Metropolitan Indy faces industrial issues

INDIANAPOLIS -- The economic rift between metropolitan Indianapolis and the industrial cities of Indiana appears to be widening, leaving industrial cities fearful the state is neglecting their needs.\nThe prosperous nine-county Indianapolis area, home to about 1.6 million people and the state government offices, relies on an economy driven by services including health care and the downtown lodging and entertainment industry.\nAs the state's biggest metropolitan area grows robust on a service economy, it becomes in danger of losing touch with the factory cities and industrial issues that define much of Indiana, some business leaders said.\n"I don't think people realize the depth of the economic transformation that is going on in our state," said Graham Toft, senior fellow at the Hudson Institute's Center for Economic Competitiveness, an Indianapolis-based think tank.\n"If we lose our manufacturing base, there is really nothing on the near horizon to pull us out," Toft told The Indianapolis Star for a story Sunday.\nToft and some other Midwest economists say the industrial slump is not like the one in 1990-91 or the 1981-82 recession.\nIndiana has lost 123,000 jobs since May 2000, of which 70 percent were in manufacturing, Bureau of Labor Statistics show.\nAn undetermined number of those factory jobs are not expected to come back. Indiana Manufactures Association leader Patrick Kiely estimated earlier this year that the loss could be as high as 60 percent.\nThe jobs are disappearing because of automation, imports, corporate reorganizations and moves to low-wage states and countries.\n"You probably need to say, for the younger generation, those who are more mobile, you may want to look at opportunities further afield," rather than at jobs in Midwestern factories, said economist William Testa of the Federal Reserve of Chicago.\nWhile the industrial woes grate across the state, Indianapolis has been cushioned by the nearly 150,000 jobs created in the metro area during the 1990s boom. Most were in the service sector, which now employs about one of every three Indianapolis-area workers.\nAlthough the metro Indianapolis economy slowed, losing about 17,000 jobs in two years, the unemployment rate appears tolerable. At 4.7 percent, it gives powerful legislators in the nine central counties, home to nearly 27 percent of the state's 6 million residents, little incentive to grapple with factory decline.\nIn May, lawmakers wrestled with the state budget deficit and still managed to come up with $100 million for economic development over two years under the Energize Indiana program inspired by Gov. Frank O'Bannon.\nThe bulk of the program, though, steers $75 million to high-technology grants, which can improve the future state economy but won't help stressed manufacturers now.\n"Everybody is downplaying the manufacturing segment, but we have a lot of manufacturing jobs up here," said Republican Rep. John Ulmer, an attorney in Goshen. "I wish the state would help us keep them."\nThough the manufacturing cities throughout the state share a common concern, no powerful voice among them has clearly articulated a common vision for the industrial cities. While their legislators address local concerns, they seldom band together on manufacturing ideas.\nWhen new high-tech jobs do emerge, they'll most likely be in metro Indianapolis or Bloomington and Lafayette, cities with high-tech strongholds emerging around the universities.\n"Some of these older communities are dying on the vine," said former Lt. Gov. John Mutz, retired head of Lilly Endowment Inc., an engine for economic development in Indiana. "That's a shame. It is conceivable some of them could develop specialties of their own."\nManufacturing, however, still matters. As part of Indiana's largest industry, factories throughout the state employ about 580,000 people, or nearly one in every five workers, the highest proportion of manufacturing jobs in any state.\nDespite this scale, the industrial work force is not huge in Indianapolis. About four of every five factory jobs in the state are outside Indianapolis.