On Manufacturing Day, Embrace a Global Future
Melina Kennedy has served as Cummins' general manager of its Global Rail and Defense businesses since November 2014.
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe first Friday in October is Manufacturing Day – a designation promoted by the National Manufacturers Association and its partners to draw attention to the fundamental importance of America’s production industries. Here in Indianapolis, it’s easy to argue that every day is manufacturing day. As the largest region in the most manufacturing-intensive state, it’s a cornerstone of our economy.
Metro Indy is has 20 percent more (per capita) advanced manufacturing jobs than other major urban areas, and a total workforce of nearly 100,000 producing life-saving medicines, high-performance auto parts, jet engines, electronics, and much more.
The story of Indianapolis manufacturing isn’t always upbeat, of course: Like the rest of the country, and particularly the Great Lakes, Indy was hard-hit by turmoil in traditional assembly line industries, losing more than 50,000 manufacturing jobs during the 1980s, 90s and 2000s. Other parts of our economy picked up the pace – it’s estimated that we’ve created eight new jobs for every manufacturing job lost – but wages suffered, and in many ways the region is only recently seeing a rebound.
Since 2010, the region has gained roughly 7,000 manufacturing jobs. But to build on this momentum, the Indianapolis region needs a proactive strategy that embraces our global future – Manufacturing Day is a perfect time to talk about our challenges and opportunities.
One major challenge is the popular opinion of globalization and its impact on manufacturing – there’s a growing anti-trade mood in the country, and the unfortunate closure of Carrier plants here made Indianapolis a flashpoint for this sentiment and the political rhetoric surrounding it.
We have to look at the big picture: Manufacturing employment in the Indianapolis region reached its peak in the early 1970s, 20 years before NAFTA; most experts say that productivity and technological advances are major culprits for lower-skill job losses, not just overseas competition. More importantly, curbing trade means shutting off major markets for local manufacturers – nearly 80% of the world’s economy and 90% of potential customers are now outside the U.S.
Whether it’s Mexico or Arkansas, lower-cost labor markets will always appeal to short-term profits – often at the risk of long-term success. But the dominant trend is that exporters and foreign-owned employers can actually be more innovative, invest more in R&D and training, and pay higher wages (20% more, on average) than those who only focus domestically. To raise living standards for local workers, Indianapolis needs more global business, not less.
We need to shift public opinion on international trade – but there’s another group that needs a more urgent wake-up call on Indy’s global opportunities.
Indianapolis ranks among the top 25 metropolitan areas in export output and employment…but these numbers are driven by just a handful of major corporations. Among smaller companies, more than 90% aren’t exporting – and 95% of our region’s manufacturers have less than 50 employees. An analysis by the Brookings Institution identifies more than a thousand local firms in traded industries that could be exporters, but aren’t – including 500 mid-sized manufacturers.
Among these businesses, an Indy Chamber survey identified recurring concerns: Language/cultural barriers, a lack of foreign market knowledge, identifying potential customers and partners, legal and regulatory issues, and the costs and resources needed to manage international logistics and transportation. If we can help make these obstacles less daunting, we can tap into massive potential to expand our manufacturing base.
A few weeks ago, the Indy Chamber released a new economic development strategy, Accelerate Indy, that takes aim at these global growth opportunities. Through a partnership with Brookings and JPMorgan Chase – the Global Cities Exchange – we’ve developed a more detailed blueprint for encouraging mid-market exporters through technical assistance, marketing programs, shared cost initiatives and other plans that have become a key pillar of Accelerate Indy.
Nationally, more than 30,000 new companies have started exporting since 2010 – as we implement Accelerate Indy, we look forward to a growing number of Indianapolis manufacturers joining this trend as we mark future Manufacturing Days.
Talent is a recurring issue in Accelerate Indy that also impacts manufacturing. It’s a testament to how manufacturing has changed that a major challenge in the industry is a shortage of human capital – engineers and skilled production workers that can manage the computerized equipment that’s common in today’s cutting-edge factories.
We need to build a pipeline of future talent, but Indy’s existing workforce is highly-productive (we rank 13th out of the 380+ U.S. MSAs in output-per-worker), taking on a 30% greater share of ‘high-tech’ manufacturing employment than the U.S. overall. We hope this is a lasting message of Manufacturing Day: The global economy is competitive, but the only way for local manufacturers and workers to lose is to forfeit – with skilled workers and a smart strategy, we can find opportunities ‘Made in Indy’ across the world.
Melina Kennedy is general manager of global rail and defense business for Cummins Inc. and co-chair of the Metro Indianapolis Global Trade and Investment Strategy.