Presented to Northwest Tennessee Regional Port Authority, Dyersburg, TN

1
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
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 above the 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
  region and 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.