Home » New report: Kentucky receives B for manufacturing, B for logistics

New report: Kentucky receives B for manufacturing, B for logistics

MUNCIE, Ind. (June 21, 2012) — 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, grades all 50 states, on how they handled those factors. (Read the report.)

Kentucky’s grades:

Manufacturing: B

Logistics: B

Human Capital: D-

Worker Benefit Costs: C

Tax Climate:  C

Expected Liability Gap: D-

Global Reach:  B+

Sector Diversification: B+

Productivity and Innovation: D

Manufacturing roared back in many states in the last year, said CBER director Michael Hicks, 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 said. “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.

At the top of the class with A’s were Ohio, Michigan, Indiana, Kansas and Iowa. 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 usually are funded in an actuarially evaluated fund.

Many states have failed to provide a direct funding stream to bond obligations or to fully fund pension plans, Hicks said, 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.

For more information, contact Hicks at [email protected] or 1-765-716-3625.