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Logistics in the Midwest June 22, 2006

Posted by Tom in Community, Economic Development, Research, Technology, Workforce.
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Bill Testa's Midwest Economy Blog offers a fresh look at logistics activity in the Midwest – and the changes the industry is going through:

Technological improvements in logistics communication, as well as the intermodal shipment of goods in standardized containers, have allowed transportation services to be produced with fewer inputs of real resources. Competition among service providers, partly owing to deregulation, has also spurred technological gains while holding down prices near to the costs of production.

Is the Midwest developing a sharper specialization in transportation and warehousing? The chart below looks at the ratio of the shares of transportation and warehousing output from 1963 to 2004 for both the region and the nation. Over the past 15 years, the Midwest’s share is widening its relative concentration in the production of goods transportation and warehousing. It may be the case that the central location of the Midwest, coupled with its established transportation infrastructure and its logistics know-how, are buffering the region’s economy with growth in transportation services.

The growth and development of the logistics industry in the Midwest is something I've been watching closely for a while.  Here in northeast Indiana, it's fueling much of our job growth.  Marion, Indiana was designated the ninth-ranked "Top Micropolitan" area by Site Selection magazine largely due to the attraction of two huge new distribution centers, one for Wal-Mart and the other for Dollar General.  

The technological improvements that Testa talks of also drove one of northeast Indiana's Strategic Skills Initiative programs.  While it's reasonably easy to obtain a Commercial Driver's license – the type needed to drive the "big rigs," the information technology-driven training in logistics and warehouse management systems is tougher to come by.  If our region was to develop not just a capacity but an expertise in logistics that could both secure our base logistics employers and attract new ones, we had to build that expertise in our workforce.  

The Marion-Grant County Chamber of Commerce and Ivy Tech Community College surveyed the landscape and found that the only logistics management training in the State was offered in Indianapolis – between a 1 to 3 hour drive from the different corners of our region.  After determining that sufficient incumbent industry demand existed to support a program startup in northeast Indiana, they partnered with an innovative program that promotes the career possibilities in logistics to our emerging workforce, imports the Indianapolis logistics curriculum to northeast Indiana and convenes the existing logistics industry leadership on a regular basis to ensure ongoing educational responsiveness to industry demand.  Their two-year grant, which has a 50 percent funding match requirement in the second year, was just over $300,000.

This is a textbook case of aligning workforce with economic development.  Our manufacturing-intensive region is developing a new industry expertise (I think it's too early to say logistics is more than an emerging cluster) and will require a greater skilled workforce as it grows.  With the SSI grant, we have the kick-start to a formal workforce pipeline development program to attend to immediate need and prepare our region for additional industry growth. 

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