The Detroit Region's Opportunity: Creating Jobs by Developing the Transportation, Distribution and Logistics Sector

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The Detroit Regional Chamber's transportation, distribution and logistics (TDL) initiative, TranslinkeD, is working to develop TDL and supply chain assets in southeast Michigan, northwest Ohio and southwest Ontario to bring jobs and investment. This is a report on the initiative's progress from March - July, 2011.

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The Detroit Region's Opportunity: Creating Jobs by Developing the Transportation, Distribution and Logistics Sector

  1. 1. THE DETROIT REGION’S OPPORTUNITYMarch 1 – Creating Jobs by Developing theJuly 31, 2011 Transportation, Distribution and Logistics Sector A Report on Progress to: • New Economy Initiative for Southeast Michigan (NEI) • Michigan Economic Development Corporation (MEDC) Carolyn Gawlik Detroit Regional Chamber Foundation One Woodward Avenue, Suite 1900 Detroit, Michigan 48232
  2. 2. The Detroit Region’s OpportunityThe Detroit Region’s OpportunityC R E AT I N G J O B S B Y D E V E L O P I N G T H E T R A N S P O R TAT I O N ,DISTRIBUTION AND LOGISTICS SECTORTable of ContentsBACKGROUND .................................................................................................................... 2REVIEW OF GRANT FUNDS EXPENDED TO DATE ............................................................... 2PROGRESS IN MEETING OVERALL PROGRAM OBJECTIVES ............................................... 2WORKSTREAMS ................................................................................................................... 3BENCHMARKS AND METRICS ACHIEVED............................................................................ 4 Workstream 1 ........................................................................................................................................... 4 Workshop 1 ............................................................................................................................................ 4 Workshop 2 ............................................................................................................................................ 5 Workshop 3 ............................................................................................................................................ 5 Survey Results: Hub Capability Perceived Importance vs. Region’s Perceived Performance . 5 Workstream 2 ........................................................................................................................................... 7 Workstream 3 ........................................................................................................................................... 7 Regional Freight Study ......................................................................................................................... 7 Freight Infrastructure Study ................................................................................................................. 8 Workstream 4 ........................................................................................................................................... 8 Workstream 5 ........................................................................................................................................... 9 Website ................................................................................................................................................... 9 Social Media .......................................................................................................................................... 9 Newsletter ............................................................................................................................................ 10 Workstream 6 ........................................................................................................................................ 10SIGNIFICANT EVENTS OR CONDITIONS THAT HAVE IMPACTED ABILITY TO MEET PROJECT OBJECTIVES........................................................................................................................................... 11ADDITIONAL INFORMATION THAT MAY BE OF INTEREST............................................... 11APPENDIX A: FINANCIAL SUMMARY ............................................................................... 12APPENDIX B: TRANSLINKED PROJECT MAP ..................................................................... 13APPENDIX C: PROJECTED STRATEGIC OUTCOMES .......................................................... 14 Page 1
  3. 3. The Detroit Region’s OpportunityBACKGROUNDIn 2007, the Detroit Regional Chamber embarked on a mission to leverage the Detroit region’s transportationassets for business attraction. The importance and value of the region’s freight movements are monumental forthe national economy. Few areas in the country can match the number and variety of assets in this region. Ourhistory in manufacturing and logistics related to the automotive industry has given us access from the majorinternational ports to the heart of manufacturing and production in the United States. TranslinkeD wasintroduced at the 2008 Mackinac Policy Conference and was made of Detroit Regional Chamber and DetroitRegional Economic Partnership members to strategically plan our future logistics and mobility resources.TranslinkeD’s focus is to develop the Detroit area into a globally recognized northern border supply chaincluster.In spring of 2010, the Detroit Regional Chamber and Michigan State University released a study concludingthat Metro Detroit could create up to 66,000 new jobs and $10 billion in new annual economic developmentif the region develops a coordinated, cross-border supply chain management strategy. That fall, the NewEconomy Initiative for Southeast Michigan and the Michigan Economic Development Corporation granted theDetroit Regional Chamber Foundation an award to develop a regional logistics and supply chain hub in theDetroit trade area. This report describes the activities of the Detroit Regional Chamber Foundation on thiswork from March 1 through July 31, 2011.REVIEW OF GRANT FUNDS EXPENDED TO DATEThe attached spreadsheet provides a financial summary of the Transportation, Distribution, and Logistics (TDL)project (see Appendix A).At this point, the grant managers anticipate no revisions in the budget.PROGRESS IN MEETING OVERALL PROGRAM OBJECTIVESThe TranslinkeD project includes collaboration with Michigan State University, Wayne State University,Southeast Michigan Council of Governments, key business leaders and transportation, distribution and logisticsleaders, academic and research thought leaders, and economic development organizations throughoutsoutheast Michigan, northwest Ohio, and southwest Ontario.The project has been divided into several workstreams (see page 3).Page 2
  4. 4. The Detroit Region’s OpportunityWORKSTREAMS • Recommendations for a regional entity, together with an organizational structure that can be implemented and sustainably funded (working jointly with Michigan State University) 1 • Establishment of a base investor group to promote and build the logistics industry through the regional entity • Development of supply chain pilot projects to demonstrate the value proposition for an international TDL hub (collaborating with lead 2 organization Michigan State University) • Design a truly regional economic development strategy for the TDL sector – informed by NEI – and conduct the appropriate economic 3 analyses • Development of an education campaign to inform key stakeholders (collaborating with lead organization Michigan State University) 4 • Creation of a unified TDL brand strategy, marketing messages, and marketing plan for the region 5 • Provision for the necessary contractual services and appropriate administrative support 6 Page 3
  5. 5. The Detroit Region’s OpportunityBENCHMARKS AND METRICS ACHIEVEDWorkstream 1The Detroit Regional Chamber worked with Michigan State University, Wayne State University, and SEMCOGto hold a series of three workshops focused on the design of a regional intermediary. Key stakeholdersrepresenting industry, universities, and economic development groups throughout the region contributed to thesuccess of these workshops by providing valuable input of regional opportunities and challenges, thoroughanalysis of benchmark data, and thoughtful discussion. Detailed presentations and results of each workshopcan be found at www.translinkeddetroit.com.Workshop 1March 11, 201141 attendeesThe March 11th workshop challenged participants to assess and prioritize hub capabilities, evaluate regionalhub organizational and governance models, and identify the next steps in creating a regional logisticsintermediary. Four main categories of capabilities are supply chain expertise, economic development,strategic infrastructure/intermediary funding, and collaboration. The region was assessed in each of thesecategories relative to eleven other logistics hubs in the U.S. and Canada.Attendees determined the most critical capabilities of a successful hub are customer service and reliability,supply chain labor, hub operations cost, strategic corridor identification, understanding the global landscape,marketing, international border, airport capability, interstate highways, rail network, streamlined government,and community involvement.Four governance models were reviewed: port authority, port authority “lite,” public/private partnership, andindustry collaborative. Strengths and weaknesses for each were documented, and necessary modelrefinements were noted.HUB CAPABILITIES •Economic competitiveness and lowest supply chain cost to serve Supply Chain Expertise •Supply chain sustainability •Infrastructure/modal support •Competitive tax environment Economic Development •Ability to serve global markets Strategic Infrastructure/ •Infrastructure support and capabilities Intermediary Funding •Joint commission or authority Collaboration •Strategic alliancesPage 4
  6. 6. The Detroit Region’s OpportunityWorkshop 2April 29, 201135 attendeesThe April 29th workshop worked to finalize the design of the regional intermediary and develop a plan fororganizational implementation. Participants determined metrics for measuring hub success. Primary metrics arethe number of direct and indirect jobs created and the economic development activity measured in dollars.Secondary metrics include the number of new businesses attracted, the business retention rate, the ratio ofpublic/private investment, and the volume and value of inbound and outbound shipments. Attendees assessedhow the benchmark cities compared in these categories. One key finding is that the Detroit-Toledo-Windsorregion already compares quite favorably in the volume and value of shipments.Participants discussed the fit of a public/private partnership organizational model in the region. Obstacles toimplement this model were identified, and opportunities to mitigate potential issues were reviewed.Regarding an operating board, key areas the group considered centered around striking a balance betweenhaving a board large enough to be representative, yet small enough to be nimble. The need for a championwas clearly expressed.Workshop 3June 10, 201131 attendeesThe June 10th workshop focused on synthesizing the results of a survey conducted of all prior workshopparticipants and invitees from both the Opportunity Assessment and the Regional Intermediary Designworkshops. Respondents expressed their thoughts on the importance of each hub capability and the currentregional performance.Survey Results: Hub Capability Perceived Importance vs. Region’s Perceived Performance 1 = not important 1 = lagging 5 = very important 3 = average 5 = above average Page 5
  7. 7. The Detroit Region’s OpportunityThose surveyed identified existing obstacles to implementing a successful regional intermediary. Cultural Mindset 3.92 Funding for Infrastructure 3.89 Regional Collaboration 3.69 Global Perception of Region 3.64 Competitive Hubs 3.22 Promoting Hub Capabilities 3.03 Value Proposition Design 2.92 Operating Board Structure 2.81 1 1.5 2 2.5 3 3.5 4 4.5 1 = minor challenge, 5 = major challengeOPEN-ENDED SURVEY RESPONSES "This seems like a great opportunity to coalesce behind logistics and supply chain with real job generation and growth potential that plays to our strengths and capacity to perform if we will just work together." "Thank you for "Very "Keep building important the momentum taking on this challenge and and for this." strategic keep up the great work!" work. Lets get going."Respondents urged the proposed intermediary to emphasize specific regional strengths. These included theairport, skilled supply chain labor, interstate highways, and the international trade corridor.Page 6
  8. 8. The Detroit Region’s OpportunityWorkstream 2The Chamber continues to support the work of MSU and A.T. Kearney on several pilot service bundles that willdemonstrate the value proposition for moving freight through the region. A seminar was held on April 1,2011 to present the opportunities to a diverse group of potential firms. The intermediary design workshopsalso encouraged attendees to refer potential firms. The objective is to identify three to five different types ofclient companies for the value proposition demonstration.Workstream 3Regional Freight StudyThe design of a regional economic development strategy for the TDL sector will be informed and influencedby the outputs from the first two workstreams. In May 2011, an RFP was released to perform an extensiveregional freight study.This project undertakes a comprehensive, data-driven analysis of regional freight movements andopportunities focusing on trade corridors, trade lanes, and other corridors of opportunity. The freight studybuilds upon the Opportunity Assessment for a Regional Supply Chain Hub published in May 2010 byMichigan State University and the Detroit Regional Chamber.The overall goal is to identify and develop freight-related economic development opportunities by conductinga regional freight analysis with the objectives to obtain and analyze data and forecast freight by mode oftransport.A key purpose of the study will beto develop a freight flow summarythat will document existing regionalfreight movements by commodity,mode, volume, and value. Thesummary will also include, but notbe limited to, freight flows fromrelevant corridors of competitionincluding the Port of Halifax, Portof Montreal, and Port of Virginia.This project will also summarizeeconomic trends and forecasts thatwould impact the study area anddetail strengths, weaknesses,opportunities and threats that couldaffect freight-related economicdevelopment opportunities in thestudy area.The base area of this project isdefined as southeast Michigan,northwest Ohio, and southwestOntario. This study involves truck,rail, water, and air freight flows to,from, within, and through the Page 7
  9. 9. The Detroit Region’s Opportunityregion. Many freight flow origins and destinations extend beyond these boundaries, so the study mustconsider the linkages to state, national, and international freight systems and markets.Key deliverables include the following: • Document current freight flows by commodity, origin and destination, mode, volume and value • Analyze current freight flows and identify trends by industry and corridor to anticipate future freight movement needs • Identify deficiencies in the corridors as they relate to freight movement • Identify key industries, major shippers, and carriers in a freight system market analysis • Highlight value-added services currently being performed to the freight, the logistics companies currently providing these services, and how the study region could fit • Compare the cost and timing of moving freight through this regional supply hub to the cost and timing of existing or alternative routes through other regions • Identify freight bottlenecks and other operation and safety deficiencies • Forecast future freight flows by corridor, mode and commodityBased on thorough review of the submitted proposals, the Chamber has sourced the regional freight study tosupply chain consulting firm TranSystems. The 14-week study will identify freight-related economicdevelopment opportunities and forecasts in the region.Freight Infrastructure StudyAdditionally, the Chamber serves on SEMCOG’s Infrastructure Study Advisory Committee. SEMCOG is leadingan infrastructure study that will examine the region’s freight infrastructure from multiple perspectives. Theproject will assess the transportation network’s ability to supply current and future freight-intensive southeastMichigan industries with efficient and reliable goods movement. Connecting freight projects to economicdevelopment will aid in making informed decisions about how to realize the best return on investment whileprogramming limited transportation funds while maximizing our transportation assets for their economicdevelopment potential. The Study Advisory Committee is a working group that will provide expert insightsthat will be used to guide the course of the study, review the study’s progress, and shape the study’s productsand recommendations.Workstream 4As part of the TranslinkeD initiative, the Detroit Regional Chamber seeks to inform and educate regionalstakeholders about the opportunity to develop the transportation, distribution, and logistics sector. Somerecent opportunities for education and program outreach included:Engineering Society of DetroitESD Institute Global Freight Hub SymposiumMarch 2-3, 2011Presentation: TranslinkeD21st Annual Wayne State University – University of Windsor Symposium“International Competition, Regulatory Coordination and the Future of the Auto Industry in North America”March 31, 2011Presentation: Developing a Bi-National Logistics HubPage 8
  10. 10. The Detroit Region’s OpportunityDetroit Regional Aerotropolis Branding WorkshopApril 7, 2011Shape an authentic and uniquely compelling brand story to tell to new industries, investors, and supply chainbusinesses through future marketing and promotional effortsMackinac Policy ConferenceEconomic Development BreakfastJune 2, 2011Provided a Transportation, Distribution and Logistics program overview to a mix of public partners, privatesector leaders and government officials.TransformeD Media Event at Southwest SolutionsJune 22, 2011Vision of TranslinkeD and how this transportation/logistical hub opportunity will spur economic development inthe city and regionWindsor-Essex Chamber Transportation Policy Committee MemberOngoingWorks regularly on transportation related issues in Windsor, Essex County, Ontario, Canada and the UnitedStates. Items related to supply and competition, framework legislation for industry, infrastructure investments,airports, highways, ports, railways and border crossings are priorities for this Committee.The Detroit Regional Chamber takes every opportunity to participate at community events and speakingengagements.Workstream 5The inputs for creating a unified regional TDL brand, marketing messages and marketing strategy will flowfrom the outputs of workstreams 1 – 4.WebsiteTo increase awareness of the region’s TDL potential and to develop the Detroit Regional Chamber as atrustworthy and relevant resource of information regarding the TDL industry in the region, the TranslinkeDwebsite, www.translinkeddetroit.com, was overhauled in April and May of 2011. The site is also accessiblethrough the Regional Initiatives portion of www.detroitchamber.com. Website content was reorganized andthe copy was rewritten. A real-time stream of social media was incorporated to indicate fresh, ongoingactivity on the front page. Slides from the presentations at the Michigan State University workshop series wereadded, along with updated facts and statistics about the region. The status of current TDL projects, such as theContinental Rail Gateway, the Detroit Intermodal Freight Terminal, the New International Trade Crossing andothers were updated. New maps, studies, and other resources were added as well.Social MediaSocial media efforts for TranslinkeD were enhanced in order to engagethe public and increase awareness of the initiative. A revamping of theTranslinkeD initiative’s Twitter account led to an increase in followers bymore than 100 percent from April to August. To keep TranslinkeD staffaware of the latest news and information related to the TDL industry inthe region, several Google Alerts were set up to alert staff on a dailybasis when relevant articles are published on the web. TranslinkeD poststweets many times each day, linking followers to articles about freight Page 9
  11. 11. The Detroit Region’s Opportunityand supply chain in the region along with breaking news regarding the initiative. The steady stream ofinformation appears on the TranslinkeD Twitter feed and on the TranslinkeD home page. This establishesTranslinkeD as a source of up-to-the-minute news and information on the industry, adding to the initiative’scredibility while increasing awareness of the area’s TDL assets and updating the public on the work takingplace through the initiative. Several prominent outlets have posted re-tweets from TranslinkeD to their ownTwitter followers, including Governor Snyder’s communications director Geralyn Lasher, Macomb Countyexecutive Mark Hackel, the Detroit News Hub, the Detroit Free Press and others.NewsletterOver 1,300 individuals who have indicated an interest in the transportation industry and subscribed to theTranslinkeD e-newsletter are contained in the Detroit Regional Chamber’s constituent database. On May 28and July 27, e-newsletters were sent to these subscribers to keep them up-to-date on the initiative’s work. Theopen rate for these e-mails averaged 15.5%, which is consistent with Business and Finance sector industryaverages (Source: http://mailchimp.com/resources/research). The click-through rate was over 25% of thosereaders, almost ten times higher than industry average, indicating that readers are actively engaged andcurious about TDL in the region. On the days the e-newsletters were sent, website traffic spiked to more thanfour times the daily average.Workstream 6In recent months, the Chamber has made key hires that are critical to the success of the TranslinkeD initiative.Benjamin Erulkar will serve as the Chamber’s new Senior Vice President of Economic Development. Erulkarrecently served as Senior Advisor to the U.S. Chamber of Commerce where he directed the CorporateCommunity Investment Program for ‘Fortune 500’ members of the U.S. Chamber’s Business Civic LeadershipCenter. Previously, he served as U.S. Deputy Assistant Secretary of Commerce for Economic Developmentduring the Bush Administration. In this role, Erulkar directed and coordinated all operations of the U.S.Economic Development Administration (EDA). Erulkar holds degrees from Harvard University (AB), JohnHopkins University (MA) and University of Pennsylvania Law School (JD).Erulkar’s economic development experience and leadership will serve to ensure that the TranslinkeD initiative,as part of the Chamber’s broader economic development effort, will play a major role in job creation andinvestment.Page 10
  12. 12. The Detroit Region’s OpportunityIn April, Kerry Sharp joined the DRC as the TranslinkeD Program Coordinator. Sharp previously worked forUnited Way for Southeastern Michigan as a Blended Funding Associate and Compliance Manager. In thisrole, she managed fifteen nonprofit agencies who received funding from UWSEM and Wayne County,ensured their compliance with grant requirements, streamlined reporting processes and built relationships withfunders and fundees. She has an extensive communications background and experience in promotion,branding, messaging, development and execution of communication strategies. Sharp holds a B.S. inAdvertising and Public Relations from Grand Valley State University.In her new role, Sharp develops consistent and continuous messaging regarding the region and its supply chaincapabilities. She develops connections to key audiences and communicates information about activities andaccomplishments.SIGNIFICANT EVENTS OR CONDITIONS THAT HAVE IMPACTED ABILITY TOMEET PROJECT OBJECTIVESThere have been none to date.ADDITIONAL INFORMATION THAT MAY BE OF INTERESTTranslinkeD is in the process of developing a comprehensive organizational structure that will seamlesslyintegrate all regional logistics initiatives while maintaining momentum. This structure will allow the region tospeak with one voice to key partners and customers internal and external to the region. Page 11
  13. 13. The Detroit Region’s OpportunityAPPENDIX A: FINANCIAL SUMMARY Detroit Regional Chamber Foundation TranslinkeD Department 53721 Report As of June 30, 2011 Revenue and Expenditures Report Oct 2010 - Sep 2012 Budget Oct 2010 - Jun 2011 Actual Amount Percentage Amount Percentage NEI Revenue $ 270,252.00 31% $ 50,921.21 36% Chamber I/C Revenue 492,303.00 57% 80,739.86 57% MEDC Revenue 99,878.00 12% 9,987.80 7% Total Revenue $ 862,433.00 100.0% $ 141,648.87 100.0% Salaries $ 366,843.00 42.5% $ 94,556.36 66.8% Fringes 80,705.00 9.4% 15,755.71 11.1% Travel 30,000.00 3.5% 10,967.61 7.7% Hosting Seminars 16,000.00 1.9% 3,501.04 2.5% Office Supplies 4,000.00 0.5% 957.61 0.7% Postage 2,000.00 0.2% 0.44 0.0% Printing 10,000.00 1.2% - 0.0% Marketing Payments 122,130.00 14.2% - 0.0% Contractual 150,000.00 17.4% 2,575.00 1.8% Indirect Admin 80,755.00 9.4% 13,262.70 9.4% Total Expense $ 862,433.00 100.0% $ 141,576.47 100.0% Reconciliation of Payments Received and Amounts Deferred Source of Funds Received Revenue Deferred NEI $ 156,747.00 $ (50,921.21) $ 105,825.79 MEDC 9,987.80 (9,987.80) - Total $ 166,734.80 $ (60,909.01) $ 105,825.79 Amount in Deferred Account 4000-53721.20 105,825.79 Amount to Reconcile $ -Page 12
  14. 14. The Detroit Region’s OpportunityAPPENDIX B: TRANSLINKED PROJECT MAP Current State of the Goal: Opportunity: Detroit Region: Creation of a 66,000 new jobs and $10 $1.6 billion in goods cross Transportation, Distribution billion in investment within the border daily and & Logistics Cluster of 10 years 235,000 TDL jobs exist Excellence Status of Coordinated Work Efforts Project Who’s Involved Actual or Expected Outcomes 100+ TDL professionals, Completed May 2010 Past: What’s MSU/DRC Phase I public/private stakeholders, been done Opportunity assessment identified potential Workshops academics & economic for 66K jobs, $10B investment over 10 (Series of 3) developers from across the years region 100+ TDL professionals, MSU/DRC Supply Chain Completed June 2011 public/private stakeholders, Intermediary Design Identified benchmarking info academics & economic Workshops Characteristics of an intermediary developers from across the (Series of 3) Regional capability assessment region To be completed Fall 2011 Analysis of trade corridors Quantification of impact TranslinkeD Freight Study DRC and vendor (TBD) Present: What’s happening now Development of value proposition Targeting shippers that will benefit from the region To be completed Spring 2012 Document supply chain & transportation Infrastructure Study SEMCOG conditions Prioritize infrastructure investments Selection process underway for pilot companies Michigan State University Pilot Project Assess pilot company’s current supply chain 3-5 shippers Implement improved supply chain strategy Develop value proposition Future: What we need to do Guide & direct strategic plan Executive Steering CEO-level stakeholders Engage broad support Committee Lead intermediary design and implementation Page 13
  15. 15. The Detroit Region’s OpportunityAPPENDIX C: PROJECTED STRATEGIC OUTCOMES Strategic Initiatives: Transportation, Distribution & Logistics Local ≅ Local marketing & community outreach ≅ Streamlined government & regional collaboration ≅ Pilot implementation focused on leveraging business partnerships Regional Intermediary Multi-State & Multi-National ≅ Multi-state & multi-national collaborative board ≅ Multi-state & multi-national strategic asset, infrastructure & transportation plan ≅ Global branding, marketing & communication plan ≅ Supply chain management talent development Build on Existing Strengths ≅ International trade corridor Assets & ≅ Airports Infrastructure ≅ Supply chain skilled labor Integration ≅ Interstate highways ≅ Border crossing facilities ≅ Railroad network Driven By: ≅ Shared, collaborative, and transparent approach Economic ≅ Pilots to validate value proposition Development ≅ Policy refinement ≅ Job creation “Supply Chain Hub” Marketing & ≅ Branding the geographic region Communication ≅ Changing the cultural mindset ≅ Putting the region “on the map” Workforce Assets Talent & Education ≅ Top supply chain management educational programs ≅ Availability of human capitalPage 14

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