Case Study_ Indiana Transportation Growth.doc


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Case Study_ Indiana Transportation Growth.doc

  1. 1. Transportation GrowthIndiana’s position as the “Crossroads of America” has provided a natural Indiana with asignificant reputation in the transportation industry. Because of Indiana’s central location inthe United States, transportation in Indiana ranks among the top five states in terms of totalinbound and outbound freight. Not only does Indiana’s interstate system providetransportation routes for domestic travel, it provides international travel routes betweenCanada and Mexico. Indiana is able to service 75 percent of the populations in the U.S. andCanada within a one day drive. “Indiana is first in interstate highway access, in the top ten inrail miles, and in the top fifteen in maritime shipping. Also, the Indianapolis InternationalAirport is listed in the top ten in air freight shipments.Memphis, Tennessee has a leading distribution center in recent years. They achieved thisstatus by building up their roads, railroads and airports systems. Their airport has become ahub for many top distribution and logistics moguls. With the growth of the IndianapolisInternational Airport in recent years, FedEx Company has decided to enlarge theirIndianapolis distribution hub, even though it is the second-largest FedEx distribution centernext to Memphis. This means traffic in and out of the Indianapolis Airport will increase, but italso means that truck transportation on Indiana’s interstates will increase with significantproportion.Traffic in Indiana has increased by 150 percent and freight loads by 600 percent since 1970.During all of this growth, Indiana’s new road miles have only seen a six percent growth. Bythe year 2020, freight traffic on the highways is suppose to double which means congestioncould cause serious problems if something is not done.The I-69 project is the key to all of these transportation problems. With the expansion of I-69,running from Indianapolis to Evansville, IN, Indiana would be providing a whole new growth tothe global transportation industry. The expansion ofI-69 would strengthen Indiana’s state slogan as the “Crossroads of America”. Indiana’scurrent distribution/transportation/logistics sector (DTL) provides jobs for 250,000 Hoosiers,along with another 75,000 DTL employees working in manufacturing operations throughoutthe state. With the expansion of I-69, Governor Daniels states that, “We can become thenation’s distribution and logistics capital. This plan is important for our metropolitan areas butis also necessary to help our small towns and rural areas flourish and fully participate in ourgrowth “. If Indiana does have the potential to become a leading distribution and logisticscenter, our economy would flourish with benefits."We have more interstates converging in Indianapolis than any other city in the country. . .I-69 will add to that great network," said Kenneth E. Cragen, president of the Indiana MotorTruck Association (i69tour). With this expansion, Indianapolis could have the potential to be akey hub for shipping, trucking, warehousing and distribution; causing industries to viewIndianapolis as infrastructure of long-term economic growth. Today, fifteen percent of allfreight being transported through the U.S. everyday stops in Indiana at some point (Friedman,i69tour). A fully completed I-69 would have the possibilities of developing into a channel ofnew business for Indianapolis, along with heightening Indiana’s strategic importance in themighty profitable industry of distribution and logistics (i69tour). It is estimated that I-69 would
  2. 2. also lessen the immense in truck traffic that is forecasted over the next ten years by fortypercent. Indianapolis has the potential to become a national cargo stopping area for allnational and international transportation. With this, Indiana will see a dramatic growth in thewarehousing and distribution plants being built.Today, the Greater Indianapolis area alone has over seven million square feet of bulkwarehousing space and has ten million square feet more in the planning stage. If the new I-69expansion does not take place, all of these distribution and warehousing plants coulddisappear, taking away the jobs of the people employed in them. Celedon Group, anIndianapolis trucking company who focuses their business primarily on freight shipments inand between NAFTA (North America Free Trade Agreement) nations, stated “We will benefitfrom the time that will be saved by completing I-69. We are delighted with any action thatmoves I-69 forward. We do a lot of business between the Midwest and Mexico, and this wouldcertainly have a positive impact when it is completed” (Star, Mar. 30)(Star, Feb 5, 2006).Another major factor influencing logistics transportation is just-in-time delivery. Just-in-timedelivery is an inventory control system that replenishes and delivers products to a retailer justas a current supply is depleted. Because more and more companies are using the just-in-timedistribution method, more businesses are looking for central locations to build warehousesand distribution centers. The I-69 expansion would give reason to companies using just-in-time distribution to house their warehouses and distribution plants in Indianapolis. Mostcompanies are finding it easier to combine several of their warehouses in one region. Thebenefits for businesses that ship products by truck on a regular basis are startling “Thesavings in operating costs will be $155,000 per day, $51 million per year and $1.2 billion overtwenty years (Star, Aug. 18). The Indiana Chamber of Commerce has pointed out in manydifferent ways how the expansion of I-69 from Indianapolis to Evansville can potentiallybenefit everyone, including Indiana’s economy. Indiana’s economy will see extreme growth inall different sectors.Economic GrowthMost people see the I-69 expansion as a waste of tax payers’ money. Not to mention, the factthat this project will end up taking around ten years to complete and the costs could exceed$1.78 billion. For a long time, Southwestern Indiana has seemed to be cut off from most otherregions of the state because of their lack of a major interstate highway system. I-69expansion could benefit this area of the state in tremendous ways. People tend to focus onthe small, less significant benefits of this project. Minimizing time between Indianapolis andEvansville is just a very small part of the many benefits the new I-69 could pose to Indiana’seconomy. The project wants to focus on the potential economic development and growth inthe southwestern region (Star, Mar. 30).Specific County GrowthThe I-69 expansion will directly affect Marion, Johnson, Morgan, Monroe, Greene, Daviess,Pike and Gibson counties. These are the counties in the state of Indiana in which the newI-69 interstate system will be built. These counties will see major changes in the economy dueto this “Major Move” (INDOT).
  3. 3. Morgan County is being to show a huge potential for economic development. Many largestream residential builders have begun planning for numerous amounts of housingdevelopments to be developed in the county. Located in Morgan County, the city ofMartinsville has been very interested in the potential economic gains that could come fromthis build. On April 1, 2004, Joe Kernan (former Governor of Indiana) observed MorganCounty’s city Martinsville on an upward growth. Martinsville had announced a $1.7 millionstate economic development funding program. The funding program’s focus is to help liftmore than $50 million of potential investments from private businesses, and create anestimated 190 jobs (Star, April 01).Governor Mitch Daniels has stated that this project is a must for the southwestern portion ofthe Indiana’s economy. Daniels says we need to push this project because Indiana’seconomy can not stand to sit by and let this great economical opportunity pass us by anylonger. We are losing money and economic gain in the long run. People only see the costsand environmental aspects of this project. They don’t understand the growth factor (Star, Nov.27).Statewide Economic GrowthJob GrowthI-69’s expansion will provide immediately provide an estimated 5,947 on-site jobs, $22.5million in wages and around $417.6 million in economic output. MacAllister MachineryCompany, an Indianapolis based heavy-machinery company, made it clear that they wouldmuch like to see this major build take place. Thirty-five percent of MacAllister’s annual salesare from Indiana road work. MacAllister’s vice president, Doug Clark, stated that, “thecompany likely would boost its employee base of 615 by about ten percent over the next fiveyears if their business picked up” (Star, Feb. 5). Indiana businesses associated with roadconstruction will begin hiring more and more workers if with the building of I-69. We haven’teven began to mention how many jobs the I-69 build would provide for union workers.Daniel’s administration team has figured that 130,000 supply-and construction oriented jobswould be created due to the I-69 build. The U.S. Department of Transportation has figuredthat for each $1 billion invested in federal highways provides 47,000 jobs to the U.S. economy(Star, Jan. 18). This is just the number of jobs that would be created during the constructiononly. This statistic does not even amount to the potential jobs created years and years afterthe project is completed. Indiana’s job growth has currently been less than half the nationalaverage. A lot of this job loss is located in the Indianapolis area.Overall ImpactWith the fully built and operation I-69, running from Indianapolis to Evansville, it wouldgenerate $3.2 billion in personal income over the first twenty years. More than 200 industriesare involved in interstate highway construction. These industries would be supportedthroughout Indiana’s economy (Star, Jan. 18). Travel time for commuters, truckers, andanyone else using Indiana’s new I-69 interstate system, to get back and forth fromIndianapolis and Evansville, would be cut by twenty-seven minutes. If you add time saved byeach person times the costs that would have been spent, estimates of $1.1 billion in savingsin time and vehicle costs would be saved in the first twenty years of I-69 being completed.Along with the saved money, business growth, increase in personal income and logistics
  4. 4. developments, Indiana would see a major decrease in traffic related accidents. Roughly40,000 serious injuries over the first twenty years would be prevented (Star, Mar. 30).Because of the narrow, winding, two-lane roads (“killer” roads, called by some people), manyfatalities and serious accidents have been occurring every year. The Indiana State Policereport that, “an average of ten people are being killed and sixty-five people suffer personalinjuries in accidents every thirty days on these outdated roads that blanket the thirteen-countyarea” (Star, Jan. 17).All together, the I69 extension would provide a substantial economic growth to the state ofIndiana. It would also allow the U.S. to grow as in terms of our logistics economy. If we do notspeed up the pace in building and redesigning new routes for our transportation systems, wewill not be able to keep up with the ever growing demand consumers insist upon. Listedabove are the economical and logistical benefits that would be provided with the massive I-69expansion. Indiana needs to move quickly with this build in order to benefit the greatest.Governor Daniels stated, “A state that aspires to greatness has to think big and act boldly”(Star, Nov. 27).