Acadiana Business

La. barely earns a 'C' in manufacturing and logistics

by Leslie Turk

In a new manufacturing and logistics report, Louisiana barely makes the grade, thanks to an F in the quality and availability of its workforce.

The 2011 Manufacturing and Logistics National Report by Ball State University's Center for Business and Economic Research grades the U.S.'s 50 states in several areas of the economy that underlie the success of manufacturing and logistics. These specific measures include: manufacturing and logistics health (Louisiana earned a C and B, respectively), human capital (F), the cost of benefits (C), the global reach (C+), state-level productivity and innovation (B), the tax climate (C), diversification (C) and venture capital activities (D).

The categories were chosen as those most likely to be considered by site selection experts for manufacturing and logistics firms, and by the prevailing economic research on growth.

On the issue of human capital, the only area Louisiana got a failing grade, the authors note:

No factor matters more to businesses than the quality and availability of labor. Workers represent the largest single cost of doing business, but more importantly they are the source of most innovation and process improvements that distinguish successful firms from those that are not successful. Because produced goods have a high degree of value dependent on each individual worker in a production line or transportation leg or hub, a uniformly high quality of workers is required. These workers must possess the ability to understand increasingly complex production processes which are today mostly managed by computers with specialized software. The factories, rail yards, distribution facilities and machine shops of today are complex, highly technical and are dependent on workers who can work successfully in this environment. Human capital is the most important factor in firm location decisions, which, in the United States, is almost entirely made up of the quality of educational background. Our human capital measurements include rankings of educational attainment at the high school and collegiate level, the first-year retention rate of adults in community and technical colleges, the number of associates degrees awarded annually on a per capita basis and the share of adults enrolled in adult basic education. These data are from the National Center for Educational Statistics.

Each category included multiple variables that were aggregated and then ranked 1st 50th, for each state - 1st being the most desirable. Within each category, the lowest aggregate score assigned provided the overall rank. Grades were assigned using a normal distribution of grades, A through F. Plus and minus scores were not assigned to A or F grades.

The Center for Business and Economic Research is an economic policy and forecasting research center housed within Ball State University's Miller College of Business. CBER research encompasses health care, public finance, regional economics, transportation, and energy sector studies. CBER teamed up with Conexus Indiana, a private sector-led initiative focused on the advanced manufacturing and logistics sectors (two industries that combined employ more than one of every five Hoosiers) on the report. For more info, click here and here.