Regional Trends and Opportunities Tidewater Association of Service Contractors Bob Sharak Hampton Roads Partnership November 21, 2007 Hampton Roads

About the Hampton Roads Partnership Unique public-private Leadership organization formed in 1996 . 17 localities, 111 members Chief elected officials and key leadership in business, education, military, and labor. Mission Provide leadership on strategic issues that improve the region’s competitive position in the global economy. Hampton Roads

Unique public-private Leadership organization formed in 1996 .

17 localities, 111 members

Chief elected officials and key leadership in business, education, military, and labor.

Mission

Provide leadership on strategic issues that improve the region’s competitive position in the global economy.

About the Hampton Roads Partnership Goal To engage in activities leading to higher living standards for residents of Hampton Roads and stronger, more agile communities Only organization focusing on regional strategic issues

Goal

To engage in activities leading to higher living standards for residents of Hampton Roads and stronger, more agile communities

Only organization focusing on regional strategic issues

Hampton Roads Partnership Strategic Plan Education School Readiness Start Strong Educational Attainment Technological Research Hampton Roads Research Partnership 6 universities, 2 federal labs and a research institute 2 US EDA Grants ($1.2M) Focus Areas: Sensors, Bio-science and M&S

Education

School Readiness

Start Strong

Educational Attainment

Technological Research

Hampton Roads Research Partnership

6 universities, 2 federal labs and a research institute

2 US EDA Grants ($1.2M)

Focus Areas: Sensors, Bio-science and M&S

Hampton Roads Partnership Strategic Plan Transportation Traffic Congestion HRTA Public Transit Regional Transit Study Regional Citizenship America’s First Region Campaign Regional Stewards Group

Transportation

Traffic Congestion

HRTA

Public Transit

Regional Transit Study

Regional Citizenship

America’s First Region Campaign

Regional Stewards Group

Hampton Roads Partnership Strategic Plan Economy Modeling & Simulation M&S Strategic Plan State Budget Request MODSIM World 2007 Conference & Expo MODSIM World 2008!! September 16-18 2008 Virginia Beach, VA

Economy

Modeling & Simulation

M&S Strategic Plan

State Budget Request

MODSIM World 2007 Conference & Expo

MODSIM World 2008!!

September 16-18 2008

Virginia Beach, VA

Economic Impacts Modeling and Simulation Industry

Hampton Roads Partnership Strategic Plan Economy Port/Logistics Technology/ Automation HRRP/WIRED Grant Logistics Hub To be continued…

Economy

Port/Logistics

Technology/ Automation

HRRP/WIRED Grant

Logistics Hub

To be continued…

Identifying Regional Trends

Identifying Regional Trends Major Drivers of the Regional Economy Defense 2006 DoD spending approx. $16.8 billion (ODU) More than one-third of the $72 billion regional economy. Accounted for approx. 75% of Regional Economic Growth since 2001. (ODU)

Major Drivers of the Regional Economy

Defense

2006 DoD spending approx. $16.8 billion (ODU)

More than one-third of the $72 billion regional economy.

Accounted for approx. 75% of Regional Economic Growth since 2001. (ODU)

Identifying Regional Trends Major Drivers of the Regional Economy Defense Nearly 112,000 military personnel, second largest concentration of military in the nation. Over 11% percent of all jobs. (HRPDC)

Major Drivers of the Regional Economy

Defense

Nearly 112,000 military personnel, second largest concentration of military in the nation.

Over 11% percent of all jobs. (HRPDC)

Identifying Regional Trends Major Drivers of the Regional Economy Defense 2002 and 2003 growth strongest since the 1980s Reagan build-up. (ODU) Major growth spurts have come with Defense build-ups. It almost doesn’t matter what happens in the rest of the economy.

Major Drivers of the Regional Economy

Defense

2002 and 2003 growth strongest since the 1980s Reagan build-up. (ODU)

Major growth spurts have come with Defense build-ups.

It almost doesn’t matter what happens in the rest of the economy.

Identifying Regional Trends Major Drivers of the Regional Economy Defense Base closures Reduce GRP $404.5 million by 2020. Lose 1,223 civilian, 921 military and 248 contractor jobs by 2011.

Major Drivers of the Regional Economy

Defense

Base closures

Reduce GRP $404.5 million by 2020.

Lose 1,223 civilian, 921 military and 248 contractor jobs by 2011.

Identifying Regional Trends Major Drivers of the Regional Economy Defense Slowing Defense growth slowing regional growth. 2007 regional growth below the historic average, slowest since 2000. (ODU) 2006 growth rate revised downward . (ODU)

Major Drivers of the Regional Economy

Defense

Slowing Defense growth slowing regional growth.

2007 regional growth below the historic average, slowest since 2000. (ODU)

2006 growth rate revised downward . (ODU)

Peak Rate 13.7% Peak Spending $606.6bn

Identifying Regional Trends Major Drivers of the Regional Economy Defense Navy FY 2008 active duty end strength 45,000 below FY 2004 total. Battle force fleet 286 ships and submarines, compared to 292 ships and submarines. (CSBA) 11 aircraft carriers versus 12 in FY 2004. (CSBA) Air Force Active duty end strength projected to decline 48,000.

Major Drivers of the Regional Economy

Defense

Navy

FY 2008 active duty end strength 45,000 below FY 2004 total.

Battle force fleet 286 ships and submarines, compared to 292 ships and submarines. (CSBA)

11 aircraft carriers versus 12 in FY 2004. (CSBA)

Air Force

Active duty end strength projected to decline 48,000.

If Not Defense, Then What? I want to say one word to you. Just one word. Are you listening? “ Logistics”

I want to say one word to you.

Just one word.

Are you listening?

“ Logistics”

Distribution & Logistics Why Logistics? Facilitate Cargo Handling & Transportation Done Well it Lowers Costs & Capital Is Its Own Industry in Today’s Global Economy Done Very Well it Attracts Other Business

Why Logistics?

Facilitate Cargo Handling & Transportation

Done Well it Lowers Costs & Capital

Is Its Own Industry in Today’s Global Economy

Done Very Well it Attracts Other Business

Distribution & Logistics Major Drivers of the Regional Economy Port Over 30,000 jobs attributable to the Port. (ODU) Freight movements expected to increase dramatically in next 20 years from 2 million TEUs in 2005 to 5 Million by 2030. (Moffat & Nichol)

Major Drivers of the Regional Economy

Port

Over 30,000 jobs attributable to the Port. (ODU)

Freight movements expected to increase dramatically in next 20 years from 2 million TEUs in 2005 to 5 Million by 2030. (Moffat & Nichol)

Distribution & Logistics Major Drivers of the Regional Economy Port APM Terminals investing $450 million in a new 300-acre container terminal in Portsmouth. 2.1M TEUs Per Year Phase1 2007 Finished 2009.

Major Drivers of the Regional Economy

Port

APM Terminals investing $450 million in a new 300-acre container terminal in Portsmouth.

2.1M TEUs Per Year

Phase1 2007

Finished 2009.

Distribution & Logistics Major Drivers of the Regional Economy Port Fourth VPA Terminal 600-acre Craney Island $2,200,000,000 Investment Stage 1 2017 2.5 million TEUs/year

Major Drivers of the Regional Economy

Port

Fourth VPA Terminal

600-acre Craney Island

$2,200,000,000 Investment

Stage 1 2017

2.5 million TEUs/year

Distribution & Logistics Major Drivers of the Regional Economy Port Majority moved by truck Increase 80 percent over the next 20 years Rail to grow 40 percent too By 2026, congestion will reduce peak hour speed to 25 MPH. Traffic congestion affects rail too at intermodal transfer points.

Major Drivers of the Regional Economy

Port

Majority moved by truck

Increase 80 percent over the next 20 years

Rail to grow 40 percent too

By 2026, congestion will reduce peak hour speed to 25 MPH.

Traffic congestion affects rail too at intermodal transfer points.

Distribution & Logistics Major Drivers of the Regional Economy Port Rail could carry more Heartland Corridor project stretching from Norfolk to Chicago. Cuts 233 miles from the existing route Reduce travel time by a day and a half.

Major Drivers of the Regional Economy

Port

Rail could carry more

Heartland Corridor project stretching from Norfolk to Chicago.

Cuts 233 miles from the existing route

Reduce travel time by a day and a half.

Distribution & Logistics Major Drivers of the Regional Economy Port Hampton Roads Transportation Authority Third Crossing Southeastern Parkway Dominion Boulevard Midtown Tunnel U.S. Route 460 Widening I-64 (Peninsula) Widening I-64 (Southside)

Major Drivers of the Regional Economy

Port

Hampton Roads Transportation Authority

Third Crossing

Southeastern Parkway

Dominion Boulevard

Midtown Tunnel

U.S. Route 460

Widening I-64 (Peninsula)

Widening I-64 (Southside)

Distribution & Logistics Port Business Trends Outsourced Manufacturing/US Imports Big Box Retailer Distribution Centers 10 To 15 Million SF are already In use Additional 20 to 60 Million SF Will Be Needed by 2030

Port Business Trends

Outsourced Manufacturing/US Imports

Big Box Retailer Distribution Centers

10 To 15 Million SF are already In use

Additional 20 to 60 Million SF Will Be Needed by 2030

Major Distribution Center Locations Near Major Transportation Routes

Distribution & Logistics Port Business Trends An Opportunity $100bn in East Coast Containerized Cargo is Discretionary and its Growing All Of It Needs To Be Handled and Managed Represents roughly $4 - $6bn in logistics services Handle It In Hampton Roads Capture $1bn in logistics work??

Port Business Trends

An Opportunity

$100bn in East Coast Containerized Cargo is Discretionary and its Growing

All Of It Needs To Be Handled and Managed

Represents roughly $4 - $6bn in logistics services

Handle It In Hampton Roads

Capture $1bn in logistics work??

Distribution & Logistics Port Business Trends Customers Desire: Low port cost and diverse services Cargo handling outside the port Pre-zoned and available land Efficient Transportation Logistic Services Distribution Center Development Door-to-Door Infrastructure Friendly Business Environment

Port Business Trends

Customers Desire:

Low port cost and diverse services

Cargo handling outside the port

Pre-zoned and available land

Efficient Transportation

Logistic Services

Distribution Center Development

Door-to-Door Infrastructure

Friendly Business Environment

Distribution & Logistics Land Use Planning Work to identify best locations Good infrastructure Utilities Roads Inexpensive Land Good Labor Force Buffers to non-complimentary uses Residential Schools

Land Use Planning

Work to identify best locations

Good infrastructure

Utilities

Roads

Inexpensive Land

Good Labor Force

Buffers to non-complimentary uses

Residential

Schools

One Consideration Norfolk Southern US 58 CSX US 460 Buffer Area(s) Industrial Area

Distribution & Logistics Closing Thoughts? Port Related Foundation Focused on Growth APM is Open Craney Island in Progress Heartland Corridor Opens 2009 New US 460 Panama Canal Expanding 2014

Closing Thoughts?

Port Related Foundation

Focused on Growth

APM is Open

Craney Island in Progress

Heartland Corridor Opens 2009

New US 460

Panama Canal Expanding 2014

Conclusions? Questions?

Conclusions?

Questions?

Thank You! Robert Sharak Vice President Hampton Roads Partnership 430 World Trade Center Norfolk, VA 23510 757-625-4696 (P) 757-625-4684 (F) [email_address] www.hrp.org

Robert Sharak

Vice President

Hampton Roads Partnership

430 World Trade Center

Norfolk, VA 23510

757-625-4696 (P)

757-625-4684 (F)

[email_address]

www.hrp.org