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Final Report May 31, 2010

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. Presentation Outline. Project Background

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Final Report May 31, 2010

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  1. Sponsored by New Economy Initiative Hosted by Detroit Regional Chamber of Commerce and Michigan State University Final ReportMay 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. 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

  8. Cities with SCM Capabilities

  9. 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?????

  10. Regional Economic Opportunity

  11. I-75, I-69 and I-94 Corridor

  12. A Connected Region and Economy Highway and Rail Corridors Map: Courtesy of Gallis and Associates

  13. 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

  14. 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.

  15. 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.

  16. 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

  17. 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

  18. 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

  19. 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

  20. Supply Chain Hub Strategy Creation Strategy and SCM Strategy Elements

  21. 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

  22. 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

  23. 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

  24. 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

  25. Ability to serve global markets 1 of 2

  26. Ability to serve global markets 2 of 2

  27. SCM Strategy Elements • Ability to serve global markets • Infrastructure and support capabilities • Airport capabilities • Interstate highways • Railroad network • Intermodal transportation capacity • Distribution facilities

  28. Infrastructure and support capabilities 1 of 2

  29. Infrastructure and support capabilities 2 of 2

  30. SCM Strategy Elements • Ability to serve global markets • Infrastructure and support capabilities • Government regulations • Higher weight limits • Carrier permitting process

  31. Government regulations

  32. 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

  33. Need for competitive tax climate

  34. 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

  35. Availability of human, land, supplier, and financial capital 1 of 2

  36. Availability of human, land, supplier, and financial capital 2 of 2

  37. 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

  38. Economic competitiveness and lowest total cost to serve

  39. 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

  40. Supply chain sustainability

  41. 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

  42. Collaboration and partnership

  43. 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 Synthesis of Strengths and Weaknesses of SCM Strategy Elements

  44. Supply Chain Hub Strategy Creation Strategy and SCM Strategy Elements Industries offering Value Add Potential

  45. Economic Model: Industry Sectors 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 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

  46. Economic Model: Industries from workshop one 1 of 3

  47. Economic Model: Industries from workshop one 2 of 3

  48. Economic Model: Industries from workshop one 3 of 3

  49. Detroit Regional Chamber – Target Industries • Transportation & logistics • Alternative energy • Aerospace • Medical devices • Homeland Security and Defense • Advanced Manufacturing

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