Indiana Economy

Agriculture and Industry in Indiana

Manufacturing is an important part of Indiana's economy. Iron, steel, electrical and transportation equipment, chemicals, and food items are produced in industrial cities throughout the state. These include Evansville, Fort Wayne, Gary, Kokomo, South Bend, and Terre Haute. Indiana also has large deposits of coal and limestone, valuable resources used in industry and construction.

A long growing season and high annual rainfall amounts contribute to rich yields from farms throughout the state. Seventy-five percent of Indiana's land is used for agriculture. Principal crops include corn, wheat, soybeans, hay, popcorn, and various types of fruits and vegetables. Many farms also produce hogs, cattle, eggs, and dairy products. The meatpacking industry is one of Indiana's largest agriculture-related businesses.

Due to its central location, Indiana is an important hub of transportation. The northwest corner of the state is one of the most heavily traveled areas in the world in terms of air, train, road, and waterborne traffic.

Indiana Agriculture and Industry

Indiana Agriculture:

Corn, soybeans, hogs, cattle, dairy products, eggs.

Indiana Industry:

Steel, electric equipment, transportation equipment, chemical products, petroleum and coal products, machinery.

The total gross state product in 2003 was $214 billion. Indiana's per capita income, as of 2003, was $28,783.

Indiana is located well within the Corn Belt, and the state's agricultural methods and principal farm outputs reflect this: a feedlot-style system raising corn, to fatten hogs and cattle. Soybeans are also a major cash crop. The state's nearness to large urban centers, such as Chicago, Illinois, also assures that much dairying, egg production, and specialty horticulture occur. Specialty crops include melons (southern Wabash Valley), tomatoes (concentrated in central Indiana), grapes, and mint (Source: USDA crop profiles). In addition, Indiana is a significant producer of tobacco. It should be remembered that most of the original land was not prairie and had to be cleared of deciduous trees. Many isolated parcels of woodland remain, and much of the southern, hilly portion is heavily forested (a condition which supports a local furniture-making sector in that part of the state).

A high percentage of Indiana's GDP comes from manufacturing. The Calumet region of northwest Indiana is the largest steel producing area in the USA, and this activity also requires that very large amounts of electric power be generated. Indiana's other manufactures include automobiles, electrical equipment, transportation equipment, chemical products, rubber, petroleum and coal products, and factory machinery. In addition, Indiana has the international headquarters of pharmaceutical company Eli Lilly as well as the headquarters of Mead Johnson Nutritionals, a division of Bristol-Myers Squibb. Elkhart, in the north, has also had a strong economic base of pharmaceuticals, though this has changed over the past decade with the closure of Whitehall Laboratories in the 1990s and the planned drawdown of the large Bayer complex, announced in late 2005.


Indianapolis from the Central CanalDespite its reliance on manufacturing, Indiana has been much less affected by declines in traditional Rust Belt manufactures than many of its neighbors. The explanation appears to be certain factors in the labor market. First, much of the heavy manufacturing, such as industrial machinery and steel, requires highly skilled labor, and firms are often willing to locate where hard-to-train skills already exist. Second, Indiana's labor force is located primarily in medium-sized and smaller cities rather than in very large and expensive metropolises. This makes it possible for firms to offer, and labor accept, somewhat lower wages for these skills than would normally be paid. In other words, firms often see in Indiana a chance to obtain higher than average skills at lower than average wages for those skills, which often makes location in the state desirable. (Source for basic manufacturing facts in the above two paragraphs is generally McCoy and McNamara, "Manufacturers in Indiana," Purdue University Center for Rural Development, Research Paper 19, July 1998.)

In mining Indiana is probably best known for its decorative limestone from the southern, hilly portion of the state, especially from around Bedford (the home area of Apollo I astronaut Gus Grissom). One of the many public buildings faced with this stone is The Pentagon, and after the attack of September 11, 2001, a special effort was made by the mining industry of Indiana to replace those damaged walls with as nearly identical type and cut of material as the original facing. There are also large coal mines in the southern portion of the state. Like most Great Lakes states, Indiana has small to medium operating petroleum fields; the principal location of these today is in the extreme southwest.

Indiana's economy is considered to be one of the most business-friendly in the US This is due in part to its conservative business climate, low business taxes, and many labor laws that have remained unchanged since the 1800s, emphasizing the supremacy of employer/management. The doctrine of at-will employment, whereby an employer can terminate an employee for any or no reason, is firmly ensconced in Indiana. Unions in Indiana are among the weakest in the US and it is difficult for unions to organize. It has been said that Indiana is a post-industrial state with a pre-Industrial Revolution mindset regarding the rights of workers. With isolated exceptions in university areas such as Bloomington and Lafayette, technology has been slow to catch on in Indiana, in part due to Hoosiers' traditional resistance to change. Most political leaders at the state level continue to emphasize the state's past economic base of manufacturing and farming.