Report Card: Michigan Gets ‘A’ in Manufacturing, ‘D’ in Human Capital

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Michigan gets an “A” for the health of its manufacturing industry based on variables including employment and income, but gets a failing grade in several other areas of the economy that relate to the industry’s success, says a new report.

“There is no short fix to remedying the problems that make this a difficult time in Michigan’s history,” says Michael Hicks, director of Ball State University’s Center for Business and Economic Research, which conducted the report that compares each state with its peers.

“Over the past couple years, the state legislature has tackled a couple of problems — reforming the tax system and trying to get a hold of the pension issue, for instance. But Michigan is, quite frankly, hobbled by a very dysfunctional major city,” Hick says. “Wrestling with Detroit’s problem will drag down any industrial development over the long term.”

Michigan received an “F” in sector diversification for its concentration of manufacturing activity in a single area. The state also ranked low, a “D” in human capital, a measurement of the quality and availability of labor.

According to the 2014 Manufacturing and Logistics Report, Michigan’s grades are as follows:

  • Manufacturing: A
  • Tax Climate: B
  • Global Reach: B
  • Logistics: B-
  • Worker Benefit Costs: C+
  • Productivity and Innovation: C
  • Human Capital: D
  • Expected Liability Gap: D+
  • Sector Diversification: F

While Indiana’s overall report card surpassed Michigan’s, both states are plagued with the issue of human capital, Hicks says. “Having below average grades for the educational attainment of adults and the quality of education for kids does not bode well for a place that would like to attract businesses or have businesses expand. There just aren’t going to be good workers for (the businesses).”

It’s not all bad news, however. “On the good side is (Michigan’s) legacy of transportation and logistics, and you act have a very solid network of university research that can help the automobile industry with its productivity,” Hick says.

To read the full report — prepared at the request of Conexus Indiana, the state’s advanced manufacturing initiative — click here.

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