The Wisconsin manufacturing sector maintained its ‘B’ grade in Ball State University’s annual industry scorecard, but the state did see declines in its global reach and expected liability gap grades.
The annual report ranks states on factors considered by site selectors for manufacturing and logistics firms. In addition to global reach and liability gap metrics, the report considers human capital, worker benefit costs, tax climate, sector diversification, and productivity and innovation.
Grades are based on a normal distribution of state rankings on each metric.
Wisconsin manufacturing’s strongest grades came with a ‘B+’ on both human capital and expected liability gap, although the latter was an ‘A’ last year.
The human capital measure takes into account educational attainment, retention rates at technical schools, associate degrees awarded annually and share of adults enrolled in adult basic education.
Wisconsin’s received a ‘C+’ for sector diversification and a ‘C” in both worker benefit costs and global reach.
The global reach measure takes into account growth in exports, foreign direct investment measures and adaptability of the state’s exporters.
Michael Hicks, director of the Center for Business Economic Research at Ball State, said trade tensions with China and other countries are chipping away at the economic expansion and pushing prices higher.
“We are in a pre-recession or end of business cycle environment,” he said. “Industrial production is down over the first six months of 2019. Manufacturing employment in many states is taking a downturn. Nationally, it is holding steady but there is retrenchment, particularly in sectors dealing with exports, transportation and equipment.”
Federal Reserve chairman Jerome Powell repeatedly noted a slowing manufacturing sector as one of the reasons the Fed chose to cut interest rates this week.
Many of the forces slowing the industry nationally have hit Wisconsin manufacturing. Exports decreased 10.8% in June and dropped 5.1% during the first half of the year, according to new U.S. Census Bureau data released Friday.
Wisconsin manufacturing employment increased nearly 1.7% in 2018 per month, compared to the prior year, but hiring has slowed this year to an average monthly year-over-year increase of 0.6%.
The Milwaukee area manufacturing index in the Marquette-ISM Report has also dipped into negative territory in two of the last three months.
