Mark Stevens

1
Sorting Out the Ideal Location

• Mark Stevens
• Partner
• Manufacturing and Distribution
• Wipfli LLP
• November 14, 2007

2
Objective

• Basis of the study
• Manage risk and ensure business continuity
• Create additional capacity
• Reduce operating costs
• Leverage alternative labor pools

3
Project Strategy
Project PlanningSetting the Direction
Negotiation SelectionDetermining theOptimal
Location
Needs AssessmentDetermining theRequirements
Bid Submittal AnalysisEvaluatingthe Options
Master PlanningExploring the Options
Invitation to RFP Engaging theCommunities
Centroid ModelingTargeting theIdeal Location
Solicitation TemplatesMarketing the
Opportunity
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Journey

• Logistics (inbound and outbound mileage)
• Labor costs
• Air transportation
• Union presence
• Tax climate
• Demographics
• Incentives
• Negotiation strategies

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Decision Making Strategy
Costs Image Accessibility Property taxes and
insurance
Constituency Satisfaction
Optimal Real Estate Transaction
Convenience/accessibility for support
personnel Available personnel base Social
diversity
Operating costs Education sources Supplier
proximity Taxes, and obligations Influencing
bodies Social Culture
Operational Effectiveness
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• Transportation
• and
• Logistics

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Combined Map (Inbound and Outbound)
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Logistics-Friendly Data

• Data is based upon the annual Site Selector
  data developed and published by Logistics Today
  and Expansion Management
• Uses 10 Transportation and Distribution
  characteristics to rank metro areas throughout
  the United States (defined on next slide)
• Primary goal is to evaluate the robustness of the
  transportation infrastructure

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Ranking Definitions

• TD (Transportation Distribution) Industry
  Measures the depth and strength of the TD
  industry, including number of companies in the
  TD sector, annual revenues generated by the TD
  sector (source U.S. Dept of Commerce)
• TD Work Force/Labor Measures the depth and
  cost of the TD work force, annual payroll of all
  companies in the TD sector, average salary, TD
  revenue per employee (source U.S. Dept of
  Commerce)
• Road Infrastructure Measures factors, such as
  public roads mileage, capital outlay for roads
  and bridges, highway maintenance per mile,
  spending for highway law enforcement (source
  FHWA data)
• Road Density, Construction, and Safety Traffic
  volumes and delays, accident statistics, and
  other factors affecting the smooth flow of
  traffic (source FHWA data)
• Road Condition Measures average roughness of
  metro roads, condition of highways and bridges,
  of structurally deficient bridges (source
  FHWA data)

FHWA Federal Highway Administration
10
Ranking Definitions

• Interstate Highway Infrastructure and access to
  interstate highways, spending on construction and
  maintenance, number of auxiliary roads
  (beltlines, bypasses . . . etc.) (source FHWA
  data)
• Taxes and Fees Measures logistics-related costs
  such as highway tax, fuel tax, and inventory tax
  (source Federation of Tax Administrators)
• Railroad Access to Class I and other rail
  services, number of rail carriers serving the
  area, and miles of railroad (source ALK
  Technologies Inc.)
• Waterborne Commerce Ocean port capacity, inland
  waterways, tonnage per port in the area (source
  U.S. Army Corps of Engineers Waterborne Commerce
  Statistics Center)
• Air Cargo Access to cargo services including
  international and expedited, number of air
  carriers, total air tonnage in the area (source
  Federal Aviation Administration Bureau of
  Transportation Statistics)

FHWA Federal Highway Administration
11
Candidate Comparison
Gary represented with the rankings for Michigan
City / La Porte, IN (24 miles from Gary)
12
Transportation Results Summary
13

• Cost of Living and Wages

14
Cost of Living Differentials

• Madison 110.2
• Indianapolis 103.9
• St. Louis 110.5
• Louisville 100.2
• Nashville 96.7
• Based on earnings of 70,000/year, rents, income
  taxes, consumable goods, consumer services,
  transportation costs, and health costs
• Source October 2006, Economic Research
  Institute

15
Wage Differentials

• Madison National Avg. Median Base
• Plant Manager 95,200 93,772
• Production Supervisor 53,900 51,259
• Shipping Supervisor 49,300 46,884
• Mfg. Engineer 69,000 66,861
• Assembler 10.48/hr. 10.58/hr.
• Machine Operator 15.05/hr. 15.20/hr.

16
Wage Differentials

• Louisville National Avg. Median Base
• Plant Manager 95,200 93,391
• Production Supervisor 53,900 52,714
• Shipping Supervisor 49,300 48,215
• Mfg. Engineer 69,000 68,034
• Assembler 10.48/hr. 10.06/hr.
• Machine Operator 15.05/hr. 14.45/hr.

17
Unemployment Rate

• Madison 3.0
• Indianapolis 4.6
• St. Louis 5.3
• Louisville 5.4
• Nashville 4.7
• Source As of August 2006 U.S.
  Department of Labor, Bureau of Labor Statistics

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• Air Transportation

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Air Transportation Availability

• Non-Stop Flights Stop Over
• Indianapolis 0 28
• St. Louis 2 28
• Louisville 0 24
• Nashville 0 26
• Commercial flights departing from Madison to the
  designated city. Number of flights is based on
  weekly departures including weekends.

Source Carlson Wagonlit Travel
20

• Union Presence

21
Union by State Candidates
Source The Center for Union Facts
www.unionfacts.com
22
Union by State All
Source The Center for Union Facts
www.unionfacts.com
23

• Tax Climate

24
State Business Tax Climate

• Score Rank
• Wisconsin 4.78 38
• Indiana 5.79 12
• Missouri 5.65 15
• Kentucky 4.76 39
• Tennessee 5.49 18

The higher the score the better, the more
favorable a states tax system is for
business Source Tax Foundation October 2006,
Number 52 Summaries based on FY 2007 for 113
variables placed into 5 components-corporate tax
index, individual tax index, sales tax index,
unemployment tax index, property tax index
25

• Demographics

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Madison, WI.
27
Lexington, KY.
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Culture
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Marketing the Opportunity

• Discover level of interest from selected
  communities
• Soft market the opportunity to those
  communities
• Assemble a compiling case that consists of
• Who we are
• What we can offer the community
• What we need in order to grow within the
  community
• Build precision questionnaires for site visits
• Document conceptual facility/site configurations
  

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Tool Links

• RFP Structure
• Sort Out Process
• Tax Analysis
• Operating Analysis

33
End of the Negotiations

• Net Benefits
• Significant reduction land costs
• Provided land development costs
• Provided utility connections
• Waived utility tap fees
• Property tax abatements
• Refund on sales and use tax
• Abatement on payroll taxes
• Skill development training
• Recruitment assistance

34
Thank you

• For more information contact
• Mark Stevens
• Telephone [phone]
• Direct 920.662.2966
• E-mail mstevens_at_wipfli.com
• Greg Butler
• Telephone [phone]
• Direct 414.431.9318
• Email gbutler_at_wipfli.com