Great Lakes…and great logistics

Trevor Friedeberg

Wednesday, May 23, 2018

Amazon, Penske investments affirm state’s superior supply chain assets

For years, the state of Michigan has boasted a motto that, quite frankly, states the obvious: If you seek a pleasant peninsula, look about you.

Ok, so we’re a bit partial to life in the Mitten.

Considered from an economic development perspective, the state’s slogan could be modified into something like: “If you’re looking for a place strategically located with a plethora of logistical advantages look around.”

Maybe not poetry, but definitely a compelling assertion that persuaded online retail giant Amazon and Penske Logistics, among others, to make major investments in the state.

In the last 18 months, the world’s preeminent online retailer has invested in four fulfilment centers – three in metro Detroit and one in Grand Rapids. Amazon’s decisions reflects Michigan’s strategic location in the Midwest consumer markets, and the state’s open-arm approach in supporting the building of centers that spawn a range of spin-off businesses, including entrepreneurial delivery services.

In May, Services, Inc. announced it will invest $150 million in a fulfilment center in Gaines Township, Kent County. The Michigan Strategic Fund approved a $4-million Michigan Business Performance program grant to support the online giant’s investment.

“Amazon’s ongoing investment in Michigan reflects the state’s prime supply chain assets, and as a Midwest distribution center for internet-based businesses,” said Jeff Mason, CEO, Michigan Economic Development Corporation.

“A project of this size will likely attract more growth and capital, and consequently, there will be a range of business investment,” said Mason. “The state’s success comes from the coordination with our regional economic partners, and an understanding of how the state’s logistical assets can support a global enterprise like Amazon’s.”

The investment in western Michigan comes after the internet-based retailer established three fulfilment centers in metro Detroit since December 2016, including in Livonia, Romulus, and Shelby Township. In total, Amazon’s total private investment in Michigan stands at $420 million with the commitment to create 4,925 jobs.

On June 28, Amazon announced its support for entrepreneurs looking to start their own delivery-packages business. The program is Amazon’s response to rapid increase in demand for the delivery of retail products, which is creating opportunities for more delivery services.

Last August, Penske Logistics announced it will invest $98.6-million into a 606,000-square-foot storage and distribution center and the creation of 403 jobs in metro Detroit. A subsidiary of Penske Truck Leasing, the logistic company operates more than 360 locations across North America, South America, Europe, and Asia. Penske Logistics offers a range of supply chain solutions, including warehousing and transportation management, lead logistics, and freight brokerage.

“This project has been made possible because of teamwork with the MEDC, the city of Romulus, InSite Real Estate and Bonner Advisory Group,” said Doug Studley, director of operations, Penske Logistics.

Transit/Transportation impacts economic development

There’s no question infrastructure plays a major role in attracting businesses to Michigan, and for current Michigan-based businesses to expand their enterprises. Michigan has a range of strategic logistical assets, including:

  • Strategically located as a place nearest one of the U.S. largest trading partners, Canada, and amid the most populated areas in North America. (NOTE: Mich. is within 500 miles of almost half of the U.S. and Canadian markets.)
    • The new Gordie Howe International Bridge crossing between Detroit and Windsor, Canada will break ground this year.
    • Michigan crossings handled 33.7% of U.S./Canadian trade in 2014.
  • Detroit Metro is one of the largest U.S. air hubs to Asia.
  • Four Class 1 rails efficiently connecting Michigan to the North American Rail Network.
  • Easy access to 15 major international shipping ports via rail and Great Lakes ports.

And, infrastructure improvements are on the way.

In March, Gov. Snyder signed a $175 million increase, which is 7 percent above existing spending. It includes $15 million for projects related to next generation technologies, hydrogen fueling stations and service delivery.

Snyder and lawmakers approved a long-term $1.2 billion transportation funding boost in 2015, through a mix of higher fuel taxes and vehicle registration fees and fund shifts. The plan is being phased in over a number of years and the term-limited governor's infrastructure commission has said at least $2.2 billion more is needed annually.

Michigan and metro Detroit has the potential to be the logistics capital of the Midwest, perhaps the same way Silicon Valley is known for its high-tech industries and start-ups. For that reason, a major focus of business attraction is on warehousing, loading/unloading cargo, shipping companies and delivery services.

Trevor Friedeberg is director of business development projects at the Michigan Economic Development Corporation.

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