Presidential candidates have been crisscrossing Indiana over the past week in advance of Tuesday’s state primary.
And every candidate has something to say about manufacturing.
Democrat Hillary Clinton promised “a manufacturing renaissance” as she toured Munster Steel Co. in Hammond and AM General in Mishawaka. Her challenger, Bernie Sanders, called for an end to “disastrous trade policies” during a rally at Purdue University in West Lafayette.
Republican front-runner Donald Trump has said he would “tax the hell” out of air-conditioner company Carrier for its plan to shift more than 2,000 jobs from Indiana to Mexico. His main opponent, Ted Cruz, blamed Carrier’s decision on burdensome federal taxes and regulations.
It’s a topic that resonates with Hoosiers.
Manufacturing drives Indiana’s economy, accounting for about one in six jobs in the state, according to the U.S. Bureau of Labor Statistics.
“We have the highest concentration of manufacturing of any state in the country,” said Brian Burton, president and CEO of the Indiana Manufacturers Association.
But the candidates “are peddling untruths” when they claim Indiana’s manufacturing economy is in dire straits, said Michael Hicks, director of Ball State University’s Center for Business and Economic Research.
In a recent study, “The Myth and Reality of Manufacturing in America,” Hicks analyzed how U.S. manufacturers have recovered from the Great Recession. Indiana, he emphasized, had record years for the value of manufactured goods produced in the state in 2014 and 2015.
Of course, when many people think of manufacturing, the number of jobs in factories resonates more strongly than the value of goods recorded on a balance sheet.
Indiana has added about 80,000 manufacturing jobs since the recession hit its low point in 2009, according to federal data. However, the state has lost manufacturing jobs over the decades. The sector employed about 520,000 Hoosiers in 2015, compared with about 665,000 in 2000.
While many politicians blame those job losses on policies that lead companies — like Carrier — to send jobs to lower-cost countries, Hicks said technology and improved productivity have caused most of the job losses in manufacturing.
“Less than 4 percent of all manufacturing jobs lost over the past decade can be linked to international trade,” Hicks said, “and most trade-related job losses are in low-productivity sectors.”
Bill Testa, vice president and director of regional research at the Federal Reserve Bank of Chicago, said it’s also important to consider that there are thousands of jobs in trucking, accounting and other services that are dependent on manufacturing but not categorized as manufacturing jobs.
“A lot of the service activity in the Midwest is dependent on manufacturing being here,” Testa said. “Manufacturing is what we do here, and we do it better than other places. It’s our specialty, so I always encourage policy makers to think about it and do what they can to nurture it.”
Perhaps one of the dangers of politicians wailing about manufacturing decline is that such talk could discourage people from pursuing careers in manufacturing.
Modern factories are high-tech and often employ workers who have education beyond high school. Hiring managers throughout the industry have said they’re having trouble finding applicants who can work with advanced machinery.
Modern manufacturing pays well, too. Burton, of the Indiana Manufacturers Association, said the average annual compensation for a manufacturing job in the state is more than $72,000. The average for all other jobs in Indiana is less than $45,000.
David Audretsch, an economics professor in the School of Public and Environmental Affairs at Indiana University Bloomington, co-authored a book titled “The Seven Secrets of Germany” last year. He said Germans have built Europe’s most successful economy, and they’ve done it by embracing manufacturing.
“In Germany, they train people for manufacturing and celebrate it,” he said. “If you have skilled workers, globalization doesn’t defeat you.”
Audretsch said the solution to strengthening manufacturing doesn’t lie in trade negotiations or “putting a wall around America and not letting companies out,” as some candidates suggest. In fact, building barriers to trade would hurt the U.S. economy.
“I don’t see any proposals from any of the candidates that are going to help us hang on to manufacturing,” he said.
“We have to compete to win in the world. To be competitive in manufacturing, we have to invest in what high-tech, innovative manufacturing needs,” he added. “That’s the best minds, the best people and the best ideas, and lots of institutions supporting it, like we do in agriculture and high tech.”
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