue:  The Bureau of Labor Statistics has projected that 45% of all job openings from 2004 to 2014 require middle-skill qualifications, as compared to 33% high skill and 22% low skill.

Let’s look at manufacturing, the industry where I’ve spent my career.  Everyone knows that basic assembly line jobs have been disappearing for years, made obsolete by new technologies or moved overseas.  But new middle-skill jobs are being created, as today’s manufacturing workers need computer skills; ‘soft skills’ like critical thinking and teamwork; and advanced technical expertise operating high-tech equipment.  These jobs pay an average of 40% higher than the Indiana median income.

In Central Indiana alone, it’s estimated that more than 5,000 manufacturing openings will be available over the next year as skilled Baby Boomer workers retire.  And new growth is expected in exciting fields like hybrid-electric vehicles, aerospace, nanotechnology and more.

In logistics, we’re seeing similar trends – Indiana ranks among the top ten states in logistics jobs per capita, and employment is projected to expand at a steady pace over the next several years.  With manufacturing output and exports growing and the ‘just in time’ nature of business today, demand for middle-skill occupations like supply chain managers is robust.

The problem for Indiana isn’t a lack of middle-skill jobs, but a lack of middle-skill workers.  Statistics from the Lumina Foundation show that just 7% of the state’s younger workers have an associate’s degree (46% have a high school diploma or less, 23% have a bachelor’s degree or more).  As Baby Boomers start leaving the workplace in greater numbers, we face a severe workforce shortage at the middle-skill level – and if businesses can’t find qualified workers, industry will begin to shun Indiana.

The fact that half of our incoming college freshmen don’t finish their degrees is a major problem.  Indiana is a perennial bottom-dweller among states in the educational attainment of our workers – more emphasis needs to be placed on education at all levels, and our colleges and universities have to work harder at keeping students on the right track.

But it’s clear that the opportunities of the ‘information economy’ don’t just apply to people with four-year degrees.  If the bachelor’s degree seems daunting, these students must explore the many other educational options that are open to them – associate’s degrees through Ivy Tech, Vincennes University and others, a host of technical/vocational training programs. 

Preparing yourself for middle-skill opportunities means a better chance at a rewarding, well-paying career that you can be proud of – and a stronger economy for Indiana.

Steve Dwyer is President & CEO of Conexus Indiana, an initiative focused on the workforce and other needs of the state’s manufacturing and logistics industries; he formerly served as Chief Operating Officer of Rolls-Royce Corporation.

Recent data released by the U.S. Bureau of Economic Analysis has sobering news for the Indianapolis region – the metropolitan area ranks 325^th out of 366 metros in per capita income growth over the last five years.  The performance of our region – the center of economic activity for the state – mirrors the widening income gap that Indiana has seen over the last few decades.  The average Hoosier worker makes less than 90 cents for every dollar earned by the typical American.