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UPDATE — Mississippi gets high grade on manufacturing strength but seen weak on advanced industries

Findings detailed in Ball State manufacturing scorecard

By TED CARTER

Mississippi has joined a short list of states that Ball State University’s Manufacturing Annual Scorecard rated as tops nationally for the health of their manufacturing sectors.

But the leading academic author of the Scorecard said Mississippi must improve the quality of its healthcare and schools to grab a larger share of 21st century advanced industries. “Mississippi does not have its fundamentals right to be a competitive for growth in advanced manufacturing,” said Dr. Michael J. Hicks, a professor at the Muncie, Ind., university and director of Ball State’s Center for Business and Economic Research, creators of the annual report card issued Aug. 13.

The “B+” Mississippi received on the Ball State Scorecard reflects manufacturing’s percentage of jobs here compared to the rest of the country, according to Hicks.

Manufacturers in Mississippi account for 16.01 percent of state GDP and put nearly $18 billion into the state economy yearly, economic statistics show.

The Scorecard shows that among Southeastern states, only South Carolina’s “A” grade for manufacturing health surpassed Mississippi’s “B+”.

Indiana and Iowa joined South Carolina at the top of the class, each pulling in an “A”.

Kansas joined Mississippi with the only other “B+” awarded.

Beyond that “B+”, the Ball State analysis contrasts Mississippi’s high grade in manufacturing strength with average, below average and failure grades for other factors related to manufacturing.

The sheer size of the Magnolia State’s manufacturing sector had a lot to do with the high grade, Hicks said.

“The state continues to have a large legacy of manufacturing,” Hicks said in an email.

“The “B+” grade reflects the growing share of employment in manufacturing relative to the nation as a whole.

“There are two problems with this.”

First, Hicks said, the growth of Mississippi’s manufacturing has been in low productivity industries. For example, he said, after adjusting for inflation, GDP per factory worker in Mississippi is less than $115,000 per worker, down from nearly $125,000 in 2012.

By contrast, Hicks said, Indiana’s is over $168,000 per worker, and the Midwest is running closer to $175,000 per worker on average.”

The second problem, Hicks claimed, is that “with the continued bottom of the barrel health and education statistics, advanced manufacturing firms will find Mississippi an unattractive location.”

On a more positive side, Mississippi rated an “A” in the diversity of its manufacturing and a “B” in the cost of worker benefits.

The state received a “C+” for its tax climate, a grade that considered the state’s phasing out of its inventory tax and broad cuts in business income taxes.

It followed with a “C” for logistics and a “C” global position.

Looking ahead, Hicks and the Ball State analysts see a lot of work ahead for Mississippi to become the advanced manufacturing destination it wants to be.

Click here for scorecard of entire United States.

by Ball State University’s Center for Business and Economic Research

Consider the “expected liability gap,” one of the categories Ball State’s Center for Business and Economic Research grades on. Bond ratings and the fiscal strength of state pension plans are key factors considered in assessing a liability gap. Mississippi rose a grade from “F” to “D” this year, a likely reflection of the increase in the funded portion of the state’s public worker pension plan to 66.8 percent. It stood at 62 percent just four years ago.

A state government’s unfunded liabilities can scare off companies to relocate to Mississippi or expand here. An expected state fiscal liability gap, Ball State said, is a good indicator of the direction of future taxes and public services.

Meanwhile, Mississippi’s slow progress on healthcare and education brought an “F” in the “human capital” category.

It received the same failing grade in the “productivity” and “innovation” categories.

The below-average grades indicate that although Mississippi has among the nation’s strongest manufacturing bases, it is facing long odds in becoming a top destination for advanced manufacturing, said Hicks, the head of the university’s Center for Business and Economic Research.

The executive director of the Manufacturer’s Association partner organization the Manufacturing Extension Partnership, or MEP, said it’s too late to proclaim Mississippi an unlikely place for advanced manufacturing.

“If that’s the case,” said James Williams, “what about…”

The MEP chief cited Airbus, American EuroCopter, Nissan, Toyota in Mississippi, Yokohama Tires and others. “These are all advanced manufacturers,” he said in an interview.

Williams said he doesn’t think the state is at the end of anything. “We are at the beginning,”

insisted Williams, who described the non-profit MEP as an identifier “of solutions for small and midsize manufacturers in Mississippi.”

He praised the potential of a new state economic development initiative dubbed “Manufacturing 4.0.”

“It’s supported by legislation” and worker training dollars, Williams said. It is expected to guide Mississippi to higher manufacturing levels over the next 10 years, especially in workforce development, he said.

“I think,” Williams said, “we are doing great things in Mississippi.”

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About Ted Carter