Eli Lilly and Co. CEO David Ricks spoke to the Economic Club of Indiana on April 20, in part about challenges in Indiana’s business climate.
The following is a transcript, edited for space and clarity, of that part of his speech and the Q&A that followed.
It’s long been said that when Lilly does well, Indiana is going to do pretty well. But I want to point out as well that the reverse is also true. When Indiana is thriving, Lilly can also thrive. And without those preconditions, we’re going to struggle.
And thinking about this next decade, the post-COVID world, how can we win? I think for a long time, this state has focused on attracting businesses and jobs primarily through economic means alone. And this is the Economic Club, so you probably appreciate that.
There are some converging trends that make the economy much more intertwined with things we might think of as daily life: the health of our citizens, and the education level of our citizens in what will increasingly be an economy driven by ideas, not just by putting things together.
And underpinning both those are two mega-trends that perhaps you believe in: preserving our planet and creating inclusion for everyone. Inclusion is about bringing more people into the success story. And I think it’s a mandate for all of us as well.
So how are we doing on these dimensions? I found this study interesting: CNBC looked at benchmarking all 50 states. And I sort of sorted it by assets and liabilities in the state.
We do well on those traditional factors: infrastructure, cost of doing business, cost of living is low, business friendly, permitting and so forth. This is the traditional agenda of our government groups, and I think they’ve executed well.
But our liabilities are all the new things. Our education in the state is not good. The ability to reskill the workforce, I think, could improve. Health, life and inclusion, overall, I think, conditions rank poorly nationally in our state. And also workforce preparedness, also related to reskilling, is a liability for us.
And digging into these data a little bit more: I think it’s important while you understand this, the need to focus on this as part of a policy agenda.
Hoosiers today have a relatively low performance on national metrics of education, whether it be proficiency in math. Thirty-seven percent passed our own test on math proficiency. I think that’s a very difficult statistic to look at.
And if you look at what our economy is based on, when we talk about STEM, it’s a manufacturing economy. But it’s projected that about 30% of the current jobs will be lost in the next decade, replaced by math and science-heavy positions.
That’s our business too. We hope to be part of that growth story. But we need to do some work to get our people in our state ready for this.
Another topic, which I applaud the Governor and others, Speaker of the House, etc., for raising what is really a hidden business cost, that of course also affects the livelihoods and health of our people. And that is the cost of treatment for health care in our state, which is, by many measures one of the worst in the country, and certainly the worst. In the Midwest. … You can see we’re by far the highest (of our neighboring states).
Who bears this cost? This is the business cost of commercial insurance. The government sets fixed rates, that’s what this is indexed toward.
So we can lower the corporate tax rate a little bit more; it’s already pretty low. But who funds this? Companies fund this. And we need to address this to attract more industry to our neighborhood here.
Not only do we have higher rates (for health care), but we also have more volume.
Chronic illness in our state is really worse than national averages on every metric. So not only do we for more for utilization of the healthcare system, we use it more, because our populace is less healthy. This needs to be addressed as well.
And here in the business community, we can make a difference through our corporate health programs, not just for people with insurance, but to keep our population healthy. And this also directly relates to absenteeism, which is a growing issue, and one that’s harder to manage. You have openings you can’t cover those shifts with other workers.
And final comment on health, there’s another bigger topic, which is public health. And here again, I think we’ve read relatively poorly. Total spending is last in Indiana among 50 states.
And other factors that can affect public health, like air quality, and others quality of movement and neighborhoods; we don’t rank very highly on either. This can also loop back into that sustainability and green energy topic, as well.
So work to do. And if I had to make a list for the upcoming legislature, this would be it, to work on these things, to work on K through 12 education and the basic building blocks of how we prepare our workforce for the future, reskilling those that have already left that system, but may struggle to find a new role in the modern economy.
Public health is a precursor to health, and it’s important to change. I think our position on that ranking list from last is something north of that.
And addressing the root cause of excessive costs for business, to hiring new workers, which is health care costs.
And as a precursor to successful the state is a green agenda. Whether you agree with that or not, it doesn’t matter, it’s happening. And if we cannot offer energy that has a sustainability mix to it, we won’t land the next big employer here in the state.
And of course, we need to include everyone. Peoples’ minds gravitate toward underrepresented groups. This is important. Certainly outcomes on all these dimensions for black and brown communities in Indiana are worse and we should do something to affect that. And one of the primary things businesses can do is offer good employment.
But it goes beyond that. I think here in central Indiana, we are 50% of the economy (of the state), but only a third of the population. Which means … two thirds of the population are really being left out of the growth story in our state, that’s rural Indiana.
And then another group which we can turn our minds to with the Ukraine crisis and others, are the people who don’t live here yet, but should and those are immigrants, which have been the lifeblood of growth in Indiana. And we need to think about that as well, because our population replacement rate is less than two.
But I also want to point out that one does special things and things I really love about this state is when we work on things together, whether it be in the business community, nonprofit, and with policymakers, we get things done.
We built a sports economy here because of that. … We can do these things, but we have to do them together.
So an ask for attending this lunch is to work with us to echo these messages, to make our state vibrant for the future to win the post- COVID decade. And it’s not just about lowering the corporate tax rate. Thanks for listening today.
The following is from the Q&A session on why Eli Lilly and Co. recently decided to build a $1 billion manufacturing plant in North Carolina.
First of all, we do need to diversify our locations. That’s important. Because we want to diversify our workforce, and we have to be closer to our customers.
But it is also true in the last four major investments we announced, two were in North Carolina, one in Limerick, Ireland, and the big new research site in Boston,
You could ask, well, is there some trend forming here? Why is he doing it?
We have an Indiana First kind of approach to these things. We prefer a cluster and our young folks together. It is important to diversify our geographies. But it’s also important to learn as to why we’re not the only ones putting these sites in these places.
So the workforce, background costs in health care and sort of community quality are very important factors that go into this, in addition to the business-friendly international economic measures.
We get calls from lots of policymakers in the state about each one of these right after they happen. And I give this speech that I gave you today.
I’m hopeful that we can organize some things and if there’s any good that came out of these announcements for Indiana, we can adapt and be much more attractive, so it becomes impossible for Lilly not to put it here.•