Iowa receives A in manufacturing from Ball State

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, depending on several factors.

The 2012 Manufacturing and Logistics Report Card, an in-depth analysis from Ball State's Center for Business and Economic Research in Muncie, Ind., grades all 50 states, on how they handled those factors.

Iowa received the following grades:

• Manufacturing: A

• Logistics: B

• Human Capital: B

• Worker Benefit Costs: C

• Tax Climate: D-

• Expected Liability Gap: B-

• Global Reach: C

• Sector Diversification: C-

• Productivity and Innovation: C

CBER director Michael Hicks says manufacturing roared back in many states in the last year, but he anticipates a slow down as worker productivity gains outstrip demand.

 "In the short run, the trend will be exacerbated by the very high probability of a U.S. recession in 2012-13," Hicks says.

"The rapidly slowing European, Chinese, Indian and Brazilian economies will place heavy pressure on firms to maintain their exports. A marked decline in U.S. exports is already in progress, and alone will deepen a slowdown already being felt across much of the country. The uncertainty surrounding financial markets will be with us for many months, depressing investment and new hiring."

CBER prepared the report at the request of Conexus Indiana, the state's advanced manufacturing initiative. It is available here.

At the top of the class with Iowa with A's were Ohio, Michigan, Indiana and Kansas. At the bottom, with F's were Alaska, Hawaii, New Mexico and Nevada.

New to the report this year is an analysis of an expected liability gap. State and local governments throughout the U.S. purchase bonds for infrastructure improvement and provide pensions and health care for workers.

Typically a dedicated revenue stream pays for these bonds from local or state finances. Pension obligations are typically funded in an actuarially evaluated fund.

Hicks says many states have failed to provide a direct funding stream to bond obligations or to fully fund pension plans, which leads to unfunded bond and pension liabilities. These unfunded liabilities represent an expected state fiscal liability gap, which is a good indicator of the direction of future taxes and public services.

To measure the expected liability gap, the report includes data on unfunded liability per capita and percentage of GDP, average benefits, and bond rankings.