Indiana’s advanced manufacturing sector is in both size and scope a national leader. Firms that manufacture goods in close connection to research and development activities are termed advanced manufacturing. Here in Indiana, 52.6 percent of the manufacturing economy is comprised of advanced manufacturing firms. That is significant since Indiana already possesses the largest share of total manufacturing of any state in the nation. So, Indiana is one of only three, or perhaps four states where advanced manufacturing represents a significant share of that state’s overall economy.
Advanced manufacturing in Indiana comprises 243,000 workers, and 2,548 establishments, located in every Hoosier county. The advanced manufacturing sector comprises roughly 40 industrial sectors. In Indiana, these are dominated by the production of trucks and automobiles. The subsectors comprise over 20 percent of all advanced manufacturing and include motor vehicle parts, motor vehicle body and trailers, assembled vehicles and power train and transmission equipment. Together, these sectors represent more than 8 percent of advanced manufacturing employment and are an integral part of the economy in virtually every Indiana community.
The production of iron and steel comprises 8.5 percent of advanced manufacturing employment with production concentrated in the northern part of the state. Other non-metallic minerals, such as processing of fuels, and other composite parts absorb another 3.73 percent of advanced manufacturing or 2,820 workers. Foundries, which process iron and steel, comprise another 3.83 percent of employment in the state.
The manufacture of medical equipment and supplies employs more than 17,000 workers across the state, and pharmaceuticals manufacturing employs another 8,073. There are over 275 businesses in these two sectors across the state. These sectors provide more than one in ten advanced manufacturing jobs in Indiana.
Befitting a heritage of transportation equipment, the production of general purpose machinery is conducted in 172 firms, employing 8,059 workers in Indiana. Despite a strong heritage in these sectors the employment mix of workers in advanced manufacturing is increasingly different than in the past.
Advanced manufacturing employment consists of blue collar, white collar and STEM jobs. Of these jobs, 17.4 percent are STEM-related occupations, 24.7 percent are white collar jobs, and 57.8 percent are blue collar jobs. These numbers require some explanation though. Both white collar and production jobs within advanced manufacturing are typically heavily related to STEM educations. A plant manager is technically a white collar job, even if her degree is in Mechanical Engineering. A production occupation is labeled as blue collar, even if that employee holds an associate degree in manufacturing technology.
Across these occupations there are shifts in employment patterns. Since the end of the Great Recession, which was very deep for all manufacturing sectors, employment has generally risen. However, most growth has been concentrated in white collar and STEM-related positions, while employment in blue collar advanced manufacturing jobs has been relatively static. Still, in Indiana that means 43,309 STEM-related jobs, 60,625 white collar jobs and 140,882 blue collar jobs in advanced manufacturing.
There are many strengths that bring advanced manufacturing to Indiana. There are five large research universities in a state of only 3.4 million workers, and Purdue University in particular is effective in commercializing research in manufacturing. Indiana has a robust business climate, and a strong transportation and logistics sector.
The weaknesses that threaten the future of advanced manufacturing come down to the fundamental availability of skilled workers. The large and growing importance of STEM-related skills in manufacturing suggest a continuing need for state policymakers and the business community to work closely with both the state’s K-12 system and universities to ensure young men and women who wish to pursue a career in advanced manufacturing have the skills necessary for success in this fast growing, high wage sector of the Indiana economy.
Michael J. Hicks, PhD is Director at the Center for Business and Economic Research, and George & Frances Ball Distinguished Professor of Economics, Miller College of Business, Ball State University.