Indiana Manufacturers Association

1. Indiana Manufacturers Association Brian Burton President and CEO Ivy Tech Community College Student Success Summit April 12, 2018

2. U.S. Economic Update

3. The US Economy on a Solid Growth Path • The US economy has solid momentum after 3.3% annualized real GDP growth in the third quarter. Fourth-quarter growth is estimated at 2.6% • Consumer spending continues to drive US economic growth, supported by rising employment, real incomes, and household wealth • Business fixed investment will benefit from expanding global markets and an easing of regulatory policies, although commercial building is slowing

4. US Economic Growth Rebounds in 2017 and 2018, as Investment Leads the Way

5. Job Growth Slows as US Approaches Full Employment while Inflation Rises Moderately

6. Regional and Indiana Economic Outlook

7. Indiana’s Real GSP Growth Outpaces Payroll Growth, Indicating Higher Productivity

8. Key Economic Indicators for Indiana

9. Indiana’s Job Market Remains Solid; Service Sector Growing More Slowly Than National Avg

10. Higher Productivity, Fewer Available Workers Will Translate Into Higher Wages

11. Manufacturing Remains the Leader in State Job Growth

12. Peak in Vehicle Sales will Limit Further Gains in Auto Manufacturing, a Major Indiana Employer

13. Home-Building Increasing Steadily in IN, with Gains Coming More from Single-Family Homes

14. Indiana Population Growth Relatively Slow, but Outpacing Most Neighboring States

15. Bottom Line for Indiana • Wage and salary income continues steady growth, even with downward revision in 2016 • Gains will need to come from wage rates more than payroll growth as state approaches full employment • Manufacturing still has some room to grow, even as auto sales level off • Out migration of jobs is an ongoing risk factor, while automation looms

16. The Importance of Indiana Manufacturing

17. Indiana is Most Manufacturing Dependent Economy in Nation

18. Top 10 States by 2016 Manufacturing GDP (in Millions)

19. Top 10 States by 2016 Manufacturing GDP per Capita

20. 2016 Manufacturing GDP per Capita

21. Indiana is 2nd in Nation in Manufacturing Job Growth * July 2009 represents the low point of employment in Indiana. Job growth is as of January 2018, per Indiana Department of Workforce Development.

22. Indiana 2016 GDP Share by Industry

23. Indiana Employment by Private Sector Industry September 2017

24. Average Indiana Weekly Wage by Sector Q3 2017

25. Indiana Manufacturing Establishments by Type Q3 2017

26. Indiana Manufacturing Employment in Indiana by Type September 2017

27. Indiana Incentivizes Job Growth, Capital Investment and Research & Development Hoosier Manufacturers Deliver: • 57% of new jobs associated with EDGE projects are created by Manufacturers. • Next largest sector only 7% (wholesale trade) • 80% of capital investment as part of HBI Credit is made by Manufacturers. • Next largest sector only 10% (all others) • 95% of R&D spending is made by Manufacturers • Next largest sector only 2.5% (information technology) *Data from LSA 2017 Indiana Tax Incentive Evaluation

28. 2018 Legislative Session

29. Overview • 901 Bills Introduced • 101 Bills Sent to Governor • Failure to pass comprehensive workforce development reform for the 2nd year in a row

30. Overview • What Did Pass This Year? • Sunday alcohol sales (SEA 1) • DACA licensing legislation (SEA 419) • CBD oil (SEA 52) • School funding shortfall (HEA 1002) - $25 M in 2017 and $75 M in 2018 • Water infrastructure task force (HEA 1267) • Software as a Service (SEA 257)

31. Structural Issues and Special Session • Failure to pass federal tax conformity and several important school issues, while clock ran out of Session • Governor has called for Special Session in May 2018. We expect debate on the following issues: • Federal Tax Conformity and Municipal Annexation • Funding for School Safety • Ball State Takeover of Muncie Schools • Vast supermajorities in both House and Senate makes it difficult to build consensus within Republican caucuses • Changes in Leadership in Indiana Senate • Retirement of President Pro Temp David Long (R – Ft. Wayne) • Change in leadership in powerful Senate Appropriations and Senate Tax & Fiscal Policy Leadership

32. Workforce

33. Two Major Bills with Minimal Impact • SEA 50 – Governor’s Workforce Cabinet • Disbands the existing State Workforce Innovation Council (SWIC) which has robust employer (and manufacturer) representation and replaces it with a Cabinet that is majority Governor’s representatives (agency heads) • As the IMA pointed out, this new structure may not comply with federal law, so the Governor’s office asked for a last minute provision to be added so that they can add more members at the Governor’s discretion, presumably to bring it to federal compliance if necessary • Concentrates more duties/responsibilities on this new Cabinet and gives them the plan to study the workforce system (again) by November 1 of this year. Also asks them to put together a plan for career counseling during the same time frame

34. Two Major Bills with Minimal Impact • HEA 1002 – Workforce Funding and Programs • Makes some changes to existing workforce programs, making them more widely available and, presumably, more efficient. Programs impacted include WorkIndiana (adult basic education), NextLevel Jobs Employer Training Grant, EARN Indiana work/study program, and the Workforce Ready Grant • Has the nonpartisan Legislative Services Agency perform a multi-year (likely 10 year) study and evaluation of all workforce programs and will report on them annually • Keeps the IMA’s definition/delineation of the terms “apprenticeship” and “work-based-learning” training programs

35. Indiana Manufacturers Association Brian Burton President and CEO Ivy Tech Community College Student Success Summit April 12, 2018