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Regional Report: Slow But Steady Economic Climb for the Midwest

You’re not likely to find explosive growth in the Midwest, but the region’s economy is advancing at a healthy, steady pace with strategic plans to enhance investment in place.

Directory 2014
Employment Growth
Each of the Midwest region’s states looks good in the latest GDP figures from the Bureau of Economic Analysis. Minnesota leads the way with growth registering 3.5 percent in 2012, followed by Indiana at 3.3 percent. Iowa tallied 2.4 percent, followed by Michigan and Ohio, both with 2.2 percent. Missouri had a 2.0 percent growth rate, Illinois registered 1.9 percent, and Wisconsin’s growth was 1.5 percent.

The region’s employment situation is particularly rosy in Iowa and Minnesota, where the most recent unemployment rates were 4.6 and 4.8 percent, respectively — the nation’s sixth- and ninth-best figures, well below the national average. The rates were 6.5 percent in Missouri and Wisconsin, 7.5 percent in Indiana and Ohio, 8.9 percent in Illinois, and 9.0 percent in Michigan.

Manufacturing growth in Illinois provides some hope going into 2014, but Kiplinger’s Economic Outlook suggests that it’ll take more than that to make a significant dent in the jobless rate there. Even so, Kiplinger expects the state’s GDP to grow, albeit at an average rate. Increases in vehicle sales will be good news for Michigan, according to the outlook — that state’s high jobless rate should continue to decline, while average GDP growth is predicted. Average growth is also in the forecast for Iowa, Missouri, Ohio, and Wisconsin, while above-average economic expansion is expected in Indiana, thanks to manufacturing and pharmaceutical growth, and in Minnesota, where education and health services are providing positive vibes.

Though the jobless rate is already low in Minnesota, the jobs keep materializing and the story keeps getting better. In August 2013, the state added 12,200 jobs and officially surpassed the jobs total it had recorded in February 2008, meaning Minnesota had officially recovered the jobs lost in the recession. By September, job vacancies in Minnesota surpassed 72,000, the highest level in 12 years. Meanwhile, through the first three quarters of 2013, more than 100 business expansions created some 5,600 new jobs, according to the Minnesota Department of Employment and Economic Development. Among many on the list of positive headlines is Olympus, maker of medical and surgical products, which is building an R&D and manufacturing facility that will create a hundred jobs and retain 265 more.

Auto and Other Sectors
The rebounding auto industry is moving Michigan in the right direction economically. Even though it does have a ways to go on the employment front, when one considers that the jobless rate there surpassed 14 percent during the recession, the progress is impressive. The state continues to seek new auto opportunities as well, and sent a delegation to China this past fall to make new connections there. There are significant headlines of business locations and expansions pretty much every week across the state. A small sampling of the good news includes announcements by Renu Wireless, Universal Marketing Group, HTC Global Services, Niowave Inc., and SpartanNash —those five companies made announcements within weeks of each other in the fall creating about 1,400 jobs in total.

Indiana has traditionally been manufacturing-heavy, and as in Michigan, its solid economic situation has a lot to do with success in the automotive industry. There have been numerous manufacturing announcements recently, including Tec Air’s new headquarters, Wayzata Home Products, Heartland Automotive, Adkev, and Patriot Porcelain, which together are creating about a thousand jobs. The state’s prime location for distribution also continues to attract new developments. For example, electronics e-tailer Newegg is investing $20 million in a distribution center in Indianapolis that will create 150 jobs, while Carl Buddig & Co. will move a lunchmeat distribution center from Illinois to Munster, Indiana. And Indiana’s life-sciences sector continues to grow, with announcements including the headquarters move of American Specialty Health from California to Indianapolis, where it will create 675 jobs.

JobsOhio reported a positive 2013 overall. In the second quarter alone, more than five dozen projects were announced that collectively created or retained nearly 37,000 jobs. The health of the state’s manufacturing sector earned an “A” from Ball State University in 2013, as did logistics (Indiana earned and “A” in those same two measures).

Strategic Industry-Attraction Plans

There are plenty of positive headlines across Illinois in virtually every sector, not surprising given the size of the state’s economy. Though there is still room to grow in order to meet the demand for jobs, things are gradually heading in the right direction. The state is home to many major corporate headquarters, and continues to gain more — 2013 saw Illinois attract the U.S. headquarters of German manufacturer Rittal Corp. as well as that of Mike’s Hard Lemonade. Meanwhile, FedEx decide to put a distribution center in Sauget, Illinois. The state is enhancing its economic development focus by launching the new Illinois Business Development Council and beginning the process of creating regular economic development strategic plans.

Missouri continues to attract new jobs and its companies keep on growing. The most recent jobs report gives an idea of the kinds of jobs, which are frequently life sciences or technology. Examples cited included announcements by Pharma Medica Research, Cofactor Genomics, LightEdge Solutions, and CD Aviation Services. The state hopes to add to the tally with its new Missouri Works economic development program, which consolidates existing incentive and work force-training programs for a more streamlined experience.

Iowa’s economic development officials are on the hunt for job creators in advanced manufacturing, biosciences, financial services, and other sectors, and the hunt is going well. The Iowa Economic Development Authority (EDA) has supported projects of a wide range of companies in recent months, including factory robotics specialist Genesis Systems Group, performance drink maker Kamath Biosciences, cloud-based software developer WebFilings, and M&S FlowMatics, Inc., which is commercializing technology developed at Iowa State University. The Iowa EDA recently asked Battelle’s Technology Partnership Practice to examine and update its organization’s roadmap.

Wisconsin has its eyes on global opportunities, and is focusing new efforts on helping the state’s companies make connections for international opportunities. That’s among the 2014 strategies that the Wisconsin Economic Development Corp. has adopted, along with work force development pilot programs, an industrial site redevelopment program, and other tools to create new jobs. Economic development successes continued through 2013, and included 130 new jobs at an expanding Worthington Cylinders, another 100 through a Jagemann Stamping Co. expansion, and 140 jobs at Muth Mirror Systems, which is expanding in Sheboygan.

States in this region have collected countless honors — here are just a few representative samples. Forbes listed Minnesota eighth in its most recent Best States for Business ranking, Iowa was 12th and Indiana 16th. Indiana’s business tax situation caught the eye of the Tax Foundation,­­ which ranked the state 10th on its State Business Tax Climate Index, as well as Chief Executive magazine, which placed Indiana fifth on its Best States for Business listing.

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