Manufacturing isn't the problem; it's part of the solution
BYLINE: Martin Jischke; Tom Snyder; Denny Oklak
A recent disheartening job report for Hoosiers sparked an economic call to arms on The Star's editorial pages April 3. The state lost more than 7,000 jobs in February, according to the Bureau of Labor Statistics.
The editorial ("Dismal job-loss report: It's time to get busy") added the news to the mountain of evidence that Indiana needs to build a diverse, knowledge-based economy.
We agree wholeheartedly. Innovation and education are the best predictors of economic success. Bad news should spark bold action -- for example, support for more innovative programs such as the Hoosier Scholars.
But we take issue with one aspect of the editorial -- the disparaging comments about Indiana's "over-reliance" on manufacturing. This feeds a common misconception that manufacturing is part of our economic past, and has a marginal place in the high-tech future.
In fact, the upheaval in manufacturing over the last 20 years has come as the sector shed low-skill jobs and increased productivity through new technologies and total quality initiatives. Manufacturing today is a high-tech, innovation-focused economic cluster; it may create a smaller number of jobs, but ones that demand 21st-century skills and command higher wages.
This "lean, mean" manufacturing sector is globally competitive, and attracting new investment. We've seen it first hand in Indiana, with Honda, Nestle and other major economic development announcements over the last year.
A few statistics tell the broader story: Between 1995 and 2004, economic output per worker in the U.S. manufacturing sector rose 34 percent. Estimates by Federal Reserve economists attribute fully half of this increase to the benefits of information technology integration into manufacturing processes. Manufacturing workers these days are more likely to be working with computers and robotic systems than standing on an assembly line for an eight-hour shift.
Manufacturers are also being pushed to be more and more innovative. Currently, nearly 80 percent of all patents filed in the United States originate from the manufacturing fields. According to Deloitte Research, products that represent more than 70 percent of current manufacturing sales will be obsolete in the next six years. That means that the manufacturing sector will have to become even more focused on research, product development and speed to market.
In this environment, manufacturing jobs require more education, from two-year technical certificates and associate degrees, to bachelor's and post-graduate degrees, and pay accordingly. Manufacturing jobs pay an average of 40 percent more than the Indiana median. And as productivity continues to rise, so should earnings.
These jobs are being created across a wide spectrum of industries. Automotive components make up less than a quarter of the state's total manufacturing sector. Our diverse production economy also includes strengths in pharmaceuticals and medical devices, aerospace, chemicals and electronics.
Many of these sub-sectors are slated for strong growth ahead. In Central Indiana, more than 85 percent of manufacturing operations are in areas projected to add jobs over the next five years.
Manufacturing requires a strong work force, a critical mass of intellectual property and a solid technology base. Ignoring the needs of today's manufacturers would sacrifice many of the best high-tech, high-wage opportunities that we profess to be our economic development priorities.
The latest job-loss statistics are a wake-up call, and our policymakers, economic developers and educators need to work together to move the state forward. But manufacturing isn't the problem -- it's an important part of the solution.
Jischke is president of Purdue University, Snyder is president-elect of Ivy Tech Community College and Oklak is chairman and CEO of Duke Realty. They are co-chairs of Central Indiana Corporate Partnership's Advanced Manufacturing & Logistics Initiative.