1. TDL & Exports Regional Intermediary Design SEMI/NWOH/SWON Workshop Two April 29, 2011 Sponsored by New Economy Initiative Hosted by Detroit Regional Chamber and Michigan State University

3. We are encouraged by the enthusiasm of all stakeholders to contribute to and continue with this important economic development and new jobs creation project

5. TDL & Exports Regional Intermediary Design Workshop Guidelines: All participants will give the meeting our full attention, positive energy and commitment to the project All participants will be open, candid and honest and allow others to do the same Respect will be the foremost goal of all participants; we will center on issues, not personalities All participants will center first on gaining understanding, second on convincing others All input raised will be captured for future use and shared with all attendees Think FUTURE; Think strategic; Think CAN DO !

6. Introductions Name Role Representing

7. TDL & Exports Regional Intermediary Design Workshop Two Desired Outcomes: Finalize Regional Intermediary design Develop plan for Regional Intermediary organizational model implementation Discuss plan to work with pilot companies Discuss Workshop Three topics

8. Workshop Two Agenda Welcome Introductions Synthesize findings from Workshop One Organizational model recommendation Finalize Regional Intermediary design: Breakout Discussion Report out Plans to work with pilot companies Planning for next Workshop

9. TDL and Exports Strategy: Future Vision World class cross-border distribution hub Air freight to motor freight Rail freight to motor freight Value added services Lowest overall cost to serve for industry partners Superior customer service for industry partners and their respective customers State of the art supply chain technology Excellent management and labor talent Win-win-win relationships with industry partners, service providers, and supply chain hub

10. The Bottom Line ! 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 Maintaining momentum over the next few months will be critical to project success Each of us will play a key role to assure 66,000 new jobs are created…..starting today !

11. Target Industries for SEMI/NWOH/SWON Hub Heavy Manufacturing Automotive renewal Alternative energy Carbon fiber manufacturing Chemical processing Defense Electronics – industrial Light Manufacturing Food processing Medical technologies Water technologies Distribution Beverage and alcohol distribution Retail importing and value add Waste management

12. Summary of Enhanced Economic Activity

13. TDL and Exports Hub Capabilities from Best Practice Research Supply Chain Expertise Economic competitiveness and lowest supply chain cost to serve Supply chain sustainability Infrastructure / modal support Economic Development Competitive tax environment Ability to serve global markets Develop supply chain solutions Strategic Infrastructure / Intermediary Funding Infrastructure support and capabilities Collaboration Joint commission or authority Strategic alliances

14. Hub Capabilities: Best Practices Research

15. Hub Capabilities: Best Practices Research

16. Supply Chain Expertise – Workshop One Breakout Results

17. Economic Development – Workshop One Breakout Results

18. Strategic Infrastructure / Intermediary Funding – Workshop One Breakout Results

19. Collaboration – Workshop One Breakout Results

20. Highest Priority Capabilities: Summary ofWorkshop One Breakout Results

21. Workshop One Findings - Environment While service is important, hub cost is not a determining factor unless it is out of line. Flights from Asia can be differentiator. Fuel cost increases will continue to drive local sourcing. Recognize that firms consider economic rather than political boundaries.

22. Workshop One Findings - Facilitators Skilled labor is an asset and selling point. Supply chain solutions and service needs to be an intermediary service to both MEDC and industry. Develop positive value proposition for pilot company Network design Quantify the impact of uncertainty and risk Increase cross-border efficiency of truck traffic. Improved railway intermodal facilities.

23. Workshop One Findings - Communication Solutions should be used as a differentiator. Develop positive message regarding suppliers, customers, and skilled labor building on industry and academic credibility. Develop supply chain education and promotion message for legislators. Improve communication between economic developers and local regulators. Coordinate regional communication and marketing. Strategy development Strategy implementation

24. Workshop One Findings - Requirements Streamlined public sector approach with involvement of private sector partners. Intermediary model should reflect the strengths of the port authority lite, industry collaboration and public private partnership models. Multi-nation, multi-state board with executive committee. Should have planning and strategic visioning attribute. One stop entry point.

25. Workshop Two Agenda Welcome Introductions Synthesize findings from Workshop One Organizational model recommendation Finalize Regional Intermediary design: Breakout Discussion Report out Plans to work with pilot companies Planning for next Workshop

26. Best Practices Research – Hub Geographies Including Additions (Bolded) from Workshop One

27. Organization and Governance Models Port Authority Model Port Authority “Lite” Model Public / Private Partnership Model Industry Collaboration Model

28. Critical Success Factors for Hub Models Public sector funding Integrated Regional and Statewide asset strategy Commitment from a major logistics provider or shipper as a catalyst to Economic Development Economic Development driven by aggressive lead management approach across all stakeholders to attract shippers and carriers Available physical capacity (Land, Facilities, People) to support growth Hub supply chain competitive advantages

29. Example Critical Success Factors from Columbus Hub Model Successful programs require: A clear regional vision with community buy-in Active leadership engagement in all phases of the effort, not just the upfront strategy A sense of urgency that acts as a forcing mechanism for change and coordination Quality of life that reinforces economic-development efforts and regional prosperity Belief that workforce development and K-12 education, which strengthen long-term regional health and talent availability, helps address reputation as a place for businesses University involvement in research, commercialization and talent development Multi-generational commitment to economic development and a systematic approach

30. TDL & Exports Regional Intermediary Model: Preparation for Break Out Session Regional Intermediary Model Recommendation: What are the strengths and weaknesses of our public/private partnership organizational model recommendation? What model refinements or extensions would be necessary?

31. Organizational Model Recommendation: Public / Private Partnership Model Provide private sector value propositions which offer economic competitiveness and lowest total cost to serve Provide private sector the advantage of serving global markets Provide public sector advantages of good Infrastructure and support capabilities Provide public sector advantages of availability of very good human, land, supplier, and financial capital

32. Our Public/Private Organizational Model Must Focus on Private Sector Value Propositions Economic competitiveness and lowest total cost to serve Lowest Cost to Serve for Industry Partners Streamlined government environment and competitive tax climate Ability to serve global markets Good Infrastructure and support capabilities Availability of very good human, land, supplier, and financial capital

33. Our Public/Private Organizational Model Must Focus on Private Sector Value Propositions Economic competitiveness and lowest total cost to serve Ability to serve global markets Integrated U.S./Canada border community Leveraged foreign trade zone locations International/NAFTA transport links Customs house, forwarding, and related services Good Infrastructure and support capabilities Availability of very good human, land, supplier, and financial capital

34. Our Public/Private Organizational Model Must Focus on Public Sector Advantages Economic competitiveness and lowest total cost to serve Ability to serve global markets Good Infrastructure and support capabilities Excellent airport capabilities, railroad network, intermodal capacity and distribution facilities State of the art supply chain security Development incentives for transportation assets Private investment for transport infrastructure Availability of very good human, land, supplier, and financial capital

35. Our Public/Private Organizational Model Must Focus on Public Sector Advantages Economic competitiveness and lowest total cost to serve Ability to serve global markets Good Infrastructure and support capabilities Infrastructure and support capabilities Availability of very good human, land, supplier, and financial capital Supply chain expertise and skilled labor World class technology enablers Land and facility availability Financial capital

36. Organizational Model Recommendation: Public / Private Partnership Model Example Example Public/Private Model: KC Smartport Board Consists of Public (DOT, MPO, Airports, Econ Develop Corps), Private (TDL, Consultant, Chambers) and Universities from two states Funded in part by dues or donations (“investments”) from board members’ organizations Roles Market Site Location Assistance (Real Estate and Transportation) Advocacy for Global Logistics Mindset Transportation Resources Connections Supply Chain Education Supply Chain Data Exchange

37. Recommendation Includes Private Features from the Industry Collaboration Model Example Industry Collaboration Model – Columbus Objectives of adding180,000 jobs by 2020 and attracting capital investment of $10 billion Focus on value added potential rather than infrastructure Pillars of activity Retention and expansion of existing businesses Attraction of major employers to establish operations in Central Ohio Creation of more commercial enterprises by leveraging research assets Support of civic infrastructure and political conditions that enhance the economic development environment

38. Recommendation Also Highlights Features from the Port Authority “Lite” Model Example of Port Lite Model – Virginia Port Authority Mission statement- To be the primary gateway for international cargo transportation through the Mid-Atlantic and Mid-West regions of the United States. Indeed Value Propositions & Goals Provide a level of service and convenience unmatched on the east coast (inland port is critical in achieving this) Support and lobby for improved and increased rail capacity from VA to the Mid-West Recruit companies to establish distribution centers for both direct economic benefit and to make VPA more appealing to international shiplines

39. Recommendation Includes Public Features from the Port Authority “Lite” Model Virginia’s integrated supply chain asset strategy

40. TDL & Exports Regional Intermediary Model: Preparation for Break Out Session II. Metrics for Regional Intermediary Model: Validate the hub organization model evaluation metrics Will our public/private partnership organizational model outputs exceed the thresholds for the metrics?

41. Hub Organizational Model Evaluation Metrics Primary Metrics: Number of jobs created (Direct & Indirect) Economic activity benefits (Dollars) Secondary Metrics: The number of new businesses attracted Business retention rate (New and Existing) Investment amounts with ratio: Public vs. Private Inbound/Outbound shipments (Volume and Value)

42. Hub Model Evaluation Metrics - Ohio Primary Metrics: Number of Jobs Created (Direct & Indirect) Rickenbacker Park: 12,500+ New Jobs Economic Activity Benefits (Dollars) Rickenbacker Park: $705 million Secondary Metrics: The Number of New Businesses Attracted Rickenbacker Park: Wal-Mart, Home Depot, Ford, Honda, The Limited, UPS and the US Postal Service, J. B. Hunt, Schneider, Norfolk Southern

43. Hub Model Evaluation Metrics - Virginia Primary Metrics: Number of Jobs Created (Direct & Indirect) Port Related business provide over 343,000 jobs Economic Activity Benefits (Dollars) Annually $41 billion in revenue, $13.5 billion in payroll compensation, and $1.2 million in local tax revenue Secondary Metrics: The Number of New Businesses Attracted VPA has attracted more then 80 port related distribution facilities $500 million commitment from Maersk to develop a new marine terminal Inbound/Outbound Shipments (Volume and Value) 2010 VPA Imports/Exports: Exports 1,005,370 TEU’s Imports: 889,648 TEU’s

44. Hub Model Evaluation Metrics - Georgia Primary Metrics: Number of Jobs Created (Direct & Indirect) - Logistics Report: GA Logistics Providers Employ 142,000 Georgians Georgia Port Authority: 295,443 jobs Economic Activity Benefits (Dollars) - Logistics Report: Generate $16 billion in annual sales Georgia Port Authority: $61.8 billion in annual sales Secondary Metrics: The Number of New Businesses Attracted - Business Attracted by Hub Capabilities: Kia North America, Coca- Cola, Home Depot, Gulfstream, Blue Bird Corp., NCR, Mercedes-Benz Inbound/Outbound Shipments (Volume and Value) - Georgia Port Authority: Exports 1,139,983 TEU’s Imports: 969,952 TEU’s

46. Studies estimated freight and transportation industry accounted for 40,000 jobs annually

47. MARC estimates 250,000 new jobs in the next 30 yearsEconomic Activity Benefits (Dollars) At the end of 15 years: Annual incomes of nearly $1 billion, Local and state tax revenues with a present value of $500 million Secondary Metrics: The Number of New Businesses Attracted - KC Smartport new businesses: Home Depot, Lowes, Smith Electric Vehicles, Sara Lee, FedEx SmartPost, Kimberly-Clark, DHL and OHL

48. Hub Metrics - 2009 Shipping Volume in Mtons

49. Hub Metrics - 2009 Shipping Value in $B

50. TDL & Exports Regional Intermediary Model: Preparation for Break Out Session III. Regional Intermediary Model Implementation: What obstacles exist for model implementation? Develop a plan to overcome the obstacles to implement our regional intermediary public/private partnership model What is the structure of the Hub Operating Board and who are the stakeholders represented on the Board?

51. SE Michigan Public/Private Partnership Organizational Model Opportunities Cross-border distribution hub and NAFTA thoroughfare away from congestion of Chicago-Toronto Trans-loading heavy imports from Canadian ports to U.S. using railroads Good airport, highway, and rail infrastructure with limited congestion and very good reliability Skilled Export and TDL management and supply chain labor talent is readily available Economical outbound motor carrier capacity Availability and affordable land Unique Offerings of Our SEMI/NWOH/SWON Model: Provide supply chain value propositions to attract companies Commitment from State of Michigan to make this happen

52. Workshop Two Agenda Welcome Introductions Synthesize findings from Workshop One Organizational model recommendation Finalize Regional Intermediary design: Breakout Groups Discussion Report out Plans to work with pilot companies Planning for next Workshop

53. TDL & Exports Regional Intermediary Model Recommendation – Break Out Session Small group breakout: Finalize Regional Intermediary organizational model design (Page 1 of 2) I. Regional Intermediary Model Recommendation: What are the strengths and weaknesses of our public/private partnership organizational model recommendation? What model refinements or extensions would be necessary? II. Metrics for Regional Intermediary Model: Validate the hub organization model evaluation metrics Will our public/private partnership organizational model outputs exceed the thresholds for the metrics?

54. TDL & Exports Regional Intermediary Model Recommendation – Break Out Session Small group breakout: Finalize Regional Intermediary organizational model design (Page 2 of 2) III. Regional Intermediary Model Implementation: What obstacles exist for model implementation? Develop a plan to overcome the obstacles to implement our regional intermediary public/private partnership model What is the structure of the Hub Operating Board and who are the stakeholders represented on the Board?

55. Workshop Two Agenda Welcome Introductions Synthesize findings from Workshop One Organizational model recommendation Finalize Regional Intermediary design: Breakout Discussion Report out Plans to work with pilot companies Planning for next Workshop

56. Pilot Company Partnerships Review piloting value proposition with representatives from firms and development authorities. Identify firms and firm demographics that might be interested in having support to identify and refine their value proposition for regional supply chain activities. Complete end-to-end integrated supply chain value proposition for pilot company.

57. End-to-End Integrated Supply Chain Model Relationship Management Information, Product, Service, Financial and Knowledge Flows E N D C O N S U M E R S SUPPLY NETWORK M A T E R I A L S INTEGRATED ENTERPRISE MARKET DISTRIBUTION NETWORK Order Procurement Administration Logistics Manufacturing Capacity, Information, Core Competencies, Capital and Human Resources

58. End-to-End Integrated Supply Chain Total Cost Analysis Approach Cost Components Sourcing + Production + Handling + Inbound Transport + DC Handling + Inventory + Customer Transport + Duties and Taxes ____________ Total Cost Dealers

63. Global Supply Chain Dynamics are Changing Firms looking for more balance between scale and reliability. Infrastructure congestion is becoming increasingly problematic. Increased energy cost will shift supply chain mode selection and design. Previous NEI workshops have emphasized the importance of being able to quantify the value proposition related to supply chain changes.

64. Changing Dynamics of Supply Chain Design $/unit Manufacturing Cost Transport Cost Economies of Scale

65. Changing Dynamics of Supply Chain Design $/unit Result of increased fuel cost Manufacturing Cost Transport Cost Economies of Scale

66. Changing Dynamics of Supply Chain Design Result of increase risk $/unit Result of increased fuel cost Manufacturing Cost Transport Cost Economies of Scale

71. Step 2: Explain value proposition to pilot company

72. Step 3: Complete value proposition by analyzing pilot company’s end-to-end supply chain

73. Step 4: Positive value proposition to use region as a Hub and proceed towards implementation

75. TDL and Exports: Implementation of Opportunity Assessment Findings Recommendation of organization model and Regional Intermediary Intermediary Design Workshop One: March 11 Intermediary Workshop Two: April 29 Implementation Workshop Three: June 10 Education, sharing of findings, and communications Piloting the implementation approach with partners April 1 Symposium Joint Workshop with MEDC: TBA

77. Develop plan for pilot company implementations

78. Develop framework for integrated supply chain asset strategy