The 2014 Manufacturing and Logistics Report, prepared by Ball State’s Center for Business and Economic Research (CBER) for Conexus Indiana, the state’s advanced manufacturing initiative, shows how each state ranks among its peers in several areas of the economy that underlie the success of manufacturing and logistics.
These specific measures include the health of the manufacturing and logistics industries, the state of human capital, the cost of worker benefits, diversification of the industries, state-level productivity and innovation, expected fiscal liability, the state tax climate, and global reach.
Oregon received the following grades with an average score that would be a C+:
Manufacturing: A
Logistics: C
Human Capital: C
Worker Benefit Costs: C
Tax Climate: C
Expected Liability Gap: B
Global Reach: D-
Sector Diversification: F
Productivity and Innovation: A
CBER director Michael Hicks says, ”Oregon received an “A” grade in productivity and innovation category and it maintained “A” in manufacturing industry category. The state remains solidly poised to add manufacturing employment. ”
The “D” grade in global reach indicates the level of international trade (in both imports and exports) and measures the region’s competitiveness in the production, movement and distribution of consumer durable and non-durable goods. Both firms and regional governments focus considerable effort at improving ties with foreign firms, but for different reasons. Governments seek foreign investment in plant and equipment, while firms care about supplier relationships on both commodities and finished goods.
Of course, manufacturers want to make goods with a global market appeal. How well this is done is an important predictor of the health of state-level manufacturing and logistics sectors into the future.
To measure global reach, they include the export-related measures of per capita exported manufacturing goods and the growth of manufacturing exports. They also include the foreign-direct investment measures of the amount of manufacturing income received annually from foreign-owned firms in a state, the level of adaptability of the state’s exporters to changing demand, as well as the reach of foreign direct investment.
The “F” grade in sector diversification indicates both risks and rewards to economic diversification. States that concentrate their manufacturing activity in a single sector typically suffer higher volatility in employment and incomes over a business cycle and are also more likely to experience greater effects of structural changes to the economy involving a single sector.
One potential benefit of low levels of economic diversification is that the resulting agglomeration economies often emerge in highly specialized regions. As a consequence, policies that seek to diversify the economy are typically pursued in concert with efforts to strengthen the supply chain of existing industries.
The full report is available Here.
For more information, contact Hicks at mhicks@bsu.edu or 765-716-3625.
