VOICES FROM THE INDUSTRY: Indiana has diverse manufacturing base

June 15, 2009

It's no secret that these are uncharted times for the U.S. auto industry. Sales fell 34 percent in April on the heels of a 37-percent decline in March. In late April, Chrysler became the first major American automaker to seek bankruptcy protection in more than 75 years, and General Motors succumbed to the same fate June 1.

As the bad news piles up, analysts have argued: Have we found the bottom of the market? Is the auto industry poised for recovery, or is there more pain ahead?

Closer to home, Hoosiers are asking about the impact on Indiana's economy as the most manufacturing-intensive state in the union.

Clearly, the bankruptcies had immediate consequences for thousands of Indiana workers. General Motors has hastened the closure of its Indianapolis metal stamping plant, and Chrysler has idled facilities in Kokomo and elsewhere. Major suppliers like Cummins also feel the pinch.

But while the Big Three automakers are important cogs in Indiana's economic engine, we shouldn't make the mistake of assuming that the destinies of the U.S. automotive sector and Indiana manufacturing are inextricably tied. Our manufacturing industry is broad and diverse, and can weather the storms.

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 percent of the state's total manufacturing jobs--Indiana ranks No. 1 in per-capita manufacturing employment. In other production-centric industries, prospects are brighter.

For example, life sciences has grown its share of Indiana's total manufacturing output from 11 percent in 1997 to 20 percent in 2007, according to a recent Indiana University report. These biomanufacturing jobs aren't immune to recession, but projections point toward continued growth.

The clean-technology sector, awash in federal stimulus and venture capital investment, is another bright spot. Cutting-edge companies like EnerDel, Bright Automotive, Brevini Wind and many more are capitalizing on the booming market for alternative energy and electric vehicles, helping carve a promising niche in "green manufacturing."

Indiana's $4.6 billion defense and aerospace industry and our emerging strength in nanotechnology (based around research centers at Purdue University and the University of Notre Dame) provide more opportunities for high-tech manufacturing.

The diversity of Indiana manufacturing also allows automotive suppliers to branch into new industries--the machine shop struggling with dwindling contracts from Big Three automakers can transition into making parts for wind turbines in the energy sector, for example, or specialized components for orthopedic device manufacturers.

For smaller manufacturers, diversity means stability. Conexus Indiana and Purdue University are creating a statewide supplier database that links these firms with more business opportunities.

Indiana's success in attracting foreign manufacturing investment is also a source of strength.

We've ranked No. 1 for two consecutive years in creating manufacturing jobs through international deals, according to IBM's annual Global Location Trends report.

Indiana is now home to manufacturing operations from 29 countries, employing more than 100,000 Hoosiers.

This includes foreign automakers like Honda, Toyota and Subaru, meaning greater diversity beyond the Big Three in our automotive sector--and more potential contracts for our auto supplier network.

Of course, the problems in the automotive industry have taken their toll on Indiana.

We can be confident but not certain that jobs from the sources discussed here can replace every job that's being shed by automakers.

But we do know that as baby boomer workers leave the work force in mass numbers and the national economy rebounds, thousands of high-tech manufacturing jobs will be available through retirements and job creation.

We must prepare Hoosiers to take advantage of these positions, which demand a higher level of training and skill than the assembly-line jobs of yesterday. With just seven out of 100 young Indiana workers possessing an associate's degree, the demands on our community college system and technical training providers will be dramatic to meet the needs of employers and preserve our manufacturing strength.

Manufacturing still employs nearly one of every five Hoosiers and accounts for a third of our gross state product, and the depth and breadth of this sector will help us recover from our economic woes.

We all hope that a strong, vibrant, domestic auto industry re-emerges to bring jobs and investment to Indiana, but tomorrow's industries may look very different from today's.

Our challenge is to prepare for the demands of manufacturers in the 21st century, not to throw up our hands or ignore the fact that manufacturing will continue to be the heart of our economy.


Dwyer is president and CEO of Conexus Indiana, an initiative focused on the work force and other needs of the state's manufacturing and logistics industries; he formerly served as chief operating officer of Rolls-Royce Corp. Views expressed here are the writer's.

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