As Unions Lose Their Grip, Indiana Lures Manufacturing Jobs

There is no doubt that the Midwest was one of the most severely impacted regions when it comes to the great recession. Actually the metro Detroit area where I reside was actually in a depression long before the rest of the country caught up.


Since most companies in the Midwest have right sized their businesses there are now pockets and glimmers of hope that things are finally starting to rebound.  With the benefits of higher productivity jobs are starting to come back.  The big difference in the Midwest are that those jobs are no longer union jobs coming back.


This WSJ story dives into the Indiana job recovery which has lured jobs back battling other Midwest states in addition to Union controlled areas.As the state's commerce secretary stated, "Our challenge as a state is to stand apart from our Midwestern colleagues.  Our goal in Indiana is really pretty simple: It is to help companies improve profitability."


Via the WSJ piece here

• Companies are concentrating many of their manufacturing investments in states where unions are weak and wages relatively low. Boeing Co., for instance, last year opened a nonunion airplane plant in South Carolina, supplementing its unionized factories in the Seattle area. Starting pay for assembly workers at the South Carolina plant is $14.35 per hour, compared with $15 in Seattle. But the union employees in Washington state tend to be much more experienced and average about $28 per hour. A Boeing spokesman cited regional differences in labor markets.
• Where companies are expanding or modernizing unionized plants, they are winning concessions. Harley-Davidson Inc. in recent years told unions in York, Pa., Kansas City, Mo., and near Milwaukee that it would move production elsewhere unless they accepted more-flexible working arrangements, including greater use of temporary workers. The unions complied.

• Over the past two decades, Caterpillar has been at the vanguard of corporate efforts to rein in unions. The company deployed white-collar staffers and temporary workers to operate plants during a 17-month UAW strike at eight plants in 1994 and 1995. The union eventually capitulated, making concessions in such areas as health-care benefits.
• Companies like Caterpillar also are shopping for lower taxes and regulatory costs. That is where the politicians come in. All of the Rust Belt states are pursuing pro-business agendas and wooing manufacturers and other employers. But Indiana has been particularly aggressive.
• Republican Gov. Mitchell Daniels, who was first elected governor in 2004, has cut costs by shrinking the state work force. That allowed the legislature last year to pass a bill that will cut Indiana's corporate income-tax rate in stages to 6.5% in 2015 from 8.5%.
• By contrast, Illinois, struggling to control pension and other costs, raised personal and corporate taxes last year—drawing a public rebuke from Caterpillar. In early February, Caterpillar sent an email to officials in Peoria County, Ill., where the company has its headquarters, telling them it had decided not to build a new construction-equipment plant there, partly because of what the company called "concerns about the business climate and overall fiscal health" of Illinois.
• In early February, Indiana enacted right-to-work legislation that bars contracts requiring all workers to pay union fees and makes it harder for unions to organize work places. Indiana became the 23rd state with such a law, and the first in the industrial Midwest. "This announces, especially in the Rust Belt, that we are open for business here," Republican House Speaker Brian Bosma said.

• The results of Indiana's efforts to attract manufacturing jobs are encouraging so far. The number of Indianans employed in manufacturing at the end of 2011 was up 7.6% from two years before to 472,500, compared with a 3% rise nationally, after plunging during the recession. Over the past decade, Indiana's performance has been better than other Rust Belt states. Its manufacturing employment is down 20%, compared with drops of 26% in Illinois, 29% in Ohio and 35% in Michigan, according to data from Moody's Analytics.
• Finding new ways to attract employers "is something that we are very diligently engaged with," says Brad Duguid, Ontario's minister of economic development and innovation. "One of our challenges will be competing with low-paid jurisdictions around the world." By some measures, that now includes Indiana.