SALT LAKE CITY — While Utah has received high marks over the years for its economic and business-friendly environment, the Beehive State still has room for improvement when it comes to its manufacturing sector.
Utah received grades of C for manufacturing and C-minus for logistics in the 2013 Manufacturing and Logistics Report Card — an analysis from Ball State University’s Center for Business and Economic Research that grades all 50 states on factors that impact success. The report was prepared at the request of Conexus Indiana, the state's advanced manufacturing initiative.
The Center For Business and Economic Research is an economic policy and forecasting research center at Ball State in Muncie, Ind. The center's research includes public finance, regional economics, manufacturing, transportation, and energy sector studies.
The report showed how each state ranks among its peers in several areas of the economy that underlie the success of manufacturing and logistics. The specific measures include manufacturing and logistics industry health, human capital, cost of worker benefits, diversification of the industries, state-level productivity and innovation, expected fiscal liability, tax climate and global reach.
In addition to the previously mentioned C-level grades, Utah also received a C grade for global reach. However, the state received A grades for human capital, worker benefit costs, tax climate and expected liability gap as well as a B grade for sector diversification and a B-plus for productivity and innovation.
“Utah’s great strength in manufacturing lies in its remarkably strong labor force,” said Michael Hicks, an economics professor and the center's director. “With a movement from a B-plus to an A in this year’s scorecard, Utah continues to improve its climate for manufacturing.”
With continued low health care costs due to the healthy lifestyles of residents, the growth of productivity in 2013 and the improvements in expected fiscal gap from a B to an A, Utah should expect an increase in manufacturing production over the next several years, Hicks added.
“All the pieces are in place for manufacturing growth in Utah,” he said.
Geography continues to play a role in the small level of manufacturing in Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona and New Mexico, Hicks explained.
“In the north, low population densities limit the availability of workers, while in the southern states, very low levels of educational attainment disincentivizes firms from expanding,” he said.
Significant energy cost reductions may overcome some of the limits to growth, especially in the northern mountain states, but it will take significant population growth to see real growth in manufacturing in these states, he noted.
“The continued expansion of the nation’s manufacturing sector continues to be one of the bright spots for the recovery,” Hicks said. “Unfortunately, it hasn’t been enough to drag the entire economy into a full-blown recovery.”