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KSM Blog | Katz, Sapper & Miller CPA

Annual Grading of Indiana’s Manufacturing Health

Posted 7:21 PM by

The Indianapolis Business Journal and Conexus Indiana recently hosted The State of Manufacturing and Logistics: High Tech Is Here … Is Indiana Ready? At the event, Dr. Michael J. Hicks of Ball State University unveiled the annual Manufacturing and Logistics National Report, which grades the health of manufacturing across the country by evaluating the following categories in each state:

  • Overall manufacturing health
  • Human capital
  • Worker benefit costs
  • Tax climate
  • Expected fiscal liability gap
  • Global reach
  • Sector diversification 
  • Productivity and innovation

Not surprisingly, Indiana was one of only five states in the United States that scored an “A” in overall manufacturing industry health. Indiana also leads the nation with the highest share of manufacturing employment per capita and the highest manufacturing sector income share of the total income of the state.

Other key takeaways include:

  • Indiana improved its score in human capital from a “D” to a “C-”: Indiana improved its retention rates for first-term degree/certificate seeking students. However, Indiana is in the bottom 10% of states for number of individuals holding a bachelor’s degree.
  • Indiana improved its score in worker benefit costs from a “C-” to a “C”: The biggest drag on Indiana’s score in this sector is driven by increased healthcare costs, as healthcare insurance premiums increased more dramatically in Indiana than other states. 
  • Indiana was one of only five states in the U.S. to score an “A” in tax climate for businesses: Indiana is in the top 20% of states for favorably individual income tax, sales tax, unemployment insurance, and property taxes in fiscal year 2014.
  • Indiana decreased its score in the expected fiscal liability gap from a “C+” to a “C”: The decrease is driven by an increase in the ratio of Indiana’s unfunded pension liabilities compared to Indiana’s GDP. This did not include any pension payments made since 2012.
  • Indiana was one of only five states in the U.S. to score an “A” in global reach: Indiana continued to see growth in exports during 2013, although the growth has slowed some compared to 2012.
  • Indiana scored a “C” in sector diversification: While Indiana is a strong manufacturing state, a significant portion of that manufacturing is located in a few sectors of manufacturing (i.e. automobiles).
  • Indiana maintained a “C+” in productivity and innovation: Overall, the average manufacturing productivity improved compared to last year, but Indiana saw a decrease in manufacturing value added compared to other states.

To view the full report, as well as Indiana’s report card, visit Ball State’s Center for Business and Economic Research.

About the Author
Justin Hayes is a director in Katz, Sapper & Miller’s Audit and Assurance Services Group. Justin works with clients to help ensure accurate financial reporting, keeping an eye on their bottom line, and helping them avoid risk and maximize efficiencies. Connect with him on LinkedIn.

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