Job Growth and Land Utilization

Framework for City of Memphis 03.28.2019

Project Methodology and Timeline

06/2018

• Data and analytics on Memphis economyOverview of economy

Preliminary identification of targets• Calculate potential growth targets

07/2018

Interviews and site visits• 44 meetings + interviews• 2 roundtables• > 100 interviewees

• Review and memo on parcel assessors, land, building databases

• Secondary research on industries and clusters

08/2018

• Tours of key corridors

Initial results and discussion• Discussion of initial target clusters• Initial growth target scenario

09/2018

Finalize job growth and land utilization framework for City of Memphis• Finalize target districts, parcels, clusters and sub-clusters• Presentation to and working session with Memphis stakeholders

10-11/2018

Four Growth Scenarios: +10K, +20K, +30K, +40K

10-Year Job Growth Targets (Jobs)Source: UDP

Baseline (39% U.S.)

Target 1 (70% U.S.)

Target 2 (Projected U.S.)

Target 3(112% U.S., Detroit)

Target 4(133% U.S., Nashville)

5,000

10,000

0

15,000

20,000

25,000

30,000

35,000

40,000

45,000

+11.0K

+19.7K

+30.0K+32.0K

+38.3K

Business Services

Distribution and E-Commerce

Transportation and Logistics

Hospitality and TourismFinancial

Services

Education and Knowledge

Creation

Medical Devices

Food Processing and Mfg.

Marketing, Design, and Publishing

Insurance Services

IT and Analytical Instruments

Printing Services

Construction Products and Services

Upstream Chemical Products

Paper and Packaging Upstream

Metal Mfg.

Production Technology and Heavy Machinery

Downstream Metal Products

Communications Equipment and Services

Downstream Chemical Products

Trailers, Motor Homes, and Appliances

Water Transportation

Plastics

0.0

0.5

1.0

1.5

2.0

-40% -30% -20% -10% 0% 10% 20% 30% 40%

Distribution and E-Commerce

Business Services

Hospitality and Tourism

Transportation and Logistics

Production Technology and Heavy Machinery

Food Processing and Mfg. Construction Products

and Services

Education and Knowledge Creation

Medical Devices

Financial Services

Automotive

Downstream Metal Products

Plastics

Downstream Chemical Products

Upstream Metal Mfg.

Wood Products

Printing Services

Lighting and Electrical Equipment

Marketing, Design, and Publishing

Upstream Chemical Products

Communications Equipment and

Services Metalworking Technology

Paper and Packaging

Wood Products

Conc

entra

tion

of A

ctiv

ity (2

016)

Employment Growth (2010-2016)Note: Only traded clusters with at least 500 and 300 jobs shown for the City and Rest of MSA, respectivelySources: UDP

STRONG BUT SLIPPING STRONG + COMPETITIVE

City of Memphis + Rest of MSA Emp Growth vs. Concentration of Activity

DETERIORATING EMERGING

Proposed Target Opportunities and Rationale

PHASE 4: • Medical Devices

Key cluster for Memphis’ and region’s jobs and wages; globally-competitive cluster with significant existing and pipeline assets(e.g., training center, STEM building at UofM, med dev accelerator) that need to be explicitly aligned; resolving land issues inairport district could create opportunities for bio-logistics

• Transportation, Distribution & LogisticsGrowth has been positive in post-recession period, but only a fraction of US rate (~25%); Memphis has to succeed in TDL: ~40K of ~110K traded cluster jobs are in Distribution and Electronic Commerce or Transportation and Logistics

• Food/Ag TechUnique assets (Indigo Ag, AgLaunch, Agricenter), good momentum, room for traditional processing and new models of urban food production; need to identify key jobs-producing applications and explore examine AgTech/finance opportunities

• Business-to-Business (B2B)Has potential to move Memphis economy ahead on multiple fronts: middle-wage job growth; improved, aligned model for

• Emerging TechSupport momentum and potential in emerging technology (e.g., blockchain, biologistics, cybersecurity, EdTech, FinTech); develop plans / assets to capture second-stage growth; expand UofM’s role in economic development in Memphis

• MusicExplore opportunities in music technologies; film, TV, video game and digital media scoring; and live performance

supporting and growing MBEs; and supportive infrastructure needed for tech and other entrepreneurship growth

Medical Devices Cluster

The Medical Devices cluster includes surgical, dental, opthalmic, optical, and other laboratory instrument manufacturing firms.

• Optical Instruments and Ophthalmic Goods• Surgical and Dental Instruments and Supplies

Key Assets

• Major global firms• Bioengineering curricula at local colleges• FedEx• Spin-out from large firms• ZeroTo510 incubator• Strong cluster group (Greater Memphis Medical Device Council)• $11M medical device training center to open in 2019

Subclusters

Sources: UDP, Mass Economics Interviews

Job Growth Rate, 2010-2016 (2016 Jobs)

City of Memphis

Rest of Memphis MSA

U.S.

14% (4.0K)

4% (1.3K)

-1% (253.8K)

10% 20%

City of Memphis

Rest of Memphis MSA

4.1K (+50)

1.3K (+20)

1K 3K 5K

10-Year Projected Jobs (at U.S. Growth Rate)

Medical Devices Cluster

Source: UDPMedical Devices LQ (Jobs) 2016

3.7(1.3K)

1.0(254K)

City of Memphis

Rest of Memphis MSA

Tennessee

U.S.

5.6(4.0K)

1.5(8.0K)

7.0

1.0

Initial Target Job Numbers

Source: UDP

Increase workforce and training capacity

Target Jobs AddedMedical Devices

Create regulatory and compliance specialization

Attraction efforts

Supplier park

Transportation, Distribution, and Logistics (TDL) Cluster

The Transportation, Distribution, and Logistics cluster includes transportation of freight and goods both locally and long distance, wholesaling, and support industries (e.g. packaging).

• Distribution and Electronic Commerce• Local Logistical Services

Key Assets

• FedEx, including planned investment• Overnight delivery to urban centers across the U.S.• Transportation infrastructure (large cargo airport, five Class 1

railroads, inland river port, robust highway system)• Specialized U of M curricula/degrees (e.g., supply chain

management)• High-quality mid-level logistics talent

Subclusters• Transportation and logistics

Job Growth Rate, 2010-2016 (2016 Jobs)

City of Memphis

Rest of Memphis MSA

U.S.

8% (69.8K)

20% (21.9K)

14% (9.8M)

10% 20%

Sources: UDP, Mass Economics Interviews

City of Memphis

Rest of Memphis MSA

71.5K (+1.7K)

22.6K (+690)

20K 40K 60K 80K

10-Year Projected Jobs (at U.S. Growth Rate)

TDL Cluster

2.5(69.8K)

1.6(21.9K)

1.2(238K) 1.0

(9.8M)

3.0

1.0

Source: UDPTDL LQ (Jobs) 2016

City of Memphis

Rest of Memphis MSA

Tennessee

U.S.

Initial Target Job Numbers

Source: UDP

Target Jobs AddedTDLRe-densify area around airport

Local trucking initiative

Strengthen bio-logistics

Food/AgTech Cluster

This cluster includes firms involved in the processing of raw food materials and the manufacturing of downstream food products.

• Animal Foods• Baked Goods• Malt Beverages• Candy and Chocolate• Farm Wholesalers

• Soft Drinks and Ice• Milling and Refining of Sugar• Packaged Fruit and Vegetables• Specialty Foods and Ingredients• Milling and Refining of Cereals and Oilseeds

• Dairy Products• Coffee and Tea• Wineries• Distilleries• Glass Containers

Key Assets

• In the heart of one of the major agricultural areas in U.S.• Historic strengths in food processing and manufacturing• AgTech is national leader in AgTech (AgLaunch)• Indigo Ag ($400M in funding) opening 20K sq. ft office in

downtown• Experts anticipate radical shift in ag/food geography

Subclusters

Job Growth Rate, 2010-2016 (2016 Jobs)

City of Memphis

Rest of Memphis MSA

U.S.

4% (3.2K)

8% (2.0K)

14% (1.0M)

10% 20%

Sources: UDP, Mass Economics Interviews

City of Memphis

Rest of Memphis MSA

3.1K (-80)

1.9K (-60)

1K 2K 3K 4K

10-Year Projected Jobs (at U.S. Growth Rate)

Sources: USDA Census of Agriculture, 2012; Mass Economics analysis

Memphis is in the center of a major agricultural region.Mid-South Delta Sales by Product (2012)

Cotton$1.2B

Rice$1.6B

Corn$2.4B

Soy$3.8B

All other products$2.8B

other top products include poultry/eggs, wheat, cattle/calves, aquaculture, and vegetables

Food/AgTech Cluster

Source: UDPFood/ AgTech LQ (Jobs) 2016

1.1(3.2K)

1.3(2.0K)

1.0(22K)

1.0(1M)

2.0

1.0

Food/AgTech Cluster

City of Memphis

Rest of Memphis MSA

Tennessee

U.S.

FutureCrop diversification, more innovation, growth in food and beverage manufacturing

1. Farm-level operations and efficiencies for today’s farms

2. Create more value with the region’s commodity crops

3. Crop diversification

4. Research and innovation, from ideation to commercialization

5. Systemic asset and capacity building

6. Increase focus on the region’s food and beverage manufacturing strength

Phase 1Food and beverage manufacturing attraction AgTech supply chain / logistics / transparency

Phase 2New product lines using regional product

Phase 3Post-CA geography of food production

Food/AgTech Cluster

Urban food production

Initial Target Job Numbers

Target Jobs AddedFood/AgTechFood and beverage manufacturing attraction (0-3 years)

AgTech supply chain / logistics / transparency (0-3 years)

New product lines using regional product (3+ years)

Post-CA geography of food production

Source: UDP

B2B as a Catalyst for Inclusive Urban Job Creation

Economic Development Infrastructure

Blue Collar B2B White Collar B2BAverage Wage vs. Educational Requirements

Sources: QWI, QCEW, BLS Employment Projections Program, Mass Economics analysis

B2B Blue Collar supports virtually all firms by offering capabilities in facilities maintenance, catering, repair services, etc.

B2B White Collar supports virtually all firms by offering capabilitiesin payroll, HR, other back office functions.

Land andLocationDemands

B2B Blue Collar has minimal location and infrastructure demands, utilizes a wide range of building types and land sizes. B2B Blue Collar firms can absorb Class C space.

White Collar B2B firms can adaptively reuse industrial buildings or be sited in commercial corridors.

Economic Inclusion

Both offer good wages and high utilization of workers without some college or an associate’s degree.

Social Inclusion

Many segments require little start-up capital; historically have provided entrepreneurship opportunities for Minority- and Women-Owned Business Enterprises (M/WBE).

High Value Professional+ Management Services

Applied Comp. Processing Engineering Digital Arts / New Media

Advanced Logistics

Specialized Business Support Services

Bio / Life Science

Neighborhood Health Services

Hospitality + Tourism

Retail

Local B2B WhiteCollar

Local B2B Blue Collar

Manufacturing

At least 35% of workers with High School degrees or less, and average wage of $40K+

20% 30% 40%

Percent of Jobs Requiring a High School Diploma or Less

50%

Aver

ageS

alar

y

$20K

$40K

$60K

$80K

$100K

$120K

Local Business to Business (B2B) Cluster

The business to business (B2B) cluster is comprised of businesses that support other local firms. The cluster can be broken into subclusters by activity type - White vs. Blue Collar - and location of activity either at the client site (offiste) or at the B2B firm (onsite).

Key Assets

• Blue Collar B2B Off-Site

• Large corporates, headquarters activities• Substantial B2B already exists• Available in-fill real estate• Need for revitalized MWBE model• Successful demonstration models (City of Memphis, MLGW)• Local expertise and experience (MMBC, Epicenter)

• Blue Collar B2B On-Site • White Collar B2BSubclusters

Job Growth Rate, 2010-2016 (2016 Jobs)

City of Memphis

Rest of Memphis MSA

U.S.

4% (97.9K)

25% (34.2K)

16% (20.6M)

20% 30%10%

Sources: UDP, Mass Economics Interviews

City of Memphis

Rest of Memphis MSA

100.5K (+2.7K)

35.2K (+1.1K)

20K 40K 60K 100K80K

10-Year Projected Jobs (at U.S. Growth Rate)

Source: UDPB2B LQ (Jobs) 2016

1.7(97.9K)

1.2(34.2K) 1.1

(460K) 1.0(20.6M)

2.0

1.0

B2B Cluster

City of Memphis

Rest of Memphis MSA

Tennessee

U.S.

B2B Activity Eds Meds Corporates Vertical AData Processing + Hosting $ $$ $$ …Computer Services $ $ $$ …Catering + Food Wholesalers $$ $$ $ …Equipment Wholesalers $ $ $$ …Facilities Management $$ $$ $ …Repair + Servicing $ $$ $ …Etc. … … … …

Example Spend Matrix

B2B is Related to but Distinct from Procurement Programs

B2B

Procurement

Initial Target Job Numbers

Target Jobs AddedB2BCreate B2B districts

Memphis Buys $50M target

Strengthen MWBE firms

Data processing, computer facilities management

Source: UDP

Proposed Target Opportunities and Rationale

PHASE 4: • Medical Devices

Key cluster for Memphis’ and region’s jobs and wages; globally-competitive cluster with significant existing and pipeline assets(e.g., training center, STEM building at UofM, med dev accelerator) that need to be explicitly aligned; resolving land issues inairport district could create opportunities for bio-logistics

• Transportation, Distribution & LogisticsGrowth has been positive in post-recession period, but only a fraction of US rate (~25%); Memphis has to succeed in TDL: ~40K of ~110K traded cluster jobs are in Distribution and Electronic Commerce or Transportation and Logistics

• Food/Ag TechUnique assets (Indigo Ag, AgLaunch, Agricenter), good momentum, room for traditional processing and new models of urban food production; need to identify key jobs-producing applications and explore examine AgTech/finance opportunities

• Business-to-Business (B2B)Has potential to move Memphis economy ahead on multiple fronts: middle-wage job growth; improved, aligned model for

• Emerging TechSupport momentum and potential in emerging technology (e.g., blockchain, biologistics, cybersecurity, EdTech, FinTech); develop plans / assets to capture second-stage growth; expand UofM’s role in economic development in Memphis

• MusicExplore opportunities in music technologies; film, TV, video game and digital media scoring; and live performance

supporting and growing MBEs; and supportive infrastructure needed for tech and other entrepreneurship growth

Job Growth and Land Utilization

Framework for City of Memphis 03.28.2019