Arizona Receives ‘C’ for Manufacturing Industry Health

Manufacturing nationally enjoyed a robust year as growth in many sectors accelerated from the already strong manufacturing recovery of 2010-11, but the impact varies from state to state, says a report from Ball State University. The 2012 Manufacturing and Logistics Report Card, an in-depth analysis from Ball State’s Center for Business and Economic Research, grades all 50 states on how they handled critical factors underlying their manufacturing performance.

Graded on a bell curve in relation to the other 49 states, Arizona received the following grades:

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

“Human capital is the most worrisome report of all these. It determines not only manufacturing performance but how you do overall,” says CBER director Michael Hicks. He shares details of Arizona’s per capita ranking relative to the other 49 states on important elements within the graded factors.

Human Capital — Educational Attainment and Performance

• Percent of adults with a high school degree 36th
• Percent of adults with a college degree 33rd
• First-year retention rate at junior college 36th
• High school graduation rate 41st
• 8th-grade math score (“This is the level that most manufacturing is testing on,” says Hicks.) 39th
• Total number of associate degrees 5th
• Under 35 years of age with an associate degree 16th

Global Reach

• Manufacturing exports 39th
• Income derived from foreign investment in Arizona 46th
• Export growth 38th
• Reach of investors from out of the United States 334th
• Value added (“My suspicion is they are investing most in agricultural goods, which is low value added,” Hicks says.) 47th
• Demand adaptability index (responsiveness to changes in the composition of foreign demand for goods) 23rd

Logistics — Transportation

• Value of goods moving on rail 36th
• Commodity basis of goods on the roads 38th
• Tonnage across all modes of transportation 36th

Productivity and Innovation

• Growth in value added in manufacturing 28th
• Research and development spending 16th
• Patent applications 18th
• (“This is not translating yet to productivity,” Hicks says. However, noting Arizona ranks 24th on a per-worker basis, he points out, “This is very high, globally.”)