Indiana Logistics

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).

While this legislative session has been disappointing for advocates of mass transit (though the fight continues), the General Assembly can still take an important action to help Indiana's transportation sector: Approving Senate Bill 321, a tax incentive to encourage our state's logistics companies to invest in private infrastructure to help move freight to, from, and across Indiana more efficiently.  David Holt, Vice-President of our Conexus initiative, describes the proposal in this column published on Inside Indiana Business:

Logistics tax credit a super-size boost to Indiana’s economy

David Holt

Last week, more than 150,000 visitors descended on Central Indiana for Super Bowl XLVI, one of the biggest sporting events in the world.  Thousands upon thousands of people packed the streets of Indianapolis, transforming the state capitol into the capitol of football fandom.

Indy drew rave reviews for how it handled the influx with hospitality and aplomb.  But this shouldn’t be surprising – after all, organizing and managing the flood of fans is really an exercise in logistics.  And Hoosiers know logistics.

Think of it this way: Take every single Super Bowl visitor in Indianapolis last week, and replace each of them with over 12 million pounds of freight, piled higher than the city’s skyline.  That gives you a sense of the volume of manufactured goods, agricultural products, steel and other materials that are shipped to, from and through Indiana every year – nearly a billion tons.

It adds up to big business.  Indiana’s logistics sector is a $10 billion industry that employs 300,000 Hoosiers.  By moving products efficiently across the country and around the world, logistics also makes our manufacturing sector work.  ‘Crossroads of America’ is more than a marketing slogan for Indiana – it’s an economic fact.

State lawmakers recognized the importance and growth potential of our logistics industry last week, when the Indiana Senate passed SB321, the Transportation and Logistics Income Tax Credit (introduced by Senator Tom Wyss of Fort Wayne) by an overwhelming 49 to 1 vote.

SB 321 provides a 25% income tax credit for qualified expenditures made before January 1, 2019, by a taxpayer to make improvements to real property that is related to constructing a new or modernizing an existing transportation and logistics distribution facility and/or the transportation of goods on Indiana highways, rail, water and air.  The legislation limits the credit to $10 million per fiscal year. 

Indiana is fortunate that our central location puts two-thirds of the nation’s population and businesses within a day’s truck drive of our borders.  But we also need world-class transportation infrastructure to maximize our geographic advantages.  Through Governor Daniels’ Major Moves plan, Indiana has been able to continue to make aggressive investments in our public infrastructure even during the recent lean budget years.  But it’s also important that we incentivize companies to invest in their privately-held infrastructure, encouraging expansion and growing our overall capacity to move freight. 

This is the goal of the Transportation and Logistics Tax Credit, which now moves to the Indiana House of Representatives for consideration.  The Conexus Indiana Logistics Council, representing the state’s major employers in transportation, distribution and supply chain operations, would like to express our gratitude to the Senate for acting to reinforce our logistics sector – and we respectfully call on the House of Representatives to do the same.

Nationally, the economy continues to lag behind expectations.  Here in Indiana, we’ve been more fortunate than many in terms of output and job creation, because our economy is concentrated in what we might call ‘the basics’ – making and moving products.  Even so, too many Hoosiers are still out of work, and too many of our employers are hesitant to grow.  Encouraging our logistics industry to keep investing and contributing to a world-class transportation infrastructure is a wise investment in our economic recovery.

David Holt is Vice-President of Operations and Business Development for Conexus Indiana, the state’s manufacturing and logistics initiative; Holt manages the Conexus Indiana Logistics Council, an industry-led forum representing the interests of this sector.

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.

Global trade paying off for Indiana manufacturers – and Hoosier economy

Two reports from last week show again how manufacturing is driving economic growth in Indiana – and why we must continue to look around the world seeking markets for Hoosier-made products.

The Bureau of Labor Statistics released a regional look at GDP growth in 2010, measuring economic activity by metropolitan area. For several Indiana cities, manufacturing continues to lead the recovery - durable goods manufacturing contributed 11.4 percentage points to the Elkhart-Goshen region, and more than 6 percentage points in Columbus and Kokomo. 

Nor was manufacturing’s effect confined to a few metropolitan districts. An earlier BLS study showed that Indiana’s overall GDP growth ranked third in the nation, behind only North Dakota (driven by its oil industry and the lack of a housing bubble to recover from) and New York (where a Wall Street rebound led the comeback). For Indiana, manufacturing was the catalyst – durable goods production contributed more to our GDP growth than any other state (2.3% of the 4.6% total increase).

These statistics confirm what we already know – Indiana is a manufacturing state, and we’ve ridden the sector out of the economic trough. Our annual Indiana Manufacturing and Logistics Report Card, released earlier this year, notes that Hoosier manufacturing employment has grown by 5% since the end of the recession, while the nation as a whole has suffered through a largely jobless recovery.

Another study, this one by the Indiana Business Research Center at IU, gives us some perspective on this manufacturing success. With the U.S. economy stagnant, Indiana set a new record in manufacturing exports in 2010. 

According to the IBRC analysis, Indiana exported nearly $29 billion in goods last year, up 25% from 2009. We outpaced the Midwest and the nation in export growth; manufactured products accounted for the vast majority of our exports, with vehicle parts, pharmaceuticals and industrial machinery leading the way.

Of course, this export boom was also made possible by a strong logistics sector supported by world-class infrastructure – international airports, maritime ports and unparalleled interstate access – creating a vital link in a global supply chain.

Hoosier manufacturers are exporting more than ever before, by choice and by necessity. Looking at the national economy, it’s hard not to sound pessimistic – job creation stuck in neutral, incomes flat, the real possibility of a double-dip recession. It adds up to sluggish domestic demand, as individuals are spending less and businesses are hesitant to invest. Looking abroad for opportunities is a must, and our trading relationships with Canada, the European Union and China are increasingly critical.

Conexus Indiana is generally focused on what Hoosier industry leaders, policymakers and educators need to do to make our manufacturing and logistics sector more productive and successful – working together to build a stronger workforce, collaborating to exploit market opportunities in areas like automotive and aerospace. But we do speak out occasionally on federal issues – for example, the need to repair failing locks and dams on the Ohio River and Lake Michigan.

Free trade is also a national priority worthy of support. Indiana’s manufacturers need more opportunities to compete in global markets to drive continued growth.

By concentrating on issues like human capital here at home, we’re making sure that when Congress does act on trade agreements with Columbia, Panama, South Korea and others – and we encourage them to do so – we’ll be ready.

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.

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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The partnership between CICP and the Indy Partnership has served Indianapolis and the region well, connecting the regional business attraction and marketing aspects of economic development with the expertise of our industry-specific initiatives - this synergy will continue.  

But we’ve also never lost sight of our mandate to maximize every dollar we receive from our investors.  Since its launch four years ago, Develop Indy has grown into a robust and aggressive organization in its own right. So today we have two mature organizations with nearly identical structures and complementary missions – one bringing new business to the region as a whole, one focused on Indianapolis, the core of the region.

It simply makes sense to merge their  operations – marketing communications, accounting and administration, certain business development and research functions. In doing so, we’ll achieve significant financial efficiencies and drive a greater share of resources towards promoting ourselves as a destination for economic opportunities.  Simply put, the move allows us to be more competitive, even as we are outspent by many of our competitor regions (on a per capita basis) in economic development.

Here's the press release with additional detail:

Develop Indy, Indy Partnership to consolidate operations for more efficient, effective economic development effort

(INDIANAPOLIS, Ind – February 15, 2011)  Two of Central Indiana’s leading economic development organizations will formally join forces to create a more streamlined effort to maximize business attraction and marketing for Indianapolis and the greater region. 

 Indy Partnership, the regional group representing the nine-county Indianapolis metro area, and Develop Indy, the local economic development engine for Indianapolis/Marion County, will consolidate their marketing, fundraising and administrative operations to create a more efficient and effective enterprise.   The two groups will maintain their separate brand identities while pursuing their respective economic development missions.

Since 2001, Indy Partnership has promoted the Indianapolis region in partnership with local economic development organizations (known as “LEDOs”) in each of the metro counties.  Indy Partnership works to attract new businesses to the region, and provides research and project management support to the LEDOs for their local business development efforts.

Develop Indy was launched in 2007 as the stand-alone LEDO for Indianapolis/Marion County, and works primarily to help existing businesses grow and expand in Marion County.  It has grown its organizational capacity significantly over the last three years.

“We have two organizations pursuing similar missions – one representing the region, one representing Indianapolis, the core of the region,” said current Indy Partnership President and CEO Ron Gifford.  “It makes sense to bring them together in a more formal fashion to achieve our strategic goals, realize financial efficiencies, and give investors more ‘bang for their buck.’”

“We’re in a very tough competition for new opportunities, often going up against cities and regions that can’t match our business climate but do have more money to tell their stories,” said Scott Miller, Develop Indy’s President and CEO.  “This new model will allow us to maximize every dollar spent so we can aggressively pursue new job opportunities and investment from around the globe.”

The two organizations will combine operations in areas like marketing, fundraising, accounting, human resources, and IT.   Develop Indy will continue to focus on local Indianapolis business development issues, while Indy Partnership will continue focusing its marketing and business attraction efforts on behalf of the entire region. 

A new Indy Partnership Executive Committee, made up of private sector business leaders and representatives from each of the county LEDO partners, will oversee the regional effort.  The Develop Indy Board of Directors will serve as the legal governing entity for fiscal and administrative matters for both entities and will continue to oversee matters related specifically to Indianapolis/Marion County. 

Veteran economic development professional Scott Fulford will become the Executive Director of Indy Partnership, as current CEO Ron Gifford assumes the position of Executive Vice President for Policy for the Central Indiana Corporate Partnership (CICP), the regional alliance of CEOs and university presidents.  Gifford will also become a member of the Develop Indy Board of Directors.  Scott Miller will remain as CEO of Develop Indy.

“Since 2007, Indy Partnership has been part of CICP, and that relationship has fostered collaboration with CICP’s industry-specific initiatives – BioCrossroads [life sciences], Conexus [manufacturing and logistics], TechPoint [technology] and the Energy Systems Network [energy and clean technologies],” said Mark Miles, CICP’s President and CEO.  “We see this new alignment between Indy Partnership and Develop Indy as creating an even stronger regional platform to promote these clusters to new business prospects.  

“At the same time, we are committed to maintaining the synergies among these groups focused on economic growth in Central Indiana,” Miles continued.  “Ron’s new roles with CICP and Develop Indy will help ensure that industry expertise from the private sector is available on call to support economic development for the entire region.”

The new structure will also enhance regional efforts by giving the county LEDO partners a larger role in the expanded Indy Partnership Executive Committee, and by encouraging more direct participation in the region’s marketing and business attraction efforts.  A formal agreement on regional cooperation will also ensure that each member county has a fair chance to make its case to new companies looking at the region. 

“To companies located around the country, ‘Indianapolis’ is the brand that we’re all selling, whether we live in Marion County or not,” said Dax Norton, Executive Director of the Boone County Economic Development Corporation.  “By combining the marketing efforts of these two organizations, we can more effectively promote the region while giving every county a seat at the table.”

A joint fundraising campaign will take place for both organizations, ensuring that corporate supporters will not face multiple solicitations on behalf of the area’s business attraction efforts.

The consolidation of operations will become effective at the end of February.  Indy Partnership will share office space with Develop Indy in the Chase Tower in downtown Indianapolis.

Indiana has earned more kudos from economic developers across the country, according to a recent report by Area Development, a trade journal for business attraction and site selection professionals.  A national survey conducted by the magazine named scored Indiana 6^th among states (and best among Midwestern states) for business climate.

In a nod to our strong logistics infrastructure, the Area Development survey also ranked the state second in rail and highway accessibility.

Another recently-released report, the Milken Institute’s Best Performing Cities 2010, offers more cautiously optimistic readings for Central Indiana.  The Best Performing Cities index factors in a number of statistical measurements, including job creation, wage and salary growth, high-tech GDP growth, high-tech GDP location quotient (the concentration of high-tech industry as compared to the national average), and the number of high-tech industries with a GDP location quotient higher than the national average.

Using this data, the Indianapolis metropolitan area ranks 112^th, squarely in the middle of the pack among larger cities – but we did move up 13 spots (from 125^th in 2009).  We were better than average in job growth, and in a testament to the continued growth of our high-tech economy, earned the best sub-rankings in high-tech GDP growth (48^th) and concentration of high-tech industries (39^th).

And just to the southwest, Bloomington made a major splash in the Milken rankings, placing 16^th among the Best Performing (Small) Cities.  Using the same data, Bloomington ranked 8^th in job growth over the last year, and third in high-tech industry concentration. 

Combined with the continued vitality of our life sciences industry and steady improvement in venture capital investment, all indications are that Indiana’s pro-growth business climate is supporting an economic recovery that should see the state emerge with a stronger high-tech sector along with a solid industrial base. 

(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.

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.

U.S. manufacturing is leading the nation out of recession with a full year of positive growth, even as the construction and housing markets continue to struggle.

The latest report from the Institute for Supply Chain Management showed July marked the 12^th straight month of expansion for the manufacturing sector.  Manufacturing employment has also grown faster than many analysts expected, good news that helped spark a modest Wall Street rally on Monday.  (See this story in the Indianapolis Star for more analysis.)

This data dovetails with the Indiana-specific economic forecast included in the Conexus Manufacturing and Logistics Report Card, which predicts that the state’s total manufacturing compensation will grow by nearly $2.5 billion over the second half of 2010 and 2011.

The future looks bright for manufacturing nationally and especially here in Indiana, the most manufacturing-intensive state in the union, as we focus on fast-growing markets like electric vehicles and medical devices. 

The question that Conexus Indiana is focused on is this – as Hoosier manufacturers seek to expand, will they be able to find the skilled workers they need to grow and remain competitive?

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.

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.

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.

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.