Our colleagues at BioCrossroads yesterday publicly announced the successful fundraising for Indiana Seed Fund II, an $8.25M venture fund aimed at promising early-stage companies in the life sciences sector.  This shows the continuing confidence and commitment of our state’s institutional investors in our entrepreneurial sector’s ability to innovate and commercialize scientific breakthroughs into successful businesses.  (BioCrossroads had already raised more than $135M in risk capital for life sciences ventures.  HALO, a network of angel investors organized by our TechPoint initiative, plays a similar role directing early-stage funding to high-tech start-ups.)

The ability to finance homegrown, high-potential businesses is of vital importance to our economic future.  As Indiana works to emerge from the shadow of the national recession, every effort must be made to attract new investment and jobs to the state as well as incentivize growth among our existing headquartered companies.  But ultimately, it will be our ability to encourage new businesses from the ground up that will yield the best returns in jobs, innovation and wealth creation.  (Start-up firms are responsible for all net job creation in the U.S. over the last thirty years, and the knowledge-intensive employment base created by fast-growing businesses in technology and the life sciences are critical to erasing Indiana’s per capita income gap.)

Legendary entrepreneurs like Colonel Eli Lilly, W.G. Irwin (of Cummins Engine) and Bill Cook helped reshape the Hoosier economy to this day.  Supporting their future counterparts through efforts like the Indiana Seed Fund is essential to building the economy of tomorrow.  Read more about the BioCrossroads’ announcement here.

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.

An excellent article in today’s Wall Street Journal about ‘hot spots’ for entrepreneurial activity in various economic sectors – validating the industry cluster approach that CICP has employed over the last decade in launching initiatives focused on particular industry opportunities.  And indeed, Central Indiana’s life sciences sector is recognized as a prime example of a growth cluster, supported by the activity of our BioCrossroads initiative.

See the full article here or read through the text below:

Where the Action Is

Across the country, new industry hubs are drawing entrepreneurs and investors—and offering start-ups support and safety in a turbulent economy

By EMILY MALTBY

Location matters.

·         Read the complete report .

It's a lesson that's all too easy to forget in a world driven by mobile devices, cloud computing and home offices. There are big benefits to setting up shop in the right spot—especially among lots of peers in the same field.

Just ask sports-gear makers in Ogden, Utah. Or health-care companies in Nashville. Or nanotechnology researchers in Albany, N.Y.

These cities, and others like them across the country, have become hubs for specific industries. Entrepreneurs are moving there and flourishing in the teeth of a bleak economy. The cities, in turn, are nurturing the entrepreneurs by giving them access to funding, mentors and facilities.

All in all, these clusters can be ideal spots for an entrepreneur in the field. Being there means getting access to a much wider range of suppliers, customers, employees and industry experts. What's more, industry peers are often willing to support each other as they get off the ground, sharing recommendations about staffers, potential sales leads and attractive office space, or giving each other guidance and insight about the industry.

Jeffrey Logsdon can attest to that. Five years ago, he moved his cybersecurity firm from Phoenix to San Antonio—a city that's seeing a surge in business for companies in the field. Company revenue doubled within three years of the move.

"I'd attribute a lot of our success to the location," he says. "I think the availability of cybersecurity talent and the low cost of doing business here has helped us. And because there are so many different cybersecurity companies, we have improved each other's business through partnerships."

As a hub grows, it brings other benefits to small firms. For one thing, even as businesses cooperate, they challenge each other to innovate—to come up with new ideas that make them stand out from the crowd. "Specialization in a region increases patents, business formation and higher wages," says Rich Bryden, director of information products at Harvard Business School, who's working with a team mapping industry hubs in the U.S.

Infomen

When businesses come together, they also catch the eye of big players with deep pockets—especially beneficial when the economy is weak and financing is limited.

"It's easier to be on the radar for investors when you're part of a critical mass," says John Fernandez, assistant secretary of commerce for economic development at the U.S. Economic Development Administration.

Hubs also catch the eye of government, says Dan Carol, senior fellow at the New Policy Institute think tank in Washington, D.C. A concentration of small firms in the same field is more likely to be recognized on the municipal level, where funding programs and policies can be created to stimulate their growth.

Here's a look at seven up-and-coming innovative centers. All have solid partnerships between the public and private sectors, a growing work force to fuel the industry and long-term strategies for development. And entrepreneurs say being there is vital to their success.

INDIANAPOLIS

LIFE SCIENCES

Indianapolis used to be the quintessential Rust Belt city. Now it's at the center of a statewide boom in the life-sciences business.

Endocyte

The state has added 8,800 jobs in the life sciences in recent years, and today some 825 medical-device companies, drug manufacturers and research labs call Indiana home.

Indianapolis, which is home to big names in the field such as Eli Lilly & Co. and health insurer WellPoint Inc., is leading the transformation. Corporations like these have added the lion's share of the state's new life-sciences jobs. Now they're helping smaller companies get off the ground, too—by spinning off new businesses as well as by backing independent start-ups. Eli Lilly, for instance, has contributed roughly $60 million to seed and venture funds that are supporting entrepreneurs.

That isn't the only way big companies are easing the way for small ones. With new firms arriving to supply the large drug makers, start-ups are getting access to a range of services at competitive prices.

"We have access to companies in Indiana where we can outsource functions like toxicology, analytics and clinical supply," says Ron Ellis, president and CEO of Endocyte Inc., a 65-employee firm that's testing a cancer treatment.

Many small firms, meanwhile, are helping others get off to a good start. David Broecker, president and chief executive of BioCritica Inc., an Eli Lilly spinoff, says his peers have referred employees, suggested work space and given information on tax and financial incentives.

It's just the environment he hoped for when he left the East Coast to build a company. He considered other spots but settled on Indianapolis because "it's all new and exciting here for these folks, so there is a hunger for doing this type of thing."

SAN ANTONIO

CYBERSECURITY

Washington, D.C., has usually taken the lead in creating Internet-defense systems. But the Alamo City is poised to give the Beltway a run for its money. There are more than 80 information-technology and cyber-related businesses in San Antonio, and that figure is increasing rapidly, according to the city's Chamber of Commerce.

Andrew Watson

Many entrepreneurs are anticipating a flood of government contracts from the new Air Force Cyber Command headquarters in town. The military chose San Antonio in part because the armed forces have always had a strong presence there—and many of the city's workers have security clearances from the Defense Department and the National Security Agency. Another big plus: a stream of skilled graduates from the Institute for Cyber Security at the University of Texas at San Antonio.

But not all the firms in town are counting on government contracts. The city has a growing group of businesses that cater primarily to the private sector, like MainNerve Inc., the company Mr. Logsdon moved to San Antonio. The firm helps health-care companies secure digital records and servers. "The quantity of people here allowed us to show more discernment in our hiring," says Mr. Logsdon. "It was the best place for us to find qualified and certified cybersecurity professionals—and it doesn't hurt that they have military experience."

ALBANY, N.Y.

NANOTECHNOLOGY

The capital of New York state is becoming a big player in a field that deals with small things—nanotechnology. The city now boasts more than 4,000 people in the industry, centered on the College of Nanoscale Science and Engineering at the University at Albany.

Mia Ertas/CNSE

The school has doubled in size during the recession to its current 800,000-square-foot complex. Dozens of nanotechnology companies have established a presence there to take advantage of research facilities and business incubators; since 2008, nearly 50 new start-ups have launched within its walls.

The build-out was part of a state plan, formulated years earlier, to revive the economy in upstate New York. Financing came partly from the state and partly from corporations like International Business Machines Corp., which now have offices there alongside entrepreneurs. That means companies can share the cost of equipment and labor—and start-ups get to associate themselves with big names.

"The prestige of being here and the credibility is amazing, which helps when you are talking with VCs and investors and large companies," says Primal Fernando, CEO and chief technology officer of Resource Management Technology Systems Inc., which moved to Albany from La Junta, Colo., last year. "And the equipment available here is not available elsewhere."

Many companies are launching off-campus, as well, in laboratories that are opening in once-vacant buildings. And financiers and other vital players have been moving in to be a part of the action.

"Venture capital has been growing to feed the innovation," says Alain Kaloyeros, a physics professor and senior vice president of the college. "Suppliers and law firms are moving to the region to support this ecosystem, so it will be quite an exciting venture to watch."

KANSAS CITY

INFORMATION TECHNOLOGY

Welcome to "Silicon Prairie."

Kansas City, straddling the Kansas and Missouri state line, is home to tech giants like Sprint Nextel Corp. and Cerner Corp., but its industry ranks have been swelling with smaller firms. In 2009, the number of tech companies rose by 5% to 2,900, trumping the growth rates of well-known hubs like Silicon Valley, Boston and Austin, Texas, according to a 2010 study published by the TechAmerica Foundation.

Dataworks, Inc.

Part of the lure for entrepreneurs: a high-speed fiber network from Google Inc., which chose Kansas City over 1,100 other cities to set up the service. Expected to roll out next year, the network will run 100 times faster than current broadband, which will likely bolster cloud-based technologies and pave the way for high-definition streaming services that will be hard to find elsewhere.

The Google initiative will be "an excellent platform for innovation," says Bryan Richard, founder of iCode Inc., a Web start-up that posts profiles of software developers. "Everyone in the technology business is talking about it here in town, and everyone wants to do something with it and maximize it."

Entrepreneurs who have relocated from the coasts also tout the friendly business environment. It's far less expensive to build a firm and develop technology, they say, and there are fewer state and city regulations to worry about. And, as in other hubs, many entrepreneurs are helping each other. "Numerous times people have asked me for things I have expertise in and there are times where I call competitors…for specific problems," says Donald Rossberg, president of Dataworks Inc., a technology-support and consulting start-up. "In the end, we all benefit."

ASHEVILLE, N.C.

BEER BREWING

Craft beer is a small industry, but it has a devoted customer base. One Southern town is going after those fans with vigor.

John Warner

Asheville, a Blue Ridge Mountain town of 75,000, has 10 breweries, with two on the way. That can't compare with the 40 in Portland, Ore., but it stacks up to other beer havens like Milwaukee and Boulder, Colo., which both have fewer than a dozen. "Asheville is definitely on the map and well recognized in the craft-brewing industry," says Paul Gatza, director of the Brewers Association in Boulder.

Entrepreneurs new to the area seek mentoring from the established brewmasters and the Asheville Brewers Alliance, formed to exchange ideas and promote the industry. They also tap Blue Ridge Food Ventures, an incubator for developing and commercializing products.

Competition among the breweries is a key driver of growth. "Every time a new brewery opens, it has to create its own creative edge, and then the other breweries have to be creative to become relevant again," explains Bill Drew, owner and brewmaster at Craggie Brewing Co. "So it's good when the new guys come in; it keeps the old guys on their toes."

In fact, the beer culture has permeated the town, with a host of businesses cooking up beer-flavored edibles and artists making tap handles and bottle labels. The environment gives brewers a place to source ingredients and fuel creativity. "By local companies teaming together, it's pretty much a win-win," Mr. Drew says.

NASHVILLE, TENN.

HEALTH CARE

Early last year, the federal government passed legislation calling for a host of health-care reforms. And Nashville is poised to benefit from the overhaul.

There are more than 250 health-care companies in the city, and their numbers are rising. Employment in nursing, hospital and ambulatory services jumped 16% between 2004 and 2008, for instance. That, in turn, provides fertile ground for companies that create medical devices and patient-care systems.

Shareable Ink

The entrepreneurial spirit "is infectious," says Leon Dowling, founder and chief executive of IMI Health Inc., which collects and organizes health records to give insight into the best patient-care practices. "Within 10 miles of my office, I can have more potential clients than any other city in America."

Last August, the city launched an entrepreneur center to spur innovation; two-thirds of the firms that have sought mentoring and financing are related to health care. State programs have also helped propel the industry. Recently, some $180 million in public funds has been made available to burgeoning firms.

It's an attractive spot for entrepreneurs like Stephen Hau, president and chief executive of Shareable Ink Corp. The company, whose digital pen records doctors' notes and transfers them to an electronic format, launched nearly three years ago in Boston and established a presence in Nashville last year. Today, 60% of the company is in Nashville.

"The community here is so well versed in health care that it keeps us plugged in to the key issues and how to resolve them," says Mr. Hau. "And in terms of the investment community today, people are careful about where they place their bets. Being here, [investors] see we are aligned with thought leaders."

OGDEN, UTAH

OUTDOOR SPORTS

Ogden, a small city some 40 miles north of the capital, packs a concentrated punch in the outdoor and recreation industry.

Goode Skis

Ogden made headlines in 2002, when it hosted events for the Salt Lake City Olympic Games. Those Olympic facilities, along with acres of pristine mountains, canyons and rivers, are the main reason outdoor-apparel and equipment companies have been moving to town: The site offers a perfect spot for testing new products, and it's easily accessible from a nearby airport that supports direct flights to Europe. What's more, business owners say, the growing base of competing companies in the area push each other to design the best equipment.

Utah has a relatively modest share of the industry; the state estimates it's home to about 5% of the outdoor-products firms in the U.S. Still, companies that expanded in or relocated to Utah have created at least 2,550 jobs in the past six years, according to the Economic Development Corporation of Utah.

Industry goliaths get partial credit for the surge in Ogden. Amer Sports Corp., the company behind Wilson, Atomic and other brands, consolidated its U.S. operations in 2007 and moved them to the town. Quality Bicycle Products Inc., a distributor based in Bloomington, Minn., set up its second location in Ogden in 2010.

Quality's founder, Steve Flagg, liked the growing retailer base, easy access to the West Coast and strong labor pool. But, he says, "the game changer was the transformation that the city was going through," as other companies moved in, and the local government actively recruited more.

Local leaders are also helping start-ups like Kahuna Creations Inc., a longboard, surfboard and landpaddle company, launch and grow. Kahuna founder Steve McBride says the mayor's office helped him land funding and find a low-rent facility in 2008. The company has grown 30% to 50% annually.

"You get a network of people who really want to help," Mr. McBride says. "We've been flourishing here."

Ms. Maltby is a small-business reporter in The Wall Street Journal's New York bureau. She can be reached at emily.maltby@wsj.com.

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.

Ivy Tech Community College President Tom Snyder penned this editorial in today’s Indianapolis Star about Hoosier manufacturing powerhouse (and CICP member) Cummins – a company has that continued to invest and create jobs in Indiana, while at the same time dominating its global market and generating handsome returns for its shareholders.

Cummins helps power Indiana's economy

It may be a function of Hoosier modesty, or the old adage that admiration and familiarity are strangers, but it often takes an outsider's perspective to remind us about what's truly exceptional in our everyday lives. I was struck by this feeling leafing through Fortune magazine's latest annual Fortune 500 list.

At No. 186 was Cummins, the Columbus-based engine-maker. That's no surprise; Most of us are familiar with Cummins, and have some idea of its size and recent success. We regard Cummins as a valued partner in our effort at Ivy Tech Community College, as well as other organizations I'm involved with, like the Energy Systems Network and Conexus Indiana.

But as I read further, I was amazed by how this Indiana manufacturing stalwart stacks up against its peers.

From 2009 to 2010, Cummins climbed from No. 218 to No. 186 on the list of the nation's 500 biggest companies, boasting more than 22 percent growth in revenues. And that's just the beginning.

Over the past decade, Cummins boasts the best growth in profits of any U.S. company. An automotive manufacturer, outpacing dot-com juggernauts like eBay and Apple, insurance and health-care giants, biotech pioneers. It beats its nearest competitor by more than 10 percent in annual earnings-per-share growth. So it's no surprise that Cummins also represents the second-best investment for shareholders over the past five years.

Clearly, Cummins' growth is due to successive generations of visionary management willing to make aggressive moves. Cummins was a pioneer in exploring overseas markets in the 1960s, and today thrives in places like China, India and Brazil. The company also is on the cutting edge of green technologies: A Cummins engine powered the first diesel-electric hybrid truck in 2005; the company is a leader in putting hybrid busses on our streets, and a partner in the Energy Systems Network initiative to bring new energy innovations to market here in Indiana.

Through it all, Cummins has been unwavering in its commitment to southeastern Indiana. Over the past six years, the company has invested more than $300 million into new facilities and expansions in the region, projects that will account for more than 2,000 jobs.

Manufacturing is leading Indiana's economic recovery. While the nation as a whole suffers through a largely jobless recovery, manufacturing employment in Indiana has grown nearly 5 percent since the end of the recession. Clean technologies and renewable energy offer promising economic opportunities for our state. It's easy to forget that these macro-economic trends are based on the collective efforts of thousands of firms across the state, led by extraordinary businesses like Cummins.

Cummins has been a valued corporate citizen and a steady contributor to our state's economic growth, engaged in critical issues like workforce development. But even so, it sometimes takes a moment like reading the Fortune report to remind us of how fortunate we truly are to count Cummins among our home state headquarters.

In 1919, 40 years after Col. Eli Lilly decided to launch his own medical wholesale company 45 miles north in Indianapolis, a businessman named W.G. Irwin decided to help a self-taught mechanic named Clessie Cummins start his own diesel engine business. Out of such historical footnotes, economies are built -- and Cummins continues to support the vitality of Indiana's economy today.

Snyder is president of Ivy Tech Community College.

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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Another member of our CICP Board of Directors, Collina Ventures’ Mark Hill, has penned a compelling piece on the need to reform local government – part of an ongoing editorial push on the part of the Indianapolis Star and a network of other Indiana newspapers to raise awareness of the need to streamline and consolidate the thousands of political offices that form a haphazard patchwork of bureaucracies across the state.

As someone who’s spent his career in the tech sector, Hill understands the power of technology to cut costs and enhance productivity.  A tech pundit once estimated that if progress in the rest of the economy matched progress in the computer sector, a Cadillac would cost $5.91, while ten minutes’ labor would buy a year’s worth of groceries.

Unfortunately, Indiana’s system of local government is anti-innovation – instead of becoming more efficient, it’s grown increasingly outdated and cumbersome.

Here is Hill’s op-ed:

Power of innovation can fix local government

Last week, the Indiana General Assembly convened at the statehouse to face the most daunting fiscal situation in a generation or more – a billion dollar deficit. 

But budget problems aren’t confined to the state level, and our lawmakers’ responsibilities don’t stop there either.  Across Indiana, local communities are dealing with the dual effects of the recession and property tax caps; Indianapolis alone faced a $50 million shortfall for its 2011 budget. 

The state legislature can help our cities and counties do more with less, by mustering the political courage to reform our broken system of local government. 

My career has been spent in the technology sector, a field that thrives on new ideas and change.  The power of high-tech innovation tends to cut costs and increase productivity.  My experience tells me that the big gains from technology actually come using the technology to change the process.

Unfortunately, our system of local government has not materially changed for more than a century-and-a-half; so instead of evolving to become more efficient and less costly, it’s done just the opposite.  It’s grown into a cumbersome and confusing maze of bureaucracy, notable for the quantity of political offices rather than the quality of public services provided.

An entire layer of government – the townships – exists to deliver services that could be more efficiently managed by counties.  And at the county level, too many elected officials perform purely administrative tasks – like coroner, recorder, or surveyor – that should have nothing to do with partisan politics. 

Township government is a perfect example of what’s wrong with the system.  The major responsibility of township trustees is delivering poor relief.  But there’s no common standard or procedure for doing so.  Half the townships report serving less than twenty households, and the average trustee spends eight times more in overhead to deliver every dollar in direct assistance than a typical private charity (using the United Way of Central Indiana as a baseline).  I know at United Way we work very hard to keep our overhead down so that we can deliver resources to those in need.

The situation cries out for change.  But the lack of visibility of these offices insulates them from public scrutiny – most township officials run unopposed in general elections, attracting little attention from the citizens they profess to serve. 

Township government should be abolished altogether, or at the very least have their budgets overseen and approved by county councils to bring some accountability to their taxing and spending decisions.  Counties should have the option to consolidate administrative offices and adopt a single executive form of government.

Defenders of the status quo have defeated these proposals during the last two legislative sessions.  But this year could be different.  Governor Daniels is a strong advocate of reform, and the new majority in the House of Representatives may be willing to put their belief in smaller government into action.

These changes represent their own kind of innovation, the kind of change that’s long-overdue for a system designed in an age of travel by horseback rather than broadband communications.

Hill, managing partner of Collina Ventures, chairs the Central Indiana Corporate Partnership's TechPoint technology and entrepreneurship initiative.

CICP’s BioCrossroads life sciences initiative received national recognition this week from the Brookings Institution, one of the nation’s most influential think-tanks on economic policy.

Brookings released a paper, “The New ‘Cluster Moment,’” reemphasizing the concept of industry clusters as a cornerstone of smart economic development planning.  Industry clusters are groups of inter-connected businesses and organizations that locate in close geographic proximity.  Clusters often start with some key competitive advantage (i.e. the presence of a major research university or large corporate headquarters) and grow as other firms seek common sources of innovation and human capital along with opportunities to form strategic alliances and streamline their supply chains.

According to Brookings, clusters are the building blocks of the ‘real economy’ – instead of driving growth through consumption and debt (as with the housing and financial bubbles), companies cluster together to drive productivity and maximize economic output. 

Clusters of firms also tend promote innovation and entrepreneurial growth, as knowledge flows more easily among companies and research institutions and more discoveries are ‘spun off’ into new business ventures.

“The New ‘Cluster Moment’” report cites Indiana’s life sciences sector as a model regional cluster, anchored by the presence of Eli Lilly and other major industry players, research institutions like IU and Purdue, and leading orthopedic device manufacturers.  It recognizes the efforts of BioCrossroads in identifying the critical needs (i.e. access to capital, encouraging industry connectivity and start-up opportunities) to maximize the growth of this cluster over the last eight years.

The BioCrossroads story was also told from a first-hand perspective this week by John Lechleiter, Chairman of Eli Lilly, in a keynote speech to the Regional Innovation Clusters Conference, sponsored by Brookings and other key public policy groups in Washington DC on Thursday.  Lechleiter, who supported CICP’s efforts in forming and setting the strategic course for BioCrossroads, discussed Lilly’s strategy for innovation and how building a life sciences ecosystem in Indiana has furthered these efforts.

He went further in asserting that the BioCrossroads model is one that should be replicated in our national effort to revitalize the economy:  “The successful effort to build a thriving life sciences hub in Indiana – in the face of some pretty strong headwinds in the state’s economy – is reason to believe that our country can overcome the economic challenges we face today.”

Read more excerpts from John Lechleiter's speech here, and view the Brookings Institution’s ‘Cluster Moment’ report here.

(The following column also appeared in the Indiana Connections e-newsletter, presented by Inside Indiana Business in partnership with Conexus Indiana, and on the Conexus Indiana blog.) 

College completion rates, manufacturing and logistics success go hand-in-hand

Andre Lacy

If asked to identify one statistic that predicts future economic success, it’s hard to ignore the percentage of young people with college degrees.  Education drives innovation, productivity and higher wages.   If the up-and-coming generation of workers is well-educated, the economy is well-positioned to grow.

That’s why it’s such a concern that the United States has slipped to 12^th among developed countries in our percentage of 25 to 34-year-olds with an associate degree or higher.  A few weeks ago, President Obama called for the United States to return to the top of the rankings by 2020 – a daunting goal that will require a 20% increase in college graduates over the next decade.

In Indiana, the climb is even steeper – we’re well below the national average in the educational attainment of young adults; just one of three young Hoosiers goes on to complete a college degree.  We’ll need to almost double that to be competitive with countries like Korea, Canada and Japan.

This educational deficit puts our future at risk.  Our capacity for technological and scientific innovation is the biggest competitive advantage that the United States has left in the global economy.  As more highly-educated workers (the Baby Boomers) begin retiring, we confront a younger workforce ill-equipped to innovate.  To be blunt, you can’t sustain a knowledge-based economy without knowledgeable workers.

In Indiana, the impact of a less-educated workforce will threaten the very foundation of our economy, manufacturing and logistics.

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, ahead of factors like the cost of labor and materials, energy costs, and tax/regulatory climates.

Not surprisingly, the same study shows the United States slipping to fourth place in its manufacturing index rankings.  The third place country, Korea, finished far ahead of the U.S. in its percentage of younger workers with college credentials.  The top two finishers, China and India, have vastly expanded their pool of educated workers in recent years (the number of Chinese college graduates entering the job market each year has grown more than 600% from 1999 to 2009).

It’s clear that improving college completion rates is essential to maintaining our domestic manufacturing base.  In Indiana, the erosion of this base would also jeopardize the logistics industry that gets manufactured goods into the hands of customers across the country and around the world.  And as global supply chains become more complex and ‘just in time’ inventories the norm, the logistics sector faces its own skilled worker shortages.

Many of President Obama’s proposals to boost higher education focuses on affordability, aiming to increase Pell Grants and expand tuition tax credits.  But while the cost of college is a key issue, we face other hurdles in Indiana specific to manufacturing and logistics:  Too many young Hoosiers aren’t aware of the high-tech jobs available, and there’s a lack of educational programs that deliver the specific skills that employers are looking for.

These challenges make up a large part of Conexus Indiana’s mission:  We’re working to promote manufacturing and logistics careers through our ‘Dream It. Do It.’ campaign.  At the same time, we’ve used industry input to create a very specific, multi-layered skills template that details what manufacturers and logistics companies are looking for in new employees.  The Indiana Department of Education and Commission for Higher Education have both embraced this template, and we’re working with our educational partners to create ‘industry-approved’ programs that can steer students into the most in-demand job openings.

But clearly this issue is bigger than any one organization, school or government agency.  We need focus and coordinated action among policymakers, employers, educators and opinion leaders to push Indiana up the rankings in college completion rates and preserve our manufacturing and logistics edge.  The same kind of attention is needed at the federal level to build a world-class workforce.

The only certainty is that a lack of action will cause us to fall even further behind in educational attainment and economic competitiveness.  We must act now, before today’s challenge turns into tomorrow’s crisis.

Andre B. Lacy is Chairman of LDI Ltd., a holding company that focuses on value-added distribution businesses.  He is an emeritus member of the Central Indiana Corporate Partnership, and chairs the Workforce Development Task Force for Conexus Indiana’s Logistics Council.

It’s obvious to all that the Internet has fundamentally changed the business of marketing, transforming consumers from passive recipients of messages through TV, radio and print to active participants in a dialogue about the products and services they prefer through online research, user-generated reviews, blogs and other web-based media.  Jim Jay of our TechPoint initiative summed it up nicely by saying, “Today, a viral video can spark more views and ‘buzz’ than a well-placed TV ad.  A well-conceived e-mail campaign can trigger a stronger response than a blizzard of direct mail…”

Marketers have adapted.  From 2003 to 2008, the traditional media sector—including media agencies, publishing, and broadcast and entertainment—lost 32% of its market value (nearly $137 billion), while new media (online content and services) gained 102%, or $58 billion.  A recent Chief Marketing Officer survey by the American Marketing Association says that CMOs plan to triple the budgets allocated to social media over the next five years.

All of the change that’s roiling the media/marketing landscape creates great opportunities for innovators and cutting-edge companies.  Fortunately, Central Indiana is home to a growing cluster of marketing and media firms and institutions that put our region in a great position to capitalize on these trends – businesses like ExactTarget,  Compendium Blogware, Aprimo (which launched from Software Artistry), Vontoo, 5 Buckets, Lights Out Intelligence, Market Path, Cantaloupe, Delivera, Formspring and many more.  There are more than 70 companies operating in this space in the state of Indiana.

This growing e-marketing sector is also served by leading research institutions.   Our own Ball State University is a national leader in digital  media research and development through its Center for Media Design. 

It’s time for Indiana to capitalize on the potential of this high-tech ‘micro-cluster.’

Today, TechPoint, with the support from the IEDC, announced Indiana’s Measured Marketing Initiative, a national media relations campaign to position Indiana as the leader of this fast-growing, emerging technology business category encompassing social and digital media and marketing – TechPoint has dubbed it “measured marketing.” The goal for this initiative is to raise awareness, generate customers for existing businesses and attract companies to create jobs and investments in Indiana.

Measured marketing companies provide a platform or service for digital marketing via email, social media, search, video, mobile and other rapidly evolving technologies, and they provide clients with return-on-investment tracking.

Check out the press release here.  For more information on Indiana’s Measured Marketing Initiative, please go to www.indianameasuredmarketing.com.

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.

October 27^th 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.

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 41^st to 20^th 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.

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.

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.

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.

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

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

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

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

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

For failing public schools, takeover seems good solution

Mark Miles

Posted: April 6, 2010

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

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

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

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

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

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

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

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

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

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

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.

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.