Regional Report: The Midwest

Despite mixed signals about the economic outlook in the nation’s heartland, several states stand out for their pro-growth business climates.

While there have been mixed signals about the Midwest’s economic outlook, individual states all have their own success stories. Indiana’s economy is firing on all cylinders and attracting growing interest from foreign companies, North Dakota is establishing itself as a hub for the UAS industry and Michigan is manufacturing the next generation of automotive technologies.

INDIANA: Firing on All Cylinders

BEST STATES FOR BUSINESS RANK IN 2019: 5

The Hoosier State economy is “firing on all cylinders,” says Jim Schellinger, Indiana secretary of commerce. In recent years, Indiana has worked to promote its reputation on the global scale with low taxes, lower costs and reduced regulations that enable businesses to focus more on their bottom line and their employees. Foreign direct investment in the state has grown by 300 percent since 2016, and Indiana is now home to more than 1,000 foreign-owned businesses that support 193,000 jobs.

“We’re working day in and day out to take Indiana to the next level,” says Schellinger. “A critical part of that vision is propelling Indiana to the forefront of a global economy.”

In December 2018, Brazilian AgTech solutions provider Solinftec announced it will create 334 jobs and establish its first U.S. headquarters in West Lafayette. Canadian-owned Greenleaf Foods announced in April 2019 a $310 million investment and 460 new jobs in a facility in Shelbyville. And Swedish defense and security company Saab announced in May 2019 a $37 million investment and 300 new jobs in a new facility in West Lafayette.

Indiana is securing more international nonstop flights to Indianapolis, and in February 2020, it will host Routes Americas 2020, with 800 delegates representing 80 airlines and 300 airports. “The momentum just keeps building, and we won’t stop moving forward,” says Schellinger. “We are not just committed to creating a pro-growth business climate, but to proactively attracting new businesses.”

 

OHIO: Continued Growth in the Buckeye State

BEST STATES FOR BUSINESS RANK IN 2019: 9

New groundbreakings and expansions are proof of the Buckeye State’s value, says J.P. Nauseef, president and chief investment officer of JobsOhio. CoverMyMeds, one of the fastest-growing healthcare technology companies in the nation, announced in June 2018 it will add more than 1,000 associates in the Columbus region. And in July 2019, Total Quality Logistics announced it will construct a second building at its headquarters campus to accommodate continued growth in the third-party logistics industry.

There’s also new growth in innovative technologies, Nauseef says. This year, the FAA granted a waiver for a company to test new UAS (unmanned aerial system) technologies in the state. Sky Vision, a technology developed in collaboration between the Air Force research lab and the State of Ohio, enables unmanned aircraft systems to detect and avoid other aircraft while in flight. In July 2019, the state also launched the SMARTCenter, a 540-acre connected vehicle facility to test advanced automotive and mobility technologies.

The Buckeye State ranked in the top 10 in Chief Executive’s 2019 Best & Worst States for Business. Nauseef attributes the success to JobsOhio, a private economic development organization that allows greater flexibility when addressing a company’s needs. “Economic opportunities developed in Ohio come with a great deal of collaboration,” Nauseef says. “Gov. Mike DeWine, Lt. Gov. Jon Husted and our legislature are engaged in keeping Ohio business-friendly with a strong budget reserve and a commitment to infrastructure.”

 

SOUTH DAKOTA: Exploring Opportunities in Cybersecurity

BEST STATES FOR BUSINESS RANK IN 2019:  15

In recent years, South Dakota has been trying to diversify beyond its agricultural economic base. The state is targeting cybersecurity as an industry that could fit the state well with “room to grow,” says Steve Westra, commissioner of the South Dakota Governor’s Office of Economic Development. Dakota State University in Madison is investing in the cyber mission with the recent completion of the Beacom College of Computer and Cyber Sciences and the new Madison Cyber Lab.

“Aside from the second-to-none talent pipeline of DSU, South Dakota offers technology companies an off-the-beaten-path location that has value in and of itself. With our low population density, lack of skyscrapers and land-locked location, our geography is an asset for intelligence security, not a liability,” said Gov. Kristi Noem in a website post.

Agriculture remains a primary driver. Soybean processing plant Ag Processing celebrated its grand opening in Aberdeen, where it expects to process 15,000 bushels of soybean per day.  “Economic development in South Dakota continues to grow and evolve…Because of South Dakota’s physical landscape, it’s no surprise we retain and recruit businesses in the ag industry—it’s a ‘natural’ fit,” says Westra.

 

IOWA: Strong Regionalism

BEST STATES FOR BUSINESS RANK IN 2019: 16

Iowa is home to some of the fastest-growing metro areas in the Midwest. An analysis of IRS data by SmartAsset found the Des Moines-West Des Moines area ranked 17th in U.S. metro areas for the percentage of tax returns reporting six-figure incomes, roughly one in every five. The economic growth and prosperity are being driven by a “secret sauce” of public-private partnerships and regional collaboration, says Jay Byers, CEO of the Greater Des Moines Partnership.

Every few years, regional leaders come together to create extensive regional vision plans to guide the area’s growth. The most recent plan released in 2017, Capital Crossroads 2.0, was formed with the input of 3,000 residents and addressed 10 areas of work. ranging from business and governance to nature and wellness. Such collaboration and long-term planning are not only improving quality of life in the area but also growing the economy, Byers says. “I think we’re doing regionalism better than most other places across the country. We don’t spend much time fighting across borders, and we’re trying to speak and grow the region with one voice.”

 

WISCONSIN: Fostering Startups

BEST STATES FOR BUSINESS RANK IN 2019: 17

The Badger State continues to attract more foreign direct investment, and there’s strong growth in food manufacturing and life sciences companies that aim to leverage the state’s natural resources and educated workforce, says Tricia Braun, deputy secretary and chief operations officer at the Wisconsin Economic Development Corporation. Manufacturing remains the fastest-growing sector in the state, particularly within the food, plastics and equipment sectors, and early-stage companies in technology, healthcare and biotech continue to attract new investment, Braun says.

“We are seeing a healthy mix of startup activity, new business attraction, foreign direct investment and existing company growth—all of which underscores the strength of Wisconsin’s business climate,” Braun says.

In June 2018, Green Bay Packaging announced a $500 million expansion that will include a state-of-the-art paper mill to replace the company’s existing 71-year-old mill. It will be one of the first mills to be built in the state in decades and will enable the company to increase capacity by 50 percent, cut greenhouse gas emissions and eliminate wastewater discharge into the Fox River. Last fall, Komatsu Mining also announced a $285 million plan to build a state-of-the-art headquarters and manufacturing campus in Milwaukee.

 

NEBRASKA: Booming in Biosciences

BEST STATES FOR BUSINESS RANK IN 2019: 20

The Cornhusker State is riding economic momentum in life sciences and is now home to more than 1,000 bioscience companies that employ more than 16,000 people in the region. In July 2019, Veramaris, a joint venture between German-based Evonik and Netherlands-based DSM, opened a plant in Blair to produce omega-3 fatty acids through the cultivation and fermentation of natural algae.

“Nebraska offers some of the best strategic business advantages in the country for bio industry firms and startups,” said Department of Economic Development Director Dave Rippe in a press release. “Our goal moving forward is to keep nurturing that momentum to grow the economy and create incredible job and career opportunities for our people.”

Google announced in February 2019 it will build a data center in Omaha as part of a $13 billion investment in data centers across the country. Scoular announced in March 2019 that it will invest $50 million in a new freeze-drying manufacturing facility in Seward with 100 new jobs, and Merck Animal Health opened a major expansion in Omaha that same month. In May 2019, Allmand broke ground on an expansion of its operations in Holdrege to facilitate increased production of light towers, generators and compressors.

 

MISSOURI: Showcasing the Workforce

BEST STATES FOR BUSINESS RANK IN 2019: 24

The Show Me State is building a workforce for the future with a new infrastructure to boost education, training and initiatives to help employers. In July 2019, Gov. Mike Parson signed Senate Bill 68, which included several pieces of workforce and economic development legislation designed to help the state compete for businesses. “It gives us the tools we need to be more competitive and shows companies everywhere that Missouri is open for business,” says Holly Koofer-Thompson, director of communications and marketing at the Missouri Department of Economic Development.

Missouri has seen several notable deals in the past year. Amazon is currently constructing a fulfillment center and creating 1,500 jobs in St. Peters, and Quaker Window Products announced in October 2018 a $65 million investment over the next 10 years to expand their operations in Eldon. In July 2019, Bayer North American Crop Science Division announced a $164 million capital investment. “The monumental investment in our state signifies Bayer’s confidence in Missouri as a solid place to do business, specifically related to agtech,” Koofer-Thompson says.

 

NORTH DAKOTA: Wide-open Economic Potential

BEST STATES FOR BUSINESS RANK IN 2019: 28

Known as a small rural state that thrived on “oil and soil,” North Dakota is now being discovered by tech companies and entrepreneurs. Department of Commerce Commissioner Michelle Kommer says business leaders find the state able to get things done faster. “If someone needs something from the Secretary of State, I can just walk across the hall and get it. That’s how we work here. It usually just takes one call to get things done,” Kommer says.

One promising sector is the unmanned aerial systems (UAS) industry. In the last legislative session, the state approved an additional $30 million in funds to develop an infrastructure to support statewide beyond visual line of sight operations. North Dakota is one of only two states with federal waivers for the activity and is home to one of the country’s top aviation schools, the University of North Dakota in Grand Forks.

The Emerging Prairie co-working space and initiative has also been expanding its presence in Fargo and across the state to drive entrepreneurship, Kommer says. “We’ve done a lot of work from a policy perspective to promote and support the entrepreneurial ecosystem. We want North Dakota to be a great place for entrepreneurs to come, grow those ideas and turn them into intellectual property.”

 

KANSAS: New Development in the Heartland

BEST STATES FOR BUSINESS RANK IN 2019: 29

The Kansas Department of Commerce reports 2018 was an exceptional year for economic development in the state. Last year, the state added more than 11,000 new jobs and more than $1.7 billion in capital investments. “The businesses that have made the wise choice to open or expand in the State of Kansas are making substantial contributions to the health of our economy and overall quality of life,” said Robert North, interim secretary for the Kansas department of commerce in a press release.

Notable investments in the past year have ranged from insurance and manufacturing to healthcare technology. In June 2018, insurance giant Geico announced it would establish a new service center and create 500 new jobs in Lenexa. And in July 2018, New Directions Behavioral Health also announced it would move its headquarters to Overland Park and create 566 jobs.

 

MICHIGAN: Driving into the Future of Mobility

BEST STATES FOR BUSINESS RANK IN 2019: 32

Despite lingering stories about the decline of Detroit, Michigan remains the global epicenter of the automotive industry. Fiat Chrysler Automobiles is investing $4.5 billion to grow its core brands and add production at five existing facilities in the state. The deal will create nearly 6,500 jobs and is the biggest investment in an automotive manufacturing facility in the region in more than a decade.

“It is monumental for FCA, Detroit and the entire state of Michigan… and it’s expected to nearly double the company’s hourly workforce in the city of Detroit,” says Jeff Mason, CEO of the Michigan Economic Development Corporation.

Innovation hubs throughout the state in Detroit, Flint and Grand Rapids are pioneering an ecosystem that will shape the future of mobility in the 21st century, Mason says. PlanetM, a partnership of mobility organizations, educational institutions and government agencies, offers grants to help mobility companies test their technologies in the region and will have at least 32 mobility pilot projects underway by the end of 2019. In January, Waymo (formerly the Google self-driving car project) announced it will establish a high-tech manufacturing family in Detroit and integrate its self-driving systems into the vehicle platforms of its OEM partners in Michigan.

“Michigan is known for putting the world on wheels more than a century ago and, as the future of transportation and mobility evolves, [it] remains the global epicenter of mobility innovation,” Mason says.

 

MINNESOTA: A Home for Executives

BEST STATES FOR BUSINESS RANK IN 2019: 37

The Land of 10,000 Lakes is a growing magnet for Fortune 500 executives and “tends to keep them once they come,” says Steve Grove, commissioner of the Minnesota department of employment and economic development. Grove points to a study from the Carson School of Management that surveyed more than 3,000 executives in the region. While most executives move every few years to capitalize on new opportunities, it found many stay in the Twin Cities because the large number of operational, divisional and regional headquarters enabled them to access opportunities across many sectors. Many Fortune 500 companies base their headquarters in the state, and many others have established large divisions here.

“When you’re in a management role here, you can shift between major companies and have an interesting and diverse career….We have the kind of business climate that talented people want to come to and stay and build companies in,” Grove says.

Daikin Applied Americas recently invested $40 million in a facility in Faribault, creating 900 jobs. Finish company Uponor invested in a facility in Hutchinson with 140 new jobs, and Renewal by Andersen recently announced a $35 million expansion in Cottage Grove.

Sezzle, a FinTech company that used the state’s angel tax credit, is planning an IPO in Australia. “The startup ecosystem has grown really fast, and more venture capital is flowing into the state,” Grove says.

 

ILLINOIS: Prosperity in the Prairie State

BEST STATES FOR BUSINESS RANK IN 2019: 48

Moody’s reported in February 2019 that Illinois was entering an economic revival, much of it driven by a boom in Chicago and manufacturing in the southern part of the state. The research firm noted that the state had particularly impressive personal income growth compared to other states in the Midwest. Erin Guthrie, acting director of the Illinois Department of Commerce & Economic Opportunity, attributes this growth to economic diversity.

“No one sector dominates, leading to more long-term stability. The state is strong in multiple industries, including manufacturing, agribusiness and transportation and logistics,” Guthrie says.

Rug manufacturer and distributor Ruggable is planning a new production facility and 175 new jobs in Bedford Park. Entara Corporation is expanding its Chicago facility to grow its managed service offerings, and Vactor Manufacturing recently held a ceremonial groundbreaking for a new product line at an existing facility in Streator.

One area of momentum is in the technology and innovation sector, which is driven by the state’s robust digital infrastructure, venture capital networks and strong talent base, Guthrie says. Illinois is the second-largest producer of computer-science graduates in the country and awards nearly 10 percent of all the nation’s computer-science degrees. Chicago ranks among the world’s top innovation hubs for startup funding, while tech giants like Facebook, Google and Amazon continue to add jobs.