As we approach the mid-point of 2017, it is important for Indiana’s elected officials and thought leaders to not only think about what they want to accomplish for the rest of this year, but identify priorities for the next 5 to 10 years. Our state has accomplished a great deal in the past decade and there is much to be proud of in terms of results. We should take pride in our outcomes, however, there still is a lot of work ahead of us for Indiana to achieve its full potential.
Indiana has done a very good job of creating a tax structure and regulatory environment that is not only competitive in the Midwest, but throughout the United States. The state has been internationally recognized for its outstanding business climate. In addition, Indiana has continued to prioritize strategic investments in transportation infrastructure throughout the state. Investments in roads, airports, and water ports will continue to serve the state well. Finally, Indiana’s commitment to quality of place investments thru the Regional Cities Initiative has garnered global attention. In a race for talent, the state has recognized the importance of investing in communities and regions to make them attractive for people to live and work.
Now that we feel better about how Indiana is positioned, it is time to bring in a dose of reality. Despite all of our progress, our state faces a number of important challenges. First and foremost, we have a talent problem in Indiana. Talent is always one of the top two decision making criteria for the companies that we work with when they are deciding where to invest capital and grow headcount. While the cost of our talent is competitive, we are challenged by the quality and sustainability of the state’s human capital. In terms of educational attainment of adults in the workforce, Indiana ranks in the bottom third in the United States. In addition, the number of adults in the state’s workforce holding an industry recognized credential or certification is quite low. As a result, Indiana needs to rethink how it invests and aligns programs to develop workforce talent in the state. The programs and agencies involved in developing Indiana’s workforce will need to evaluate and potentially streamline to produce better results.
Another important issue for Indiana is the impact of automation on the state’s manufacturing sector. The impact of automation and technology on manufacturing has already begun. Given Indiana’s leadership and concentration in manufacturing, the state needs to make sure that it plays a role in preparing citizens and businesses for those changes. While the impact of automation creates challenges, it also presents an opportunity. Given the fact that Indiana has the highest per capita concentration of manufacturing in the United States and engineering excellence that exists in higher education and the private sector, the state should own manufacturing automation. Indiana needs a strategy to lead the way on the integration of automation into manufacturing.
The drug epidemic that has impacted the United States has left its mark on Indiana. From methamphetamine to opioids, the state has an enormous battle on its hands. Not only does drug abuse have a tremendous impact on families, it creates enormous challenges for health care and law enforcement professionals, and employers. In particular, many manufacturing and distribution companies cannot find employees to fill open positions that can pass a drug test. This has had a profound impact on both rural and urban communities throughout Indiana. Governor Holcomb and the legislature have identified the seriousness of the issue and have allocated resources to step up the fight against it.
Another challenge for our state is how to better support the entrepreneurial and technology community. While we have come light years from where we were a decade ago, there is much work left to do. The investment in the Next Level Indiana Fund, continued financial support for the 21st Century Fund, and removal of the sunset date for the Venture Capital Investment (VCI) tax credit were all very important for the State of Indiana. We have already discussed the challenges associated with the quality and sustainability of our talent pool. This challenge becomes even more acute when you get outside of our larger regions. Another issue relates to leveraging more venture capital investment for Indiana companies. The fact that the legislature chose not to make the VCI tax credit transferable means that angel investors and venture capital firms located outside of Indiana that do not have tax liability in the state (which is most of them) receive no benefit at the time of investment. A number of states across the country have made this type of change to draw more investment into their states. Indiana should do the same.
Finally, Indiana’s greatest risk may be complacency. There are some that believe Indiana has made enough changes during the past decade and it is now time to sit back to see how they work. In particular, many people use our state’s low unemployment rate as reason to not take bold steps at this time. Based on our firm’s work on behalf of corporate clients throughout the United States, I can assure that this is not how Indiana’s competitors are thinking about their communities and states. In the Midwest alone, you have very aggressive governors and legislatures in states like Kentucky, Michigan, Missouri, Ohio, and Wisconsin. These states are continuing to make changes to position themselves for economic growth. Indiana has made itself the leader in the Midwest due to a lot of hard work and innovation by citizens, private sector leaders, and elected officials. Now is the time to keep the gas pedal firmly pushed down and move quickly to build upon Indiana’s leading position. If we choose not to do so, we will fall behind.
Larry Gigerich is executive managing director of Ginovus.