Heather Ennis: Hoosier manufacturing’s renaissance is riding on rail

Not long ago, Indiana’s reliance on manufacturing as a main driver of our economy was viewed as a handicap because factory jobs were drying up across the United States and production was moving overseas.

That is no longer the case, as thousands of jobs are “reshored” and analysts predict immediate, strong and sustainable growth in manufacturing employment in our state.

Among those forecasts, Conexus Indiana is predicting 5% to 10% employment growth in advanced manufacturing in Indiana, including 13,000 new jobs in transportation equipment, chemical, and computer and electronic products by 2026. With more than $8 billion in new manufacturing investments announced in the first half of 2023 alone, Hoosiers can count on continued strong growth in high-wage manufacturing jobs.

What sets Indiana apart and makes our state such a hotbed for American manufacturing—in addition to a can-do attitude and our ideal geographic location in the center of the country—is a first-class intermodal freight network of highways, waterways and railroad tracks that gives our manufacturing, agriculture, mining, distribution and trade sectors a distinct advantage.

Indiana’s freight rail sector is the linchpin of this intermodal network. Composed of 43 individual railroads operating across 3,946 miles of track, freight rail provides our major industries with safe and efficient connections to markets statewide, across North America and throughout the world via rail links to coastal and Great Lakes ports.

Railroads remain the safest means for transporting freight over land, including hazardous materials. The facts show that railroads have gotten progressively safer each year, driving the hazmat accident rate down 73% since 2000.

Continual improvement on rail safety is driven by the massive amounts of private-sector dollars—more than $23 billion annually—that railroads churn into infrastructure, equipment and technology. And railroads pay their own way, reinvesting an average of about 40 cents of every dollar they earn back into the rail network.

The U.S. freight rail system stands in stark counterpoint to the way we build and maintain highways, which rely on billions of taxpayer dollars each year. Because the public pays the lion’s share of the roads’ infrastructure costs, heavy-haul trucking operators enjoy a built-in subsidy and competitive advantage over railroads. A recent Purdue University study on “Indiana’s Highway Cost Allocation and Revenue Attribution” found that 80,000-pound tractor trailers pay for only 80% of the damage they cause. The other 20% is subsidized by car taxes and the general fund.

And while even some of the most basic needs of our publicly funded infrastructure often go unmet, railroads continue to invest year after year.

About 5,000 Hoosiers also make their livings working on the railroad. These are high-paying jobs with great benefits. The railway supply industry accounts for more than 6,000 additional direct jobs, according to a recent study. Railroad and railway supply jobs in turn support thousands more jobs in other sectors—on farms, in factories and mines, and throughout the economy.

Freight demand is expected to grow 30% nationally by 2040, and all modes of transportation will be asked to move more—especially railroads. By way of perspective, it would have taken 16.6 million trucks to carry the 299 million tons of rail freight that started, ended or moved through Indiana in 2021.

As Congress and the Indiana Legislature look to support manufacturing growth, it is imperative we avoid policies that would undercut the ability of railroads to reinvest in the rail network. Such policies would undermine both rail safety and rail service, disadvantage our manufacturing sectors, divert freight from rail to highway, and increase burdens on taxpayers.

A thriving rail industry able to invest at a high level is of vital interest to all of us in Indiana.•

__________

Ennis is CEO of the Northwest Indiana Forum.