Michigan could lead in logistics

By John Gallagher
Detroit Free Press Business Writer

Michigan’s strategic position as a gateway to Canada and the rest of the U.S. could be exploited to make the state a key leader in the growing field of logistics, a study commissioned by the nonprofit group Business Leaders for Michigan reported today.

Doug Rothwell, president and CEO of Business Leaders for Michigan, said the study “reaffirms that Michigan has numerous opportunities to grow its economy by exploiting its position as a global gateway and by investing in infrastructure that will improve product movement — especially with Canada, our No. 1 trade partner, but also Europe and Asia.”

Michigan’s proximity to Canada provides an advantage over Midwest competitors. “By increasing the capacity and reliability of transport in southeast Michigan, particularly by further developing the airport and building a new international border crossing, we can help protect this existing industry base,” he said.

Among its recommendations, the study concluded that Michigan should continue to enhance Detroit Metro Airport’s status as a major passenger and air cargo hub, with the Grand Rapids and Lansing airports serving as additional connections.

The study noted that metro Detroit already offers an array of transportation infrastructure, including Metro Airport, the Ambassador Bridge, the Detroit Windsor Tunnel, a railroad tunnel between Windsor and Detroit, and the Detroit Intermodal Freight Terminal in southwest Detroit. But all could be improved, and proposals to enhance the rail tunnel and to build a new bridge between Detroit and Windsor so far have not produced actual construction.

The study also noted what it called “mild concern” on the part of shippers and other firms over some limited availability of specialized equipment and modest concern about road conditions in Michigan and how the quality of roads could impact truck equipment.

The study was compiled by Global Logistics Development Partners, Global Innovation Partners and Greyhill Advisors and included reviewing Michigan’s logistics system and interviewing industry stakeholders, local policy makers, shippers, and the logistics industry.

The entire study is posted at www.businessleadersformichigan.com.

This latest study echoed some of the findings of earlier ones, including an assessment by the Washington, D.C.-based Brookings Institution that recommended that Michigan build on its existing industrial base to expand its economy.

Michigan poll: Voters support increased taxes for investment in roads, public transportation systems

Support crosses political boundaries

Michigan voters believe transportation systems create jobs and boost the state’s economy, and are willing to pay more to invest in them according to a survey released today by the Michigan Environmental Council.

The survey recorded widespread dissatisfaction with Michigan’s roads and public transportation. Respondents believe costs for those systems will spiral out of control if the shortcomings are not addressed quickly and aggressively.

More than 70 percent of voters said that they would not vote against elected officials who vote to raise taxes $20 per month for transportation infrastructure upgrades.

“Taxes are not a dirty word for voters when it comes to rebuilding roads and creating better public transportation systems,” said Chris Kolb, president of the Michigan Environmental Council and a former state representative. “Support for transportation investment was across the board—majorities of Democrats, Republicans and Independents all say they were willing to pay more.”

The statewide poll of 600 voters was conducted by Maryland-based Victoria Research & Consulting in February and March.

Among key findings:

  • 67 percent rate Michigan’s public transportation systems as fair or poor; 87 percent rate our roads fair or poor.
  • More than 90 percent believe we should do better at fixing roads and bridges. 76 percent think we should ensure that bike lanes, sidewalks and pedestrian crossings should be included in road projects.
  • 70 percent believe we should improve or fix bus systems. More than 60 percent believe we should improve passenger rail lines.
  • 64 percent want increased state investment in infrastructure.
  • 78 percent believe new transportation investment creates jobs and boosts the economy.
  • 62 percent are willing to pay increased taxes of $10 a month or more to fix transportation systems.
  • 71 percent reject raising taxes for transportation infrastructure as a reason to vote against elected officials.
  • 72 percent agree with the statement “Time is running out on gas, we need to invest in a cleaner, better transportation future.”

“Voters want their tax dollars spent wisely, and believe transportation systems are a smart investment in jobs and the economy,” said Donna Victoria of Victoria Research.

The poll results can be viewed by clicking here.

Boosting the Great Lakes International Economy

Brookings Institution

The regions on both sides of the Great Lakes international border need to team up to strengthen their highly integrated economies.

That was the conclusion of over 250 public and private leaders from both the United States and Canada recently brought together by Brookings and the University of Toronto Mowat Centre in Detroit-Windsor

The tone was set by Bruce Katz’s keynote–where he pressed for international metro action to expand exports and encouraged the industrial Great Lakes to seize and lead the low-carbon, clean-tech economy.

Overall, two topics dominated discussion by delegates as ripe for international teamwork.

One was building the 21st century transportation infrastructure the region needs as a platform for enhanced exports–and in particular building a state-of-the-art span connecting Detroit and Windsor, the world’s highest dollar international trade crossing point. Michigan Senate Majority Leader Randy Richardville, and Canada’s Consul General Roy Norton were pitching hard for the Michigan Legislature to follow Governor Rick Snyder’s call, and vote final approval for the new bridge.

The New International Trade Crossing has been 10 years in the planning, and is strongly backed by business leaders and governments on both sides of the border. It seemed a done-deal when Gov. Snyder announced that Ontario would pay cash-strapped Michigan’s share of the project, and in turn the U.S. Department of Transportation would let the Canadian dollars stand-in as Michigan’s match for federally-funded highway projects across Michigan.

The project keeps being sabotaged by the aging billionaire Mattie Maroun (born 1927), owner of the equally aging Ambassador Bridge (built 1929), fighting hard to keep a monopoly on toll traffic.

Maroun has contributed hundreds of thousands of dollars to Michigan State legislators, and bankrolled groups that are behind dirty tricks that would make Donald Segretti blush, including fake eviction notices at the doors of homeowners near the proposed bridge and patently false TV spots claiming Michigan taxpayers will foot the bill.

Meanwhile the whole $250 billion economic relationship with Canada is at risk, as the tightly wound manufacturing, agricultural, and commerce supply chains are bottlenecked–just at a moment they are poised to grow.

Another area for Great Lakes international teamwork is converting the region’s prodigious innovation, technology-base, and manufacturing talent to support new jobs and leadership in the clean-technology market. Recent Brookings research shows Michigan already 12th in the nation in share of clean-tech jobs and confirmed the jobs potential of clean-tech growth.

Grand Rapids Mayor George Heartwell made the point, “I can think of nothing more important than a more robust, and better harmonized Great Lakes renewable energy portfolio standard to drive job creation in the clean energy sector.”

Heartwell was articulating the market opportunities seen by business leaders in West Michigan, who feel well positioned to grow product lines and new jobs developing and manufacturing clean-energy and clean water solutions. When Gov. Snyder showed up in West Michigan to give his first “Reinvent Michigan Award” to Energetx, a wind turbine and electric vehicle parts supplier, the former venture capitalist was also petitioned by a 40-member delegation of clean energy business buddies, asking him to better support these emerging markets with more aggressive public policy.

As the Brookings study shows, clean-tech is one emerging arena in which to repurpose the engineering and manufacturing competencies of the Great Lakes to replace jobs lost in auto and other sectors–if state and metro leaders provide the supportive policy platform.

Cross-Border Public-Private Partnerships

Dome Magazine

by Rick Haglund

If the proposed New International Trade Crossing bridge connecting Detroit and Windsor gets built, Canada’s contribution to Michigan’s economy could go well beyond the $550 million our northern neighbor has pledged to pay for the state’s costs.

The bridge project could usher in a new era of cross-border, public-private partnerships used to expand transportation systems, Great Lakes environmental clean-ups and border security systems.

“The sky’s the limit. What you can turn into economic development opportunities using public-private partnerships is incredible,” said Lieutenant Governor Brian Calley, the governor’s point man on winning legislative approval for the bridge.

Public-private partnerships, known as P3s, often are mischaracterized as a privatization of government services or simply contracting for goods and services provided by private companies.

A P3 is a contractual agreement between a governmental entity and a private-sector company in which the risks and profits of building and operating public use projects, such as roads, bridges, municipal water systems and wastewater treatment plants, are shared.

As with the New International Trade Crossing plan, a private contractor or developer often finances the entire project and earns a return from the revenue generated by tolls or user fees.

“It’s a methodology using the best attributes of a strong government with the assets of the private sector in being innovative and taking risks, with the opportunity of making a profit,” said David Lick, a P3 legal expert at the Lansing law firm Foster Swift Collins & Smith.

Lick has been involved in structuring P3s since the 1980s, but they are not widely known in Michigan. One such project he worked on recently was a recycling and material recovery plant for the Resource Recovery and Recycling Authority of Southwest Oakland County.

In that project, the authority purchased the land for the plant, which was financed and built by a private contractor. The authority and the contactor share in the profits from the recycled material that’s produced and sold.

“I think we could make more use of P3s than we do now,” Lick said.

In Canada, P3s have been used to build 157 projects since the early 1990s, including hospitals, schools and sports stadiums. Canada is considered one of the world’s leaders in using such partnerships.

“The United States is a little behind the curve in using P3s,” said Sarah Hubbard, president of Acuitas, a Lansing lobbying firm, and former lobbyist for the Detroit Regional Chamber, another champion of the bridge project. “It can be a tough concept to understand.”

Indeed, the National Council for Public-Private Partnerships lists 18 types of P3s and says no two projects are alike.

P3s can be an attractive option for state and local governments that are dealing with aging infrastructures and tight budget.

Last year, the Michigan Department of Transportation rebuilt a section of the I-69 freeway in St. Clair County and a portion of I-75 near Flint using one type of P3 known as design-build-finance, or DBF.

In those projects, the contractor financed the construction and is being repaid over four years. The arrangement provided an acceptable financial return to the contractor and “allowed the project to go from concept to bid-letting much more quickly,” Lick said.

“The main benefit of a design-build project is to allow for innovative ideas to be implemented faster and in a competitive environment,” said state Transportation Director Kirk Steudle. “Once the bids are received and the plans approved, work proceeds quicker.”

P3s have been controversial, in part, because of the amount of power given to private developers, or concessionaires, who often operate the public works projects that they build.

One of the bills in the Michigan Legislature enabling the construction of the New International Trade Crossing specifically establishes it as P3. The legislation is needed, officials say, because it is unclear whether a private company has the legal authority to collect tolls on a bridge that has public involvement.

“There is an outstanding legal question,” Calley said. “I don’t believe there is a prohibition for a private company to collect tolls, but it’s a question that’s open for debate.”

In Canada, questions have also arisen about whether or not P3s save money for taxpayers.

For instance, a 2008 Ontario Auditor General’s report found that $200 million could have been saved in the construction of the Brampton Civic Hospital had the province financed the project itself, rather than letting a private developer finance it.

And public employee unions have criticized P3s, saying they cut jobs for government workers.

Lick said borrowing costs by private companies doing P3s can be higher than for government-financed projects, but they sometimes can qualify for tax-free municipal bond interest rates.

Other advantages of such partnerships make them a viable choice for constructing and operating public works projects, he said.

Cost overruns, common in such projects, usually are minimized when P3s are used.

“I think the issue of cost overruns is mitigated because the private sector does not have an open checkbook,” Lick said. “It has to produce the best value for every dollar spent.”

They keys to successful projects are having competent contractors and savvy government partners, according to Lick.

“Make no mistake — the use of a public-private partnership takes a government that has a strong backbone and knows what it is doing,” he said.

Calley and others say the potential for cross-border P3s between Canada and Michigan lies mostly in areas such as transportation and logistics.

Phil Power, chairman of The Center for Michigan, an Ann Arbor-based “think-and-do tank,” wrote in a recent column that creating a “multi-modal logistical hub” linking southeast Michigan and Ontario could create 200,000 jobs and billions of dollars in economy activity.

Such a hub would link air, water, rail and road transportation and could turn the region into the most efficient freight-moving center in the Midwest.

Gov. Rick Snyder also has said he’d like to see the proposed high-speed rail link between Chicago and Detroit extended to Toronto. A P3 could be used for such a project.

“There are a lot of transportation assets located in this area,” Calley said. “I think it is important to keep in mind the potential of building a continental transportation hub here.”

Can-Am land transport up 36%

WASHINGTON – U.S.-Canada surface transportation rose by over a third in June over the same period last year, totaling $42 billion.

The value of imports carried by truck were up 36 percent compared to June 2009, while exports were 34.2 percent higher during this period.

Overall, reports the Bureau of Transportation Statistics, land transportation trade between the U.S. and both NAFTA partners was up 37.6 percent in June over 2009 and up 4.6 percent from May 2010.

However, while truck trade reached $69.9 billion in June, it was still 5.8 percent below the June 2008 level.