A new economic report gave Nebraska's manufacturing and logistics sectors a below-average grade, one that shows no improvement over the last two years and is significantly lower than neighbor Iowa's.
Nebraska scored a C- in manufacturing and a C+ in logistics in a national report by Ball State University's Center for Business and Economic Research, while Iowa scored an A and B, respectively. The other states scoring an “A” for manufacturing were Indiana, Kansas, Michigan, Ohio, Oregon, South Carolina and Wisconsin.
The research graded all 50 states on several areas of the economy that contribute to the success of manufacturing and logistics. The measures included manufacturing, logistics, health, human capital, cost of worker benefits, diversification of the industries, productivity and innovation and global reach.
Nebraska's best score was a B+ in human capital. Iowa's best scores were A's in manufacturing and human capital. Nebraska's worst scores were a D in sector diversification and a D+ in global reach. Iowa's worst scores were a D- in tax climate and C- in global reach.
Of the nine categories, Nebraska bested Iowa in just three: Worker benefit costs, tax climate and expected liability gap.
Tina Hoffman, a spokeswoman for the Iowa Economic Development Authority, called manufacturing a robust sector for the state but said its tax climate may not be as competitive because it taxes only sales revenues from within the state. That makes Iowa an attractive place for global companies sending their products across the world, but not for a company making components for original equipment manufacturers within the state, she said.
“Those are things we try to level the playing field with incentives,” Hoffman said, noting that Iowa Gov. Terry Branstad signed a new law last week that will reduce business property taxes.
Nebraska Department of Economic Development officials did not respond Wednesday to a request for comment.
Michael Hicks, the director of the Ball State center, said that Nebraska “continues to have many of the ingredients for manufacturing growth but has yet to realize dramatic growth,” a trend he said could be reversed by the rapid development of cheaper energy in the region.
“The Dakotas, Minnesota, Iowa, Missouri, Nebraska and Kansas have very different histories with respect to manufacturing. However, the expansion of low-cost energy will likely draw these states closer together in an environment which favors expanded manufacturing,” he said.
Ken Lemke, an economist with the Nebraska Public Power District, agreed that there hasn't been dramatic manufacturing growth in Nebraska but said there has been some. He called the state well-positioned for more growth in the form of logistics through oil and gas field development in the Dakotas and Kansas, the development of the Keystone XL pipeline and increased oil activity in southwest Nebraska.
In terms of electricity rates, Lemke views Nebraska as competitive. He said, for example, it's not likely that Facebook chose Iowa for its $300 million data center project over the cost of electricity.
“It came down to two states,” Lemke said. “Electricity is a very large driver and, at the end of the day, there wasn't much of a difference in cost.”