Midwestern Manufacturing Improving--Except Illinois

Date: October 31, 2017

High workers’ comp costs and a disastrous tax and regulatory climate continue to drive jobs away.

Manufacturing in the Midwestern states is faring pretty well in recent years, with one outlier: Illinois.

Between August 2016 and July 2017, the Rockford Register Star reported, Wisconsin added 9,900 manufacturing jobs; Minnesota added 2,500; Iowa added 1,800; Michigan added 5,600; Missouri added 5,800; Kentucky added 4,100; and Indiana added 6,000. Illinois added just 600 in the past year and has lost 304,000 manufacturing jobs—roughly one-third of its total—since 2000. According to the Illinois Department of Employment Security, the state lost 3,000 manufacturing jobs in August 2017 alone.

Illinois’ score in Conexus Indiana’s 2017 Manufacturing and Logistics Report Card for the U.S. reflects these numbers. Conexus Indiana is a private sector initiative focused on the manufacturing and logistics sectors of the economy. Its manufacturing and logistics report card is produced each year with the help of the Center for Business and Economic Research. The report card ranks each state on manufacturing industry health, logistics industry health, human capital, worker benefit costs, tax climate, expected fiscal liability gap, global reach, sector diversification, and productivity and innovation—all issues of importance for manufacturing site selection professionals. Illinois scored a ‘C’ grade or below in nearly every category:

  • Manufacturing industry health: C+
  • Logistics industry health: A
  • Human capital: C+
  • Worker benefit costs: D+
  • Tax climate: D
  • Expected fiscal liability gap: F
  • Global reach: C+
  • Sector diversification: C+
  • Productivity and innovation: B-

The Chicago Business Journal summed up the problem succinctly: “A convoluted regulatory structure, a two-year budget impasse, and a lack of reform in the state has made it home to, among other things, the highest worker’s compensation costs in the region. Moving out of the state is increasingly becoming a real possibility for many manufacturers.”

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