Region's manufacturing focus accounts for slow growth, jobs deficit

2014-01-19T06:00:00Z 2014-01-20T13:27:04Z Region's manufacturing focus accounts for slow growth, jobs deficitJoseph S. Pete joseph.pete@nwi.com, (219) 933-3316 nwitimes.com

Northwest Indiana grew at a slower pace than the state and nation last year, partly because of the heavy concentration in manufacturing.

The region lost 5,500 manufacturing jobs following the 2008 financial crisis, but has only recovered about 60 percent of the manufacturing jobs lost, according to a study by Micah Pollak, assistant professor of economics at Indiana University Northwest.

Pollak recently released his 2014 economic forecast for the Gary metro area, which includes Lake, Porter, Jasper and Newton counties. His work expands upon the Indiana Business Research Center's outlook for the state, which forecasts sub-par growth.

Indiana Business Research Center Director of Economic Analysis Timothy Slaper predicts the state's economy would continue to muddle along, after growing by an estimated 1.3 percent and adding 37,200 jobs over the part year.

The state's economy is projected to gain another 55,000 jobs in 2014 and another 47,000 jobs in 2015, at which time Indiana is expected to be back up to the pre-recession employment level of 2007.

"It is forecast that neither Indiana nor the United States will return to long-run growth trends," Slaper wrote. "Rather, more of the sub-par growth rates are expected."

Sluggish growth has been an issue in Northwest Indiana, which lost 14 percent of its manufacturing jobs during the Great Recession and has yet to get them back.

Northwest Indiana's economy grew by about 1.6 percent between August 2012 and August 2013, according to the Northwest Indiana Coincident Index. That's slower than the state, nation and 2 percent growth that had been forecasted.

Statewide, the economy grew twice as fast over that period, at a rate of 3.3 percent, the study found.

"The slower economic growth in Northwest Indiana can primarily be attributed to the types of jobs in the region, particularly the high concentration of employment in manufacturing," Pollak wrote. "More than 25 percent of earnings in Northwest Indiana come from manufacturing jobs. This high concentration of earnings and employment in a single industry means it is harder for the region to adapt to changing economic conditions as all our eggs, so to speak, are in one basket."

The financial crisis hit Northwest Indiana harder than many areas of the country, because it slowed demand for steel and metal products both nationally and internationally. A huge number of jobs in the Calumet Region are concentrated in manufacturing.

"It is hard to overestimate the significance of this concentration of manufacturing jobs in Northwest Indiana," Pollak wrote. "Lake and Porter counties, which comprise 93 percent of the population in the Gary metro, have a location quotient for manufacturing of 23.6: employment in these counties in 23.6 times more concentrated in manufacturing than in the national as a whole. For comparison, the state of Indiana has a location quotient for manufacturing of 4.8 percent, which by national standards is considered high."

Other sectors fared better during the downturn, the study found. The health care and social assistance industries added 4,500 new jobs in Northwest Indiana since 2007, marking an increase of 12.5 percent.

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