1 ©2009 ViTAL Economy, Inc. TDL Cluster Indicator Scan Tuesday, July 21, 2009 1:00pm-3:00pm MAN-TRA-CON, Marion ViTAL Economy Alliance Rob Beynon – [email protected]

— 1 —©2009 ViTAL Economy, Inc.

TDL ClusterIndicator Scan

Tuesday, July 21, 20091:00pm-3:00pm

MAN-TRA-CON, Marion

ViTAL Economy Alliance Rob Beynon – [email protected]

Industry Cluster Opportunity Analysis

Third Cluster Meeting


Industry Cluster Third Workshop Agenda

Where we have been Quick Review of principles

Indicator Scan of Targets Wind Turbine Manufacturing Waste Energy Carbon Capture New Option: Coal Mixing

Next Steps


Southern Illinois will: Be the fastest growing economic region in Illinois Be the regional gateway:

From America’s Heartland to the global economy From the global economy to America’s Heartland

Be named a national and regional model for collaborative, regional rural economic transformation

Achieve a positive balance between livability &

sustainable growth

Southern Illinois will: Be the fastest growing economic region in Illinois Be the regional gateway:

From America’s Heartland to the global economy From the global economy to America’s Heartland

Be named a national and regional model for collaborative, regional rural economic transformation

Achieve a positive balance between livability &

sustainable growth

Why….? Connect SI Vision and Goals


Overall Roles and Responsibilities

Establish a leadership team Recruit members to the cluster team Keep industry cluster team members

engaged Identify existing local research Attend key cluster meetings providing

input and analysis Create and lead action teams Provide input and analysis of market

niches and hypotheses Conduct industry cluster asset mapping Provide input to final report Present cluster report in public session

Provide guidance and advisement to VE industry cluster approaches

Provide key primary research based upon the cluster work plan

Market Attractiveness Macro and Micro analysis

Regional and national industry interviews Provide facilitation of key industry cluster

meetings and teleconferences Transfer knowledge to the cluster team Prepare final cluster report

Industry Cluster Team Research Team

©2009 ViTAL Economy, Inc.

ViTAL Economy Alliance

Identification of a set of regional goals and issues to be addressed, ex.• Increase regional average wage• Raise per capital income• Lower Poverty• Increase private payer healthcare coverage

Determine market segmentation for each niche market

Identify niche markets and hypotheses for each initial industry

Determine market attractiveness for each niche market

• Market size, growth rates, general trends, demand trends, supply trends, market profitability

Cluster team and research team test hypotheses

Conduct primary and secondary research review

Identify and quantify industry trends and opportunities

Cluster team inventory of indigenous resources supporting niche markets

Cluster Team conduct regional industry cluster mapping

Determine top two industry clusters to be opportunity analyzed

List the key questions that need to be answered for each hypotheses

Return and identify other

niche markets if current are not

feasible

Return and identify other

niche markets if current are not

feasible

Develop strategic and implementation strategy

ViTAL Economy Industry Cluster Opportunity Analysis

Prioritize niche markets for continued primary and secondary research

Start

Cluster Analysis Milestones

• Milestone #1

• Milestone #2

• Milestone #3

• Milestone #5 & #6


Industry clusters and market sub-segments with an indigenous competitive advantage are identified through the asset mapping and research process

PEOPLE

TECHNOLOGY

INFRASTRUCTURE

LOCATION

NATURALRESOURCES

INDIGENOUSASSET MAPPING

FOCUSES

PRELIMINARY CLUSTER

LIST

PRIORITIZEDCLUSTER AND

MARKET SEGEMENT LIST

ASSET MAPPING PROCESS

PRELIMINARY CLUSTER LIST

SCREENED AGAINST INDIGENOUS ASSETS


I. Market Description/Segmentation

II. Market Attractiveness Market size--regional, national, international Market growth rates General business trends within markets Demand trends--regional, national, international Supply trends--regional, national international Market profitability

III. Regions Competitive Position to Produce a Product or Service Local production capabilities Local technical capabilities Local capacity utilization Cost components, i,e, labor, raw materials, finance costs, etc Cost curve position vis-à-vis potential regional, state, national and

international competitors

Framework…Cluster Assessment Outline


IV. Timing Issues to Establish Competitive Position in Market Length of time to establish industry Likely actions of potential competitors

V. Financial Viability and Financial Resources Required to Pursue Opportunity

Business Case Assessment Capital requirements Availability of capital at the regional, state and national level

Framework…Cluster Assessment Outline


Framework…Structured Fact-Based Analysis

1. Structured framework utilizes fact-based hypotheses• Followed by fact information gathering and analysis

• To prove or disprove the hypothesis

2. Defines the “boundaries” of an issue and breaks it down

into component parts

3. Eliminates blind alleys quickly, allowing you to focus on

the main issues

The VE approach uncovers opportunities for the industry clusters in SI.

It does not apply a “generic silver bullet” method typical of other processes.

The VE approach uncovers opportunities for the industry clusters in SI.

It does not apply a “generic silver bullet” method typical of other processes.


Areas Examined To Date

CLUSTER

• Light Sport Aircraft• Rail Maintenance and Cleaning• Terminals

• River• Intermodal• Coal mixing

TRANSPORTATION, DISTRIBUTION &

LOGISTICS

OPPORTUNITIES

• Carbon Capture• Wind Turbine Manufacturing• Energy from Waste

ENERGY


Indicator Scan Methodology:High Level Examination of the Clusters

Comments on each indicatorComments on each indicator

• •

TechnologyTechnology

Market LocationMarket Location

SkillsSkills

Government Support

Government Support

11 22 33

Summary statementSummary statement

Clear OpportunityClear Opportunity

CompetitivenessCompetitiveness

Business Interest Exists


Community Interest Exists


List of indicators

Rating of indicatorEach indicator within each cluster has been rated. Red is poor. Yellow is neutral. Green is an advantage.


Indicator Scan

Sport Aircraft Manufacturing




Is there a clear opportunity?Is there a clear opportunity?

• Sport pilot certification issued by FAA as of 2007

• Rapid growth in licensed sport aircraft in 2007, from 500 to 4,000 aircraft in the US (2008 figures not available)

•Competitors exist for the opportunity

•Maintenance would create ongoing employment opportunities

• Sport pilot certification issued by FAA as of 2007

• Rapid growth in licensed sport aircraft in 2007, from 500 to 4,000 aircraft in the US (2008 figures not available)

•Competitors exist for the opportunity

•Maintenance would create ongoing employment opportunities



SkillsSkills

Government Support

Government Support

11 22 33

There is a market niche though size is unclear.There is a market niche though size is unclear.







Source: FAA




•There are two types of manufacturing opportunities

• “ready-to-fly” and• kit aircraft

•Approximately 70 manufacturers are represented in the US. Most are based overseas.

•Few manufacturers appear to be based in the Mid West

•There are two types of manufacturing opportunities

• “ready-to-fly” and• kit aircraft

•Approximately 70 manufacturers are represented in the US. Most are based overseas.

•Few manufacturers appear to be based in the Mid West




SkillsSkills

Government Support

Government Support

Numerous manufacturers exist but appear to be underrepresented in the Midwest

Numerous manufacturers exist but appear to be underrepresented in the Midwest





Community Interest Exists 11 22 33



Availability of TechnologyAvailability of Technology

•Technology well developed and available through existing manufacturers.

•Relationship with manufacturer easiest way to gain technology.

•Need to be manufactured to standards set by the American Society for Testing and Materials, approved by the FAA.

•Technology well developed and available through existing manufacturers.

•Relationship with manufacturer easiest way to gain technology.

•Need to be manufactured to standards set by the American Society for Testing and Materials, approved by the FAA.




SkillsSkills

Government Support

Government Support

11 22 33

Technology availableTechnology available








SkillsSkills•Staff need to be trained in line with the standardized manufacturing specifications of

sport aircraft.

•Staff need to be trained in line with the standardized manufacturing specifications of

sport aircraft.

SIU graduated 43 students from the Aviation Technologies program in 2008

Enrollment into the program reached 120 in 2008.

Source: Southern Illinois University




SkillsSkills

Government Support

Government Support

11 22 33

SI has a competitive advantage in skillsSI has a competitive advantage in skills








Location to MarketLocation to Market• The Mid West has a significant number of existing and potential pilots• Few sport aircraft manufacturers are represented in the Mid West• SI has an airport actively exploring developing these opportunities

• The Mid West has a significant number of existing and potential pilots• Few sport aircraft manufacturers are represented in the Mid West• SI has an airport actively exploring developing these opportunities




SkillsSkills

Government Support

Government Support SI appears to have a locational advantage.SI appears to have a locational advantage.








Government SupportGovernment Support

• Governments typically strongly support manufacturing and aviation opportunities

• An example of this is the IL Manufacturer’s Purchase Credit (MPC) earned when a manufacturer purchases machinery and equipment that qualifies.

• Governments typically strongly support manufacturing and aviation opportunities

• An example of this is the IL Manufacturer’s Purchase Credit (MPC) earned when a manufacturer purchases machinery and equipment that qualifies.

Source: Illinois Department of Revenue




SkillsSkills

Government Support

Government Support

11 22 33

Government support is anticipated.Government support is anticipated.











SkillsSkills

Government Support

Government Support

Stated Business InterestStated Business Interest

No public statement of interestNo public statement of interestClear OpportunityClear Opportunity





Stated Community InterestStated Community Interest

Local interestLocal interest

11 22 33

11 22 33


Sport Aircraft Manufacturing - Summary




SkillsSkills

Government Support

Government Support

SummarySummary

This opportunity appears worth exploringThis opportunity appears worth exploringClear OpportunityClear Opportunity





CLUSTER INDICATOR SCAN ANALYSISSPORT AIRCRAFT MANUFACTURING

INDIGENOUSCOMPETITIVEADVANTAGE

• People• Location

• Indigenous Assets• Infrastructure• Technology

MARKET ATTRACTIVENESS

Low High

Low

HighHigh

PotentialClusters

INDICATOR SCAN


Indicator Scan

Rail Maintenance Rail Maintenance


Rail Maintenance


• Rail carriers pressuring system users to own their own cars, therefore a growing maintenance and cleaning market

•Class 1 rail carriers owned only 35% of rail cars in early 2007.

• In 2004, Class 1 rail carriers spent $306 million on car repairs outside their facilities

• Rail carriers pressuring system users to own their own cars, therefore a growing maintenance and cleaning market

•Class 1 rail carriers owned only 35% of rail cars in early 2007.

• In 2004, Class 1 rail carriers spent $306 million on car repairs outside their facilities



SkillsSkills

Government Support

Government Support Large, growing private maintenance, cleaning market

exists.

Large, growing private maintenance, cleaning market exists.







11 22 33

Source: AAR


Rail Maintenance


• This is a large established business. There are over 50 significant operations in the U.S. SI has existing car cleaning and engine refurbishing operations.

• SI is not close to a major rail terminals, but it does have numerous major rail lines running through it

• This is a large established business. There are over 50 significant operations in the U.S. SI has existing car cleaning and engine refurbishing operations.

• SI is not close to a major rail terminals, but it does have numerous major rail lines running through it




SkillsSkills

Government Support

Government Support

As SI is not near major terminals, niche opportunities are the most probable

As SI is not near major terminals, niche opportunities are the most probable







Rail Maintenance


•Technology is readily obtained. Skills required are typically mechanical and metal working skills such as welding.

•Technology is readily obtained. Skills required are typically mechanical and metal working skills such as welding.




SkillsSkills

Government Support

Government Support Technology is not a hurdle.Technology is not a hurdle.






11 22 33


Rail Maintenance

SkillsSkills• Skills vary from simple for cleaning to advanced for engine work. For some work courses on standards and regulations set by the Federal Rail Administration are required.• SIU and regional colleges offer mechanical and related training• A national shortage of skilled employees exists at the advanced level

• Skills vary from simple for cleaning to advanced for engine work. For some work courses on standards and regulations set by the Federal Rail Administration are required.• SIU and regional colleges offer mechanical and related training• A national shortage of skilled employees exists at the advanced level




SkillsSkills

Government Support

Government Support

11 22 33

SI appears to have neither an advantage nor a disadvantage








Rail Maintenance

Location to MarketLocation to Market• As SI is not near a major terminal, it appears unlikely to attract engine work from major rail carriers• However, the private owners of cars are less likely to be concerned by this. • Location makes maintenance and cleaning of rail cars used east of the Mississippi reasonable

• As SI is not near a major terminal, it appears unlikely to attract engine work from major rail carriers• However, the private owners of cars are less likely to be concerned by this. • Location makes maintenance and cleaning of rail cars used east of the Mississippi reasonable




Training IssuesTraining Issues

Government Support

Government Support

Well positioned for services for rail cars used east of the Mississippi.

Well positioned for services for rail cars used east of the Mississippi.







Rail Maintenance


• Rail maintenance does not fit government priorities so will probably not receive strong support or interest

•Conversely, does not have major impediments

• Rail maintenance does not fit government priorities so will probably not receive strong support or interest

•Conversely, does not have major impediments




SkillsSkills

Government Support

Government Support Government support probably neutral.Government support probably neutral.






11 22 33


Rail Maintenance





Government Support

Government Support


Local businesses are active or have expressed interest

Local businesses are active or have expressed interest







Public community interest not noted, but expect support for job potential

Public community interest not noted, but expect support for job potential

11 22 33

11 22 33


Rail Maintenance - Summary




SkillsSkills

Government Support

Government Support

SummarySummary






CLUSTER INDICATOR SCAN ANALYSISRail Maintenance





Low High

Low

High High PotentialClusters

INDICATOR SCAN


Indicator Scan

Terminals Terminals


Terminals


• In the last decade, transportation and distribution has been one of the fastest growing sectors in the US

•Much of this growth has occurred in the Mid West

•Transportation is anticipated to recover with the overall US economy

• In the last decade, transportation and distribution has been one of the fastest growing sectors in the US

•Much of this growth has occurred in the Mid West

•Transportation is anticipated to recover with the overall US economy



SkillsSkills

Government Support

Government Support Transport and distribution anticipated to continue its growth

as the economy recovers.

Transport and distribution anticipated to continue its growth as the economy recovers.







11 22 33

Source: BEA


Terminals


• SI is well positioned on major interstates, Class I rail carrier lines, and major domestic waterways

• SI is not close to a major urban centers

• SI is well positioned on major interstates, Class I rail carrier lines, and major domestic waterways

• SI is not close to a major urban centers




SkillsSkills

Government Support

Government Support

The connection of major transportation connections is attractive but as SI is not near major cities, niche

opportunities are the most probable








11 22 33


Terminals


•Technology is readily obtained. •Technology is readily obtained. CompetitivenessCompetitiveness



SkillsSkills

Government Support

Government Support Technology is not a hurdle.Technology is not a hurdle.






11 22 33


Terminals

SkillsSkills• Skills required vary from simple to advanced.• SIU and regional colleges offer relevant training• A national shortage of skilled employees exists at advanced levels

• Skills required vary from simple to advanced.• SIU and regional colleges offer relevant training• A national shortage of skilled employees exists at advanced levels




SkillsSkills

Government Support

Government Support

11 22 33









Terminals

Location to MarketLocation to Market

• SI has a unique geographic location on major waterways, interstates, and rail lines• But it is not near a major urban center (consumers) as export port

• SI has a unique geographic location on major waterways, interstates, and rail lines• But it is not near a major urban center (consumers) as export port




SkillsSkills

Government Support

Government Support










11 22 33


Terminals


• Government support for transport opportunity is feasible

• The Delta Regional Authority (DRA) is supporting regional intermodal development

• USDA may support related initiatives

• Government support for transport opportunity is feasible

• The Delta Regional Authority (DRA) is supporting regional intermodal development

• USDA may support related initiatives




SkillsSkills

Government Support

Government Support

11 22 33

Government support is anticipated, particularly if strategic objectives are identified.

Government support is anticipated, particularly if strategic objectives are identified.







Terminals





Government Support

Government Support


Mixed comments from businessMixed comments from businessClear OpportunityClear Opportunity






A number of communities are actively exploring

A number of communities are actively exploring

11 22 33

11 22 33


Terminals - Summary




SkillsSkills

Government Support

Government Support

SummarySummary






CLUSTER INDICATOR SCAN ANALYSISTERMINALS





Low High

Low

HighHigh

PotentialClusters

INDICATOR SCAN

©2009 ViTAL Economy, Inc.— 39 —

WorkplanWhat are we doing next?

©2009 ViTAL Economy, Inc.— 40 —

Next Steps

• What deserves follow up?

• Why?

Documents

1 ©2009 ViTAL Economy, Inc. TDL Cluster Indicator Scan Tuesday, July 21, 2009 1:00pm-3:00pm MAN-TRA-CON, Marion ViTAL Economy Alliance Rob Beynon – [email protected]