logistics and supply chain asset study
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Purpose, Vision & GoalsSelected FindingsConsiderations for Development
Agenda
Directions for Development
Create sustainable jobs that can support growing families and help to revitalize Michigan●Assess the logistics and supply chain market opportunity● Identify the factors and actions necessary for successful development●Quantify the benefits, costs, and returns on investments●Create a compelling blueprint for successful action and implementation
Study Purpose
Grow as a recognized North American center for regional and global industry, marshalling and developing infrastructure, technology and human assets for supply chain and logistics functions, to renew and advance the economy of Michigan and the livelihood of its citizens
Vision
Create more and sustainable jobs to support growing families, through better alignment of Michigan’s logistics and supply chain assets with domestic and global opportunities
Organize development to make Michigan the epicenter of a bi-national supply chain economic system with benefits reaching across the state
Foster a 21st Century logistics operating environment
Better leverage Michigan’s natural, cultural and economic advantages
Move to action
Goals - Summary
Create more and sustainable jobs through better alignment of Michigan’s logistics and supply chain assets with domestic and global opportunities.
● Catalyze growth and change in manufacturing, distribution and trade with well placed transportation and logistics facilities providing efficient access to markets, resources and services
● Prioritize infrastructure investment and policy initiatives to lower cost, reduce time, and remove risk
Organize development to make Michigan the epicenter of a bi-national supply chain economic system with benefits reaching across the state.● Pull together as a state in economic development and investment● Offset peninsular location by improving the functioning and positioning of
Michigan and Ontario as one region● Join the southeast Michigan trade and production center to facilities and
activities throughout the state and the Great Lakes area● Support the integration of commercial processes in design, fabrication,
assembly and distribution through business attraction, siting, and transportation and information networks
Goals – Example Detail
Purpose, Vision & GoalsSelected FindingsConsiderations for Development
Agenda
Directions for Development
Multimodal domestic and trade network●Full modal range, good NAFTA and global connections–Principal nexus to top US trading partner
●All modal avenues “lets us be aggressive and resilient, and makes our property more valuable”
Ample roadway capacity and route alternatives●Built for greater demand: lesser congestion and room to grow●Lesser risk of delay due to multiple routes●Robust truck supply for outbound shipping
Land in key locations
Fresh water●Reliable resources for production input, processes and cooling● “Unique opportunity in tri-state area versus California and Texas”
Core Assets (Michigan Advantages)
Manufacturing skills●Culture of making things– “If need reverse engineering, many firms can help within 100 miles”
●Reflected in supplier base for many industries●Supported by leading universities
Logistics skills●Well established logistics capabilities: many modes, leading plus many
smaller third party logistics (3PL) companies●Honed in service to demands of auto industry●Value added services: kitting, sequencing, packaging, labeling,
assembly, warehousing●Deep customs and border process experience●Supported by leading universities– “Should be Silicon Valley for supply chain operations”
Core Assets (Michigan Advantages cont’d)
Michigan needs a comprehensive economic development plan and cohesive strategy●Stop current state of cannibalizing from neighboring communities within
the state
Perception that areas are hurt due to lack of “move-in” ready real estate●Developers have been wary about building spec buildings●Often companies moving into the area do not want to build a new facility
or gut an old one due to time constraints●Many existing facilities are obsolete●General lack of availability of sites with direct rail access
Lack of consistent high speed broadband access in certain rural areas
Economic Development Environment
Major highway conditions good, off-highway “crumbling”●Primary system conditions comparable to other states●Other investment in infrastructure “isn’t there and roads declining”
Michigan location “not on the way to anywhere” – except Canada●Consequence of peninsular geography●Affects location for regional distribution more than manufacturing●Location models typically capture only US population–US population within 500 miles of Detroit: 117 million–US/Canada population within 500 miles of Detroit: 131 million– 14 million added population equivalent to Los Angeles MSA
Logistics Limitations
Tools: network alternatives, facility flexibility, information feeds, service recovery – and logistics skills●Facility flexibility favors leasing over purchase to adjust to market shifts–Requires inventory of modern, variable tenant buildings
Risk management affects operational and location decisions
MI is strong in several management areas – notably network alternatives and logistics skills – and can grow stronger●Building market awareness important
Risk Management
Purpose, Vision & GoalsSelected FindingsConsiderations for Development
Agenda
Directions for Development
Site Requirements TemplateHeavy Industrial/Manufacturing
General Manufacturing Food Processing Hi-Tech Mfg & Processing
Example • Machinery • Plastics • Packaged foods • Electronics
Size (Contig. Developable Acres) • Minimum 25 • Minimum 10 • Minimum 10 • Minimum 25
Security • Manageable at site • Manageable at site • Manageable at site • Manageable at site
Population W/in 1 hour drive • >30,000 • >30,000 • >20,000 • >50,000
Public Transit • Accessible • Accessible • Accessible • AccessibleSkills • As defined by the
specific industry• As defined by the
specific industry• As defined by the
specific industry• Strong engineering and
IT skills across broad range
Other Economic Network • Proximity to supplier/vendor base
• Proximity to supplier/vendor base
• Proximity to supplier/vendor base
• Proxi to agriculture base
• Proximity to strong, specialized supplier/vendor base
Highway Access • Interstate, state highway or major arterial within 10 miles
• Interstate, state highway or major arterial within 20 miles
• Interstate, state highway or major arterial within 30 miles
• Interstate, state highway or major arterial within 15 miles
Intermodal Rail Access • Within 100 miles • Within 100 miles • Within 150 miles • Not typically required
Rail Siding • Preferable • Preferable • Preferable • N/APAir Access • Cargo
• Express• Cargo• Express
• N/AP • Express
Port Access • Bulk• B/B & Project
• Bulk• B/B
• Bulk • N/AP
International Access • Canada• Global connection
• Canada• Global connection
• Global connection • Global connection
Water Flow (GPD) • 36,000 • 17,000 • 25,000 • 65,500Sewer Flow (GPD) • 32,500 • 15,500 • 22,500 • 60,000Electricity • 1.0 MW • 0.5 MW • 1.0 MW • 2.0 MW• Telecom • Fiber-telecomm highly
preferred • Fiber-telecomm highly
preferred• Fiber-telecomm highly
preferred• Dependent telecom &
route diversity
Opportunity MatchesOpportunity Type Region Outlook Michigan
Targeted Industries
Michigan Role
Advanced Engineering, Manufacturing & Machining
SE, DET Increased activity Further research ongoing
Yes Support of auto, defense, R&D, and other industries Encourage and fund specific training programs to
increase skilled workforce availability
Agribusiness All except urban areas
Strong existing value chains Further research ongoing
Yes Continued agricultural farming and export Expand on food processing Support agriculture for biofuels and biofuel R&D Consider agricultural or aquaculture specific energy
rates to help growthAquaculture UP Increasing Activity Activity currently taking place with indigenous tribes
in the UP More activity expected due to accessibility to clean
water Consider agricultural or aquaculture specific energy
rates to help growthAutomotive Throughout
state, with emphasis on southern areas
Increasing activity – automotive companies have stated they want the supply chain to be geographically close
Yes Small and large auto parts manufacturing companies Support efficiencies in rail system that would allow
materials traveling through Michigan to be offloaded instead of being shipped back to Michigan by truck
Opportunity MatchesOpportunity Type Region Outlook Michigan
Targeted Industries
Michigan Role
Biofuels UP Increasing Activity Yes Support biofuel processing and R&D in combination with agribusiness
Defense & Aerospace SE, UP, NE, DET
Linked into automotive activity
Further research required
Yes Solar panels for NASA Other defense and aerospace manufacturing (not
well defined)Food Production Throughout
the state High industry growth due
to focus on home dining Re-regionalization of food
production
Yes Food production, re-establish ties to agricultural Regional distribution of both raw products and
finished products
Logistics Services MW, EM, SW, SE, DET
High industry demand Yes Most of Michigan’s industrial activities involve exporting
Activity will increase as Michigan continues to recover economically from the downturn
Medical Device EC, EM, WM, UP
Slow Increase Yes Individual level – doctor comes up with a new idea, patents it and starts production
Pharmaceuticals/ Biotech
EC, EM, WM, UP
Some indication of new activity, particular interest in water usage
Yes To be determined
Opportunity MatchesOpportunity Type Region Outlook Michigan
Targeted Industries
Michigan Role
Raw Materials – Minerals
UP, NW, NE Increasing activity – encouraged by Michigan but little monetary help
Michigan needs to help support infrastructure improvements to allow raw materials to be exported more easily from the region
Raw Materials – Forest UP, NE Stable to increasing activity – encouraged by Michigan but little monetary help
Yes Michigan processes forest materials into tissue, biofuel, paper, etc
Michigan needs to help support infrastructure improvements to allow raw materials to be exported more easily from the region
Renewable Energy UP Increasing activity Yes Michigan has encouraged and started assisting the UP with access to forests
Michigan needs to financially help with infrastructure improvements (highway, energy, rail)
Wood Products UP Strong existing value chains Yes Wood processing is a significant industry
Furniture WM, SM Positive employment forecast
Yes To be determined
Chemicals ECM, DET Positive employment forecast, contributions to GSP, and commodity forecasts
Yes Assist with conversations and activities related to railroad expansion
Continue work with “I-Park” concept - encourages companies that use the same services to co-locate
Purpose, Vision & GoalsSelected FindingsConsiderations for Development
Agenda
Directions for Development
Michigan has Logistics & Supply Chain assets around the state, but the key infrastructure assets are concentrated in SE MI, inside the I-69 corridor●Major interstate highway corridors●Both bi-national bridges, and the planned bridge●All rail intermodal facilities, and the planned improvement●Air hub ●Top volume waterfront
All contribute to MI’s capability to support domestic & international trade, have capacity for growth, and interact as a multimodal system with alternatives that reduce risk
Directions for Development
These assets are matched by critical non-infrastructure assets, also concentrated in SE MI: ●Workforce skills in manufacturing and logistics●Research universities in manufacturing and logistics●Affordable land for development – but not suitable buildings
Directions for Development
Opportunities to exploit LSC assets with developable sites have been identified around the state, but economic development focused in Detroit is uniquely able to leverage all of the key state assets, especially planned new infrastructure ●Build where your assets are: proximity to transportation assets and labor
pools are primary considerations in LSC site selection●Generates quantifiable benefits around the state●Opportunity in Detroit is clustered in two sites connected by interstates
Economic development programs throughout MI should be pursued to exploit local opportunities, and to complement the effort in Detroit as part of a statewide economic system
Directions for Development
Finish what we started: NITC, DIFT
Site assembly - chiefly residential●Acquisition and rezoning, or special use zoning
Site preparation: making developer-ready
Risk reduction options●Provision of free or low cost land●Provision of low-cost financing
Access route improvements●Mainly state of good repair: arterial pavement, bridges, current condition
and anticipation of higher volume
LSC Program Example: Detroit
Neighborhood support●Security and lighting●Transit access from homes to jobs●Traffic and noise buffering (residential/industrial breaks)●Local hiring and apprenticeships
Development programs●Business attraction marketing–Selling MI logistics advantages, tailored to targets and district–Branding–Exploit MEDC 3PL program
●Use of incentives and inducements
LSC Program Example: Detroit
Real Estate●Address zoning or permitting process issues to ensure expedited and
certain process for new development or redevelopment● Identify redevelopable land in private ownership and provide technical or
other assistance to facilitate redevelopment●Establish site certification programs to identify “shovel-ready” parcels
that may be marketed outside the state
Transportation Infrastructure●Address state of good repair issues on regional and local roadways
LSC Program Example: Outside Detroit
Business Attraction and Retention●Work with MEDC and other parties to develop a marketing strategy and
materials to increase visibility and change perceptions outside MI●Work with local businesses to build more robust local/regional cluster
relationships: supplier/vendor, innovation/development
Incentives and Other Policy Tools●Develop a specific evaluation framework for applying state’s flexible
incentive programs– Identify hard (financial) and soft (training, permitting and regulatory
process) efforts that region and local municipalities can use to augment state programs
–Set thresholds for target companies on criteria of industry/use targeting
–Establish ongoing ROI and reporting criteria for state and local incentive eligibility
LSC Program Example: Outside Detroit
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