FILE - ME mill

A mill dam in Kennebunk, Maine.

Maine received a solid score for its human capital, but the state earned a failing grade when it comes to its global reach, according to a new report.

The Manufacturing Scorecard 2019 report from the Center for Business and Economic Research (CBER) at Ball State University in Muncie, Indiana, evaluates states on a range of categories from state-level productivity to the cost of worker benefits. The data sets are the ones site selection experts for manufacturing and logistics firms are most likely to consider.

While the Pine Tree State received an F for its global reach, which examines various export-related measures, it also received D- grades for the health of its logistics industry and for productivity and innovation. The state received a B for its human capital and also a C- for its manufacturing industry health.

“I would leverage more on human capital,” said Srikant Devaraj, research assistant professor at CBER. “The workforce there is pretty strong.”

The state received a middle-of-the-road grade of C for its sector diversification, expected liability gap and tax climate. That is an improvement for the state’s tax climate, which has been mired in the D range since 2009.

One tangible action state policymakers can consider is to change the tax structure, but changes could affect businesses’ thinking. If companies perceive the fiscal liability gap is increasing, they might consider relocating part or all of their business to another location.

“If I were to invest something in Maine right now, I see that it’s a C, but I will keep looking at it over time,” Devaraj said, referencing the expected liability gap. “If that goes from C to a D, then I might start to worry, saying, ‘how is the state going to bring this fiscal liability gap down?’”

The fiscal liability gap looks at unfunded liabilities, including unfunded liability per capita and percentage of GDP, average benefits and bond rankings. These unfunded liabilities are a good indicator of the direction of future taxes and public services, according to the study.

“The production of goods holds particular interest in the US economy,” the report found.

“Manufacturing firms are not necessarily reliant on local demand for goods and are therefore footloose,” according to the report. “Their location depends more on local factors such as the quality and availability of the labor force, transportation infrastructure, non-wage labor costs, access to innovative technologies, and the cost of doing business.”

CBER pulls its data from a number of sources, including the Department of Commerce International Trade Administration and Bureau of Economic Analysis, the Internal Revenue Service (IRS) and the Census Bureau.

Meanwhile, a recent prosperity index study found that Maine trailed its New England counterparts. Maine ranked No. 15 overall in the United States Prosperity Index study released by The Legatum Institute, a London-based think tank.

The Center Square Contributor