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From Site Selection magazine, March 2014

Central Casting

The Hoosier State looks to make better use of the talent it harbors.

Purdue mechanical engineering professor Douglas Adams is part of a team developing “smart” turbine blades that use sensors and computational software to improve energy capture by adjusting for changing wind conditions.
Photo courtesy of Purdue University


he mutual benefits that corporations and higher learning institutions can confer on one another were illustrated in December when Lilly Endowment, a private foundation whose chief asset is stock in Indianapolis-based Eli Lilly and Co., awarded $5 million to Indiana University, one of a series of grants totaling nearly $63 million that the Endowment awarded to 39 colleges and universities as part of its Initiative to Promote Opportunities Through Educational Collaborations. IU will match the endowment grant with an institutional commitment of $3.7 million.

“The goal of this initiative — retaining our talented graduates in the state of Indiana — is fundamentally important to the economic vitality of our state and central to the mission of Indiana University as a public university,” said Indiana University President Michael A. McRobbie.

McRobbie said the latest round of funding comes at a particularly fortuitous time as it dovetails with major new initiatives at IU related to translating faculty and student discoveries into disclosures and spin-up companies and enhancing online education. Among the IU projects expected to receive funds from the Lilly Endowment grant is an annual convention that brings together Indiana employers and state higher education institutions to ensure that curriculum development is aligned with emerging employment needs.

The Hoosier State’s higher education assets go well beyond Bloomington, including IU’s network of other campuses across the state. Purdue, now led by former Gov. Mitch Daniels, has one of the world’s leading research parks. Notre Dame continues to place economic development front and center. Vincennes University’s Toyota Advanced Manufacturing Technician Program continues to earn plaudits. And such schools as Ball State, Indiana State, Valparaiso and Butler are making their presence felt as much in economic development as on the basketball court.


Purdue’s Discovery Park is one of the Indiana higher education community’s signature assets for partnering with and jumpstarting companies.
Photo courtesy of Purdue University

Ivy Tech Community College is the state’s largest public postsecondary institution and the nation’s largest singly accredited statewide community college system, serving nearly 200,000 students annually. The Ivy Tech Foundation, like IU, also received a grant from the Lilly Endowment ($4.9 million), and will use its monies to implement three strategies that better align the college’s degree and certificate programs with the needs of Indiana employers: regularly gathering and evaluating employer and student survey data; growing certificate and degree programs in demand by Indiana employers, including the addition of a new automation and robotics technician degree designed in collaboration with auto manufacturing employers; and improving and increasing career planning, internships and job placements across the campuses of Ivy Tech.

While progress has been made in recent years toward enhancing and expanding opportunities for Indiana college graduates to find meaningful employment, more needs to be done, said Sara B. Cobb, vice president for education at the Lilly Endowment.


Ivy Tech is the nation’s largest singly accredited statewide community college system, serving nearly 200,000 students annually at campuses throughout Indiana.
Image courtesy of Ivy Tech

“Despite a steady supply of four-year college graduates, Indiana ranks very low among the states in the percentage of its adult working-age population that has a bachelor’s degree, and the state’s average per capita income ranking also is unacceptable,” she said in December. Indiana currently ranks 40th nationally in education attainment, 39th in personal per capita income and 43rd in percentage of the adult population with college degrees.

Straightening the Time Warp

Where did she get her data? Another Indiana university, for one.

“The Causes of State Differences in Per Capita Income: How Does Indiana Fare?” was published by Muncie-based Ball State University’s Center for Business and Economic Research (CBER) in August 2013. It finds that while the state has enjoyed small annual increases in the average standard of living over the last 50 years, there are stark differences in per capita personal income from one part of the state to another. Indiana’s rank in per capita income is a decline from 1980, when Indiana ranked 30th, which was itself a decline from 1950, when Indiana ranked 21st.

“We are not saying that Indiana is a poor place, but in some areas of the state, incomes have clearly not kept up with the national or regional averages,” said Michael Hicks, director of CBER, the research division of the Miller College of Business. Researchers started by looking at wages in 2010 inflation-adjusted numbers, then assigning each county the year in which its current standard of living was equal to that of the nation as a whole. The state average was at the 1996 national level. Residents of Marion County had an average personal income in 2010 equivalent to the national average in 1999. Most counties in Indiana had personal income levels that were 20 to 30 years behind the national average.

“The largest difference between the areas with counties that have kept up or surpassed national income averages are associated with educational attainment at the bachelor’s degree and beyond,” Hicks said. “It also is clear that place-based differences play a large role in per capita income. Regional attractiveness to residents plays a major role in per capita income across states and counties. There are some places — including the northern suburbs of Indianapolis — where people choose to live because the housing is nicer, neighborhoods are safer and the schools are better. And because of this concentration of highly educated workers, companies populate those areas.”

CBER released two other reports in late 2013 on the effectiveness of state and local tax incentives. “An Analysis of State and Local Tax Incentives,” co-authored by Hicks and Dagney Faulk, examined actual job creation effects of incentives offered through the IEDC from 2005 (its year of inception) to 2012.

Hicks said the state’s EDGE credit, a tax credit made available based upon verifiable employment reports, has performed well for Indiana, with each $1,000 invested resulting in an additional manufacturing job. But local tax abatements in Indiana have been far less effective, with about $30,000 in lost local tax revenue required for each new manufacturing job created. The study found that local governments abated $50.78 billion in property value through the study period, or about $8.5 billion per year. At a 3-percent property tax rate, that is about $253 million in lost property tax revenue per year or about $2.75 million per county per year.

Among its recommendations: Promote the creation of Regional Development Authorities (RDAs) covering all Indiana counties. The study found that job creation in locations with an RDA is significantly better than in those counties without one. Counties with an RDA have higher levels of total and manufacturing employment.

Bridging the Gap

The value of Indiana’s learning and training resources is not lost on Tim Judy, vice president, program management for Autoneum North America, based in Farmington Hills, Mich. In early February, the company, which makes acoustic and thermal management products for the automotive industry, announced it would lease and equip a 300,000-sq.-ft. (27,870-sq.-m.) manufacturing and distribution facility at the River Ridge Commerce Center in Jeffersonville, across the Ohio River from Louisville, Ky., where it will create approximately 220 jobs by 2018.


Mitch Daniels, governor of Indiana from 2004 to 2012, began his tenure as president of Purdue University in January 2013.

“We expect to utilize state and local resources for training, candidate screening and job fairs/recruitment,” Judy says by email. “The abundance of universities and technical schoolss in the region, although not a primary driver of our selection, certainly gave us confidence we will have the ability to find the right level of technical expertise in the associates we plan to hire.”

The Indiana Economic Develop-ment Corp. offered Autoneum North America up to $2 million in conditional, performance-based tax credits and up to $200,000 in training grants based on the company’s job creation plans. River Ridge Development Authority approved additional property tax abatement at the request of One Southern Indiana.

About 30 percent of Autoneum’s 9,500 employees worldwide are in North America. The new facility expands the company’s North American manufacturing footprint to 13 plants (including JVs), and will support continued growth for Autoneum with multiple North American OEM customers, all within a good radius of the new location.

Among those JVs is UGN, which operates a plant in Valparaiso, Ind., and which has publicly stated that its own site selection process for a new $25-million, 150-job facility has come down to Indiana and Ohio as finalists. Inquiries to UGN did not receive replies. Judy says that the two projects are entirely separate, though “I expect the process is similar.”

Autoneum’s process began with the up-front hiring of Mohr Partners to handle the company’s site search and incentive negotiations, says Judy. “From Autoneum, I was the project leader for the site search, working with Mohr and our North American CEO, COO, CFO and the head of global manufacturing from our headquarters in Switzerland,” he says. “We made the selection and decision to locate in Jeffersonville. The criteria used included geographic location to our customers, infrastructure availability, workforce ability and technical expertise, as well as the incentive package offered by the state and local authorities.”

Asked whether construction progress of the long-simmering Ohio River Bridges project near Jeffersonville had any bearing on the location decision, Judy says, “We definitely identified this as a key element in our decision. It will improve access to our plant, and not only make our site more accessible, but ultimately reduce our overall logistics costs.”

A Leader Among Leaders

In December 1930, inventor David Ross and Josiah K. Lilly, founder of Eli Lilly and Co., each donated $25,000 to establish the Purdue Research Foundation, in order to make the university’s research more accessible to industry. Today the nearly $1 billion Purdue Research Foundation manages and licenses Purdue’s intellectual property, accepts gifts, administers trusts, acquires property and performs other services, including the administration of Purdue Research Park (PRP), established in 1961. Today the park network has four locations that are home to 236 companies with more than 4,200 jobs.


This map depicts the campus network of Ivy Tech.
Image courtesy of Ivy Tech

Among the findings of a recent economic impact study of the park: $1.3 billion economic impact for State of Indiana; $48 million contributed to state and local taxes; and $49 million in federal R&D grants for small businesses brought to the state since 1987. Park-based companies contributed nearly $22 million in sponsored research to Purdue University.

Combined, the Park is a top 20 employer in the state. High-tech, high quality jobs paying an average annual salary of $63,000 — 65 percent higher than the Indiana average.

Jumpstarting Startups

From 1996-2012, Indiana ranks 37th on the Kauffman Foundation’s Entrepreneurial Activity Index. Its schools are doing their part to change that figure too, and once again Purdue is in the vanguard.

In January, Purdue announced a new project, “Deliberate Innovation for Faculty” (DIFF) incorporating commercialization goals as a valuable enhancement of basic research and to foster increased entrepreneurialism.

“I’ve been working with entrepreneurship at Purdue for more than 15 years, and the interest from faculty, staff and student innovators is at its highest yet and continues to grow even more as university research and commercialization becomes part of our national culture,” said Greg Deason, vice president and executive director of the Purdue Foundry, a startup hub at the university. “Strategically including long-term commercialization goals in research will do more than move innovations to the public faster. It also will support our economy by creating new companies and jobs in high-tech areas.”

In February, Purdue and medical device company Cook Medical announced a $12-million evergreen investment fund to support Purdue-based life sciences companies.

A parallel effort to the DIFF program is the school’s new Center for Drug Discovery, ramping up this spring, which supports more than 100 faculty in six colleges. Pharmaceutical companies continue to outsource R&D, and the new center will put Purdue in position to capitalize.

“Purdue is among an elite handful of universities that are very productive in this area, and we are well-positioned to partner with the pharmaceutical industry and become a world leader in drug discovery,” said Philip Low, the Ralph C. Corley Distinguished Professor of Chemistry and inaugural director of the center.

Evidence shows that’s already under way: During the fiscal year July 1, 2011, to June 30, 2012, Purdue Research Foundation officials reported 356 invention disclosures, 446 patent applications worldwide, 95 issued patents worldwide and the creation of five startups from Purdue-licensed technologies. The number of patents issued to Purdue-related discoveries has more than tripled from 31 in 2007–2008.

When he was Indiana’s governor, among Mitch Daniels’ most successful gambits was his “Major Moves” set of transportation infrastructure investments, including the long-term lease of the Indiana Toll Road. Last fall, after consultation with faculty and other leaders, Daniels announced a series of 10 actions that have come to be known as the “Big Moves.” They include such measures as expansion of drug discovery and plant science research, expanding faculty and enrollment at the engineering school, and accelerating the pace of degree completion. Daniels expects major effects.

“When one arrays the public research universities of the US by their concentration of STEM disciplines (measured in percentage of undergraduate degrees conferred), Purdue already ranks third,” wrote Daniels in a January 2014 open letter to the community. “After our Big Moves expansions are complete, we should be even more distinctive as a leader in producing the thousands of new engineers and technologists for which both business and governmental leaders are calling.

“We aspire to be the leading technology school between the coasts,” he wrote, “and a wellspring of new inventions and jobs to strengthen the Indiana economy of tomorrow.”

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