This may come as a surprise, but they're still making things in the Midwest.
While much has been made of the decline in American manufacturing since 2001, especially in the years since the Great Recession, there's still strength in the sector, according to data from the National Association of Manufacturers (NAM).
The lower Midwestern states of Indiana, Ohio and Illinois lead the nation in manufacturing, according to CNBC's analysis of NAM's data. Through a combination of regulatory changes, expanding direct foreign investment and the adaptation to new technologies, Indiana in particular has emerged as the best state in the U.S. for manufacturing. At the end of 2014, Indiana was home to 8,485 manufacturers employing 515,526 workers, according to the Bureau of Labor Statistics.
The sector, valued at $95.3 billion, made up 30 percent of the state's GSP in 2014, according to the Economic Policy Institute, roughly the same rate as in the mid-'90s. But it's not your grandfather's dirty plants pumping out sheets of steel under the smoggy sky of Gary anymore.
"Indiana has always been a big manufacturing state," said Patrick Kiely, president and chief executive of the Indiana Manufacturers Association. "We've always been thought of as the old smokestack state, while in fact that's really not the case anymore."
Indiana's manufacturing sector has gained strength in recent years, thanks in part to policy changes, like becoming a right-to-work state in 2012 and decreasing the corporate income tax rate. In July it's scheduled to drop to a flat 6.5 percent. Additionally, Indiana has become a target for direct foreign investment, and more than 300 Japanese companies have set up shop since the mid 1980s, including automakers Toyota and Honda, Kiely said.
Motor vehicles and parts still make up a big portion of Indiana's manufacturing output—$15.5 billion in 2012. But the state also has fast-growing capacity in pharmaceuticals and medical devices. Indianapolis-based pharma giant Eli Lilly last year opened an expanded insulin-manufacturing facility in Indiana, adding 100 skilled positions, and medical device company Zimmer Holdings agreed to purchase Biomet for $13.4 billion. The corporate headquarters for the combined company will remain in Warsaw, Indiana.