The State of Indiana Manufacturing and
2016 Session Preview
Indiana Manufacturers AssociationJanuary 2016
Alabam
a
Arizona
California
Connecticu
t DC
Georgi
aIdah
o
Indiana
Kansas
Louisiana
Marylan
d
Michiga
n
Mississ
ippi
Montana
Nevada
New Je
rsey
New Yo
rk
North Dako
ta
Oklahoma
Pennsyl
vania
South Caro
lina
Tenness
eeUtah
Virginia
West Virg
inia
Wyoming
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
13.36%
29.45%
19.19%20.08%
16.92%
25.87%
18.80%
2014 Manufacturing as Percent of State GDP
Indiana Has the Most Manufacturing Dependent Economy in Nation
Indiana 2014 GDP Share by Industry
Manufac
turing
Finan
ce, ins.,
real esta
te, e
tc.
Government (F
ederal, St
ate & Lo
cal)
Educati
on, healt
h care, an
d socia
l serv.
Professional &
business
Retail tr
ade
Wholesale tr
ade
Constructi
on
Transporta
tion and w
arehousin
g
A&E, recre
ation, lo
dging, f
ood servi
ces
Other servi
ces, exce
pt gove
rnment
Informati
on
Ag., forestr
y, fishing, h
unting
Utilities
Mining0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00% 29.45% - $93.6 billion
14.84%
9.19% 8.68% 8.09%
5.83% 5.37%3.54% 3.42% 3.37%
2.24%
1.88% - $5.9 billion
2.02% 1.71%0.36%
2014 GDP by Industry in Indiana
Publically Funded
Indiana Employment by Private Sector IndustryJune 2015
Manufac
turing
Educati
on and healt
h servi
ces
Professional a
nd business
services
Retail tr
ade
Leisure an
d hospitality
Constructi
on
Finan
cial ac
tivities
Wholesale tr
ade
Transporta
tion and w
arehousin
g
Other servi
ces
Informati
on
Agricultu
re, forestr
y, fishing a
nd hunting
Utilities
Mining
Unclassi
fied0
100,000
200,000
300,000
400,000
500,000
600,000523,439
Average Indiana Weekly Wage by Sector June 2015
Manufac
turing
Finan
cial ac
tivities
Informati
on
Constructi
on
Professional a
nd business
services
Natural
resource
s and m
ining
Educati
on and healt
h servi
ces
Trade, tr
ansporta
tion, and utiliti
es
Other servi
ces
Unclassi
fied
Leisure an
d hospitality
$0
$200
$400
$600
$800
$1,000
$1,200 $1,101
Indiana Manufacturing Establishment by Type June 2015
1,754
859
647
616
613
536
508
504
498
423
323
225
217
171
154 149 140
52 38 23 15
Fabricated Metal Product
Machinery
Printing and Related Support Activities
Transportation Equipment
Miscellaneous
Food
Furniture and Related Product
Plastics and Rubber Products
Wood Product
Nonmetallic Mineral Product
Chemical
Computer and Electronic Product
Primary Metal
Textile Product Mills
Paper
Electrical Equipment, Appliance, and Component
Beverage and Tobacco Product
Petroleum and Coal Products
Apparel
Textile Mills
Leather and Allied Product
Indiana Manufacturing Employment by Type June 2015
123,878
59,931
44,154
44,054
38,736
37,473
31,268
28,911
24,024
15,500
15,150
14,092
13,942
9,929 8,778 4,890 3,573 3,099 754 741 562
Transportation Equipment
Fabricated Metal Product
Machinery
Primary Metal
Plastics and Rubber Products
Food
Chemical
Miscellaneous
Furniture and Related Product
Printing and Related Support Activities
Computer and Electronic Product
Nonmetallic Mineral Product
Wood Product
Paper
Electrical Equipment, Appliance, and Component
Beverage and Tobacco Product
Petroleum and Coal Products
Textile Product Mills
Leather and Allied Product
Apparel
Textile Mills
State Jobs Added Rank
Michigan 22,500 1
Ohio 14,100 2
Indiana 12,200 3
North Carolina 8,600 4
Kentucky 7,300 5
Utah 6,500 6
Wisconsin 6,300 7
Oregon 5,400 8
Georgia 5,200 9
Florida 4,400 10
Manufacturing Jobs Added:January 2012 – October 2015
Manufacturing Jobs Added:October 2014 – October 2015
State Jobs Added Rank
Michigan 72,000 1
Indiana 52,500 2
Ohio 40,100 3
Kentucky 26,600 4
North Carolina 25,700 5
Georgia 23,300 6
Tennessee 22,600 7
Wisconsin 21,900 8
Florida 20,000 9
Oregon 16,300 10
2016 Legislative Session• House: 71 Republicans, 29 Democrats• Senate: 40 Republicans, 10 Democrats• January 5 – First Day• January 12 – State of the State Address• February 3 – Deadline for bills to clear first house. • February 5 – Primary Candidate Filing Deadline• March 2 – Deadline for House bills to clear Senate• March 2 – Deadline for Senate bills to clear House• March 14 – Session Ends.
Tax Issues• Fuel Taxes, Cigarette Taxes, State and Local Reserves for
Infrastructure Funding• Business Property Taxes
• “Big Box” assessment – What is a good comparable sale to measure assessed value?
• Business Personal Property Taxes – Disincentive for business investment
• Combined Reporting for Corporate Income Tax• Would require all affiliated business entities to report all income
in Indiana tax return. • Combine losses and credits from other states as well? • Need nexus for entity to be combined into Indiana return?• Waters edge election?
Environment and Energy• No More Stringent Than Federal Rules standard for Indiana
environmental rules. • Consistency and simplicity for regulated entities.
• Clarification of “legitimate use” for solid waste and hazardous materials.
• Further discussions for expanded use of cogeneration/combined heat power opportunities.
• No decision yet from Pence Admin. on implementation of Clean Power Plan.
• Indiana joined lawsuit against CPP. Publically opposed Ozone rules.
How Well Is Manufacturing Supported by Government?
2015 Indiana Manufacturing Survey
Infrastructure• Governor’s Plan - $241 million from state reserves, $450
million appropriated in 2018, 2019 and 2020, $50 million from accelerated distribution from Next Generation Trust Fund, $240 million from bonding, $26 million from bond refinancing.
• Senate Republican Plan for Local Units – One time distribution of local income tax trust account - $ 418 million.
• House Republicans – Longer term solutions? 5 cent gas tax increase to make up buying power losses since 2001; added local flexibility; study of tolling possibilities on I-70 and I-65; slowly add sales tax on gas to highway funds.
• House Democrats – Move all sales tax dollars from fuel sales to road and bridge spending - $500 million
• Senate Democrats – 50% distribution of local income tax trust accounts; $250 million from state reserves; local options
• Definition:• Employers may temporarily reduce the hours of employees in lieu of
layoffs during economic downturns.• Also referred to as short time compensation. • Work share is NOT job sharing.
• Nationwide, the average take-up rate is only 0.17% of the eligible work force.
• 30 states have programs on the books• Federal government gave out $100 M in stimulus funds to state
work share programs. • This funding is no longer available to Indiana for start-up costs.
Work Share
• Cost to the UI System• DWD estimates that the program will cost $1.5 M in
start-up costs.• Estimated $1 M in yearly administrative costs.
• Lingering Questions• Effect on existing collective bargaining agreements?• What about potential employer fraud? • Impact on UI Trust Fund?• Impact on other employers due to UI being a
mutualized benefit system?
Work Share
Indiana performs poorly as a state in key metrics of overall state skills
levels
Workforce Challenges
Workforce Challenges
• 36% of US businesses cited difficulties finding qualified talent in a 2014 Manpower survey.
• It is expected that the US manufacturing industry will only be able to fill 40% of the needed positions between 2015 and 2025.
• 500,000 Indiana workers with no high school diploma and 1 million workers with nothing more than a high school diploma
• 35% of Indiana high school graduates don’t attend college and of those that do attend, nearly 30% need remediation and only 30% complete a 4-year degree on-time
• Demand for over 21,000 trained “middle skill” manufacturing production workers in Indiana in 2013.
• During that same time, only 4,600 individuals received the necessary post-secondary education and 1,000 completed corresponding career and technical education programs in Indiana.
• Enrollment in and completion of manufacturing credential programs remains low, compared to demand.
Workforce challenges
Availability of Workers (2015)
2015 Indiana Manufacturing Survey
Availability of Workers (Next 3 to 5 Years)
2015 Indiana Manufacturing Survey
New Workforce Solutions
• New direction for Department of Workforce Development• Focus on industry needs• Demand-Driven Workforce System• SkillsUp Indiana Program
• Ivy Tech Re-Alignment
Civil Rights• RFRA – LEGAL implications different from PERCEPTION
implications. • 2016 Question – do you include sexual orientation and gender
identity as protected classes in state’s civil rights code? • Balance of rights of conscience – sincere religious beliefs – and
equitable treatment for LGBT individuals. • IMA monitoring proposed legislation for new causes of action
against Indiana employers.• Definitions and application language matters.
Your IMA Governmental Affairs Team Brian Burton, President & CEOGeneral business [email protected]
Andrew Berger, Vice President, Governmental Affairs and Tax PolicyTaxes, budget, energy, environment, state & federal [email protected]
Stephanie Wells, Director of Workforce Development Policy & AdministrationEducation & workforce development [email protected]
Ed Roberts, Governmental Affairs ConsultantWorker’s comp, unemployment insurance, [email protected]
Jeff Goodwin, Executive Vice President & COO, IMASERVHealth care & health-related [email protected]