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Presented to Northwest Tennessee Regional Port Authority, Dyersburg, TN

Contributions of Proposed Investment in Northwest Tennessee Regional Port at Cates Landing to the Regional Economy . Presented to Northwest Tennessee Regional Port Authority, Dyersburg, TN. Murat Arik, Ph.D. Associate Director. Business and Economic Research Center

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Presented to Northwest Tennessee Regional Port Authority, Dyersburg, TN

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  1. Contributions of Proposed Investment in Northwest Tennessee Regional Port at Cates Landing to the Regional Economy Presented to Northwest Tennessee Regional Port Authority, Dyersburg, TN Murat Arik, Ph.D. Associate Director Business and Economic Research Center Jennings A. Jones College of Business Middle Tennessee State University Murfreesboro, TN 37132 October 5, 2009

  2. Presentation Outline • Introduction • Overview of Study Area and Port of Cates Landing • Study Area • Port of Cates Landing • Study Questions • Understanding and Measuring Impact of the Port • Conceptual Framework • Economic Impact • Findings • Benefit-Cost Analysis • Economic Impact • Socioeconomic Implications of the Proposed Development

  3. I. Introduction • Sponsored by the Northwest Tennessee Regional Port Authority, the primary purpose of this study is to analyze the broader socioeconomic contributions of the proposed investment in the Port of Cates Landing. • The proposed investment amount is about $35 million.

  4. Presentation Outline • Introduction • Overview of Study Area and Port of Cates Landing • Study Area • Port of Cates Landing • Study Questions • Understanding and Measuring Impact of the Port • Conceptual Framework • Economic Impact • Findings • Benefit-Cost Analysis • Economic Impact • Socioeconomic Implications of the Proposed Development

  5. II.1. Overview of Study Area Three-County Region: Dyer, Lake, and Obion Immediate Neighbors (50-mile radius): Crockett, Gibson, Lauderdale, and Weakley

  6. II.1. Overview of Study Area • Regional Facts • The seven-county region has a total population of nearly 200,000. • Total labor force (seven counties) is nearly 92,000. • Publicly available socioeconomic indicators suggest that the entire region and individual counties are in economic distress (we will revisit this later). • The entire region has been shedding manufacturing jobs since the early 1990s.

  7. II.1. Overview of the Port of Cates Landing • The Port and Industrial Park Facts • A perfect spot on the Mississippi River • Located abovethe 100-year floodplain • Nearly two decades of efforts through public and private partnerships • About $15 million investment so far • The proposed investment of $35 million • will make the Port and industrial park a reality • will create a truly intermodal port in the region • will increase economic competitiveness of the regionand its businesses by directly connecting them to New Orleans

  8. Presentation Outline • Introduction • Overview of Study Area and Port of Cates Landing • Study Area • Port of Cates Landing • Study Questions • Understanding and Measuring Impact of the Port • Conceptual Framework • Economic Impact • Findings • Benefit-Cost Analysis • Economic Impact • Socioeconomic Implications of the Proposed Development

  9. III. Study Questions • This study addresses three major questions: • What are the benefits of the proposed port investment to society? • What are the short- and long-term economic contributions of the proposed investment to the regional economy? • What are the implications of the proposed investment for the indicators of socioeconomic distress in the northwest Tennessee?

  10. Presentation Outline • Introduction • Overview of Study Area and Port of Cates Landing • Study Area • Port of Cates Landing • Study Questions • Understanding and Measuring Impact of the Port • Conceptual Framework • Economic Impact • Findings • Benefit-Cost Analysis • Economic Impact • Socioeconomic Implications of the Proposed Development

  11. IV. Understanding and Measuring the Impact of the Port • General Assumptions • All benefits and economic impact estimates are driven by barge-eligible cargo volume. • Total estimated cargo volume is: inbound (852,180) + outbound (712,121) = 1,564,301 tons. • These estimates are derived from IMPLAN regional models and Census surveys. • Modal Shift • From long truck and rail from/to Memphis to short truck from/to the Port and rail from/to the Port • This shift reduces the number of long trucks on highways by 22 percent and vehicle miles traveled by 70 percent.

  12. IV.1. Conceptual Framework

  13. IV.1. Conceptual Framework

  14. IV.2. The Concept of Economic Impact • Short-Term Impact • Two Scenarios • The Port and Industrial Park Construction • What-If Scenario: Steel Mill Construction • Long-Term Impact • Three Scenarios • Marine-Related Services • Industrial Park Tenants • What-If Scenario: Steel Mill Operations

  15. IV.2. The Concept of Economic Impact

  16. Presentation Outline • Introduction • Overview of Study Area and Port of Cates Landing • Study Area • Port of Cates Landing • Study Questions • Understanding and Measuring Impact of the Port • Conceptual Framework • Economic Impact • Findings • Benefit-Cost Analysis • Economic Impact • Socioeconomic Implications of the Proposed Development

  17. V.1. Benefit-Cost Analysis • Once it becomes operational, the Port and associated developments will make the regional economy highly competitive. • Major societal benefits include transportation cost savings, fatality reduction, injury reduction, greenhouse emission reduction, and hazardous material spill reduction.

  18. V.1. BCA Assumptions

  19. V.1. Benefit-Cost Analysis • For every dollar ($1) invested, society will gain $2.89 at minimum in return.

  20. V.2. Economic Impact: Basic Assumptions • The Port and Industrial Park • $35 million spending • 783 marine-related direct jobs: the jobs that are necessary to handle 1.6 million tons of cargo • 203 direct jobs created by industrial park tenants • 30 percent industrial park vacancy rate • What-If Scenario: Steel Mill Construction and Operation • $550 million investment (spread over three years) • 300 direct steel mill jobs

  21. V.2. Economic Impact Results

  22. V.2. Economic Competitiveness and Job Retention • The study region has been shedding manufacturing jobs for decades. • The study region lost more than 4,000 manufacturing jobs between 2008 and 2009 • The proposed port investment will help the region retain nearly 2,300 manufacturing jobs.

  23. Presentation Outline • Introduction • Overview of Study Area and Port of Cates Landing • Study Area • Port of Cates Landing • Study Questions • Understanding and Measuring Impact of the Port • Conceptual Framework • Economic Impact • Findings • Benefit-Cost Analysis • Economic Impact • Socioeconomic Implications of the Proposed Development

  24. VI. Implications: Wages • Port-related jobs pay significantly higher than the average wages in Dyer, Lake, and Obion counties.

  25. VI. Implications: Wages Average wages for direct permanent jobs are higher than the average wage in the region.

  26. VI. Implications: Population The Port is likely to reverse the population growth trend in the region.

  27. VI. Implications: Unemployment All counties in the study region have unemployment rate higher than the U.S. average.

  28. VI. Implications: Unemployment Rate with the Port The port investment has potential to reduce the unemployment rate in the region by 50 percent.

  29. VI. Implications: Personal Income • Annual per capita income in the region ranges from $17,826 in Lake County to $29,372 in Obion County. • Per capita income in all counties in the region is far below the per capita income in the U.S.

  30. VI. Implications: Impact of Port Investment • Per capita income in the core region increases by 3.9 percent in the long term. • Per capita income in the seven-county area increases by 1.6 percent.

  31. VI. Implications: Poverty Rate • Lake County has the 15th highest poverty rate among counties in the U.S. • Poverty rate in Lake County is 26 percentage points higher than the U.S.

  32. VI. Implications: Impact of Proposed Investment on Poverty • Poverty rate in the region will decline 7.60 percentage points to 9.50 percent.

  33. Conclusion & Summary Findings • The benefit-cost and economic impact analyses suggest that the proposed $35 million investment is well worth it. • The Port will not only bring much-needed high-paying jobs but also diversify the regional economy to a great extent. • For example, Lake County will have manufacturing jobs, and the core study region will have a new economic sector: water transportation. • Findings of this study strongly recommend this level of investment in the region.

  34. Summary Findings

  35. TIGER Grant Update • Available amount $1.5 billion • 1,400 proposals submitted • of which 96 are port-related • Total requested funding is $57 billion. • Available amount is about 2.6 percent of the total funding request.

  36. Thank you! For more information, please visit us at www.mtsu.edu/~berc.

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