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LETTER: Manufacturing is not dead 

October 28, 2017

There’s been a lot of discussion from business and elected leaders about the death of Midwest manufacturing. Even though the industry employed more than 516,900 Hoosiers last year, with an output of nearly $100 billion, some continue to argue that “manufacturing is dead.”

I don’t agree. Despite slumps in U.S. manufacturing as a whole, in Indiana, it has remained a mainstay for decades. It’s in a position to grow, especially as companies look to “reshore” their operations back to places in the Midwest.

According to a report from The Boston Consulting Group, manufacturers with at least $1 billion in annual revenue plan to add more production capacity in the U.S. than in China. The U.S. and Indiana could see this growth because of four reasons: cost, quality, supply chain and access to credit.

Countries like China have traditionally kept labor costs low, resulting in lower overall costs. But in fact, labor costs in China are only 4 percent cheaper than in the U.S., and these savings are diminished when manufacturers account for packaging, shipping, executive travel and freight costs. This, coupled with U.S. tax incentives, makes it clear why manufacturers are turning stateside to produce their goods.

Another factor is quality. There’s a reason why Indiana is known internationally for our automotive, pharmaceutical and R&D sectors. The U.S. also maintains the gold standard in protecting intellectual property, so manufacturers worry less about patents being illegally replicated. 

We also have an advantage because several major interstate highways crisscross our state, connecting us to companies located throughout the country.  

Finally, bringing manufacturing back to the U.S. allows companies to have easier access to credit and financing. Interest rates and inflation are relatively low, which means businesses can invest more in expanding operations.

All these factors point to a positive future where jobs continue to return and where Indiana manufacturing grows.

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Andrew Crask
Bank of America Merrill Lynch

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