Supply Chain Opportunity Assessment: Economic Development for SE Michigan Final Report
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Supply Chain Opportunity Assessment: Economic Development for SE Michigan Final Report Presentation Transcript

  • 1. Sponsored by New Economy Initiative Hosted by Detroit Regional Chamber of Commerce and Michigan State University Final Report May 31, 2010 Supply Chain Opportunity Assessment: Economic Development for SE Michigan
  • 2. Presentation Outline
    • Project Background
    • Project Objectives and Workshop Deliverables
    • SCM Strategy, Targeted Industries, and Economic Impact
    • Economic Development Policies and Collaboration and Communications
    • Recommendations and Next Steps
  • 3. Opportunity Assessment History
    • The Gateway Funnel
    • The Detroit Region’s NAFTA Advantage
    • Border Crossings and Network Flows
    • Cities with SCM Capabilities
    • Regional Economic Opportunity
    • I-75, I-69 and I-94 Corridor
    • A Connected Region and Economy
  • 4. The Gateway Funnel
  • 5. The Detroit Region’s NAFTA Advantage
  • 6. Border Crossings and Network Flows
  • 7.  
  • 8. Geographic Scope of Project: SEMI/NWOH/SWON
    • The geographic scope of the project included the region of Southeast Michigan and neighboring regional locations which would benefit from the creation of a regional supply chain hub
    • The neighboring regional locations included Northwest Ohio and Southwest Ontario
    • The region or geographic scope of the project is Southeast Michigan, Northwest Ohio and Southwest Ontario and the hub is referred to as the SEMI/NWOH/SWON regional hub
  • 9. Cities with SCM Capabilities
    • ?????????????????????????????
    SEMI/NWOH/SWON
    • Indianapolis is positioning itself as a less congested alternative for Chicago as a distribution hub particularly for electronics and parts. Indianapolis is focusing on cross-country rail and truck movements. This initiative has some focus on education but not to the degree that Memphis, Louisville, Kansas City, and Columbus have.
    Indianapolis, IN
    • Building on the Rickenbacker Airport and other inter-modal capabilities, Columbus has established itself as a distribution hub for fashion, electronics, and appliances. The initiatives include a strong focus on education.
    Columbus, OH
    • Chicago has always been a major manufacturing and distribution center due to its proximity to inter-modal transportation services and its population density. While this will continue, Chicago locations are being challenged by other sites due to increasing congestion.
    Chicago, IL
    • Created an inter-modal hub including rail, motor, and air to facilitate movement and processing of goods throughout the central Midwest. The initiatives include a strong focus on education.
    Kansas City, MO
    • Louisville was the second major supply chain hub building on its location as the global hub for United Parcel Service. The UPS hub has attracted storage and processing facilities that can take advantage of the inbound and outbound movement of air freight. The educational needs of the region are supported strongly by programs at the University of Louisville.
    Louisville, KY
    • Memphis was one of the first supply chain hubs building on its location as the global hub for Federal Express. The FedEx hub has attracted storage and processing facilities that can take advantage of the inbound and outbound movement of air freight. The educational needs of the region are supported strongly by programs at the University of Memphis.
    Memphis, TN Supply Chain Management Capabilities City
  • 10. Michigan SCM Capabilities
    • U.S. – Canada location and border system
    • Airport facilities and services
    • Relative capacity and congestion levels
    • Strong rail/intermodal facilities and services
    • Appropriate business taxation forms and levels
    • Reasonable regulatory systems
    • Critical mass of SCM customers, service providers, and professional SCM staff
    • OTHERS?????
  • 11. Regional Economic Opportunity
  • 12. I-75, I-69 and I-94 Corridor
  • 13. A Connected Region and Economy Highway and Rail Corridors Map: Courtesy of Gallis and Associates
  • 14. Presentation Outline
    • Project Background
    • Project Objectives and Workshop Deliverables
    • SCM Strategy, Targeted Industries, and Economic Impact
    • Economic Development Policies and Collaboration and Communications
    • Recommendations and Next Steps
  • 15. Introduction to the Opportunity
    • Grow cross-border trade and increase the demand for trade services supported by both the public and private sector;
    • Develop the human capital to design, guide and operate a 21 st Century global supply chain hub by providing education and training to build a world class workforce;
    • Advocate for policy changes at the local, federal and state levels to provide business incentives, improve the region’s transportation infrastructure, and support smooth operation while assuring border security;
    • Develop a research agenda and clearinghouse for related research to assist companies and policy makers; and
    • Increase the number of jobs in the sector.
  • 16. Opportunity Assessment Key Activities
    • Identification and design of forward thinking innovative features of the supply chain hub to become differentiated as a world class hub;
    • Economic analysis to assess the economic multiplier impact for job creation;
    • Rationalization of opportunity of the supply chain management hub concept; and
    • Documentation of the appropriate products and industries and critical success factors for the regional supply chain hub.
  • 17. Supply Chain Opportunity Assessment: Workshop One Recap
    • Increase awareness of Supply Chain Opportunities for SEMI/NWOH/SWON
    • Determine capabilities and benefits to be incorporated into the Supply Chain Hub for SEMI/NWOH/SWON
    • Determine the industries and associated cargo volumes which would be attracted to utilize the Supply Chain Hub for SEMI/NWOH/SWON
  • 18. Supply Chain Opportunity Assessment: Workshop Two Recap
    • Validate SCM design dimensions and attributes for the supply chain hub for SEMI/NWOH/SWON
    • Determine the SCM policies to enable implementation of the SCM design dimensions
    • Assess the economic potential of the supply chain related industry types for SEMI/NWOH/SWON
  • 19. Supply Chain Opportunity Assessment: Workshop Three Recap
    • Validate SCM strategy, targeted industries, and economic impact for SEMI/NWOH/SWON
    • Determine economic development policies necessary for successful implementation of the SCM strategy
    • Agree on next steps to assure project momentum continues
  • 20. Presentation Outline
    • Project Background
    • Project Objectives and Workshop Deliverables
    • SCM Strategy, Targeted Industries, and Economic Impact
    • Economic Development Policies and Collaboration and Communications
    • Recommendations and Next Steps
  • 21. Supply Chain Hub Strategy Creation Strategy and SCM Strategy Elements
  • 22. SEMI/NWOH/SWON Supply Chain Strategy
    • Building on the unique characteristics, identify the industries that we can focus infrastructure, regulation, policy, and communication resources to attract firms that can use SEMI/NWOH/SWON as a supply chain hub or interchange.
    • The supply chain hub is, in reality, a collection of supply chain facilities or mini-hubs:
      • Air freight to motor freight
      • Rail freight to motor freight
      • Value added services
  • 23. SEMI/NWOH/SWON Supply Chain Strategy
    • The SCM Strategy involves multiple areas:
      • Build differentiated supply chain hub(s) which will stimulate economic growth and job creation
      • Attract industries to the supply chain hub
        • Industries with a heavy manufacturing focus
        • Industries with a light manufacturing focus
        • Industries with a distribution and value added services focus
      • Facilitate development of hub with private/public sector partnership
    • The SCM Strategy Elements (design dimensions) outline the necessary and the differentiated capabilities of the SCM Strategy
  • 24. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Government regulations
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
    • Economic competitiveness and lowest total cost to serve
    • Supply chain sustainability
    • Collaboration and partnership
  • 25. SCM Strategy Elements
    • Ability to serve global markets
      • U.S.-Canada trade corridor
      • International/NAFTA transport links
      • Access to Canadian ports
      • Customs house, forwarding, and related services
      • Foreign trade zone facilities
  • 26. Ability to serve global markets 1 of 2 Attribute Current State Implications Future State U.S.-Canada Trade Corridor Some infrastructure and institutional barriers Constrained opportunity for plant and DC locations Easier border flow; more systems for customs clearance; additional border crossing International/ NAFTA Transport Links Access to multiple transportation modes but limited integration Reduced ability to serve U.S., Canada, and global markets Achieve more integrated and coordinated transportation flow Access to Canadian Ports Provides competitive option between U.S. eastern ports and Canada Cost reduction through tax and competitive advantages Access to Canadian maritime ports opens competitive option for SE MI
  • 27. Ability to serve global markets 2 of 2 Attribute Current State Implications Future State Customs house, forwarding, and related services Services already in place but benefits not fully realized Stronger than competing regions Extend competitive advantage Foreign trade zone facilities High quality, underutilized capability Reduced duties and fees Extend competitive advantage
  • 28. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
      • Airport capabilities
      • Interstate highways
      • Railroad network
      • Intermodal transportation capacity
      • Distribution facilities
  • 29. Infrastructure and support capabilities 1 of 2 Attribute Current State Implications Future State Airport capabilities DTW airport capacity; frequent direct Asian flights; available capacity for dedicated and belly cargo freight Less congested than Chicago; draw for global fulfillment operations; dedicated air freighter and belly cargo to accommodate 100% screening rules Build on DTW aerotropolis and utilize Toledo, Windsor, Willow Run, Lansing, Flint, Pontiac, Saginaw, and other local airports Interstate highways Network of I-75, I-94, and I-69 is less congested than Chicago’s Good connectivity from Detroit south and west and through Canada Exploit current capacity and expand network
  • 30. Infrastructure and support capabilities 2 of 2 Attribute Current State Implications Future State Railroad network US-Canada railroads pass through Michigan; shipper access to NS and CSX through Conrail; access to U.S. East coast and Chicago Access to Halifax and Montreal ports; Conrail connections to two railroads; access to U.S. east and west coast Railroad infrastructure improvements will improve access east and west; also need improvement in other states within the region Intermodal transportation capacity Several dispersed facilities with excess capacity Detroit ramp less congested; good connection to east coast cargo Potential for more centralized DIFT concept; new CN intermodal facility Distribution facilities Good private, leased, and public warehouse capacity Physical capacity and labor available for new business activity Extend competitive advantage; Build consol/deconsol, cross-dock centers
  • 31. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Government regulations
      • Higher weight limits
      • Carrier permitting process
  • 32. Government regulations Attribute Current State Implications Future State Higher weight limits Favorable to some shippers and industries Lower transportation costs; favorable for intermodal particularly in transition from rail intermodal Extend competitive advantage Carrier permitting process Multi-agency system Cumbersome process; not favorable for carriers and shippers Need “one stop shop” permit process; need reciprocal, bi-national permitting
  • 33. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Government regulations
    • Competitive tax climate
      • Michigan Business Tax
      • Personal property taxes on equipment
      • Personal income tax
      • Tax abatements and incentives
  • 34. Need for competitive tax climate Attribute Current State Implications Future State Michigan business tax Gross receipts intensity and surcharge issues Negative effect on Michigan businesses Reduce gross receipts intensity and eliminate surcharge Personal property taxes on equipment Relatively high Discourages investment in Michigan Reduce personal property taxes Personal income taxes Relatively low and flat Advantage for Michigan Extend competitive advantage Tax abatements and incentives Competitive, targeted Allows Michigan to compete for specific projects but results in higher general rates Targeted application
  • 35. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Government regulations
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
      • Supply chain expertise
      • Supply chain skilled labor
      • Technology enablers
      • Land and facility availability
      • Financial capital
      • Supplier and support capabilities
  • 36. Availability of human, land, supplier, and financial capital 1 of 2 Attribute Current State Implications Future State Supply chain expertise Presence of supply chain institutions, companies, and universities Strong SCM managerial capabilities Advantage over other states; retain in-state talent; need firms to manage SCM risk Supply chain skilled labor Readily available labor Highly skilled Use retraining funds for skilled labor Technology enablers Good resources and capabilities: EDI, RFID, GPS tracking, demand, visibility systems, TMS, WMS, trade mgmt systems skills Good support technology for SCM operations Leverage capabilities into competitive advantage; create a critical mass in technology sector
  • 37. Availability of human, land, supplier, and financial capital 2 of 2 Attribute Current State Implications Future State Land and facility availability Competitive real estate prices Advantage over other states Land is cheap; good place for DC’s Financial Capital Lack of venture capitalists and angel funding Problem for start-up firms Invest in hub; need long-term capital and policy commitment from users to occupy land Supplier and support capabilities Strong supply base Nearby supplier locations Extend competitive advantage
  • 38. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Government regulations
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
    • Economic competitiveness and lowest total cost to serve
      • Hub operations cost
      • Hub service levels
      • Outbound empty trucks
  • 39. Economic competitiveness and lowest total cost to serve Attribute Current State Implications Future State Hub operations cost Higher cost to operate Are there offsetting productivity advantages? Lowest cost to serve; lowest weather risk during transportation Hub service levels Managerial and skilled labor may create advantages; northern fringe location may inhibit access to entire U.S. Service advantages could offset cost disadvantages Better service potential for combined U.S./Canadian market for intermodal imports Outbound empty trucks Trade imbalance; excess empty containers Low outbound rates Fill outbound trucks
  • 40. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Government regulations
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
    • Economic competitiveness and lowest total cost to serve
    • Supply chain sustainability
      • Customer service and reliability
      • Security
      • Green/environmental aspects
      • Reliable weather
  • 41. Supply chain sustainability Attribute Current State Implications Future State Customer service and reliability Increased uncertainty due to congestion Increased cost and reduced service Customers requiring more reliability and closer suppliers to lower cost and improve service Security Consumers and regulators expecting increased security Increased freight monitoring Need technology and facilities to monitor freight Green/ environmental aspects Firms strongly focus on low cost suppliers Firms looking for suppliers who can minimize environmental impact Firms looking for closer suppliers or transporters that have less environmental impact
  • 42. SCM Strategy Elements
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Government regulations
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
    • Economic competitiveness and lowest total cost to serve
    • Supply chain sustainability
    • Collaboration and partnership
      • Teamwork with government stakeholders
      • Develop common value-based SCM message
      • Partnership with private sector and targeted industries
  • 43. Collaboration and partnership Attribute Current State Implications Future State One integrated regional plan Regional support from all stakeholders of the integrated SCM plan Champion Need a “champion” or major player to act as an anchor; early investment and commitment
  • 44. Synthesis of Strengths and Weaknesses of SCM Strategy Elements
    • Strengths
      • Good potential for cross-border distribution hub away from congestion of Chicago-Toronto
      • Good potential for trans-loading heavy imports from Halifax or Prince Rupert
      • Good airport and highway infrastructure with limited congestion
      • While wage rates are high, skilled management and labor talent is readily available
      • Land and facilities readily available
      • Relatively inexpensive outbound motor carrier capacity
    • Weaknesses
      • Located on peninsula unless cross-border is considered
      • Perceived or real high union wage scale
      • Perceived or real high gross receipts and personal property taxes
      • Infrastructure barriers and custom processes, particularly at border
      • Current industry sectors in recession
      • Poor perception of current capabilities
      • Lack of public/private partnership authority
      • Absence of regional government authority to coordinate and promote supply chain initiatives
  • 45. Supply Chain Hub Strategy Creation Strategy and SCM Strategy Elements Industries offering Value Add Potential
  • 46. Economic Model: Industry Sectors 1 Crop and animal production 2 Forestry, fishing, and related activities 3 Oil and gas extraction 4 Mining, except oil and gas 5 Support activities for mining 6 Utilities* 7 Construction 8 Wood product mfg. 9 Nonmetallic mineral product mfg. 10 Primary metal mfg. 11 Fabricated metal product mfg. 12 Machinery mfg. 13 Computer and electronic product mfg. 14 Electrical equipment and appliance mfg. 15 Motor vehicle, body, trailer, and parts mfg. 16 Other transportation equipment mfg. 17 Furniture and related product mfg. 18 Miscellaneous mfg. 19 Food, beverage, and tobacco product mfg. 20 Textile and textile product mills 21 Apparel, leather, and allied product mfg. 22 Paper mfg. 23 Printing and related support activities 24 Petroleum and coal products mfg. 25 Chemical mfg. 26 Plastics and rubber products mfg. 27 Wholesale trade 28 Retail trade 29 Air transportation 30 Rail transportation 31 Water transportation 32 Truck transportation 33 Transit and ground passenger transportation* 34 Pipeline transportation 35 Other transportation and support activities* 36 Warehousing and storage 37 Publishing including software 38 Motion picture and sound recording industries 39 Broadcasting and telecommunications 40 Information and data processing services 41 Fed. Reserve banks, credit intermed. & related svcs 42 Securities, commodity contracts, investments 43 Insurance carriers and related activities 44 Funds, trusts, and other financial vehicles 45 Real estate 46 Rental, leasing svcs. & lessors of intangible assets 47 Professional, scientific, and technical services 48 Management of companies and enterprises 49 Administrative and support services 50 Waste management and remediation services 51 Educational services 52 Ambulatory health care services 53 Hospitals and nursing and residential care facilities 54 Social assistance 55 Performing arts, museums, and related activities 56 Amusements, gambling, and recreation 57 Accommodation 58 Food services and drinking places 59 Other services* 60 Households
  • 47. Economic Model: Industries from workshop one 1 of 3 Industry code Industry description Industry/Cargo (workshop notes) 1 Crop and animal production 1. Agriculture products (1110) 2. Shipping for greenhouses in Windsor (1110) 3. Home grown diverse food producing 4. Short shelf-life products (flowers from Africa) (1110) 111110 Soybean Farming 3 Oil and gas extraction 4 Mining, except oil and gas 1. Raw material exports: sand (2123), iron ore (2122), coal (2121); platinum; salt; water "Salt, common, mining and/or beneficiating" 212393 Other Chemical and Fertilizer 2. Water Mineral Mining "Salt, rock, mining and/or beneficiating" 212393 Other Chemical and Fertilizer Mineral Mining "Sodium chloride, rock salt, mining and/or beneficiating" 212393 Other Chemical and Fertilizer Mineral Mining Rock salt mining and/or beneficiating 212393 Other Chemical and Fertilizer Mineral Mining 6 Utilities 8 Wood product mfg. 1. Wood product (3210) 9 Nonmetallic mineral product mfg. 1. Carbon fiber manufacturing (3359, 331B, 3270) 2. Glass production (3270) 3. Advanced composites (331B) 10 Primary metal mfg. 1. High security commodities: platinum 11 Fabricated metal product mfg. 1. Machining capabilities (3332, 332B, 3335) 13 Computer and electronic product mfg. 1. Battery technology/recycling (3359) 2. Electronics (3341, 3344, 3345) 3. Defense (electronic equipment) (334A)
  • 48. Economic Model: Industries from workshop one 2 of 3 Industry code Industry description Industry/Cargo (workshop notes) 14 Electrical equipment and appliance mfg. 1. Electric engine mfg for infrastructure (3353) 15 Motor vehicle, body, trailer, and parts mfg. 1. Automotive (3361): auto parts (336A) 2. Defense (vehicles) (3361) 3. Automotive charging (??) 17 Furniture and related product mfg. 1. Office furniture (3370) 18 Miscellaneous mfg. 1. Wind turbines (3336): alternative energy; Medical Technology (3391); devices and prosthetics; 2. Defense industries (Armaments, troop supplies) (332A) Security/Defense: TACOM, TARDEC; 3. High speed rail components; Nuclear pre-fabricated parts (3339, 336B) 19 Food, beverage, and tobacco product mfg. 1. Alcohol/spirits (3121) Foodstuff (3110) Perishables: high regional consumption of cognac; Europe import; local wineries (3121) canning (3110) home grown food processing (3110) 22 Paper mfg. Paper goods (3222) 25 Chemical mfg. Chemicals and polymers (Dow – Kuwaiti Dow) (3251, 3253, 3259) Advanced composites; Nuclear (non specified); Battery technology/recycling (3359) Bio-fuels (3240) 30 Rail transportation Bulk materials (non spec) (4820) 32 Truck transportation Parts distribution; (4840) Premium delivery
  • 49. Economic Model: Industries from workshop one 3 of 3 Industry code Industry description Industry/Cargo (workshop notes) 35 Other transportation and support activities Heavy aircraft maintenance (3364); Aircraft parts distribution (3364); Recruit supply chain service industries to relocate to Detroit area (ex: Indy): inbound for consumer goods, retail distribution, containerized cargo, flexible containers, deconsolidation, cross-dock, add-on services, labeling, rework, consolidating services, demand aggregation and disaggregation, common shipments across industries, home delivery, data warehouse for shipping data, fulfillment centers, mfg goods that require sub-assembly (4930) 36 Warehousing and storage Distribution facilities; (4930) 47 Professional, scientific, and technical services Plant science (research, not a product) 50 Waste management and remediation services Recycling/reclaiming (5620); Waste paper/metal/scrap (5621, 5622, 5629)
  • 50. Detroit Regional Chamber – Target Industries
    • Transportation & logistics
    • Alternative energy
    • Aerospace
    • Medical devices
    • Homeland Security and Defense
    • Advanced Manufacturing
  • 51. MEDC - Target Industries
    • Alternative Energy
    • Automotive Engineering
    • Life Sciences
    • Homeland Security and Defense
    • Advanced Manufacturing
    • Film Industry
  • 52. Target Industries: Synthesized from Workshop Two
    • Automotive Renewal
    • Alternative energy
      • Battery technology
      • Bio fuels
      • Wind
      • Solar panels
    • Beverage and alcohol distribution
    • Carbon fiber manufacturing
    • Chemical processing
    • Defense
    • Electronics - industrial
    • Food processing
    • Medical technologies
    • Retail importing and value add
    • Water technologies
    • Waste Management
  • 53. Target Industries: Cluster Descriptors
    • HEAVY: Heavy Manufacturing and industrial cluster attracted to hub for resource efficiency and differentiation
      • Automotive renewal
      • Alternative energy
      • Carbon fiber manufacturing
      • Chemical processing
      • Defense
      • Electronics – industrial
    • LIGHT: Light Manufacturing and industrial cluster attracted to hub for resource efficiency and differentiation
      • Food processing
      • Medical technologies
      • Water technologies
    • DISTRIBUTION: Warehousing and consumer based industry attracted to hub market location for distribution and value added services
      • Beverage and alcohol distribution
      • Retail importing and value add
      • Waste management
  • 54. Value Propositions by Industry Cluster Strong private sector message Collaboration and partnership Minimal uncertainty Reliable weather Minimal uncertainty Reliable weather Minimal uncertainty Reliable weather Supply chain sustainability Reduced cost of uncertainty due to less congestion Reduced cost of uncertainty due to less congestion Reduced cost of uncertainty due to less congestion Economic competitiveness and lowest total cost to serve Technical talent and global SC skills Available DC capacity Technical talent and global SC skills Technical talent and global SC skills Availability of human, land, supplier, and financial capital Ideal for heavy manufacturing Competitive tax climate Load limits Load limits Government regulations Infrastructure and labor skill Infrastructure and support capabilities Technical skill and global air-motor-rail interface Technical skill and global air-motor interface Technical skill and global air-motor-rail interface Ability to serve and be served by global markets Distribution Light Manufacturing Heavy Manufacturing SCM Element
  • 55. Supply Chain Hub Strategy Creation Strategy and SCM Strategy Elements Industries offering Value Add Potential Economic and Job Creation Impact
  • 56. Geographic Scope of Economic Modeling
    • The region or scope of the project is the SEMI/NWOH/SWON regional hub
    • Canadian data for the economic modeling activity required a long lead time to secure and thus was not available for the economic analysis
    • The economic modeling results reflect the impact on the SEMI/NWOH region only
    • Including SWON data into the analysis at a later date will increase the positive economic results of the project
  • 57. Economic Model: Geographic Scope
  • 58. Three Stages of SCM Economic Activity Stage 1 (Current) Economic activity associated with SCM Stage 2 (+3 years) Economic activity associated with SCM following recovery Stage 3 (+7 to10 years) Enhanced economic activity associated with SCM scale and industry attraction
  • 59. What Does it Take to Go from Stage 2 to Stage 3? Stage 2 (+3 years) Economic activity associated with SCM following recovery Stage 3 (+7 to10 years) Enhanced economic activity associated with SCM scale and industry attraction Stage 1 (Current) Economic activity associated with SCM
  • 60. SCM Economic Activity for Stage 3
    • SCM Stage 3 activities involve multiple areas:
      • Build differentiated supply chain hub (s) which will stimulate economic growth and job creation
      • Attract industries to the supply chain hub
        • Industries with a heavy manufacturing focus
        • Industries with a light manufacturing focus
        • Industries with a distribution and value added services focus
      • Facilitate development of hub with private/public sector partnership
        • Air freight to motor freight
        • Rail freight to motor freight
        • Value added services
  • 61. Economic and Job Projections
    • U.S. base economic activity level in dollars (Source: IBISWorld Industry Market Research Reports)
    • Determine Great Lakes regional activity (Source: IBISWorld)
    • Determine Michigan economic activity based on relative population
    • Establish base Michigan economic activity level (economic and jobs) – Stage 2
    • Estimate economic growth potential based on Michigan share of industry (economies of scale) and growth (attraction) – Stage 3
  • 62. Target Industry Evaluation
    • Growth Opportunity:
      • Organic: New growth from existing industries
      • Opportunistic: Growth resulting from market share shift
      • Innovative: New growth from industry innovations
    • Growth potential – dependent on historical growth (5 years), projected growth (5 years), current share, and potential for locational synergy – 1.00 would be neutral growth
    • Change perception
      • Increase probability of success
      • Emphasize competitive strategy elements
      • Define common and consistent strategy
      • Communicate strategy
  • 63. Industry Forecasts – Heavy Manufacturing 1.13 Opportunistic and Innovative Defense 1.19-1.40 Opportunistic and Innovative Electronics - industrial 1.11 Organic and Innovative Chemical processing 1.30 Opportunistic and Innovative Carbon fiber manufacturing 1.08-1.65 Organic and Innovative Alternative energy 1.20-1.30 Organic and Innovative Automotive renewal Growth Potential Growth Opportunity Industry
  • 64. Economic Evaluation: Heavy Manufacturing 6.4 28.4 22.0 1,181 5,250 4,069 Electronics -Industrial 41.2 213.3 172.1 5,074 26,324 21,250 Total 1.0 3.8 2.8 312 1,231 919 Forestry and bio-fuels 4.7 28.7 24.0 722 4,461 3,739 Defense 8.8 65.4 56.6 1,035 7,717 6,682 Chemical processing 1.5 5.5 4.0 299 1,056 757 Alternative energy 18.8 81.5 62.7 1,525 6,609 5,084 Automotive renewal Increase Resulting from Hub (000) Stage 3 Job Activity with Hub (000) Stage 2 Job Activity (000) Increase Resulting from Hub ($M) Stage 3 Economic Forecast with Hub ($M) Stage 2 Economic Forecast ($M) Industry
  • 65. SCM Industry Activity – Heavy Manufacturing $ ? Jobs ? $ 21,250M Jobs 172,100 $26,324M (23.8% increase) Jobs 213,300 (23.4% increase) Stage 1 (Current) Economic activity associated with SCM Stage 2 (+3 years) Economic activity associated with SCM following recovery Stage 3 (+7 to10 years) Enhanced economic activity associated with SCM scale and industry attraction
  • 66. Industry Forecasts – Light Manufacturing 1.19 Innovative Water technologies 1.23 Innovative Medical technologies 0.87-1.11 Organic, Opportunistic, and Innovative Food processing Growth Potential Growth Opportunity Industry
  • 67. Industry Forecasts – Distribution 1.20-1.40 Innovative Waste Management 0.91-1.34 Opportunistic and Innovative Retail importing and value add 1.04-1.15 Organic, Opportunistic, and Innovative Beverage and alcohol distribution Growth Potential Growth Opportunity Industry
  • 68. Economic Evaluation: Light Manufacturing, Distribution 3.8 14.9 11.1 1,243 4,902 3,659 Warehouse & storage 25.5 169.5 144.0 5,476 31,750 25,851 Total 3.3 18.5 15.2 626 3,572 2,946 Waste management 5.2 20.3 15.1 1,741 6,864 5,123 Retail trade 6.8 26.8 20.0 1,554 6,127 4,573 Wholesale trade 6.4 89.0 82.6 735 10,285 9,550 Food, beverage Increase Resulting from Hub (000) Stage 3 Job Activity with Hub (000) Stage 2 Job Activity (000) Increase Resulting from Hub ($M) Stage 3 Economic Forecast with Hub ($M) Stage 2 Economic Forecast ($M) Industry
  • 69. SCM Industry Activity – Light Manufacturing/Distribution Stage 2 (+3 years) Economic activity associated with SCM following recovery Stage 3 (+7 to10 years) Enhanced economic activity associated with SCM scale and industry attraction $ ? Jobs ? $ 25,851 M Jobs 144,000 $ 31,750 M (22.8% increase) Jobs 169,500 (17.7% increase) Stage 1 (Current) Economic activity associated with SCM
  • 70. Total SCM Industry Economic Activity $ ? Jobs ? $ 47,101 M Jobs 316,100 $ 58,074 M (23.3% increase) Jobs 382,800 (20.8% increase) Stage 1 (Current) Economic activity associated with SCM Stage 2 (+3 years) Economic activity associated with SCM following recovery Stage 3 (+7 to10 years) Enhanced economic activity associated with SCM scale and industry attraction
  • 71. Total SCM Industry Economic Activity 66.7 K Jobs! $ ? Jobs ? $ 47,101 M Jobs 316,100 $ 58,074 M (23.3% increase) Jobs 382,800 (20.8% increase) Stage 1 (Current) Stage 2 (+3 years) Stage 3 (+7 to10 years)
  • 72. Supply Chain Hub Strategy Creation Strategy and SCM Strategy Elements Industries offering Value Add Potential Economic and Job Creation Impact Economic Development
  • 73. Presentation Outline
    • Project Background
    • Project Objectives and Workshop Deliverables
    • SCM Strategy, Targeted Industries, and Economic Impact
    • Economic Development Policies and Collaboration and Communications
    • Recommendations and Next Steps
  • 74. Enabling Economic Development
    • Global markets
    • Infrastructure
    • Regulations
    • Tax climate
    • Capital availability
    • Economic competitiveness
    • Supply chain sustainability
    • Collaboration
    SCM strategy elements Targeted industries Industry Value Proposition
    • Heavy manufacturing
    • Light manufacturing
    • Distribution
  • 75. Enabling Economic Development
    • Global markets
    • Infrastructure
    • Regulations
    • Tax climate
    • Capital availability
    • Economic competitiveness
    • Supply chain sustainability
    • Collaboration
    SCM strategy elements Targeted industries Industry Value Proposition Economic development Job creation
    • Heavy manufacturing
    • Light manufacturing
    • Distribution
    66.7 K Jobs!
  • 76. Enabling Economic Development SCM strategy elements Targeted industries Industry Value Proposition Economic development Job creation Policy refinements
  • 77. Enabling Economic Development SCM strategy elements Targeted industries Industry Value Proposition Economic development Job creation Policy refinements Collaboration and communications
  • 78. Enabling Economic Development: Policy Refinements SCM strategy elements Targeted industries Industry Value Proposition Economic development Job creation Policy refinements
  • 79. Policies to Enable Economic Development
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Streamlined government environment
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
    • Economic competitiveness and lowest total cost to serve
    • Supply chain sustainability
  • 80. Policies to Enable Economic Development
    • Ability to serve global markets
      • Integrated border community
      • Maximize U.S./Canadian location advantages
      • Enhance transportation services environment
      • Leverage foreign trade zone locations
      • Design integrated process to receive in SE MI and facilitate cross-border shipments
      • Seek partnerships opportunities with other major U.S. ports
  • 81. Policies to Enable Economic Development
    • Ability to serve global markets
    • Infrastructure and support capabilities
      • Create development incentives associated with transportation assets
      • Tie economic development and site location to transportation assets
      • Allow private investment in transport infrastructure
      • Coordinate between all modes of transportation
  • 82. Policies to Enable Economic Development
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Streamlined government environment
      • Incentivize use of brownfield properties for transportation and distribution
      • “ One stop permitting”
      • Neutral entity to implement and drive logistics in SE MI, SW Ontario, and NW Ohio
  • 83. Policies to Enable Economic Development
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Streamlined government environment
    • Competitive tax climate
      • Reduce corporate tax burden
      • Equalize local tax structures
      • Block implementation of state service tax on B2B transactions
  • 84. Policies to Enable Economic Development
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Streamlined government environment
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
      • Enhance commercialization of Michigan university supply chain talent
      • Connect trained workforce directly to employers
  • 85. Policies to Enable Economic Development
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Streamlined government environment
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
    • Economic competitiveness and lowest total cost to serve
      • Reduce costs to transportation industry
      • Maintain advantage with state load limits
      • Promote advantages of integrated cross-border service potential
  • 86. Policies to Enable Economic Development
    • Ability to serve global markets
    • Infrastructure and support capabilities
    • Streamlined government environment
    • Competitive tax climate
    • Availability of human, land, supplier, and financial capital
    • Economic competitiveness and lowest total cost to serve
    • Supply chain sustainability
      • Emphasize role that reduced uncertainty and more proximate sourcing can have on enterprise sustainability
      • Provide incentives for lower and reduced environmental impact for shippers and carriers
  • 87. Enabling Economic Development: Collaboration and Communications SCM strategy elements Targeted industries Industry Value Proposition Economic development Job creation Policy refinements Collaboration and communications
  • 88. Collaboration and Communication to Enable Economic Development
    • Collaboration and communication
      • Communicate the benefits of reduced SC operating uncertainty in Midwest
      • Communicate common and credible voice to policy makers with an industry perspective
      • Create an operational SCM Development entity to be a single voice to coordinate, promote, facilitate, and advance SE MI supply chain initiatives (e.g., Georgia, Columbus, Indianapolis, Kansas City, and Virginia)
  • 89. Collaboration Structure – Kansas City
    • Smart Port Board of Directors
      • Burlington Northern Santa Fe | Profile | Website Skip Kalb , Director, Strategic Development
      • Dysart Taylor | Profile | Website Ken Hoffman , Attorney
      • Greater Kansas City Foreign Trade Zone, Inc. | Profile | Website Alfred J. Figuly , President
      • Johnson County Airport Commission | Profile | Website R. Lee Metcalfe , Executive Director
      • Kansas City Area Development Council | Profile | Website Robert J. Marcusse , President
      • Kansas City Southern | Profile | Website Pat Ottensmeyer , Executive Vice President of Sales & Marketing
      • Kansas Department of Transportation | Profile | Website Chris Herrick , Director of Planning & Development
      • Mid-America Regional Council | Profile | Website Ronald B. Achelpohl , Manager, Transportation Programs
      • Missouri Department of Transportation | Profile | Website Elizabeth Wright , District Engineer
      • TranSystems Corporation | Profile | Website Michael A. Priest , Regional Vice President
  • 90. Kansas City - Agencies
    • Executive Committee
    • Alfred J. Figuly President Greater Kansas City Foreign Trade Zone, Inc.
    • Skip Kalb Director, Strategic Development BNSF Railway Company Robert J. Marcusse President Kansas City Area Development Council Email: [email_address]
    • Michael A. Priest Principal and Regional Vice President TranSystems Corporation
  • 91. Collaboration Structure – Columbus, OH Columbus Region Logistics Council
    • ODW Logistics
    • Battelle Memorial Institute
    • Columbus Chamber
    • Abbott Nutrition
    • Big Lots
    • Cardinal Health
    • Columbus Regional Airport
    • Authority
    • Columbus State Community College
    • CSX Intermodal
    • DB Schenker Logistics
    • DSW Shoes
    • Exel
    • Honda of America Mfg., Inc.
    • Kraft
    • Limited Brands
    • McGraw Hill
    • Norfolk Southern
    • Pacer International
    • Spartan Logistics
    • Sterling Commerce
    • The Ohio State University
    • The Pizzuti Companies
    • UPS
  • 92. Collaboration Structure - Georgia
    • Georgia Center for Logistics and Innovation – target industries Georgia Industries
    • Cleantech
    • Data & Call Centers
    • Defense
    • Energy & Environment
    • Entertainment
    • Financial Services
    • Food Processing
    • Global Trade
    • Headquarters
    • Information Technology
    • Logistics & Transportation
    • Manufacturing
    • Tourism
  • 93. Georgia Center for Innovation and Logistics
  • 94. Georgia Center for Innovation and Logistics
    • Wide range of stakeholders to address logistics issues. problem holder–problem solver model.
    • "Problem Holders" come from logistics, shipping and transportation entities. Driven by real-world experiences, they bring complex challenges and opportunities to the table.
    • "Problem Solvers" come from the worlds of academia and technology, from entrepreneurial to established companies . They contribute a unique technological perspective and can often provide the most objective analysis of an industry issue.
    • Logistics is comprised of many firms operating independently and interdependently; and all are reliant upon a common infrastructure - in essence, a "logistics ecosystem."
    • The Center of Innovation for Logistics is focused on identifying a structure from which everyone can work: a unique set of resources detailing the composition and impact of logistics throughout Georgia.
  • 95. Why is Collaboration and Communication Necessary to increase Scale and Attractiveness?
    • Reduces likelihood of redundant infrastructure investments
    • Increases potential for critical scale through effective investments, borrowing, and grants
    • Communicates the message in context of supply chain performance benefits to the firm rather than economic development benefits for the region
    • Communicates a common, consistent message to potential clients
  • 96. Presentation Outline
    • Project Background
    • Project Objectives and Workshop Deliverables
    • SCM Strategy, Targeted Industries, and Economic Impact
    • Economic Development Policies and Collaboration and Communications
    • Recommendations and Next Steps
  • 97. Project Findings and Recommendations
    • Opportunity Assessment has re-enforced the economic development potential for the Hub
      • 66,000 new jobs created
      • Doing nothing may run the risk of additional jobs lost
    • Hub organizational model should include all impacted stakeholders; both public and private stakeholders
    • Key Hub competencies should include supply chain expertise, economic development, collaboration, and grantsmanship
    • Maintaining momentum over the next few months will be critical to project success
  • 98. Example Hub Organizational Concept Government Universities Industry Public Private Development Entity
  • 99. Key Hub Competencies
    • Supply Chain Expertise
      • Design of supply chain solutions for Industry
      • Monitoring to assure effective implementation of solutions for industry
    • Economic Development
      • Marketing and communications of supply chain solutions to targeted industry
      • Creation of industry partner communities
    • Collaboration
      • Collaboration scope is regional, multi-state, and international
      • Stakeholders work together to design, market and implement supply chain solutions
      • Monitor results to assure hub success; Jobs created and value created for industry
    • Grantsmanship
      • Design of the regional physical infrastructure footprint for the supply chain hub(s)
      • Pursue funding to finance the infrastructure improvements
  • 100. Supply Chain Opportunity Assessment: Next Steps
      • Identify key public and private stakeholders who will be critical for project implementation
      • Continue with workshop meetings to implement project findings and recommendations
      • Identify leader organization and governance to implement the supply chain and economic development strategies
      • Pilot the implementation of the strategy by designing and implementing a supply chain solution for an industry
  • 101. Summary: Supply Chain Hub Strategy Strategy and SCM Strategy Elements Industries offering Value Add Potential Economic and Job Creation Impact Economic Development