Grading Indiana's Human Capital: The Perils of Complacency

Steve Dwyer

By: Steve Dwyer - President & CEO , Conexus Indiana

Categories: Education, Logistics, Manufacturing

Earlier this week, Conexus Indiana released our 2012 Manufacturing & Logistics Report Card. The Report Card is an annual analysis of Indiana's competitiveness in our largest economic sector, developed by economists at the Ball State University Center for Business & Economic Research.

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Most of the news coming out of this year's Manufacturing & Logistics Report Card is positive – strong employment numbers, growth in exports and foreign investment, a pro-business tax climate and sound fiscal policies that give employers the confidence to grow in Indiana. You'll read more about these findings elsewhere in this newsletter.

But I want to mention two areas of the Report Card, and talk about the perils of complacency.

In the private sector, successful companies embrace change. Market-leading organizations don't keep their edge by sticking with the status quo – they understand the need to evolve to meet the needs of their customers.

The same dynamic applies to the task of preparing our state's workforce, a challenge that should be shared by policymakers, educators and industry leaders together. But I fear that until fairly recently, we've been overly satisfied with the status quo; now we find ourselves needing to charge forward just to catch up.

The reason for our complacency is a strong manufacturing heritage and a large incumbent workforce that has been well-trained over the course of decades on the job. On the 2012 Report Card, Indiana gets a B+ in the ‘Productivity and Innovation' category, a credit to these workers' skill, drive and ingenuity.

But the average Hoosier manufacturing employee is 54 years old, and our satisfaction with the quality of our workforce is therefore on the edge of a perilous demographic cliff. And as experienced Baby Boomer workers retire, employers will be looking for a new kind of applicant – tech-savvy, educated, ready for the 21st century factory.

As manufacturing and logistics have become increasingly high-tech, the demands on its workforce have risen accordingly. Traditional assembly line jobs have largely been rendered obsolete or sent overseas – today's workers are running computerized equipment, sophisticated robots and supply chain management systems. Their jobs demand advanced technical skills and critical thinking abilities.

That's why the majority of U.S. manufacturing workers now have some post-high school degree or certificate. But in Indiana, the demands of industry have evolved beyond the educational abilities of the next generation.

The Manufacturing & Logistics Report Card gives Indiana a C- grade in Human Capital, based on disappointing rankings in the adult population with a high school diploma (31st among states, though graduation rates have improved in recent years), adults with a four-year college degree (42nd), and associate's degrees awarded per capita (32nd). This is where complacency about workforce development and education has gotten us, and now we face a looming crisis as employers begin to confront the shortcomings of their next generation of workers.

In recent years, we've awakened to the hazards of inaction and started to make progress. At the K-12 level, sweeping reforms in school accountability, empowering teachers and giving parents more options are taking effect. Our higher education institutions have been diligent in building closer relationships with industry and setting aggressive goals – Indiana is now conferring college degrees at a rate competitive with the nation.

Specific to the manufacturing and logistics challenge, Conexus has worked to connect employers and educators to develop new industry-approved training programs and expose young Hoosiers to the exciting careers available in these industries. Most recently, we've created a first-of-its-kind high school manufacturing/logistics curriculum that gives students a solid foundation of knowledge and a head-start towards a post-secondary degree or certificate.

So Indiana is shaking off its complacency about our human capital gap. But shame on us that we allowed the comfort of the status quo to create a looming crisis in the industries that supply jobs to one of every four working Hoosiers. We're joining the battle, but it's far from won: Our challenge going forward is to maintain an intense, collaborative focus on preparing the next generation of manufacturing and logistics workers. In a knowledge-intensive, global economy, a static approach to education and training is no longer an option – if we're standing still, we're falling behind.

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