Sunday, April 25, 2010

Airport, riverport, EDC explore opportunities


Joy Joy Campbell, Messenger-Inquirer
Published: Sunday, April 25, 2010 12:04 AM CDT
Owensboro has been saddled for years with a reputation of having no interstate highway within its transportation system.

The region has boasted the other major ingredients for economic development -- river, rail and air -- but that one infrastructure handicap could often be an automatic disqualifier for some companies scouting Kentucky for a new site.

Now, two key players in the regional logistics industry and the leader of the region's economic development efforts are taking a closer look at infrastructure changes on the horizon -- including new connectors to interstate highways -- that might strengthen Owensboro's position for economic growth in what is called the logistics industry.

Ed Riney, president and CEO of the Owensboro Riverport Authority, Bob Whitmer, manager of the Owensboro-Daviess County Regional Airport, and Nick Brake, president and CEO of the Greater Owensboro Economic Development Corp., have begun regular meetings to explore those opportunities.

"The three of us understand that this could be good for the community, but we've just begun and have a lot to do," Riney said. " ... I think this potentially is one of the few economic drivers in the community other than the hospital."

Report shows opportunities

The collaboration among these three has led to a new report, "Growth Opportunities for Greater Owensboro in the Logistics Industry," which was prepared by Brake.

"We wanted to profile the logistics industry and see what's here; to study our employment base to see what opportunities there might be and what future prospects we have," Brake said.

Logistics companies primarily provide services in packaging, labeling, transporting and storing materials. Consulting firms for those services also come under that umbrella industry.

The report cites this definition from the Council of Supply Chain Management Professionals: "Logistics is the process of planning, implementing and controlling efficient flow and storage of goods, services, related information from point of origin to point of consumption for the purpose of conforming to customer requirements."


The analysis shows that the Owensboro region -- which for the study includes both the Owensboro and Evansville Metropolitan Statistical Areas -- has a healthy manufacturing base.

"A lot of these industries, especially the aluminum companies, are here because of low electricity costs," Brake said. "We looked at changes and potential threats to that."

The industry list includes quite a number that are "energy-use intensive companies," he said.

The region could not compete in the global market, however, with Iceland, the Middle East and China as players, he said. "Our strategy is to hold those jobs and companies we have and figure out how we can attract others," Brake said.

That's where capitalizing on the region's strengths comes into play.

"Owensboro's excellent highway, rail, river and air access allows commerce to flow quickly to all parts of the world," the report said.

The industry profile shows the region has more than 11,000 jobs in the Owensboro and Evansville MSAs, and logistics generates nearly 7,000 more jobs in other industries.

The annual payroll is nearly $300 million. Directly and indirectly, the industry provides more than $400 million in payrolls.

In the Owensboro MSA alone, nearly 100 companies are providing 2,000 jobs and generating nearly $100 million in annual payroll.

The report concludes with some next steps.

"We want the riverport to evaluate the container business," he said. " ... And the airport should fully utilize its 8,000-foot runway."

Logistics, logistics, logistics

"Our strategy is to coordinate our efforts on economic development and take advantage of logistics," said Whitmer, who is in his second year as the airport's director.

A simpler definition of logistics is the process of controlling the flow of materials from a starting point to an ending point.

Whitmer recently heard an expression he likes to repeat: "A mile of roads will get you one mile, but a mile of runway will get you anywhere in the world."

The airport's 8,000-foot runway is the key characteristic that makes it special in Kentucky's logistics industry, Whitmer said.

The asset puts Owensboro in good company. The only other Kentucky cities with 8,000-foot-plus runways are Louisville and Lexington and northern Kentucky/Cincinnati. And Owensboro's is the longest runway in western Kentucky.

Whitmer touts three other reasons companies should take notice:

* Pilots and companies prefer to use an airport with a fully staffed control tower, such as Owensboro's. The tower is staffed from 6 a.m. to 10 p.m., 365 days per year.

* The airport has 367 acres open for development.

* It's a full security airport with heightened security measures.

The airport now has two airlines flying passengers in and out of Owensboro -- Allegiant Air and KentuckySkies.

Because Allegiant flies more than 66 passengers per day, the Transportation Security Administration deems the airport "full security."

That means everyone must get security clearance before boarding planes, and background checks are done on employees.

Gating, videotaping, signage and fencing are required, and all of that is much more scrutinized than before the TSA designation, Whitmer said.

"From an economic development standpoint, it's a more secure airport," he said. "If you put a business on this property, it will be harder (for vandals, etc.) to get to you."

Attracting a cargo company to Owensboro is not just a pipe dream, according to all three logistics leaders.

"We realize we're very well located for UPS in Louisville and FedEx in Memphis," said Whitmer. "We're centrally located between those two primary shipping companies."

Memphis has the busiest airport in the world, primarily because of FedEx, not passenger count, he said.

A new National Guard Armory also will be built at the Owensboro airport, and that, too, is considered a plus. And the airport is well located between Fort Knox and Fort Campbell, he said.

"There may be some potential there in stockpiling and warehousing," Whitmer said.

He already has met with U.S. Rep. Brett Guthrie, a Bowling Green Republican who represents the 2nd Congressional District, to discuss those opportunities.

The airport is doing well creating amenities for the community. Whitmer and his colleagues are meeting and learning more about trends in the industry to move toward job creation.

"We've created a few jobs here, but nothing like a cargo hub or an airport maintenance facility," Whitmer said. "I commend the foresight the board had in moving forward with the 8,000-foot runway."

Riverport can be a bigger player

Riney is in his third year as the Owensboro Riverport Authority's president and CEO. He, too, is convinced that regional changes in infrastructure -- namely the addition of miles of four-lane roads and the possibility of having clear connectors to Interstate 64, Interstate 65 and Interstate 69 -- show that Owensboro is better positioned to take advantage of growth in the logistics industry.

"For years, we heard that Owensboro couldn't be very successful because we didn't have a four-year university or an interstate," Riney recently told a group gathered for a Food for Thought luncheon. "We're getting an adjunct or satellite campus of Western Kentucky University and a connector to Interstate 69. I think Owensboro is a real diamond in the rough."

The riverport has 35 to 38 employees and is located on 400 acres. It handles a number of commodities including aluminum, steel, zinc, grain, paper, fertilizer and others.

Until recently, the riverport was heavily focused on aluminum. In the past couple of years, however, Riney and the staff have worked to diversify as market conditions change.

"We have really focused on agriculture," he said. "We wanted to have one-third agriculture, one-third metal, one-third paper and other products."

Today, the U.S. moves only about 2 percent to 4 percent of its commerce by water, while Europe moves about 45 percent, according to Riney.

Riney and others are tracking a major initiative that could provide an opportunity.

It's called Marine Highway One, a five-state effort to develop a plan that would allow the states' transportation departments to request federal funds to build on to its riverports.

The initiative -- and there are others like it throughout the U.S. -- anticipates the opening of a third shipping lane on the Gulf Coast in 2014 as a result of the expansion of the Panama Canal.

"This could impact Owensboro with more traffic coming right by us," Riney said. "We would very much like Owensboro to compete for some federal dollars to be a container port."

The opportunity clearly falls under a long-term strategy, with any payback down the road, he said.

He, too, cites geographic and physical assets that could make Owensboro a player. But the riverport's real chances for such a new venture also hinge on the location of other new container ports.

The riverport needs a new loading dock, and a potential site has been identified. That dock would be critical for a container port, Riney said.

"We want to evaluate the site and determine if we can build a loading dock," he said. "If so, we can pursue this initiative."

The project would require state and federal funding.

The riverport also is approved as a Foreign Trade Zone, which could be an asset in a new logistics strategy.

With that designation, companies could bring goods into the riverport from a foreign country and do a lot of different things to them such as assemble, repackage or repair, or hold them -- without paying taxes.

That status is a good marketing tool, Riney said, and it could be useful in attracting a regional cargo company.

Future considerations include whether the airport may apply for Foreign Trade Zone status; the riverport could transfer its FTZ, or it could operate under one board authority.

"We need to figure out how we can cooperate and what, specifically we want to do, so that we can present a plan to the state and federal governments," Riney said. "This will take the full cooperation of the riverport , airport and economic development boards and city, county and state leaders -- a collective effort."

Joy Campbell, 691-7299, jcampbell@messenger-inquirer.com

The Big Four

The Owensboro region has:

* The Ohio River -- and a full-port, intermodal riverport.

* An airport with an 8,000-foot runway -- the longest runway in western Kentucky.

* A CSX railroad main line running through it.

* Links to Interstate 64, Interstate 65 and Interstate 24 on the nation's highway system through the Natcher and Audubon parkways with Interstate 69 and Interstate 66 corridors under development and accessible 30 minutes to the south and west.

On the Web

* Read the profile, "Growth Opportunities for Greater Owensboro in the Logistics Industry," prepared by Nick Brake, president/CEO of the Greater Owensboro Economic Development Corp., at http://owensboroedc.blogspot.com/.