Indiana isn’t just a battleground in this year’s presidential primaries. (Hoosiers vote Tuesday.) It’s also at the center of America’s debate over trade.
In that debate, some contend that international commerce is more a threat than an opportunity and that the United States is better at exporting factory jobs than manufactured products.
In that context, presidential candidate Hillary Clinton’s visit on April 26 to the AM General auto assembly plant in Mishawaka, Ind., suggests the reality is quite different.
Local broadcaster WNDU reports that AM General is “a successful U.S. business that does very little business in the United States. For instance, AM General now builds ‘R’ series Mercedes SUV’s and ships every one of them to China.”
The success of this Indiana manufacturer may seem remarkable given today’s political rhetoric on trade, but those who look beneath the surface will find it isn’t that unusual in the Hoosier state.
Indiana is succeeding in several ways. First, local businesses are seizing the opportunities presented by international trade.
Already, more than 800,000 Indiana jobs depend on trade, and the state’s exports have approached $50 billion annually in recent years. Canada and Mexico are Indiana’s largest markets by a wide margin, accounting for nearly half of export sales.
Nor is trade just the domain of large companies. Of the 8,258 Indiana companies that exported in 2013 (latest numbers available), 85% were small or medium-sized firms.
Among those leading the charge is the auto sector. Exports of motor vehicles increased by an impressive 89% between 2009 and 2014, topping 2 million cars and trucks for the first time in 2014. U.S.-built cars shipped to China have risen sevenfold since 2009.
Also among Indiana’s top exporters are firms in the machinery, chemicals, pharmaceutical, and medical devices sectors. Indiana’s services exports also topped $8 billion in 2013, roughly doubling in the past decade.
Second, Indiana has attracted substantial investment from overseas. AM General is an American manufacturer in South Bend producing a European nameplate vehicle for sale in Asia. But 770 foreign companies have chosen to invest in Indiana, and today they employ more than 160,000 Hoosiers. (The Organization for International Investment offers this helpful profile of foreign firms that have invested in Indiana.)
Third, both of these factors are contributing to the health of Indiana’s impressive manufacturing sector. The total value of shipments by Indiana manufacturers has risen by 67% in the past 15 years, and the sector’s value added has expanded by nearly half.
Trade is a huge part of this success — both imports and exports. Manufacturers account for more than half of U.S. imports: Access to imported raw materials and intermediate goods is vital to their competitiveness.
And according to the U.S. Department of Commerce, exports of Indiana-made manufactured goods have risen by an impressive 177% over the past 15 years, powering the expanded production seen in the graph below.
However, manufacturing employment in Indiana has declined by about 25% in the same 15-year span (though it expanded by 50,000 jobs in 2009-2014). The efficiency and productivity of Indiana manufacturing is evident as firms have been able to expand shipments by two-thirds over the past 15 years — and do so with a smaller workforce.
But it couldn’t be more wrong to say that Indiana manufacturing is in decline when output is up dramatically and foreign companies increasingly view the state as an ideal place to set up shop. In fact, foreign firms’ investments in Indiana’s manufacturing sector employ more than 100,000 Hoosiers.
One takeaway is that the world is a little more complicated than campaign trail soundbites might capture. A closer look at more made-in-Indiana, sold-everywhere success stories is a great place to start.