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New Report Gives Ohio an “A” in Manufacturing and Logistics

Ohio has always been known as a major manufacturer of a variety of industrial products. It is one of the nation’s largest producers of primary and fabricated metal products as well as rubber and plastic products. The manufacturing output for Ohio in 2012 reached $87.2 billion, which is the fifth highest in the United States; and the state was also a leader in manufacturing employment last year with close to 658,000 manufacturing jobs, surpassed only by much larger states California and Texas. These numbers are great to see as the state continues to rebound from a decade that brought devastating cuts in manufacturing jobs. In just the last three years manufacturers in the state have added 55,000 jobs. For all of these reasons and more, a report from Ball State University’s Center for Business and Economic Research has called Ohio a powerhouse in the manufacturing realm, giving the state an “A” in both manufacturing-industry health and logistics-industry health.

The report rated all fifty states in nine different categories; the states were not ranked against each other. Only eight states received an “A” in manufacturing and only five received an “A” in logistics. Ohio and Indiana were the only two states to receive an “A” in each of these areas. The report referred to the Midwest as the “manufacturing backbone” of the United States. And though this is true, some of Ohio’s neighboring states have serious issues with their tax climates and/or unfunded pension liabilities. These struggles do have an impact on the region’s stability and even Ohio’s manufacturers could see improvement in these areas as well. Even with room for improvement in that regard, the state remains a staple not only in the Midwest but across the nation as a whole. The high score for the state does not come as a surprise to corporate and state economists and leaders. So what is the secret to this success?

Many factors are at work in this situation, and one that has played a large role is the amount of investment that has been made by the auto industry and suppliers. Recent investments have totaled $1.6 billion in the state, according to Kristi Tanner, a managing director with JobsOhio. And though the Ball State report had negative feedback on the state’s tax structure, both Tanner and president of the Ohio Manufacturer’s Association, Eric Burkland disagreed. Opposing that idea, Burkland cited an overhaul that disposed of many manufacturing taxes. It was also noted that though worker-benefit costs are high in Ohio, the soaring numbers in productivity more than balance the scales.  According to a recent HIS Global Insight report, productivity per worker is up about 33% since 2000. Ohio outperforms other states in manufacturing productivity and the relationship between that productivity and employee benefit costs is key to the states overall success.

Industries across the nation were hit hard in the last recession, but many states, especially Ohio, are making a big come back. Other states and corporate leaders could learn from Ohio’s success as one of the nation’s leading manufactures. The “A’s” that the state received from the Ball State report were not just for effort, but for follow through, which has been evident not only in revenue and productivity but in the number of manufacturing jobs available in Ohio as well.