Indiana’s manufacturing industry continues to be the engine powering the state’s economy. Over 25% of Indiana’s economy and 17% of its employment is produced directly by manufacturing companies. The add-on effect of this economic activity is huge. For every dollar spent on manufacturing, $1.85 of additional activity is generated. For every production job, 3-4 jobs are created in other sectors.
Because manufacturing plays such an outsized role in Indiana, the tax changes in the One Big Beautiful Bill Act, which in many cases are focused on supporting manufacturing businesses, are big wins for Indiana.
The pro-growth policies in the OBBB will spur new investment, equipment upgrades, and added research and development. The State of Indiana also acted to support manufacturing investment through property tax cuts, making investments in production equipment less expensive.
These big wins on federal and state tax policies may be negated by uncertainty on tariff policy. The impact of individual tariff increases will vary between companies and individual products based on differences in supply chains and customers. But the volatility in tariff policy makes planning around those cost impacts very difficult.
This is especially true for manufacturers who are focused on long-term capital investments.
For Indiana manufacturers, the biggest trading partners are close to home. Canada and Mexico top the list, supported by trade agreements and geographic proximity.
However, Asian markets, particularly China, remain major destinations for Indiana exports — especially in pharmaceuticals, motor vehicles, and auto parts. Indiana is a global manufacturing center and uncertainty in trade policy, particularly as it applies to Canada and Mexico, will push against the momentum to invest.
Access to a quality workforce continues to be a long-term challenge for manufacturers. Indiana’s unemployment rate continues to tick down in 2025, and based on DWD data, there were over 22,000 open manufacturing jobs in the state at the end of June. The number of openings has remained consistent, even as the overall headcount of production work has dropped slightly in recent months. This trend shows that manufacturers are struggling to keep up with the attrition of an aging workforce.
Much is being done by the public and private sectors to grow Indiana’s workforce. Manufacturers will have to work proactively to reach students about career opportunities in manufacturing. And manufacturers will have to continue adapting to new technologies that allow them to increase productivity and grow.
Indiana’s excellent business climate and changes to federal tax policy make this state a great location to grow manufacturing. If trade policy can settle down and progress can be made on all workforce fronts, then Indiana’s number one industry will continue to dominate.
