©2009 ViTAL Economy, Inc. 1 Energy Cluster Wednesday, January 28, 2009 8:00am-11:00am John A. Logan College ViTAL Economy Alliance Jim Haguewood.- [email protected]

©2009 ViTAL Economy, Inc.— 1 —

Energy ClusterWednesday, January 28, 2009

8:00am-11:00amJohn A. Logan College

ViTAL Economy Alliance Jim Haguewood.- [email protected]

Mark Madsen – [email protected]

Industry Cluster Opportunity Analysis

Kick-off Workshop


Industry Cluster Kick-off Workshop Agenda

10 Min. – Welcome & Introductions – Kathy Lively

10 Min. – Connect SI Vision and Goals – Kathy Lively

30 Min. – VE Industry Cluster Approach

20 Min. – State of the Industry?

45 Min. – Let’s Get Started!• What constitutes the SI energy industry cluster?

• What is the industry cluster sense of urgency?

• What is worth your time, talent and treasure to participate?

• Current industry initiatives and short term win opportunities?

• Define and agree on the cluster market niches (3-5) & hypothesis

10 Min. – BREAK

20 Min. – Industry Cluster Team Roadmap

15 Min. – Industry Cluster Team Recruitment Plan

10 Min. – Industry Cluster Team vs. Research Team Work Plan

10 Min. – 60-Day Work Plan


Southern Illinois will:• Be the fastest growing economic region in Illinois

• Be the regional gateway:– From America’s Heartland to the global economy

– From the global economy to America’s Heartland

• Be named a national and regional model for collaborative, regional rural economic transformation

• Achieve a positive balance between livability &

sustainable growth

Southern Illinois will:• Be the fastest growing economic region in Illinois

• Be the regional gateway:– From America’s Heartland to the global economy

– From the global economy to America’s Heartland

• Be named a national and regional model for collaborative, regional rural economic transformation

• Achieve a positive balance between livability &

sustainable growth

Why….? Connect SI Vision and Goals


Strategy Economic Sectors Job Goals• Global Workforce Opportunities 18,750

• Knowledge Based Enterprise (KBE) 8,023

• Senior Living 3,676

• Energy and Mining 5,680

• Tourism 4,450

• Logistics, Distribution and Transportation

1,675

10,919 New Jobs From$36,517 - $40,785

10,919 New Jobs From$36,517 - $40,785

41,461 Existing Jobs >$5,000/Yr

41,461 Existing Jobs >$5,000/Yr

16,379 New Jobs @ $43,500

16,379 New Jobs @ $43,500

$642 MillionNew KBE Activity

1,600+ Firms


1,600+ Firms

4,500+ Families with Healthcare Coverage

4,500+ Families with Healthcare Coverage

Lift 10,000 Citizens Out Of Poverty


$200 Million Information Technology

Investment

$200 Million Information Technology

Investment

Increase SI Export Value by$1 Billion/yr

Increase SI Export Value by$1 Billion/yr


Greater Egypt

Southern Five

Southeastern

Greater Wabash


All new jobs created byIndustry Clusters will be

targeted to include private payer health benefits for workers and

families

All new jobs created byIndustry Clusters will be

targeted to include private payer health benefits for workers and

families

• Tourism

• Bio-Agriculture

• Knowledge Based Enterprises (KBE)– Healthcare Technology Products & Services

– Advanced Manufacturing

– Recreational, Marine, Hunting, Technology Products & Services

– Visual Creative & Performing Arts and Services

– International Incubation and Innovation

– Green Technologies

– Homeland Security Response and Services

– Life Sciences, Plant and Animal

• Global Workforce Opportunities

• Energy

• Mining Technology

• Transportation, Logistics & Warehousing

• Senior Living

• Education & Training (also supports all the other clusters)

Is SI worth fighting for?Is SI worth fighting for?




ViTAL Economy Industry Cluster Identification and Assessment System

1. System Framework

2. Characteristics of the Approach

3. Clusters vs. Clusters Teams

4. Guiding Principles of Success

5. Discover the Value Chain - Input

6. Identify Key Existing Local Research - Input


Framework…..Geographic Region

100 Miles North

to South

Population=423,670 Workforce=195,429

130 Miles East-West


Traditional Industry Cluster Definition

A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, including

product producers, service providers, suppliers, universities, and trade associations. Clusters arise out of the linkages or externalities that pan across

industries in a particular location.

Vertical and independent orientationVertical and independent orientation


ViTAL Economy Industry Cluster Definition

Establish core value linkages both within and across industry sectors. These linkages creatively leverage the indigenous

strengths of a region. Clusters are assessed and prioritized in a collaborative process which insures that the critical challenges

and opportunities of a region are continually addressed.

Horizontal and interdependent orientation Horizontal and interdependent orientation


I. Market Description/Segmentation

II. Market Attractiveness• Market size--regional, national, international• Market growth rates• General business trends within markets• Demand trends--regional, national, international• Supply trends--regional, national international• Market profitability

III. Regions Competitive Position to Produce a Product or Service• Local production capabilities• Local technical capabilities• Local capacity utilization• Cost components, i,e, labor, raw materials, finance costs, etc• Cost curve position vis-à-vis potential regional, state, national and international competitors

IV. Timing Issues to Establish Competitive Position in Market• Length of time to establish industry• Likely actions of potential competitors

V. Financial Viability and Financial Resources Required to Pursue Opportunity• Business Case Assessment• Capital requirements• Availability of capital at the regional, state and national level

Framework…Cluster Assessment Outline


Framework…Structured Fact-Based Analysis

1. Structured framework utilizes fact-based hypotheses• Followed by fact information gathering and analysis

• To prove or disprove the hypothesis

2. Defines the “boundaries” of an issue and breaks it down

into component parts

3. Eliminates blind alleys quickly, allowing you to focus on

the main issues

The VE approach uncovers opportunities for the industry clusters in SI.

It does not apply a “generic silver bullet” method typical of other processes.

The VE approach uncovers opportunities for the industry clusters in SI.

It does not apply a “generic silver bullet” method typical of other processes.


Framework….Hypothesis Testing

1. A set of propositions based on facts already at hand, and intuition to

address issues, challenges, and industry and economic trends.

2. Propositions will be prioritized and evaluated through questions,

research and Quick and Dirty Testing (QDT)

“Not everything that can be counted counts and noteverything that counts can be counted.” Albert Einstein

“Not everything that can be counted counts and noteverything that counts can be counted.” Albert Einstein

Today, you as the core cluster team members will define the key initiatives of this cluster team as you determine the critical questions (hypotheses) for the research team to analyze.


Clusters should leverage indigenous resources

HIGH POTENTIAL CLUSTER IDENTIFICATION APPROACH

The ViTAL Economy Alliance Brings Significant Capabilities to Identify Competitive

Advantage Elements and Assess Market Attractiveness

The ViTAL Economy Alliance Brings Significant Capabilities to Identify Competitive

Advantage Elements and Assess Market Attractiveness

Maximizing Economic Development Potential

INDIGENOUSCOMPETITIVEADVANTAGE

• People• Location

• Indigenous Assets

• Infrastructure• Technology

MARKET ATTRACTIVENESS

Low High

Low

HighHigh

PotentialClusters

Desired Economic Development Goals

• Diversify economy

• Create sustainable economic growth

• Create jobs which exceed average national wage

• Create jobs with associated benefits

• Increase workforce capabilities

• Attract outside capital

• Deepen and strengthen capabilities of existing industry clusters

RESULTSIN


Important Distinction; Clusters vs. Cluster Teams

• Clusters are economic environments where people turn ideas into businesses– Better– Faster– More Reliably

• Cluster teams are catalysts….– To provide the vision and leadership– To assess and prioritize opportunities– To link resources, internal and external– To transform regional economies


Industry Cluster Team Guiding Principles

1. Industry cluster leadership and participation are key to generating outcomes

2. Work plan discipline, completing all elements of each phase, is key to achieving success

3. Trust and respect is required between companies and individuals

4. Collaboration is recognized as a key to achieving regional goals

5. Uncovered opportunities will have action teams assigned with leadership immediately

The Vital Economy Industry Cluster approach achieves measurable results through the recognition

and endorsement of key principles

The Vital Economy Industry Cluster approach achieves measurable results through the recognition

and endorsement of key principles


ViTAL Economy Core Principles

CollaborationBuilds Sufficient Critical Mass to Compete Globally, while

Emerging Cluster Strategies Assure Regional growth

+Connectivity

Links Geographically Remote Resources to Increase Access, while Creating Opportunity, Building Diversification, Enabling

Collaboration

+Changed Spending

Increases Productivity and RevenuesOpens New Markets, Expands Opportunity,

Establishes Measurable Benchmarks and Goals


Cluster Teams Understand and Use the 8-steps of Managing Change

1. Establish a Sense of Urgency

2. Form Powerful Guiding Coalitions

3. Create a Vision

4. Communicate the Vision

5. Empower Others to Act on the Vision

6. Plan for, Create, and Communicate Short Term Wins

7. Consolidate improvements and Produce More Change

8. Institutionalize New Approaches

Source: Harvard Business School


Rural Economies Must Move Closer to “C”

Move Up the Value Chain, Capture Greater Share of Value Chain

Margins, Increase Economic Prosperity

Friction is the Cost of Getting From P to CP C

P C

P=Producer & C=Customer


Fuel Energy Source

Generation Energy Storage

Transmission Distribution Customer Energy

Services

Company Presence

Special Infrastructure

Skilled Workers

R&D/Innovation

Step #1 – Identify each element of the industry value chain (hydrocarbon)Step #2 – Identify whether the element exists in the study region

Discover the SI Energy Value Chain Elements

Distributed Power

Energy Storage

Fuel Energy Source

Generation Transmission Distribution Customer Energy

Services


Fuel Energy Source

Generation Energy Storage

Transmission Distribution Customer Energy

Services

Company Presence

Special Infrastructure

Skilled Workers

R&D/Innovation

Step #1 – Identify each element of the industry value chain (alternative)Step #2 – Identify whether the element exists in the study region

Distributed Power

Energy Storage

Fuel Energy Source

Generation Transmission Distribution Customer Energy

Services

Discover the SI Energy Value Chain Elements


Foundation: Key Local Research

Reports and studies five years or younger:

• CSI Readiness Assessment - www.mantracon.org/new_connectsi.htm • CSI Asset & Indigenous Resource Mapping - www.mantracon.org/new_connectsi.htm



State of the Industry…Major Trends?

With global demand for energy ever on the rise, and renewable/alternative energy sources playing an increasing but still minor role, U.S. coal — especially clean-coal — becomes

increasingly important.Connect SI Readiness Assessment, Chapter 1.10



What is the State of the Industry…Major Trends?

With global demand for energy ever on the rise, and renewable/alternative energy sources playing an increasing but still minor role, U.S. coal — especially clean-coal — becomes

increasingly important.Connect SI Readiness Assessment, Chapter 1.10

• The recession has reduced the demand for energy and the price of oil in the short-term

• While the speed of recovery remains unclear, longer term expectation include – increased global demand for energy– development of renewable energy– major short-term investment in alternative energy R&D and

development


Trend…Oil Prices Projected to Increase

0

50

100

150

200

250

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

2028

History Projections

High

Low

2007 dollars per barrel

0

50

100

150

200

250

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

2028

History Projections

High

Low

2007 dollars per barrel

Source: EIA (Energy Information Administration) Annual Energy Outlook 2009

This EIA outlook and short term futures trading suggest that high oil is here to stay, driven by global demand.

This EIA outlook and short term futures trading suggest that high oil is here to stay, driven by global demand.


Trend…Major Investment in New Energy

International renewable energy investment hit a record in 2007, nearly $150 billion, a 60% increase over 2006.

Source: EIA (Energy Information Administration) Annual Energy Outlook 2009; UNEP 2008

0

50

100

150

200

250

300

350

400

450

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

2023

2026

2029

Biomass Wind Waste Geothermal Solar/PV

History Projections

President Obama’s New Energy for America Plan includes $150 billion over 10 years to develop alternative energy and the proposed stimulus package contains $20 billion in tax cuts for alternative energy and R&D

President Obama’s New Energy for America Plan includes $150 billion over 10 years to develop alternative energy and the proposed stimulus package contains $20 billion in tax cuts for alternative energy and R&D

Global Investment in New EnergyGlobal Investment in New Energy


Trend…Liquid Energy Fuels Growth

Source: Business Week, October 29, 2007; Energy Information Administration

0

2

4

6

8

10

12

Canadian Oil Sands Ultra-Heavy Crudes Biofuels

Coal-to-Liquids Gas-to-Liquids Other

Unconventional liquid fuels will help compensate

for an expected shortfall in ordinary oil

Mill

ion

s o

f B

arre

ls O

il E

qu

ival

ent/

Day

History Projected

• SI has the opportunity to play a key role in coal-to-liquid and biofuels

2000-2030 Growth

Coal-to-Liquid +138%

BioFuels +66%

Heavy Crude +65%

Canadian Oil Sands

+260%


The Price of Oil and New Technology

Analysis: When crude oil stabilizes at $75 per barrel or more, new technologies and alternative sources of energy will

emerge and impact markets

•The price of crude oil slumped to its lowest level in 4 years, dropping from $145/barrel in Aug 08 to $48/barrel in Jan 09.

•Cheaper oil dampened alternative energy development – shares of alternative energy companies dropped significantly and billions of dollars of projects were put on hold



Identify the SI industry cluster components

Distributed PowerDistributed Power

Energy StorageEnergy Storage

Fuel Energy Source

Fuel Energy Source

GenerationGeneration TransmissionTransmission DistributionDistribution Customer Energy

Services

Customer Energy

Services

Hydrocarbon

Microsoft Office Excel 97-2003 Worksheet


Identify the SI cluster component parts

Distributed PowerDistributed Power

Energy StorageEnergy Storage

Fuel Energy Source

Fuel Energy Source

GenerationGeneration TransmissionTransmission DistributionDistribution Customer Energy

Services

Customer Energy

Services

Alternative

Microsoft Office Excel 97-2003 Worksheet


What is the cluster sense of urgency?


What is worth your time, talent and treasure to participate?


Current Initiatives….Short term win opportunities

• New energy related projects?


Identify 3-5 Market Niche Opportunities

Market

Niche

Hypotheses Hypotheses Hypotheses

Algae – bio-diesel

Agricultural and old mining areas with standing water are attractive areas for algae growing ponds

Readiness Assessment Identified Markets• Green Technologies

• Mining Technologies

• Clean Coal

• Bio-fuels

Readiness Assessment Identified Markets• Green Technologies

• Mining Technologies

• Clean Coal

• Bio-fuels


Industry Cluster Recruitment Plan

What industry cluster segments are missing from the table?


Cluster Team Recruitment Plan

Prospect Recruiter


Industry Cluster Roadmap


Industry Cluster Roadmap

Stage #1 – Formation

• Establish broad-based core leadership team

• Define the industry cluster, geographic boundary, and niche or sector identification.

• Invite and recruitment of key cluster participants

• What will keep a participant at the table for 18 months?

• Define industry cluster team vision

• Pursue short term wins

Stage #2 – Recognize & Research

• Begin industry cluster mapping

• Be on the lookout for linkage opportunities

• Map the industry cluster indigenous resources

• Determine economic value of the industry

• Identification of workforce development needs

• Industry cluster gap assessment

• Global and national industry research exchange


START 3 MONTHS 5 MONTHS 8 MONTHS

Stage #1 Stage #2 Stage #3 Report

Stage #3 – Report• Global and national industry

research exchange• Analysis and apply new

information into the industry economy

• Benchmarking the industry cluster

• Delivery of Industry Cluster report


ImplementationInstitutionalize


Energy Industry Cluster Team Schedule

Cluster Work Plan Jan Feb Mar Apr May June July Aug

Stage 1: Formation x x x

Cluster Kickoff Event with VE x

Market-Segmentation, Attractiveness

Identify Niche Markets

Interim Conference Call x

Hypotheses Testing

2-3 Hour Update Meeting with VE x

Review Primary and Secondary Research

Stage 2: Recognize-Research x x x

Identify Trends and Opportunities


Refine Niche Market Opportunities

2-3 Hour Update Meeting with VE x

Identify Connectivity Requirements

Stage 3 :Report x x x x

Complete Competitive Analysis


Issue Cluster Report x


Industry Cluster Team Support Structure

KathyLivelyKathyLively

Jim HaguewoodMark Madsen

Jim HaguewoodMark Madsen

Steve MartinRob BeynonSteve MartinRob Beynon

EnergyEnergyTransportation, Distribution and

Logistics

Transportation, Distribution and

Logistics

Cary MinnisCary

Minnis

CSI Support

Project Management• Integration with overall CSI effort• Deliverable quality• Project timing

Project Management• Integration with overall CSI effort• Deliverable quality• Project timing

Research Team• Cluster team management• Approaches & methodologies• Economic and business analysis

Research Team• Cluster team management• Approaches & methodologies• Economic and business analysis

Cluster Teams• Data collection• Economic and business analysis• Recruitment

Cluster Teams• Data collection• Economic and business analysis• Recruitment

Research AnalystsResearch Analysts


Industry Cluster & Research TeamsWork Plans


Overall Roles and Responsibilities

• Establish a leadership team

• Recruit members to the cluster team

• Keep industry cluster team members engaged

• Identify existing local research

• Attend key cluster meetings providing input and analysis

• Create and lead action teams

• Provide input and analysis of market niches and hypotheses

• Conduct industry cluster asset mapping

• Provide input to final report

• Present cluster report in public session

• Provide guidance and advisement to VE industry cluster approaches

• Provide key primary research based upon the cluster work plan

– Market Attractiveness

– Macro and Micro analysis

• Regional and national industry interviews

• Provide facilitation of key industry cluster meetings and teleconferences

• Transfer knowledge to the cluster team

• Prepare final cluster report

Industry Cluster Team Research Team


Industry Cluster & Research TeamsWork Plans

Next 60 days


Stage #1 Work Plans Next 60 days

Industry Cluster Team• Determine core cluster leadership team • Draft cluster vision statement • Complete cluster participant recruitment plan• Conduct recruitment calls • List indigenous resources leveraged – each

niche market• Link resources to hypothesis to be tested

SLIDE 29• Begin list of key regional, national industry

interviews• Refine niche market focus

Research Team• Market attractiveness research – each niche

– Size– Growth rates– Business trends– Political, economic & business data

• Expanded value chain mapping• Niche market

– Demand trends– Supply trends– Regulatory and political trends

• Conduct hypotheses testing• Conduct preliminary industry interviews• Refine niche market focus• Prepare for interim conference call

Interim Conference Call - Date: Time:

Month #3 Meeting - Date: March ? Time: Location:



Energy ClusterBackup Slides

ViTAL Economy Alliance Jim Haguewood.- [email protected]

Mark Madsen – [email protected]

Industry Cluster Opportunity Analysis

Kick-off Workshop


Jim HaguewoodExperience:• 21 years in property management & development,

• Executive Director of Clallam netWorks Economic Development Council 2000-2005

• Leader in development of Clallam Business Incubator and Clallam netWorks economic and community development strategy

• Community leadership; Mainstreet, tourism committees, College Foundation Board, Tribal Gaming Board

• 16 years President of Haguewood’s Restaurant, Inc.

• Bachelor of Arts, Washington State University, 1982

Areas of Strength: Industry Cluster Development Strategies and

Coordination

Presentation and Facilitation

Strategic Planning

Property Management

Project Management

Innovation Entrepreneurship Ecosystems

Experience:• 27 years experience in business, education and government

• Transitional CEO, Board Member and mentor to startup or expanding firms

• Founding President of the North Olympic Peninsula Resource and Conservation District

• College Foundation Board

• Bachelors – Agricultural Economics, Brigham Young University

• Masters – Economics and Business, Utah State University

• Doctoral – Economics, Oklahoma State University. Teaching and research emphasis in Community and Economic Development, and Applied Business Economics

Areas of Strength: Business Organization and Management Entrepreneur Training and Mentoring Economic Counsel Rural and Regional Economic Development Community Development Community Leadership Management of complex real estate development

and construction projects

Mark Madsen


Steve MartinExperience:• Senior Vice President, Strategic & Development Planning,

Washington, DC

• Former Assistant Director, U.S. Government Accountability Office, with experience in infrastructure issues

• 20+ years’ experience working with the US Congress, including extensive contacts within the departments of Transportation, Justice, Commerce, and State

• Working with issues concerning the economic vitality of smaller communities.

• B.A., Miami University (Ohio), 1979

• A.M., Duke University, 1982

Areas of Strength: Project Management

Economic Research and Analysis

Extensive contacts throughout federal government and with DC-based trade associations

Presentation and Facilitation

Experience:• Vice President, Development Economics,

Vancouver, Canada

• Successful experience developing winning business cases for airports, ports, and communities seeking rail carriers

• Specializes in work in rural economies with smaller organizations and communities

• Work experience throughout the U.S. and Canada

• M.A., Japanese Business/Economic History, University of British Columbia, 1989.

• B.A., University of British Columbia, 1986

Areas of Strength: Economic Research and Analysis

Business Case Development

Strategic Planning

Multiple Accounts Evaluation

Transportation and Logistics

Rob Beynon

InterVISTAS Consulting


Iterative “hypothesis-based” approach

Benefits of Approach

There is more data available than time or money to collect it

Delineates and limits the scope of issues and data that needs to be collected

Identifies what data and analysis is essential as opposed to what is merely interesting

STEP 1: IdentifyIssues

• Identify 3-5 issues which address questions

• Issues should fully address all we need to understand

Step 4: Collect Data/Complete Analysis/

Iterate Process• Collect required data

and complete analysis to answer key questions

• Reformulate issues based on findings

Step 3: FormulateKey Questions

• Key Questions drive primary research/data collection & analysis

Step 2: FormulateHypotheses

• Create hypotheses that answer each issue

• Hypotheses should completely address each issue

ConsultantSupport

Data Collection and Analytical Approach


• Limiting mindset: willingness to accept mediocrity and lack of a sense of excellence

• Insufficient climate of collaboration and trust, making change very difficult

• Continued belief that “the cavalry is coming” despite proof to the contrary

• Losing the best and brightest — youth brain drain• Lack of participation in the global economy• Continued focus on traditional economic sectors in

decline rather than rising economic sectors• Climate of economic (and community) despair• Public policy reinforces & funds old economy strategies,

and inhibits new ones

SI’s Big Dilemma:Climate of Limited Opportunity

Resulted in only 1.35%

AAGR for last 25 Years

Resulted in only 1.35%

AAGR for last 25 Years

Keeps SI From Realizing Its true Potential!

Keeps SI From Realizing Its true Potential!

• Fragmented and poorly leveraged

• Primary focus on local opportunities

• Insufficient # of visionary leaders

• Too many boundaries

Issues Weighing

Down SI

Indigenous

Resources &

Innate Talents

Is SI worth Fighting for?Is SI worth Fighting for?


• Southern Illinois is the global location where inter-generation active lifestyle families, visitors & KBE workers choose to live work and play — growth abounds

• SI’s historic liability of remoteness and lack of access becomes an asset; instead of forgotten by Chicago, Springfield and Washington, SI is a land and lifestyle treasured, respected, sought after and envied — there is only one SI in the World

• SI communities see themselves in a new light; they are respectful of their place; they see themselves as gateways to a land that is "The Garden of The Gods"

• Tourism venues, town centers,rural lands, business locations and neighborhoods all demonstrate by their look and feel that SI is a very special place to be preserved and enhanced for all time

• SI is a place of welcome for people of all cultures whether visiting or living here; in the land of "The Garden of the Gods” all are welcome and of value

• It is a place many want to be, but only the fortunate choose to take advantage of this unique opportunity; SI becomes a place that is worth a premium, rather than one that feels it must offer a discount to be desired

Source: ViTAL Economy Alliance



Regional AssetsRegional Assets

• Heartland of America location, equidistant to 2/3 of U.S. markets, central to economic expansion of the Americas

• SIU - a major R&D university with 60+ years history serving students from over 100 world cultures supports global KBE growth

• Robust education and training resources position SI for global workforce training opportunity

• Mild climate, unique natural environment, active lifestyle assets, arts and culture amenities, attractive quality of life characteristics are important factors for KBE, tourism and senior living growth

• Inter-modal logistics, transportation and distribution resources have a strong foundation in SI

• SI has plentiful legacy and alternative-energy assets. SI is a coal leader and is strong in 2 of 4 areas of projected alternative energy growth by 2030

• Heartland of America location, equidistant to 2/3 of U.S. markets, central to economic expansion of the Americas

• SIU - a major R&D university with 60+ years history serving students from over 100 world cultures supports global KBE growth

• Robust education and training resources position SI for global workforce training opportunity

• Mild climate, unique natural environment, active lifestyle assets, arts and culture amenities, attractive quality of life characteristics are important factors for KBE, tourism and senior living growth

• Inter-modal logistics, transportation and distribution resources have a strong foundation in SI

• SI has plentiful legacy and alternative-energy assets. SI is a coal leader and is strong in 2 of 4 areas of projected alternative energy growth by 2030

Connecting SI’s Assets and Trends to 2012 Goals

>$2 BillionNew Annual

Wages

>$2 BillionNew Annual

Wages

41,461 Existing Jobs>$5,000/Yr

41,461 Existing Jobs>$5,000/Yr

27,298 NewHi-Wage Jobs27,298 New

Hi-Wage Jobs


1,600+ Firms


1,600+ Firms

4,500+ Families with Healthcare

Coverage

4,500+ Families with Healthcare

Coverage



$200 Million Information Technology Investment

$200 Million Information Technology Investment

Global & Nat’l TrendsGlobal & Nat’l Trends

• Global growth presents SI with opportunity to accelerate its economic growth from 1.34% to 3.85% per year

• KBE activity now accounts for 50% plus of GDP growth, 3x’s growth in occupations and pays double the average wage of other jobs

• By 2010, the U.S. will have a 10M worker shortfall requiring strong workforce development resources

• 3 of 4 factors required to support KBE activity in rural America are SI strengths

• 58% of all U.S. and global tourists want authentic active, historic and cultural experiences (50-80 million)

• Logistics is a $900 billion U.S. industry in a global $3.43 trillion market growing at 10-15% per year

• 74% global increase in coal consumption, 138% in coal-to-liquid and 66% in bio-fuels by 2030

• Global growth presents SI with opportunity to accelerate its economic growth from 1.34% to 3.85% per year

• KBE activity now accounts for 50% plus of GDP growth, 3x’s growth in occupations and pays double the average wage of other jobs

• By 2010, the U.S. will have a 10M worker shortfall requiring strong workforce development resources

• 3 of 4 factors required to support KBE activity in rural America are SI strengths

• 58% of all U.S. and global tourists want authentic active, historic and cultural experiences (50-80 million)

• Logistics is a $900 billion U.S. industry in a global $3.43 trillion market growing at 10-15% per year

• 74% global increase in coal consumption, 138% in coal-to-liquid and 66% in bio-fuels by 2030

++ ==

CSI 2012 M/S1 Goals*

Note: Regional Assets (Chap 2); Trends (Chap 1); * Milestone #1 Connect SI Goals were announced to the Public 26 Feb 2007



Source: “State of Working Illinois”, by Northern Illinois University (Nov 2005); “21st Century Workforce” (May 2004); IMF; VE research

GD

P A

vera

ge

An

nu

al

Gro

wth

Rat

e %

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

3.85%

“Stay the Course” vs. “Change the Course”

AAGR Connect SI Goals 2008 - 2012

0

1

2

3

4

5

6

AAGR 1977-2001

Worldwide USA State-wide Southern Illinois

1.34%

2.19%

3.14%

5.62%

Milestone #1 Goals Increase GRP by $2.9B (2012); $162M in additional State & Local tax revenue

Milestone #5 Targets Increase GRP by $5.2B (2012); $292M in additional State & Local tax revenue

Milestone #1 Goals Increase GRP by $2.9B (2012); $162M in additional State & Local tax revenue

Milestone #5 Targets Increase GRP by $5.2B (2012); $292M in additional State & Local tax revenue

Taking Control of SI’s Destiny: Aggregate Results

6.89%

M/S#1

M/S#5



Measurable Indicators of ProgressTowards 2012 CSI Goals

It’s Time to Go Global!

0

2

4

6

8

10

12

Exports as a % ofGDP

U.S.

Illinois

SI

11%

8.4%

2.4%

0%10%20%30%40%50%60%70%

Private SectorPayroll &Benefits

TransferPayments, All

Gov't &EducationEarnings

U.S.

IL

SI

54%

33%36%

46%

67%64%

SI Becomes

an Innovation Economy

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2005Southern Illinois USA-RuralUSA-Average Best in World

%

Pen

etra

tio

n o

f P

op

ula

tio

n

SI is a Global Broadband Leader

12%24%

34%

54%

• Insured population +10%

• Medicaid -26%

• Medicare +18%

• UninsuredUninsured -32% -32%

Healthcare Economics are Transformed!



Transforming Southern Illinois: ROI

• Achieving 50% or 100% of Connect SI 2012 economic growth goals provides substantial ROI on a five year $9M investment in Connect SI

Percent of Goals Reached by 2012: 50% 100%

• Annual growth in the economy– Current GRP = $17.6B

$1.75B $3.5B

• Annual growth in wages

– Current Wages = $8B$1B $2B

• Annual growth in wage-related tax revenue– State and Local Taxes

$82M $164M

• Annual growth in assessable tax base– Historic EAV growth of 2.72% AAGR

+800M+2.5% AAGR

+1.6B+5% AAGR

Annual SI Return on Investment – 2012 and beyond

What ROI is enough to gain your commitment of time, treasure and talent to transform the SI economy now?

What ROI is enough to gain your commitment of time, treasure and talent to transform the SI economy now?



Greater Wabash COI GoalsGreater Wabash Region

(23 Feb 2007)

Baseline 2012 Same Trend

2012 Goal

Change vs. Baseline

Change vs. 2012 Same

Population (2004) 51,421 49,561 53,000 +3.1% +6.9%

Employable Population (16-64) (2000)

31,980 30,777 32,913 +2.9% +6.9%

Labor Participation (16-64) (2000) 71.1% 71.1% 72.5% +1.97% +1.97%

Employed 2004 All Ages 26,400 25,445 27,746 +5.1% +9.0%

Average Wage 2004 $26,311 $33,671 $36,517 +$10,206 +$2,846

Total Region Wages 2004 $694.6m $856.8m $1,013m +$318.9m +$156.4m

Determination of specific measurable, wage and employment goals from change in regional wages vs. 2012 trend

NEW JOBS: 1,381 WAGE: $43,500 $60.1m

NEW JOBS AT AVERAGE WAGE: 920 WAGE: $36,517 $33.6m

IMPROVEMENT OF EXISTING JOBS: 5,280 WAGE: $5,000 $26.4m

CLIMATE OF ECONOMIC OPPORTUNITY: $36.4m


Southern Five COI GoalsSouthern Five Region

(23 Feb 2007)


2012 Goal

Change vs. Baseline


Population (2004) 58,644 53,971 63,000 +7.4% +16.7%


35,887 33,014 40,950 +14.1% +24.0%



Average Wage 2004 $27,959 $35,980 $37,591 +$9,632 +$1,611



NEW JOBS: 784 WAGE: $43,500 $34.1m

NEW JOBS AT AVERAGE WAGE: 522 WAGE: $36,517 $19.6m




Southeastern COI Goals

Southeastern Region

(23 Feb 2007)


2012 Goal

Change vs. Baseline


Population (2004) 49,465 47,833 56,000 +13.2% +17.1%


31,115 30,373 36,400 +17.0% +19.8%



Average Wage 2004 $27,494 $35,604 $40,206 +$12,782 +$4,672



NEW JOBS: 3,746 WAGE: $43,500 $163.0m

NEW JOBS AT AVERAGE WAGE: 2,498 WAGE: $40,276 $100.6m




Greater Egypt COI Goals

Greater Egypt Region

(23 Feb 2007)


2012 Goal

Change vs. Baseline


Population (2004) 253,049 258,869 274,432 +8.45% +6.0%


164,134 167,909 179,238 +9.2% +6.8%



Average Wage 2004 $27,830 $35,765 $40,765 +$12,935 +$5,000

Total Region Wages 2004 $3,748m $5,019m $6,432m +$2,684m +$1,413m


NEW JOBS: 10,468 WAGE: $43,500 $455.4m

NEW JOBS AT AVERAGE WAGE: 6,979 WAGE: $40,765 $284.5m



Documents

©2009 ViTAL Economy, Inc. 1 Energy Cluster Wednesday, January 28, 2009 8:00am-11:00am John A. Logan College ViTAL Economy Alliance Jim Haguewood.- [email protected]