The Piedmont Triad Aerotropolis Leveraging Piedmont Triad International

The Piedmont Triad Aerotropolis Leveraging Piedmont Triad International Airport and other Regional Assets for Competitive Advantage Presented by John D. Kasarda, Director The Kenan Institute of Private Enterprise The Kenan Flagler Business School University of North Carolina Chapel Hill June 12, 2007 Grandover Hotel and Conference Center. Piedmont Triad, North Carolina THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

The Overarching Context • The Piedmont Triad Region is at an economic crossroads as an increasingly fast paced, globally networked economy is changing the rules of competition and business location. • Strategic decisions and development initiatives taken today will determine the economic future of the Region in terms of industrial mix, business competitiveness, job creation, and citizen quality of life. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Four Critical Regional Challenges 1. Will the Piedmont Triad continue to successfully diversify into “new economy” high tech, R&D, medical sciences, and information intensive business services sectors? 2. Will both its traditional manufacturing and emerging high tech, health and white collar service industries be able to compete effectively, domestically and worldwide, in the new globally connected, speed driven marketplace? THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Four Critical Challenges (cont’d) 3. Will job creation in the Piedmont Triad Region in the coming decades achieve the goals both in quantity and quality set by local public and private leadership? 4. Will industrial and commercial development at and around Piedmont Triad International Airport be economically efficient, physically attractive, and environmentally sustainable? How these four interwoven challenges are met will go a long way in determining the economic future of the Piedmont Triad Region. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Responding to these Challenges Successful response requires informed vision and coordinated action by Piedmont Triad leaders: • A solid understanding of the drivers of 21 st century industrial competitiveness, job creation, and business location, especially the growing importance of speed, agility, and long distance accessibility airports provide. • The Piedmont Triad’s government and business leaders must implement a coordinated set of regional strategies and actions to capitalize upon the new Fed. Ex mid Atlantic hub and broader regional assets to harness and leverage new business realities. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

New Business Realities • High value to weight products dominate the new economy • Global supply chains are the new competitive units • Global competitiveness requires production flexibility and customization • Market turbulence and uncertainty are unavoidable • Speed and agility are as important as price and quality • Air commerce underlies all the above! THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

United States Total Air and Vessel Exports for 1990, 1997 And 2005, by Value (in Millions of US$) Source: U. S. Department of Commerce Merchandise Trade Files. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Air Commerce Facts • Air logistics and the new economy are inextricably interwoven • 40% of the value of world trade now goes by air (vs. under 2% by weight) • World air cargo traffic is expected to triple over the next 20 years (international air express much faster) • Air commerce is generating strings and clusters of airport linked businesses along major highway corridors THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Airport-Linked Business Clusters • Freight forwarding and third party logistics • E commerce fulfillment centers • Transformation (kitting, subassembly, sequencing) and flow through facilities • Time critical and just in time manufacturing • Perishables and cold storage facilities • ICT, biotech, and other high technology industries • Business services and regional office complexes • Hotels, trade, and exhibition centers THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Airport-Driven Economic Development • Firms are clustering near major airports because of the accessibility, speed, and agility airports provide to new economy global supply chains and connectivity to corporate customers nationally and worldwide. • As more aviation intensive businesses cluster around major airports and along transportation corridors radiating from them, a new urban form is emerging—the Aerotropolis—stretching up to 20 miles from the airports. Economic impacts are often extended up to 60 miles. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Aerotropolis Schematic Research/ Technology Park s la ne Flow-Thru and E-Fulfillment Facilities ro THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu Hotel Ae Air Cargo Bonded Warehouse District Business Offices Terminal/ ble Shopping Arcades s Aerolanes Terminal/ Shopping Arcades In Hotel Business Offices gy olo n ch Te s n or tio ica orrid n u C mm ICT) o ( C fo- es ha olan ris Aer C o nfe ren ce Hotel and Entertainment District Industrial Park Ce nte r Residential Exhibition Complex Pe Park r Aerotrain ness rido R W eta Me hole il/ rch sal e Ma andis rts e Busi Cor ress Exp iers r u Co ice Aerotrain Business Park Off Residential Aero lanes Logistics Park and Free Trade Zone Industrial Park Distribution Center

Three Selected Aerotropolises in Evolution • Memphis • Ontario, CA • Subic Bay THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Memphis America’s Leading Air Logistics Hub THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

MEM: Aerotropolis Engine With Fed. Ex Supercharger • $22 Billion Annual Economic Impact of Airport – $19. 5 Billion from Cargo Activities • 166, 000 Jobs Generated in Metro Area – Over 1 in 4 Metro Jobs Tied to Airport – 40, 000 Employed by Fed. Ex Alone • Per Capita Economic Impact of Airport Highest of Any U. S. Metro Source: University of Memphis: Memphis Airport Economic Impact Study. 2005 THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Comparative Economic Impact of Airports Airport/City 2004 Passengers Metro Population Economic Impact Memphis 10, 883, 759 1, 250, 293 $21 Billion Denver 42, 393, 766 2, 330, 146 $17 Billion Phoenix 39, 504, 898 3, 715, 360 $14 Billion Minneapolis 36, 713, 173 3, 116, 206 $11 Billion Source: Memphis-Shelby County Airport Authority THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Memphis Regional Logistics and Distribution Clusters THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Ontario, California Regional multimodal air logistics complex 45 miles east of Los Angeles • Ontario Int’l Airport (UPS regional hub with air links to China) • Two major interstate highways near airport (I 10, I 15) with I 10 link to LA/Long Beach port • Over 80 LTL truck companies in area • Intermodal rail (with truck cross docking) 3 miles from airport • More than 10 million sq. ft. of logistics and distribution space added every year since 1998. Now spawning higher end employment • Aerotropolis forming around Ontario Airport and outward along interstate highways THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Ontario, California Multimodal Complex THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Subic Bay, Philippines THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Subic Bay, Philippines • Fedex locates Southeast Asia regional hub at closed US Naval airfield in 1995 • Cumulative investment (virtually all by foreign investors) grows from $355 million in 1995 to $3. 4 billion in 2005 • Exports increase from $24 million in 1995 to $1. 31 billion annually in 2005 • Total airport linked employment rises to 56, 400 in 2005 • Similar growth taking place in the region around the former Clark Air Base as it is now a UPS air express hub with some Fed. Ex cargo service THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

The Piedmont Triad’s Opportunity • Developing a regional multimodal logistics platform anchored by the Fed. Ex mid Atlantic hub offers the Piedmont Triad Region its best opportunity to create world class competitive advantage in attracting and growing business and industry. • The Region’s confluence of central East Coast location, superior interstate highways, PTI and its new Fed. Ex mid Atlantic hub provide the region with logistics assets that can develop and brand the region nationally and globally the way RTP and research have done for the Raleigh Durham Chapel Hill area and financial services for Charlotte. • To accomplish this all jurisdictions in the Piedmont Triad Region must work together as a unified entity reflecting the reality that the region is a single market economy. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Building Upon and Further Improving the Region’s Surface Transportation Assets Rationale: The three “A’s” are replacing the three “L’s” in industrial and business location. The battle for air cargo is won on the ground, not in the air. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Major Logistics Asset Piedmont Triad Region’s Excellent Regional Highway Connectivity THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

PTI Area Future Transportation Plan Showing Proposed Outer and Inner Ring Roads Outer Ring Road (NC-68) Outer Ring Road (I-73) Inner Ring Road (Bryan Blvd. ) Inner Ring Road (Market St. ) Outer Ring Road (I-840) (I-40) THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director Source: Piedmont Triad Airport. Authority. www. kenaninstitute. unc. edu

The Aerotropolis Core: Airport Property Development THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Initial Fed. Ex-Related Development Program Runway 5 L -23 R Bryan Blvd. Relocation Initial Fed. Ex Site Initial Connecting Taxiway THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director Source: Piedmont Triad Airport Authority. www. kenaninstitute. unc. edu

PTI Campus at Full Build-Out THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Piedmont Triad Region Intermodal Interfaces at PTI Full Build-Out Central Cargo Facility THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

The Future Piedmont Triad Aerotropolis THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Traffic Analysis Zones Around PTI (2, 4 And 6 Miles) Source: Piedmont Authority for Regional Transportation. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Population & Employment Change in Aggregated Traffic Analysis Zones (TAZ) within 2, 4, And 6 mile Buffers around PTI: 2002 to 2035 THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Change in Employment by Sector Type and Distance from PTI: 2002 to 2035 Source: Piedmont Authority for Regional Transportation. THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

The Piedmont Triad Aerotropolis Challenge A Piedmont Triad Aerotropolis in some form will emerge around PTI. The critical issue is: Will it form and grow in an intelligent manner so that development is economically efficient, aesthetically pleasing, and environmentally sustainable, or in the spontaneous, haphazard, inefficient, unsightly, and ultimately unsustainable manner that has characterized much commercial development in many other U. S. airport regions? THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Recommendations and Action Steps The Report contains 30 recommendations that together provide a road map for the development of a world class Piedmont Triad economy built on the key drivers of a 21 st century economy. I have grouped the recommendations as follows --Overarching Regional --Infrastructure and Transportation --Airport Area Land Uses --PTI-Specific --Education and Workforce --Marketing --Regional Leadership THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Overarching Regional Recommendations 1. To compete nationally and globally, Piedmont Triad local governments must work together as a single entity 2. Air logistics represents the Piedmont Triad’s best opportunity to create a world class differentiating competency, leverage it fully 3. The Region’s multi modal logistics assets provide an advantage that can attract investment, generate tens of thousands of new jobs and raise the image and awareness of the Piedmont Triad, build and brand around these assets 4. The Piedmont Triad Aerotropolis will complement, not compete with what cities are doing in the Region — work together for success 5. Fast cycle logistics should become the Region’s new competitive tool, not low cost and traditional incentives THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Infrastructure and Transportation Recommendations 1. PTI tenants and users will require upgraded local highways, new interstates, extended rail lines, and state of the art telecommunications infrastructure 2. Substantial improvements need to be made in the Region’s transportation system 3. PART should consider establishing a task force to plan transportation improvements in PTI airport area 4. PART should establish multiple bus routes to facilitate transportation for part time Fed. Ex workers to the airport THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Airport Area Land Use Recommendations 1. PTI needs to acquire additional land for future growth 2. Elected leaders and planners must manage land uses near the airport for the benefit of the airport and the entire Region 3. Property near the airport should be zoned for uses compatible with airport growth; residential development should be discouraged/prohibited, and zoning should encourage location of airport oriented businesses THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

PTI-Specific Recommendations 1. PTI master plan must be flexible and responsive 2. PTI’s intermodal transportation infrastructure should be designed to allow seamless and flexible flows of materials among convergent transportation modes 3. Planning for the PTI air logistics hub should prioritize aesthetics and environmental sustainability 4. PTI must continue to aggressively recruit additional passenger and air cargo service 5. Piedmont Triad Airport Authority should explore additional non aeronautical revenue sources 6. All PTI entrances should be well designed and attractive 7. PTAA should consider engaging private sector partner(s) THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Education and Workforce Recommendations 1. Develop a state of the art distance education and training center at or near PTI to serve the entire Region 2. Logistics curricula concentrations at Piedmont Triad community colleges and universities need to expand improve THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Marketing Recommendations 1. Marketing of the PTI Air Logistics Hub should emphasize the importance of its logistics based capabilities in attracting time sensitive goods processing businesses 2. PTI and regional economic development organizations should enlist experts in logistics/supply chain management, multi modal infrastructure development and IT to design systems to support fast cycle logistics 3. Piedmont Triad Airport Authority and Piedmont Triad Partnership should focus marketing efforts on major corporate relocation/site selection consultants 4. PTAA and economic development organizations should consider branding the Piedmont Triad Aerotropolis THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

Regional Leadership 1. Regional leaders, particularly from PTAA, PART, and PTP, should look at best practices at other airports (e. g. Amsterdam Schiphol Airport and Denver International Airport) 2. Piedmont Triad municipal and county officials and planners should meet to coordinate actions 3. Piedmont Triad leaders should produce a comprehensive, multi year action plan to guide development of the Piedmont Triad Aerotropolis 4. Piedmont Triad local governments should expedite building and other permit approvals for companies 5. Aerotropolis and Heart of the Triad (HOT) development should be coordinated THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu

This is a once in a century opportunity for the Piedmont Triad Region. Work together for everyone’s advantage. Thank you. Email follow up to: john_kasarda@unc. edu THE KENAN INSTITUTE OF PRIVATE ENTERPRISE The Kenan Flagler Business School at The University of North Carolina at Chapel Hill Dr. John D. Kasarda, Director www. kenaninstitute. unc. edu