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Plotting a post-Rust Belt future for the Midwest
By: Carol D’Amico - Senior Advisor, Conexus Indiana
Categories: Economy, Manufacturing
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.
IIB Twitter WatchA 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.
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