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Transcript of Michigan State University, 2010 Sponsored by New Economy Initiative Hosted by Detroit Regional...
Michigan State University, 2010
Sponsored by
New Economy Initiative
Hosted by
Detroit Regional Chamber of Commerce
and
Michigan State University
Supply Chain Opportunity Assessment:Economic Development for SE MichiganSupply Chain Opportunity Assessment:Economic Development for SE Michigan
Final Report
May 31, 2010
Final Report
May 31, 2010
Michigan State University, 2010- 2 -
Presentation OutlinePresentation 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
Michigan State University, 2010- 3 -
Opportunity Assessment HistoryOpportunity 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
Michigan State University, 2010- 5 -
The Detroit Region’s NAFTA Advantage The Detroit Region’s NAFTA Advantage
Michigan State University, 2010- 6 -
Border Crossings and Network FlowsBorder Crossings and Network Flows
Michigan State University, 2010- 8 -
Geographic Scope of Project: SEMI/NWOH/SWONGeographic 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
Michigan State University, 2010- 9 -
Cities with SCM CapabilitiesCities with SCM Capabilities
City Supply Chain Management Capabilities
Memphis, TN 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.
Louisville, KY 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.
Kansas City, MO 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.
Chicago, IL 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.
Columbus, OH 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.
Indianapolis, IN 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.
SEMI/NWOH/SWON ?????????????????????????????
Michigan State University, 2010- 10 -
Michigan SCM CapabilitiesMichigan 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?????
Michigan State University, 2010- 13 -
A Connected Region and EconomyA Connected Region and Economy
Highway and Rail Corridors
Map: Courtesy of Gallis and Associates
Michigan State University, 2010- 14 -
Presentation OutlinePresentation 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
Michigan State University, 2010- 15 -
Introduction to the Opportunity 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 21st 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.
Michigan State University, 2010- 16 -
Opportunity Assessment Key ActivitiesOpportunity 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.
Michigan State University, 2010- 17 -
Supply Chain Opportunity Assessment:Workshop One RecapSupply 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
Michigan State University, 2010- 18 -
Supply Chain Opportunity Assessment:Workshop Two RecapSupply 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
Michigan State University, 2010- 19 -
Supply Chain Opportunity Assessment:Workshop Three RecapSupply 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
Michigan State University, 2010- 20 -
Presentation OutlinePresentation 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 CreationSupply Chain Hub Strategy Creation
Strategy and SCM Strategy Elements
- 22 -
SEMI/NWOH/SWON Supply Chain StrategySEMI/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 StrategySEMI/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 ElementsSCM 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 ElementsSCM 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 marketsAbility to serve global markets
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
1 of 21 of 2
- 27 -
Ability to serve global marketsAbility to serve global markets
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
2 of 22 of 2
- 28 -
SCM Strategy ElementsSCM 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 capabilitiesInfrastructure and support capabilities
Attribute Current State Implications Future State
Airport capabilities
DTW airportcapacity; frequent direct Asian flights;available capacityfor dedicated andbelly 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
1 of 21 of 2
- 30 -
Infrastructure and support capabilitiesInfrastructure and support capabilities
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 newbusiness activity
Extend competitive advantage; Build consol/deconsol, cross-dock centers
2 of 22 of 2
- 31 -
SCM Strategy ElementsSCM Strategy Elements
• Ability to serve global markets• Infrastructure and support capabilities• Government regulations
– Higher weight limits– Carrier permitting process
- 32 -
Government regulationsGovernment 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 ElementsSCM 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 climateNeed 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 ElementsSCM 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 capitalAvailability of human, land, supplier, and financial capital
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
1 of 21 of 2
- 37 -
Availability of human, land, supplier, and financial capitalAvailability of human, land, supplier, and financial capital
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
2 of 22 of 2
- 38 -
SCM Strategy ElementsSCM 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 serveEconomic 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 ElementsSCM 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 sustainabilitySupply 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 ElementsSCM 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 -
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
Collaboration and partnershipCollaboration and partnership
- 44 -
Synthesis of Strengths and Weaknesses of SCM Strategy ElementsSynthesis 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 CreationSupply Chain Hub Strategy Creation
Strategy and SCM Strategy Elements
Industries offering
Value Add Potential
- 46 -
Economic Model: Industry SectorsEconomic 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 mining6 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 oneEconomic Model: Industries from workshop one
1 of 31 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 producing4. 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 MiningRock 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 oneEconomic Model: Industries from workshop one
2 of 32 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 oneEconomic Model: Industries from workshop one
3 of 33 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 IndustriesDetroit Regional Chamber – Target Industries
• Transportation & logistics • Alternative energy • Aerospace • Medical devices • Homeland Security and Defense• Advanced Manufacturing
- 51 -
MEDC - Target IndustriesMEDC - Target Industries
• Alternative Energy • Automotive Engineering • Life Sciences • Homeland Security and Defense • Advanced Manufacturing • Film Industry
- 52 -
Target Industries: Synthesized from Workshop TwoTarget 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 DescriptorsTarget 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 ClusterValue Propositions by Industry Cluster
SCM Element Heavy Manufacturing
Light Manufacturing
Distribution
Ability to serve and be served by global markets
Technical skill and global air-motor-rail interface
Technical skill and global air-motor interface
Technical skill and global air-motor-rail interface
Infrastructure and support capabilities
Infrastructure and labor skill
Government regulations
Load limits Load limits
Competitive tax climate Ideal for heavy manufacturing
Availability of human, land, supplier, and financial capital
Technical talent and global SC skills
Technical talent and global SC skills
Technical talent and global SC skills
Available DC capacity
Economic competitiveness and lowest total cost to serve
Reduced cost of uncertainty due to less congestion
Reduced cost of uncertainty due to less congestion
Reduced cost of uncertainty due to less congestion
Supply chain sustainability
Minimal uncertainty
Reliable weather
Minimal uncertainty Reliable weather
Minimal uncertainty Reliable weather
Collaboration and partnership
Strong private sector message
- 55 -
Supply Chain Hub Strategy CreationSupply Chain Hub Strategy Creation
Strategy and SCM Strategy Elements
Industries offering
Value Add Potential
Economic and Job Creation Impact
- 56 -
Geographic Scope of Economic ModelingGeographic 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
- 58 -
Three Stages of SCM Economic ActivityThree 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?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 3SCM 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 ProjectionsEconomic 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 EvaluationTarget 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 ManufacturingIndustry Forecasts – Heavy Manufacturing
Industry Growth Opportunity Growth Potential
Automotive renewal Organic and Innovative 1.20-1.30
Alternative energy Organic and Innovative 1.08-1.65
Carbon fiber manufacturing Opportunistic and Innovative 1.30
Chemical processing Organic and Innovative 1.11
Defense Opportunistic and Innovative 1.13
Electronics - industrial Opportunistic and Innovative 1.19-1.40
- 64 -
Economic Evaluation: Heavy ManufacturingEconomic Evaluation: Heavy Manufacturing
Industry Stage 2 Economic
Forecast ($M)
Stage 3 Economic
Forecast with Hub
($M)
Increase Resulting from Hub
($M)
Stage 2 Job
Activity (000)
Stage 3 Job
Activity with Hub
(000)
Increase Resulting from Hub
(000)
Automotive renewal
5,084 6,609 1,525 62.7 81.5 18.8
Alternative energy
757 1,056 299 4.0 5.5 1.5
Chemical processing
6,682 7,717 1,035 56.6 65.4 8.8
Defense 3,739 4,461 722 24.0 28.7 4.7
Electronics -Industrial
4,069 5,250 1,181 22.0 28.4 6.4
Forestry and bio-fuels
919 1,231 312 2.8 3.8 1.0
Total 21,250 26,324 5,074 172.1 213.3 41.2
- 65 -
SCM Industry Activity – Heavy ManufacturingSCM Industry Activity – Heavy Manufacturing
$ ?
Jobs ?
$ 21,250M
Jobs 172,100
$26,324M (23.8% increase)
Jobs 213,300 (23.4% increase)
Stage 1 (Current)
Economic activity associated with SCM
Stage 2 (+3 years)
Economic activity associated with SCM
following recovery
Stage 3 (+7 to10 years)
Enhanced economic activity associated with SCM scale
and industry attraction
- 66 -
Industry Forecasts – Light ManufacturingIndustry Forecasts – Light Manufacturing
Industry Growth Opportunity Growth Potential
Food processing Organic, Opportunistic, and Innovative
0.87-1.11
Medical technologies Innovative 1.23
Water technologies Innovative 1.19
- 67 -
Industry Forecasts – DistributionIndustry Forecasts – Distribution
Industry Growth Opportunity Growth Potential
Beverage and alcohol distribution
Organic, Opportunistic, and Innovative
1.04-1.15
Retail importing and value add Opportunistic and Innovative 0.91-1.34
Waste Management Innovative 1.20-1.40
- 68 -
Economic Evaluation: Light Manufacturing, DistributionEconomic Evaluation: Light Manufacturing, Distribution
Industry Stage 2 Economic
Forecast ($M)
Stage 3 Economic
Forecast with Hub
($M)
Increase Resulting from Hub
($M)
Stage 2 Job
Activity (000)
Stage 3 Job
Activity with Hub
(000)
Increase Resulting from Hub
(000)
Food, beverage
9,550 10,285 735 82.6 89.0 6.4
Wholesale trade
4,573 6,127 1,554 20.0 26.8 6.8
Retail trade 5,123 6,864 1,741 15.1 20.3 5.2
Warehouse & storage
3,659 4,902 1,243 11.1 14.9 3.8
Waste management
2,946 3,572 626 15.2 18.5 3.3
Total 25,851 31,750 5,476 144.0 169.5 25.5
- 69 -
SCM Industry Activity – Light Manufacturing/DistributionSCM Industry Activity – Light Manufacturing/Distribution
$ ?
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
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
- 70 -
Total SCM Industry Economic ActivityTotal 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 ActivityTotal 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) Stage 2 (+3 years) Stage 3 (+7 to10 years)
66.7 K Jobs!
- 72 -
Supply Chain Hub Strategy CreationSupply Chain Hub Strategy Creation
Strategy and SCM Strategy Elements
Industries offering
Value Add Potential
Economic and Job Creation Impact
Economic Development
- 73 -
Presentation OutlinePresentation 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 DevelopmentEnabling Economic Development
SCM strategy elements
Targeted industries
Industry Value
Proposition
• Global markets• Infrastructure• Regulations• Tax climate• Capital availability• Economic competitiveness• Supply chain sustainability• Collaboration
•Heavy manufacturing
•Light manufacturing
•Distribution
- 75 -
Enabling Economic DevelopmentEnabling Economic Development
SCM strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
• Global markets• Infrastructure• Regulations• Tax climate• Capital availability• Economic competitiveness• Supply chain sustainability• Collaboration
•Heavy manufacturing
•Light manufacturing
•Distribution
66.7 K Jobs!
- 76 -
Enabling Economic DevelopmentEnabling Economic Development
SCM strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
Policy refinements
- 77 -
Enabling Economic DevelopmentEnabling Economic Development
SCM strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
Policy refinements
Collaboration and
communications
- 78 -
Enabling Economic Development: Policy RefinementsEnabling Economic Development: Policy Refinements
SCM strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
Policy refinements
- 79 -
Policies to Enable Economic DevelopmentPolicies 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 DevelopmentPolicies 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 DevelopmentPolicies 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 DevelopmentPolicies 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 DevelopmentPolicies 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 DevelopmentPolicies 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 DevelopmentPolicies 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 DevelopmentPolicies 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 CommunicationsEnabling 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 DevelopmentCollaboration 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 CityCollaboration Structure – Kansas City
Smart Port Board of Directors– Burlington Northern Santa Fe | Profile | WebsiteSkip Kalb, Director, Strategic Development– Dysart Taylor | Profile | WebsiteKen Hoffman, Attorney– Greater Kansas City Foreign Trade Zone, Inc. | Profile | WebsiteAlfred J. Figuly, President – Johnson County Airport Commission | Profile | WebsiteR. Lee Metcalfe, Executive Director – Kansas City Area Development Council | Profile | WebsiteRobert J. Marcusse, President – Kansas City Southern | Profile | WebsitePat Ottensmeyer, Executive Vice President of Sales & Marketing – Kansas Department of Transportation | Profile | WebsiteChris Herrick, Director of Planning &
Development – Mid-America Regional Council | Profile | WebsiteRonald B. Achelpohl, Manager, Transportation Programs – Missouri Department of Transportation | Profile | WebsiteElizabeth Wright, District Engineer– TranSystems Corporation | Profile | WebsiteMichael A. Priest, Regional Vice President
- 90 -
Kansas City - AgenciesKansas City - Agencies
Executive Committee• Alfred J. Figuly
President Greater Kansas City Foreign Trade Zone, Inc.
• Skip Kalb Director, Strategic DevelopmentBNSF Railway Company
Robert J. MarcussePresident Kansas City Area Development Council Email: [email protected]
• Michael A. Priest Principal and Regional Vice President TranSystems Corporation
- 91 -
Collaboration Structure – Columbus, OHColumbus Region Logistics Council Collaboration Structure – Columbus, OHColumbus Region Logistics Council
ODW LogisticsBattelle Memorial InstituteColumbus ChamberAbbott NutritionBig LotsCardinal HealthColumbus Regional Airport AuthorityColumbus State Community CollegeCSX IntermodalDB Schenker Logistics
DSW ShoesExelHonda of America Mfg., Inc.KraftLimited BrandsMcGraw HillNorfolk SouthernPacer InternationalSpartan LogisticsSterling CommerceThe Ohio State UniversityThe Pizzuti CompaniesUPS
- 92 -
Collaboration Structure - GeorgiaCollaboration 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
- 94 -
Georgia Center for Innovation and LogisticsGeorgia 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?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 OutlinePresentation 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 RecommendationsProject 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 ConceptExample Hub Organizational Concept
Government Universities
Industry
Public Private Development Entity
- 99 -
Key Hub CompetenciesKey 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 StepsSupply 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