©2007 vital economy, inc. 1 southern illinois: garden of the gods readiness assessment chapter 5:...

©2007 ViTAL Economy, Inc.— 1 —

Southern Illinois: Garden of the Gods

Readiness Assessment

Chapter 5: Southern Illinois Competitiveness

January 7, 2008; revised February 17

CONNECT SI

ViTAL Economy AllianceFrank Knott, Project Lead; Stan Halle, Senior Editor;

Jim Haguewood, Rob Beynon, & Neil Gamroth, Principal Economic Researchers

[email protected]; http://www.vitaleconomy.com


Table of Contents EXECUTIVE OVERVIEW:EXECUTIVE OVERVIEW: the Big Picture & Importance of Change in SIthe Big Picture & Importance of Change in SI

READINESS ASSESSMENT (RA)READINESS ASSESSMENT (RA)

1. State, National & Global Trends1. State, National & Global Trends

2. Indigenous Resources & Industry Asset Mapping

3. Enabling Environment

4. Climate of Innovation, Incubation & Entrepreneurship

5. Southern Illinois Competitiveness

6. Regional Perspectives

7. Roadmap to Success

APPENDICES

5.01 Global Market Readiness

5.02 Workforce Availability and Quality

5.03 Knowledge Infrastructure: Assessment

5.04 Location Advantages

5.05 Implications & Recommendations


Chapter 5:Southern Illinois Competitiveness

5.01 Global Market Readiness …………………………. 6

5.02 Workforce Availability and Quality ……………….. 11

5.03 Knowledge Infrastructure: Assessment …………..18

5.04 Location Advantages ……………………………… 26

5.05 Implications & Recommendations ……………….. 32

Southern Illinois — "Garden of the Gods"

Chapter 1 of the RA presented global and national trends;Chapter 2, the assets that enable SI to compete and leverage these trends;

Chapter 3, reviewed SI’s enabling environment readiness to capture forecasted growth opportunities; Chapter 4, assessed the SI climate of innovation and entrepreneurship;

Chapter 5, determines SI’s readiness to compete on the national and global stage


The Pyramid of Competitiveness

Source: National Competitiveness Council, Annual Report 2006

The NCC defines competitiveness as those factors that impact the ability of SI firms to compete in international markets & provide SI citizens with the opportunity to improve their quality of life

The NCC defines competitiveness as those factors that impact the ability of SI firms to compete in international markets & provide SI citizens with the opportunity to improve their quality of life

5.0 Competitiveness: Introduction

SustainableGrowth


Illinois Competitiveness Rankings In Relationship to 50 U.S. States

Beacon Hill Institute 2006 State Competitiveness Report …… 33rd

Milken Institute 2007 Cost of Doing Business Index …………. 18th

Tax Foundation 2008 State Business Tax Climate Index …… 28th

Morgan Quinto Press 2006 Most Livable State Index ……….. 28th

Sources: ViTAL Economy Research and Individual Research Reports as listed above

Economic Outlook State Economic Performance

42 Illinois 48

1 Utah 20

10 Texas 1

2007 American Legislative Exchange Council (ALEC) — Laffer State Economic Competitiveness Rankings

(Beacon Hill, Tax Foundation, Morgan Quinto Press and ALEC ranks best to worst 1-50. Milken Institute ranks worst to best 1-50)

5.0 Competitiveness: Introduction





The global marketplace is growing four times faster than the SI economy. Emerging and developing countries around the world desire U.S. products and services to support their

improving quality of life. SI should leverage Illinois global trade-experience to expand SI import and exports by $1billion/year. “It is the 4th quarter in SI and time to get in the game!”


The Opportunity on the Global Stage

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

Ave

rag

e A

nn

ual

G

row

th R

ate

%

3.14%

2.19%

1.34%

5.62%

0

1

2

3

4

5

6

AAGR 1977-2001

Worldwide USA State-wide Southern Illinois

The World economy is growing at

four-times the rate of SI

AAGR = Average Annual Growth Rate

Accessing the Global Economy is the Key to SI Economic GrowthAccessing the Global Economy is the Key to SI Economic Growth



Illinois Participation in U.S. Global Trade

Top five export nations for Illinois:

Canada Mexico U.K. Japan Australia

3.5%3.6%3.7%3.8%3.9%4.0%4.1%4.2%

2003 2004 2005 2006

Illinois % Share of U.S. Trade

0

2,500

5,000

7,500

10,000

12,500

Canada Mexico

United Kingdom Japan

Australia Germany

Top Foreign Export Markets for Illinois(2006 $ million)

Source: Foreign Trade Division, U.S. Census Bureau, 10/07

• U.S. Top Five Total Trade Partners

1. Canada – 18.2%2. China – 12.4%3. Mexico – 11.2%4. Japan – 6.7%5. Germany – 4.6%

Top five export nations for the U.S.:

Canada Mexico Japan China UK

Largest and fastest growing country market in the world is not in Illinois’

top five export markets!

Largest and fastest growing country market in the world is not in Illinois’

top five export markets!



SI Represents Less Than 1% of Illinois Global Trade

Illinois Export Products Value %

Machinery Manufactures $11.7B 27.8%

Computers & Electronics $5.4B 12.8%

Transportation Equipment $4.7B 11.1%

Electronic Eq., Appliances & Parts $2.8B 6.6%

Processed Foods $1.9B 4.5%

Fabricated Metal Products $1.6B 3.8%

Misc. Manufactures $1.5B 3.5%

Plastic/Rubber Products $1.0B 2.3%

Crop Productions $710M 1.7%

Printing & Related Products $424M 1.0%

Oil/Gas Extraction $296M .69%

Petroleum/Coal Products $110M .26%

Wood Products $71M .17%

Beverage/Tobacco Products $50M .12%

Mining $38M .09%

Animal Production $22M .05%

Fishing, Hunting, Trapping $2M .00%

Illinois Export Facts

• Total value Illinois exports 2006 = $42.08 billion

o 29.2% went north to Canada ($12.3B)

o 8.8% went south to Mexico ($3.7B)

Source: Office of Trade & Industry Information, Manufacturing and Services International Trade Administration, U.S. Department of Commerce

Southern Illinois Export Analysis

GSP** Export Value% of GSP

Illinois $560 billion $42.08 billion 7.5%

SI $17.6 billion $420 million 2.4%

SI as a %

3.47% of IL GSP

1% of State exports

SI exports as a % of GSP are less than 1/3 of Illinois = $1 billion gap/year

SI exports as a % of GSP are less than 1/3 of Illinois = $1 billion gap/year


**GSP = Gross State Product (similar to GDP)


SI Global Market Doors are Open

Illinois ranks #5 in U.S. global trading in 2006 Illinois exports have grown by 64% from 2002-2006 70% of all U.S. trade goes through the State of Illinois Direct export values were 7.5% of Illinois GSP in 2006 Exports support 448,400 jobs in Illinois, approx. 7.5% of the workforce In addition to top U.S. trade partners (slide 8), the fastest growing

export markets 2002-2006 are: Argentina, Turkey, Chile, Switzerland, and Taiwan

• SIUE International Trade Center serving 45 Southern Illinois Counties• International Trade Missions, Annual Export Conferences

• International Market Analysis, Identification of Foreign Buyers• Export Finance Assistance

• SIUE International Trade Center serving 45 Southern Illinois Counties• International Trade Missions, Annual Export Conferences

• International Market Analysis, Identification of Foreign Buyers• Export Finance Assistance

Source: DCEO Office of Trade and Investment, Southern Illinoisan, October 2007, SIUE International Trade Center

Global Market Initiatives & Resources Available to SI:



Chapter 5:Southern Illinois’ Competitiveness

5.02 Workforce Availability and Quality


In a “World is Flat” Economy, a region’s success is no longer measured on where you compete, but rather how you compete. Highly skilled and educated human resources will be the key to

economic prosperity for the foreseeable future.


The Global Workforce BindThe quantity and quality of SI’s workforce are the most important and immediate factors impacting economic growth, particularly given the shift from agriculture and manufacturing to knowledge based

economy (ref: Section 1.04)

• Demographic developments are leading to fewer people in the prime workforce age group

• Flattening and declining birthrates around the world are reducing workforce supply

• Job opportunities for low skilled workers are declining everywhere

• Expanding economic development worldwide is demanding more products and services

• Technology progress is demanding an increase in quality and quantity of workforce

• Global competition is increasingly generating greater demands for quality workers

Source: Confronting the Coming Talent Crunch;

What is Next? Global Manpower Report

5.02 Workforce Availability & Quality

The Connect SI initiative will exacerbate these shortfalls and must be addressed

The Connect SI initiative will exacerbate these shortfalls and must be addressed


15-64 Population

EmployedParticipation

Rate

Illinois 8,207,764 6,230,617 76%

SE Region 32,161 22,252 69%

GE Region 164,134 108,267 66%*

GW Region 31,980 22,721 71%

S5 Region 35,887 22,528 62.8%*

SI Region 264,162 175,768 66.5%

Labor force participation rate: 15-64 age population/total employed

Source: 2000 U.S. Census; ** Adjusted, not including prison populations

•SI: more than 10% below Illinois in labor force participation rate

Low Labor Participation Rates

Challenge SI Workforce Availability

National Average 69.6%

10% = 24,995 individuals that are available to be in the workforce, but for one reason or another, they are not employed or seeking employment

10% = 24,995 individuals that are available to be in the workforce, but for one reason or another, they are not employed or seeking employment


Quantity Gap

Quantity Gap


SI Same Trend Growth SI Working Age Population Growth Potential Shortfall

13,758 -1,855 15,613

Connect SI Job Goals COI Est. Increase in Labor Force by 2012 Potential Workforce Shortfall

43,298 24,248(70.9% participation of 34,198 COI population projection)

19,050

TOTAL Potential Workforce Shortage: 34,663

Franklin, Jackson, Jefferson, Perry, Williamson Projected Worker Shortage 2010

Source: 21st Century Workforce: Southern Illinois, May 2004


Connect SI Strategy Magnifies the Possible Worker Shortage in SI

Quantity Gap

Quantity Gap


SI’s Talent Supply/Demand Disconnect Is Worse Than Global Disconnect5.02 Workforce Availability & Quality

Quantity& Quality

Gap

Quantity& Quality

Gap

Source: Confronting the Coming Global Talent Crunch, What’s Next? Manpower 2006

Number of people of available/required by skill level

$/hour & skills

Lack of resources creates tension on the

high-skills market

Over-supply of low-skills resources creates

unemployment

Supply of workers

Demand for workers

Developed Economies Global

Labor Market

Men Women

Pronounced over-supply of low-skilled

labor

Southern Illinois Labor Market

SI opportunity to create amore highly skilled Workforce

Getting both the right supply and right skills is essential


The share of occupations that only require OJT is smaller in Southern Illinois

than in the U.S.

The share of occupations that only require OJT is smaller in Southern Illinois

than in the U.S.

Tomorrow’s occupations will require much more education and training than yesterday’s occupations

Tomorrow’s occupations will require much more education and training than yesterday’s occupations

Southern Illinois Comparison to the U.S.

% of tomorrow’s occupations requiring at least a bachelor’s degree in Southern

Illinois is higher that the U.S.

% of tomorrow’s occupations requiring at least a bachelor’s degree in Southern

Illinois is higher that the U.S.

Southern

Illinois

United States

32% 28%

Southern

Illinois

United States

74% 94%

Implication: the quality of the SI workforce in the future needed to fill forecast jobs is higher than the U.S.

Implication: occupations in SI that only require OJT are declining; thus the need for increased emphasis on training and retraining of incumbent workers in the region as more get displaced

Source: 21st Century Workforce: Southern Illinois, May 2004

SI Future Economy Will Require Higher Skilled Workers


Quality Gap

Quality Gap


Job Training Projections for SI

Source: The State of Working Illinois, 2005

44% of the new job growth requires postsecondary vocational training or higher level of education

44% of the new job growth requires postsecondary vocational training or higher level of education

SI Workforce Training Scenario

SI Workforce Training Scenario


SI Jobs Projection:

= 43,29844% requiring

postsecondary or higher education

= 19,051

SI Jobs Projection:

= 43,29844% requiring

postsecondary or higher education

= 19,051

Quality Gap

Quality Gap





Knowledge infrastructure is comprised of public and private organizations and institutions whose role is the production, maintenance, distribution, application and protection of knowledge. This

infrastructure is critical to building and sustaining a viable innovation economy.


Knowledge Infrastructure: Roles

Regional knowledge infrastructures have three primary roles in building a robust and growing knowledge economy

1. Creating Knowledge Education and skills — programs that build, retain and/or acquire skills R&D — programs that support innovation through investment

2. Sharing Knowledge Build critical mass and linkages — programs which increase collaboration Strengthen information & communication networks — expand ICT

systems

3. Using Knowledge Commercialization processes — improve prospects for commercialization Develop clusters — programs to strengthen existing and build emerging

clusters Attract & secure Investments — programs to increase investment capital

for R&D Develop int’l linkages — programs to facilitate international R&D linkages

Source: The Role of Knowledge Infrastructure in Regional Economic Development, Canadian Journal of Regional Science 2005 and Western Australian Technology & Industry Advisory Council, 2003



SI Knowledge Infrastructure Assets Are Plentiful

SIUC’s Four R&D Pillars Energy & Environment

Biotechnology

Materials Technology

Neuroscience

Small Business Development Centers Rend Lake College

Shawnee College

Southeastern Illinois College

John A. Logan College

SIUC and SIUE

Illinois Eastern Colleges

SI Business Incubators SIUC Business Incubator

West Frankfort Business Incubator

DRA Mounds Incubator

Many Entrepreneurs & Innovators

across SI

Illinois Entrepreneurship Network• Southern Illinois Entrepreneurship Center

• Illinois Small Business Development Ctr

• Illinois Manufacturing Extension Center

• Southern Tech

• Illinois Procurement Technical Asst Ctrs

• Technology Enterprise Centers

• International Trade Centers

• Camp CEO Programs

• Challenge Grant Program

SIU Transportation Education Center

SIU 20+ Research Centers Dixon Springs Agriculture Research Ctr

Illinois Clean Coal Institute

National Corn-to-Ethanol Research Ctr

SIU Business Research Parks

SIUC Coal Research Center

SIU School of Medicine

Source: ViTAL Economy Research



Education Attainment is the Foundation for a Strong Workforce

SI trails Illinois in % high school completion

SI’s workforce with advanced degrees is less than half that of Illinois

This low level of educational attainment is a major challenge to compete in a global economy 0% 25% 50% 75% 100%

S5SEGWGEIL

0% 10% 20% 30%

S5SEGWGEIL

Population with High School or Higher in SI Regions and IL

Population with Bachelor Degree or Higher in SI Regions and IL

Source: ViTAL Economy Research

• SI’s “creating knowledge” infrastructure is in place, but results

are not satisfactory

• Only 12% of SI population has a bachelors degree or higher when SI job-growth trends require 32% with

bachelor or higher degrees!

• SI’s “creating knowledge” infrastructure is in place, but results

are not satisfactory

• Only 12% of SI population has a bachelors degree or higher when SI job-growth trends require 32% with

bachelor or higher degrees!



Current Programs Limit Growth5.03 Knowledge Infrastructure: Assessment

Source: Adapted from Lalkaka, R. (1996)

Business Development Process

Idea/Need

Business Creation Employment

SupportiveNationalPolicies

University-Community

Linkage

InternetTechnical

Assistance

InternationalBusinessLinkages

InitialGovernment

Funding

TechnicalInfrastructure

MarketOpportunities

SI Linkages to National andInternational

Support Resources

EntrepreneurialSelection &Graduation

RigorousBusinessStrategy

Development

LocalConsultants

ManagerTraining

TenantFinance

ChampionSponsors

Board

ProfessionalServicesNetwork

SI Support Linkages for

Entrepreneurship

GROWTH?LimitedGrowth


SI Utilization of Knowledge Needs Improvement

Technology Transfer Assessment Criteria Rating

A strong and focused research base feeds the pipeline for commercialization

Federal R&D funding provides a critical base for technology transfer and commercialization efforts

Champions catalyze most successful R&D-based economic development

The entrepreneurial culture of a region is key to its technology transfer success

Networking is an integral part of the culture

Early-stage capital is a critical ingredient in launching regional start-ups

Innovation centers provide a focal point for technology-based activities

Incubators and research parks are important in areas not known for technology

Private corporations and foundations play a major role

Focused long-term vision, investment, leadership and commitment are in place

= Weak to None = Improving = Average = Good = Strong



SI Knowledge Infrastructure Assessment

Readiness Criteria Rating Assessment Rationale

Knowledge Infrastructure - SI presence of knowledge assets

K-infinity educational infrastructure assets are robustSignificant R&D centers of excellence are available

Create Knowledge - build, retain and/or acquiring skills

Knowledge is not being created at level required for workforce

Create Knowledge - via R&D programs that support innovation

R&D program investments are not promoting innovation

Sharing Knowledge - via programs that increase collaboration

Inadequate linkage of knowledge sharing resources

Using Knowledge - improve prospects for commercialization

Commercialization processes are very weak

Using Knowledge - develop emerging and existing clusters

Cluster development is currently non-existent

Using Knowledge - increase investment capital for R&D

Investment capital has been very limited in region

Using Knowledge - facilitate international R&D linkages

International linkages have potential, but are not being leveraged



Country # Country #

India 346 Malaysia 14

China 160 Pakistan 14

Japan 141 Turkey 13

South Korea 96 Bangladesh 12

Taiwan 71 Jordan 12

Thailand 27 Nigeria 12

Cyprus 24 Brazil 11

Canada 23 France 11

Nepal 16 Kenya 11

Saudi Arabia 15 Columbia 10

Germany 14 Morocco 10

SIUC Student Country of Origin

(2006)

•21,003 total students

•1,149 from 110 countries

•5.5% of student body

•National average 3.9%

SIUC Student Country of Origin

(2006)

•21,003 total students

•1,149 from 110 countries

•5.5% of student body

•National average 3.9%

SIUC Top 20 Student Country of Origin Other Than U.S.

SIUC Top 20 Student Country of Origin Other Than U.S.

Source: SIUC

SIUC Asset: Foreign Students

SIUC top three foreign students country of origin are in the top five Illinois

trading partners

SIUC top three foreign students country of origin are in the top five Illinois

trading partners






“Location, location, location” is a historic axiom of economic development. Every community possesses distinct geographic, natural and proximity advantages. This Section will briefly review the location of advantages, which SI should leverage in relationship to trends, opportunities and

assets described in Chapters 1-4.


SI Location Advantages: Intro

Southern Illinois: Heartland location equidistant to 2/3 of U.S. markets

Central to economic expansion of the Americas

Positioned to be an easily accessible workforce development center for

addressing 10 million worker global talent shortage

Well positioned geographically and asset-rich to attract affluent seniors —

77 million baby boomers retiring

Within a four hour drive time of 11+ million regional tourists

Now the center of a rail network stretching to the Atlantic, Pacific and Gulf of

Mexico — from regional to all of North America

Within a day’s drive to many of the fifty fastest growing U.S. cities

Access to major rivers and recreational lakes


SI sits on the ultimate U.S. logistics sweet-spot, the intersection of major N-S and E-W trade routes

SI sits on the ultimate U.S. logistics sweet-spot, the intersection of major N-S and E-W trade routes


SI Competitive Advantage: Location (1 of 2)

Most vacations are now short — proximity and ease of access are key

Major nearby hubs include: Indianapolis, IN St. Louis, MO Memphis, TN Louisville, KY Nashville, TN

SI has airport assets that facilitate Southern Illinois becoming a tourism destination

= Potential Gateway

to Southern IllinoisSource: Map Point and Federal Aviation Administration

How will SI leverage this competitive

advantage?


advantage?


Grey Area Shows 4-hour driving time from Marion

Population within 4-hour drive: 11,303,789

Marion


0.9% U.S. population growth in 2006

California, Texas, Florida contained most of the fastest growing centers in the U.S.

Several centers within a day’s drive of SI are included in 50 fastest-growing centers for 2000-2006 at growth rates of 12% to 98% (see Red Stars)

Source: U.S. Census Bureau and Map Point

Note: Map shows calculated 8 hour driving time from SI

SI Competitive Advantage: Location (2 of 2)

SI Relationship to Nearby 50 Fastest Growing U.S. Cities



advantage?


advantage?


SI’s Temperate Climate is an SI Competitive Advantage

Greater Egypt: Avg winter temp 32°F Avg summer temp 76°F

Greater Wabash: Avg winter temp 35°F Avg summer temp 82°F

Southeastern: Avg winter temp 32°F Avg summer temp 75°F

Southern Five: Avg winter temp 35°F Avg summer temp 78°F

Source: www.growit.com

USDA Zone

Average Annual

Minimum Temperate

Zone 4a -25 to -30

Zone 4b -20 to -25

Zone 5a -15 to -20

Zone 5b -10 to -15

Zone 6a -5 to -10

Zone 6b 0 to -5

Zone 7a 5 to 0

Zone 7b 10 to 5


How will SI leverage this competitive advantage?


SI has both an attractive climate for retirees & long-growing season

SI has both an attractive climate for retirees & long-growing season


Average Annual Precipitation

Greater Egypt: Avg rainfall = 42 inches Avg snowfall = 12 inches

Greater Wabash: Avg rainfall = 28 inches Avg snowfall = 9 inches

Southeastern: Avg rainfall = 42 inches Avg snowfall = 13 inches

Southern Five: Avg rainfall = 45 inches Avg snowfall = 11 inches

Source: DCEO





Chapter 5:Southern Illinois’ Competitiveness




SI Competitiveness: VE Assessment

Global Market Readiness

Climate for Investment Attraction

Workforce

Knowledge Infrastructure

Sharing and Utilization of Knowledge Assets

Location Advantages

Connectivity Literacy (see Chp 3, Slides 34-48)

WEAK

IMPROVING

GOOD

AVERAGE

STRONG

The lack of Global Market Readiness is holding back the Region from leveraging its Knowledge Infrastructure and Location Advantages to build a high growth economy

The lack of Global Market Readiness is holding back the Region from leveraging its Knowledge Infrastructure and Location Advantages to build a high growth economy



SI Competitiveness: Implications

Limited Global Market Participation $1 billion export gap: 2.4% of SI GRP vs. 8.4% of the Illinois GSP participates in the global economy Global market niches exist in energy technologies, bio-ag, international innovation & incubation, logistics, etc. State level international trade expertise needs to be better leveraged

Solid and Improving Workforce SI’s 66.5% labor participation rate challenges the Region’s growth opportunities The incumbent workforce has a strong work ethic and desire to stay in SI SI’s workforce development assets are positioned to help address the projected U.S.10 million worker shortfall

Robust Knowledge Infrastructure SI has a broad array of knowledge assets, but needs to better align towards a common strategic direction Education Center of Excellence could coalesce regional KBE resources to pursue global workforce opportunity

Strong Location Advantages SI is in a geographic “Sweet Spot” to take advantage of major trends SI’s location advantage benefits Tourism, Energy, and Transportation, Logistics & Warehousing sectors

Improving Connectivity Literacy SI has begun to transform its connectivity infrastructure, but has low connectivity awareness and literacy Link NP-COI with all industry clusters to identify applications that increase competitiveness and market-share

Only a Unified Region can leverage SI’s potential critical massin becoming a formidable force on the Global Stage

Only a Unified Region can leverage SI’s potential critical massin becoming a formidable force on the Global Stage

GRP = Gross Regional Product; GSP = Gross State Product



SI Competitiveness: Recommendations

Focus on economic growth opportunities that leverage its regional strengths and de-emphasize state weaknesses as shown by Illinois poor rankings in multiple competitiveness reports

Develop a specific global export strategy that focuses on closing the $1 billion trade gap versus Illinois trade levels

Develop education center of excellence connecting knowledge infrastructure assets to enable SI to address part of the ten million global worker talent crunch

Develop an industry-led transportation, logistics & distribution industry cluster to leverage SI location advantages

Develop an industry-led tourism cluster that will connect SI tourism assets to take advantage of SI’s unique market location

Implement regional marketing strategies to improve connectivity literacy


©2007 vital economy, inc. 1 southern illinois: garden of the gods readiness assessment chapter 5:...

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