Category

Strengths (S)

Weaknesses (W)

Opportunities (O)

Threats (T)

Ease of Doing Business

Top Business Climate: Consistently ranked in the top states for business by various polls (e.g., #3 by Chief Executive, #6 by Area Development). Pro-Business Policies: High rankings for favorable regulatory framework, low taxes, and strong government cooperation. Strategic Location: Central U.S. location provides a crucial advantage for logistics and distribution, reaching over 70% of the US population within a two-day drive.

Workforce Shortages/Skills Gap: A major concern for business leaders is the insufficient supply of appropriately trained workers, particularly lacking work ethic and initiative. Infrastructure Strain: Rapid population and economic growth have placed increasing strain on existing infrastructure, noted as an area for state improvement.

Infrastructure Investment: State commitment to enhance infrastructure and energy capacity to support continued business expansion and ease logistical bottlenecks.

Tort System Costs: Concern among some business groups regarding the state's ranking for tort system costs and potential legislative proposals that could increase legal costs for businesses.

Domestic Manufacturing

Durable Goods & Auto Focus: Strong growth in durable goods manufacturing, particularly in Transportation Equipment Manufacturing (cars/auto parts), which has seen significant job creation since 2010. Foreign Direct Investment (FDI): High level of FDI, especially from Japan and Germany, with over 1,000 foreign-based establishments and significant capital investment.

Long-Term Job Decline: Overall manufacturing employment has declined significantly since 1990, especially in non-durable goods (e.g., printing, paper), indicating a shrinking base in traditional sectors.

EV Ecosystem Development: The transition to electric vehicles (EVs) offers a massive opportunity to further solidify the state's role as a US auto production leader by attracting battery and EV component manufacturers.

Tariff Impact: Business leaders report feeling the effects of US trade tariffs, which can increase the cost of imported raw materials and parts essential for the manufacturing supply chain.

Sustainability Initiatives

Favorable Climate Ranking: Ranked highly for "Climate Risk & Resilience" by business consultants, suggesting a good environment for long-term operational stability. Research & Development Hubs: Presence of institutions like Oak Ridge National Laboratory and universities fostering R&D in energy, data centers, and emerging technologies.

Lack of Prominence: State-led, high-profile sustainability initiatives appear less visible compared to the dominant focus on economic and workforce development.

Green Industrial Growth: Leveraging the EV manufacturing boom to position the state as a leader in sustainable production and clean energy-related technology.

Cost of Housing/Childcare: Rapid growth and high demand for workers in new industries increase the cost of living (housing, childcare), which could undermine efforts to attract and retain a stable, long-term workforce.

Balance of Trade

Export Value: A large exporter with $38.9 billion in goods exports (2024), driven by high-value products like Medical Instruments, Cars, and Computers. SME Contribution: A high percentage of the state's total exports are generated by small and medium-sized enterprises (SMEs), indicating a broad export base.

Significant Trade Deficit: The state has a considerable negative trade balance, with imports ($10.5B in July 2025) greatly exceeding exports ($3.2B in July 2025), driven by its massive manufacturing and consumer base.

Product Diversification: Opportunities exist in expanding exports of specialized pharmaceuticals, cotton, and other products where the state has an economic complexity advantage.

Global Political Instability: High reliance on international trade makes the economy sensitive to global political instability and changes in major trade agreements, which can affect its top partners (Canada, Mexico, China).