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Report
Logistics and Supply Chain Asset Study
Collaborative Development Council Briefing
August 20, 2014
Agenda
Purpose, Vision & Goals
Selected Findings
Considerations for Development
Directions for Development
Study Purpose

Create sustainable jobs that can support growing families and
help to revitalize Michigan
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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
Vision
 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
Goals - Summary

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 binational 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 – Example Detail
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
Agenda
Purpose, Vision & Goals
Selected Findings
Considerations for Development
Directions for Development
Core Assets (Michigan Advantages)

Multimodal domestic and trade network
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
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
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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
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Reliable resources for production input, processes and cooling
“Unique opportunity in tri-state area versus California and Texas”
Core Assets (Michigan Advantages cont’d)

Manufacturing skills
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
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
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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”
Economic Development Environment

Michigan needs a comprehensive economic development plan and
cohesive strategy
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
Perception that areas are hurt due to lack of “move-in” ready real
estate
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
Stop current state of cannibalizing from neighboring communities within
the state
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
Logistics Limitations

Major highway conditions good, off-highway “crumbling”
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
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
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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
Risk Management

Tools: network alternatives, facility flexibility, information feeds,
service recovery – and logistics skills
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
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
is strong in several management areas – notably network
alternatives and logistics skills – and can grow stronger
 MI
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Building market awareness important
Agenda
Purpose, Vision & Goals
Selected Findings
Considerations for Development
Directions for Development
Site Requirements Template
General Manufacturing
Food Processing
Hi-Tech Mfg & Processing
Example
Size (Contig. Developable Acres)
Heavy Industrial/
Manufacturing
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Machinery
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Minimum 25
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Plastics
Minimum 10
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Packaged foods
Minimum 10
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Electronics
Minimum 25
Security
Population W/in 1 hour drive
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Manageable at site
>30,000
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Manageable at site
>30,000
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Manageable at site
>20,000
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Manageable at site
>50,000
Public Transit
Skills
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Accessible
As defined by the
specific industry
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Accessible
As defined by the
specific industry
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Accessible
As defined by the
specific industry
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•
Other Economic Network
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Proximity to
supplier/vendor base
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Proximity to
supplier/vendor base
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•
Proximity to
•
supplier/vendor base
Proxi to agriculture base
Accessible
Strong engineering and
IT skills across broad
range
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
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Within 100 miles
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Within 100 miles
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Within 150 miles
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Not typically required
Rail Siding
Air Access
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Preferable
Cargo
Express
Bulk
B/B & Project
Canada
Global connection
36,000
32,500
1.0 MW
Fiber-telecomm highly
preferred
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Preferable
Cargo
Express
Bulk
B/B
Canada
Global connection
17,000
15,500
0.5 MW
Fiber-telecomm highly
preferred
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Preferable
N/AP
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N/AP
Express
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Bulk
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N/AP
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Global connection
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Global connection
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25,000
22,500
1.0 MW
Fiber-telecomm highly
preferred
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65,500
60,000
2.0 MW
Dependent telecom &
route diversity
Port Access
International Access
Water Flow (GPD)
Sewer Flow (GPD)
Electricity
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Telecom
Opportunity Matches
Opportunity Type
Region
Outlook
Advanced Engineering,
Manufacturing &
Machining
 SE, DET
 Increased activity
 Further research ongoing
Agribusiness
 All except
urban areas
 Strong existing value chains
 Further research ongoing
Aquaculture
 UP
 Increasing Activity
Michigan
Targeted
Industries
 Yes
Michigan Role
 Yes
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 Support of auto, defense, R&D, and other industries
 Encourage and fund specific training programs to
increase skilled workforce availability
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Automotive
 Throughout
state, with
emphasis on
southern
areas
 Increasing activity –
automotive companies
have stated they want the
supply chain to be
geographically close
 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 growth
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 growth
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 Matches
Opportunity Type
Region
Outlook
Biofuels
 UP
 Increasing Activity
Defense & Aerospace
 SE, UP, NE,
DET
Food Production
Logistics Services
Medical Device
Pharmaceuticals/
Biotech
Michigan
Targeted
Industries
 Yes
Michigan Role
 Linked into automotive
activity
 Further research required
 Throughout
 High industry growth due
the state
to focus on home dining
 Re-regionalization of food
production
 MW, EM, SW,  High industry demand
SE, DET
 Yes
 Solar panels for NASA
 Other defense and aerospace manufacturing (not
well defined)
 Food production, re-establish ties to agricultural
 Regional distribution of both raw products and
finished products
 EC, EM, WM,
UP
 EC, EM, WM,
UP
 Slow Increase
 Yes
 Some indication of new
activity, particular interest
in water usage
 Yes
 Yes
 Yes
 Support biofuel processing and R&D in combination
with agribusiness
 Most of Michigan’s industrial activities involve
exporting
 Activity will increase as Michigan continues to
recover economically from the downturn
 Individual level – doctor comes up with a new idea,
patents it and starts production
 To be determined
Opportunity Matches
Opportunity Type
Region
Outlook
Michigan
Targeted
Industries
Michigan Role
Raw Materials –
Minerals
 UP, NW, NE
 Increasing activity –
encouraged by Michigan
but little monetary help
Raw Materials – Forest
 UP, NE
 Stable to increasing activity
– encouraged by Michigan
but little monetary help
 Yes
Renewable Energy
 UP
 Increasing activity
 Yes
Wood Products
 UP
 Strong existing value chains
 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
 Michigan has encouraged and started assisting the
UP with access to forests
 Michigan needs to financially help with infrastructure
improvements (highway, energy, rail)
 Wood processing is a significant industry
Furniture
 WM, SM
 Yes
 To be determined
Chemicals
 ECM, DET
 Positive employment
forecast
 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
 Michigan needs to help support infrastructure
improvements to allow raw materials to be exported
more easily from the region
Region Comparative Summaries – Reference Map
EDC Region Comparative Summary:
Freight Infrastructure
EDC Region Comparative Summary:
Other Logistics Factors
Agenda
Purpose, Vision & Goals
Selected Findings
Considerations for Development
Directions for Development
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
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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:
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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
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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
LSC Program Example: Detroit

Finish what we started: NITC, DIFT
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Site assembly - chiefly residential
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Acquisition and rezoning, or special use zoning
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Site preparation: making developer-ready
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Risk reduction options
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Provision of free or low cost land
Provision of low-cost financing
Access route improvements
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Mainly state of good repair: arterial pavement, bridges, current condition
and anticipation of higher volume
LSC Program Example: Detroit
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Neighborhood support
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Security and lighting
Transit access from homes to jobs
Traffic and noise buffering (residential/industrial breaks)
Local hiring and apprenticeships
Development programs
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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
LSC Program Example: Outside Detroit
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Real Estate
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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
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Address state of good repair issues on regional and local roadways
LSC Program Example: Outside Detroit

Business Attraction and Retention
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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
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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
Thank You!

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