1. Transportation, Distribution and Logistics in Indiana Reha Uzsoy, Ph.D., P.E. Director, Laboratory for Extended Enterprises at Purdue Professor of Industrial Engineering (765) 494-0829 uzsoy@ecn.purdue.edu Supported by the Central Indiana Corporate Partnership

2. Strengths in Indiana Location and infrastructure –Major interstates, crossroads of America Extensive industrial base that is used to operating in demanding TDL environments –JIT logistics for the auto companies Strong universities Extensive network of regional campuses and community colleges

3. Indiana State Product Manufacturing dominates in Indiana’s economy –Up 27% to 32% –Vs. US 16% to 17% TDL also major –Up 8.2% to 10.3% –Comparable to US –Only growing IN share except manufacture –Probably much more internal to companies

4. Indiana Employment Productivity increase makes jobs grow more slowly Mfg 26% to 22% 605K to 688K TDL still major –Up 7.8% to 8.3% 181K to 258K jobs (without internal)

5. TDL Sectors TDL has two parts –Transportation 33-37% of product, 38-42% of jobs –Wholesale/distribution nearly twice as big

6. Indiana Wages per Job TDL wage growth (real + inflation) keeping pace with Average and Mfg TDL in 2000 is 13% below Mfg but 22% above Average and 130% above Retail

7. TDL Effects on Other Industries Input-Output multipliers try to estimate the impact of economic activity in one sector on the whole economy For purposes of this study we used Regional Input-Output Multipliers (RIMS II) information purchased from the U.S. Bureau of Economic Analysis (BEA) – Based on 1997 national benchmark data, in combination with 2000 regional and national output and employment estimates –Separate values for Indiana alone, and whole United States

8. Two Directions We considered multiplier effects in two directions First, what is the full economic impact of TDL activity within different categories? –On total demand, wages, and employment Second, what would be the impact on TDL demand of expanded manufacturing activity, especially in high tech “Battelle” categories? Both done for all U.S. and for Indiana alone

9. TDL Impact in U.S. Each $ of US TDL activity yields an average $2.75 in the all demand, and $0.83 in earnings Each $M of US TDL activity yields an average 23.20 jobs Some sectors like Freight Forwarders have higher yield ALL U.S. Demand ($ per $) Earnings ($ per $) Employment (jobs per $M) Railroads and related services2.850.9022.58 Trucking and courier services, except air 3.070.9329.25 Warehousing and storage2.770.8026.53 Water transportation2.850.7420.71 Air transportation2.830.8323.00 Freight forwarders & other3.271.0530.37 **Transportation Average2.940.8825.41 Wholesale trade2.560.7820.99 **TDL Average2.750.8323.20 (Source: U.S. BEA - RIMS II Multipliers. Averages unweighted)

10. TDL Impact in Indiana INDIANA Demand ($ per $) Earnings ($ per $) Employment (jobs per $M) Railroads and related services2.070.6317.31 Trucking and courier services, except air 2.180.6321.73 Warehousing and storage1.940.5119.86 Water transportation1.740.3210.65 Air transportation1.830.5017.53 Freight forwarders & other2.040.6528.32 **Transportation Average1.970.5419.23 Wholesale trade1.820.5416.80 **TDL Average1.890.5418.01 Each $ of IN TDL activity yields an average $1.89 in the all demand, and $0.54 in earnings within IN Each $M of IN TDL activity yields an average 18.01 jobs within IN Smaller values vs. US due to some inputs and indirect activity being realized outside IN (Source: U.S. BEA - RIMS II Multipliers. Averages unweighted)

11. Mfg Impact on TDL in U.S. Each $ of US high tech mfg yields about $.14 in the Wholesale Trade and $.09 in Transportation, or total $0.23 Wholesale values are similar for Other Mfg, but Transportation is higher, probably due to heavy volumes of bulk material in low tech mfg ALL U.S. Wholesale Trade Transpor- tation All Other SectorsTotal Life Sciences0.1240.0972.5752.795 Informatics0.1460.0762.6942.917 Advanced Manufacturing0.1450.0942.6802.920 All "Battelle"0.1430.0922.6682.903 Other Manufacturing0.1500.1142.7062.969 Other Services0.0890.0942.6182.800 All Manufacturing0.1490.1082.6942.950 All Services0.0900.0922.6312.812 (Source: U.S. BEA - RIMS II Multipliers. Group values unweighted averages)

12. Mfg Impact on TDL in IN INDIANA Wholesale Trade Transpor- tation All Other SectorsTotal Life Sciences0.0760.0451.7451.865 Informatics0.0810.0361.7211.837 Advanced Manufacturing0.0930.0561.8762.026 All "Battelle"0.0890.0521.8341.974 Other Manufacturing0.0860.0651.7521.903 Other Services0.0510.0591.7981.908 Total Manufacturing0.0870.0621.7751.924 Total Services0.0510.0571.7971.905 Each $ of high tech IN mfg yields about $.09 in the Wholesale Trade and $.05 in Transportation within IN, or total $0.14 Like US, Wholesale values are similar for Other Mfg, but Transportation higher Smaller values vs. US due to some inputs and indirect activity being realized outside IN (Source: U.S. BEA - RIMS II Multipliers. Group values unweighted averages)

13. And So… Case for TDL as an important part of the Indiana economy appears pretty solid Potential for significant growth in the future Significant effects on other industries in the state as well as employment Many advantages in Indiana! –Even the competition says so!

14. Vision Indiana as the home of an innovative, world-class TDL sector supported by creative public-private partnerships, innovative technology firms and enlightened, informed economic policies developed with the participation of all stakeholders

15. Role of Higher Education Provide intellectual capital through federal and industrial research Work with stakeholders to support economic policy decisions Significant role in workforce development We are all in this together!!

16. Current Status TDL initiative located in Purdue’s Center for Advanced Manufacturing 21st century proposal submitted with significant industrial, academic support –Not successful Currently reworking concepts, seeking industrial and academic partners