Target Industries for the EDC of St. Charles County Preliminary Findings

Transcription

1 Target Industries for the EDC of St. Charles County Preliminary Findings June 2016 Prepared for:

2 Josh Beck, EDFP Partner, Location Strategies MarksNelson Partner in charge of Location Strategies Practice o Corporate Site Selection, Real Estate Development, and Economic Development Consulting Led projects involving more than $30 million in incentives and over 1,000 new employees from companies ranging in industry & size (start-up to Global 1,000) Facilitated the development and launch of four public-private economic development organizations and past experience in state and local economic development Certified Economic Development Finance Professional

3 Goals Identify the greatest opportunities for St. Charles County within the context of the target industries of regional and state partners o Identify target industries not just clustering industries o Understand actionable target project types not just target industry sectors by NAICS Evaluate supply/demand gaps in the St. Charles County real estate market that may be an obstacle for targets

4 Target Industry Data Analysis

5 Target Industry Filtering Process for 3,4,6 Digit NAICS At least 500 existing jobs in St. Charles County Average Wages at or above St. Charles County average wage At least 10 existing businesses Positive growth over the last 10 years

6 Target Industries of Regional & State Partners Missouri DED & Missouri Partnership St. Louis Regional Chamber St. Charles County Workforce Development Board Advanced Manufacturing Multimodal Logistics & Manufacturing* Advanced Manufacturing Financial & Professional Services Financial Services & Information Technology* * Financial Services Information Technology ** Information Technology Transportation & Logistics * Energy Solutions Biosciences Bioscience Logistics (Warehouse / Distribution) Health Sciences & Services Health Science & Services Healthcare

7 Recommended Target Industries Regional Target Industry Financial Services & IT Industry Description Data Processing, Hosting, and Related Services Custom Computer Programming Services Manufacturing Transportation Equipment Manufacturing Machinery Manufacturing Fabricated Metal Product Manufacturing Management & Administration Corporate, Subsidiary, and Regional Managing Offices Office Administrative Services

8 St. Charles County Industry Summaries for Recommended Industry Targets Financial Services & Information Technology Management & Administration Jobs (2016) % Change ( ) Avg. Earnings (2016) 3, % $145,820 Nation: 41.0% 1, % $73,902 Nation: 28.6% Manufacturing 10, % $87,335 Nation: -7.5% Source: EMSI

9 Financial Services & Information Technology Data Processing, Hosting, and Related Services (NAICS ) Custom Computer Programming Services (NAICS ) Existing Businesses 2015 Number of Establishments GRP $533,481,392 $90,061,954 Location Quotient 2006 Location Quotient Location Quotient Year LQ Growth 1.77 / 26% 0.43 / 91% Competitiveness Ind. Mix Effect Nat'l Growth Effect Expected Change Competitive Effect Source: EMSI

10 Management & Administration Corporate, Subsidiary, and Regional Managing Offices (NAICS ) Office Administrative Services (NAICS ) Existing Businesses 2015 Number of Establishments GRP $122,953,278 $52,692,001 Location Quotient 2006 Location Quotient Location Quotient Year LQ Growth 0.05 / 10% 1.06 / 212% Competitiveness Ind. Mix Effect Nat'l Growth Effect Expected Change Competitive Effect Source: EMSI

11 Advanced Manufacturing Transportation Equipment Manufacturing (NAICS 336) Machinery Manufacturing (NAIC 333) Fabricated Metal Product Manufacturing (NAICS 332) Existing Businesses 2015 Number of Establishments GRP $1,999,646,599 $237,974,173 $71,349,939 Location Quotient 2006 Location Quotient Location Quotient Year LQ Growth Year LQ Growth % 83% 9% 43% Competitiveness Ind. Mix Effect (496) (321) (73) Nat'l Growth Effect Expected Change (284) (183) (41) Competitive Effect 3, Source: EMSI

12 Growth Rates & Projections Compared to State & Nation Financial Services & Information Technology Targets Management & Administration Targets Advanced Manufacturing Targets Source: EMSI

13 Existing Industry Presence Financial Services & IT Targets Management & Administration Targets Manufacturing Targets Source: EMSI

14 Recommended Project Targets Advanced Manufacturing Synergistic Industry Financial Services & IT Management & Administration Foundational

15 Recommended Project Targets Industry: Financial Services & IT Advanced Manufacturing Synergistic Industry Financial Data Services & IT Centers Management & Administration Foundational

16 Business Case: Data Centers Electric cost Broadband access Water availability Workforce Natural disaster risk Airport accessibility Market verification

17 Electric Cost Industrial electric rates in Missouri in February 2016 were 6.07 cents per kwh, compared to 6.35 cents per kwh in Illinois and a national average of 6.38 cents per kwh Ameren, the largest electric provider in St. Charles County, touts electric rates 28% less than the national average Source: U.S. Energy Information & Ameren

18 Source: MoBroadbandNow Broadband Access

19 Water Availability St. Louis MSA Ranked 34 th of 225 MSAs for water availability with low vulnerability Approx. 50 million gallons per day of capacity identified through PWSD No. 2, City of O Fallon, and City of Wentzville alone Sources: USGS, University of Florida

20 Source: BLS, EMSI Description 2016 Jobs Change % Change Compared to MSA, State, Nation % Faster Growth in St. Charles County or % Slower Growth in St. Charles County Median Hourly Earnings % Lower Wage Rate in St. Charles County or % Higher Wage Rate in St. Charles County County County County STL MSA MO Nation County STL MSA MO Nation Computer Systems Analysts % 42% 32% 25% $ % -1% -8% Information Security Analysts % 29% 21% 22% $ % -9% -22% Computer Programmers % 37% 24% 22% $ % -4% -10% Software Developers, Applications Software Developers, Systems Software % 43% 27% 21% $ % -7% -15% % 37% 25% 18% $ % -4% -11% Web Developers % 48% 39% 23% $ % -4% -24% Network and Computer Systems Administrators % 25% 18% 15% $ % -5% -14% Computer Network Architects % 27% 21% 17% $ % -10% -12% Computer User Support Specialists Computer Occupations, All Other % 32% 22% 20% $ % -4% -8% % 32% 25% 22% $ % -8% -12% Operations Research Analysts % 33% 25% 18% $ % -6% -30% Computer and Information Research Scientists < 10 Insf. Data Insf. Data NA NA NA Insf. Data - - -

21 County State Total Flood Hurricane Severe Ice Severe (Evacuation) Storm Storm Snow Tornado Drought Bond Illinois Clinton Illinois Macoupin Illinois Madison Illinois St. Clair Illinois Warren Missouri Monroe Illinois Jersey Illinois Franklin Missouri Calhoun Illinois St. Charles Missouri Jefferson Missouri Lincoln Missouri St. Louis Missouri Source: USGS, FEMA

22 Source: ESRI Distance to Airport: Lambert

23 Source: ESRI Distance to Airport: Spirit of STL

24 Market Verification by Existing Data Centers

25 Industry Trends: Data Centers Growing popularity of co-location Existing business retention concern Move towards multiple smaller data centers closer to target markets Shrinking distance for redundant facilities

26 Initial Action-Item Recommendations for EDCSCC Identify Target Corridors for Data Center Development 26 Pursue Data Center Site Evaluations for Properties within Prioritized Corridors Encourage the Development of Leasable Co-Location Space Develop a Marketing Strategy Touting St. Charles County as the Location of Choice for Data Center Development

27 Recommended Project Targets Industry: Management & Administration Advanced Manufacturing Synergistic Industry Data Centers Financial Services & IT Back Office, Shared Management Services, & Administration HQ Foundational

28 Business Case: Back Office, Shared Services, HQ Workforce Airport accessibility Telecommunications network & time zone Market verification

29 Description 2016 Jobs Change Change Compared to MSA, State, Nation % Faster Growth in St. Charles County or % Slower Growth in St. Charles County Median Hourly Earnings % Lower Wage Rate in St. Charles County or % Higher Wage Rate in St. Charles County County County County STL MSA MO Nation County STL MSA MO Nation Customer Service Representatives 2, % 17% 14% 13% $ % -8% -10% General and Operations Managers 2, % 17% 15% 11% $ % 0% -25% Bookkeeping, Accounting, and Auditing Clerks 1, % 15% 12% 9% $ % -3% -11% Bill and Account Collectors 1, % 24% 25% 20% $ % -11% -30% Receptionists and Information Clerks % 13% 12% 4% $ % -9% -17% Computer User Support Specialists % 32% 22% 20% $ % -4% -9% Telemarketers % 47% 36% 54% $ % -8% -16% Sales Representatives, Wholesale and Manufacturing, Technical and Scientific Products % 18% 15% 15% $ % -18% -38% Data Entry Keyers % 32% 32% 28% $ % -11% -14% Switchboard Operators, Including Answering Service % 22% 18% 21% $ % -12% -19% Brokerage Clerks % -93% -45% 41% $ % -16% -38%

30 Business Case: Back Office, Shared Services, HQ PST: - 2 hrs. MST: - 1 hrs. St. Charles County CST: +/- 0 hrs. EST: + 1 hrs.

31 Source: ESRI Distance to Airport: Lambert

32 Source: ESRI Distance to Airport: Spirit of STL

33 Related Businesses Announcements Within 5 Years Serco - Expanded by approx. 400 call center jobs in 2015 Medical Transportation Management (MTM) - Added 150 employees at HQ in 2014 NISC - Expanded St. Charles County facility by 44,000 SF in 2014 Royal Canin - Expanded in 2011/2012 with new office staff and expanded call center National Asset Recovery Services (NARS) - Relocated HQ to St. Charles County in 2012 Air Evac Lifeteam - Relocated HQ and call center to St. Charles in 2012 Roberts Marketing Group - Opened 500 person call center in St. Charles County in 2012 Client Services - Expanded call center by 300 FTEs and 100+ part-time positions

34 Target Higher Value Functions Outbound Call Center Inbound Call Center Back Office & Shared Services Regional, National, and Global HQ Difficult competition with low-cost off-shore markets (ex: India) Higher value functions requiring strong pool of professional-level talent

35 35 St. Charles County Office Market Dynamics Average Vacancy 14.7% Asking Rent / SF (all properties) $18.70 Total Leasable SF 1,924,245 Median List Price / SF (all properties) $ $ Building Size (all properties) 13,758 5,200 Max Contiguous Space Available (all properties) 9,471 2,961 Lot Size (acres; all properties) Year Built (all properties) Vacancy Rent CBRE C&W JLL CBRE C&W JLL Mid-County 7.50% 4.80% - $23.39 $ St. Charles 21.30% 12.60% 16.00% $18.16 $16.14 $18.67 Downtown 26.70% 18.10% 19.50% $15.76 $16.83 $16.98 North County 15.40% 13.50% 19.90% $16.48 $17.12 $17.16 West County 11.50% 11.20% 10.40% $20.46 $21.51 $21.48 South County 7.30% 11.80% 6.10% $20.75 $22.50 $20.65 Clayton % 7.20% - $23.84 $24.17

36 36 St. Charles County Office Market Dynamics Office Market Share By City Current and Planned/Proposed Property Types 9% 5% 6% 2% 27% 17% 34% Lake St. Louis O'Fallon St. Charles St. Peters Weldon Spring Wentzville 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Current Usage Vacancy Under Construction Class A Class B Class C Planned & Proposed

37 37 St. Charles County Office Market Dynamics Vacancy by Building Class Total Vacant (SF) Vacancy Rate Building Size (SF) Max Contiguous Space (SF) Average Median Average Median # of Listings > 10K SF # of Listings < 10K SF Class A 850, % 46,761 35,400 27,437 10, Class B 568, % 15,518 10,000 6,247 4, Class C 122, % 10,858 6,222 2,998 2, Class A vacancy is high compared to market and national averages Contiguous spaces over 10K SF for larger users make up more than 80% of class A vacancy. Nearly 700K SF of class A space is available in blocks > 10K SF Of vacant class A space greater than 10K SF, the average available contiguous space is 60K SF, the largest available contiguous space is 132K SF, and the smallest is approximately 20K SF

38 38 St. Charles County Office Market Dynamics Vacant Office Space by Class by Year Built Of 136 office spaces listed as vacant in St. Charles County, 60 are less than 20 years old and 10 are less than 10 years old < 10 Years Old < 20 Years Old Class A Class B Class C

39 39 Initial Action-Item Recommendations Encourage the Development of Office Suites Engage in Target Marketing of HQ Prospects Develop a Marketing Strategy Touting St. Charles County as the Location of Choice for Back Office, Shared Services, and Headquarters

40 Recommended Project Targets Industry: Advanced Manufacturing Automotive & Advanced Manufacturing Aerospace Suppliers Synergistic Industry Data Centers Financial Services & IT Back Office, Shared Management Services, & Administration HQ Foundational

41 Automotive Production/Employment Projections Sources: Center for Automotive Research, Automotive News, BLS

42 Automotive Supply Chain Raw Material Suppliers Tier 2 Supplier Tier 1 Supplier Original Equipment Manufacturer Dealer

43 Source: BLS, EMSI Description 2016 Jobs Change % Change Compared to MSA, State, Nation % Faster Growth in St. Charles County or % Slower Growth in St. Charles County Median Hourly Earnings % Lower Wage Rate in St. Charles County or % Higher Wage Rate in St. Charles County County County County STL MSA MO Nation County STL MSA MO Nation Team Assemblers 2, % 64% 49% 48% $ % -7% -1% First-Line Supervisors of Production and Operating Workers % 29% 28% 23% $ % 8% 0% Electrical and Electronic Equipment Assemblers % -8% -5% -2% $ % 11% 19% Assemblers and Fabricators, All Other % 43% 37% 38% $ % -17% -34% Welders, Cutters, Solderers, and Brazers % 34% 29% 24% $ % -2% -5% Machinists % 50% 52% 41% $ % 7% 3% Production Workers, All Other % 36% 28% 31% $ % -24% -30% Mechanical Engineers % 31% 32% 25% $ % -2% -11% Computer-Controlled Machine Tool Operators, Metal and Plastic % 50% 50% 43% $ % 5% 0% Multiple Machine Tool Setters, Operators, and Tenders, Metal and Plastic % 49% 44% 36% $ % 4% -4% Extruding and Drawing Machine Setters, Operators, and Tenders, Metal and Plastic % 21% 8% 5% $ % -7% -23% Mechanical Engineering Technicians % 24% 24% 20% $ % 3% -3% Structural Metal Fabricators and Fitters % 24% 22% 19% $ % -11% 8% Engineers, All Other % 31% 26% 22% $ % -8% -21% Welding, Soldering, and Brazing Machine Setters, Operators, and Tenders % 91% 98% 87% $ % -7% -13% Engine and Other Machine Assemblers % 55% 46% 32% $ % -14% -28% Lathe and Turning Machine Tool Setters, Operators, and Tenders, Metal and Plastic % 51% 40% 37% $ % 5% -4% Fiberglass Laminators and Fabricators % 16% 21% 24% $ % 9% 3% Engineering Technicians, Except Drafters, All Other % 32% 28% 22% $ % -12% -28% Grinding and Polishing Workers, Hand % 8% 22% 16% $ % 2% 4% Drilling and Boring Machine Tool Setters, Operators, and Tenders, Metal and Plastic % 39% 48% 39% $ % -3% -12% Foundry Mold and Coremakers % -11% 10% -2% $ % -2% 2% Heat Treating Equipment Setters, Operators, and Tenders, Metal and Plastic < 10 Insf. Data Insf. Data NA NA NA Insf. Data NA NA NA

44 Business Case: Automotive Suppliers Source: Center for Automotive Research, Norfolk Southern Corp.

45 Existing Related Businesses General Motors Lear Corporation Faurecia Craftsmen Industries Pittsburgh Glass Works

46 Industry Trends: Aerospace Suppliers OEM backlogs at an all-time high Sources: Wall Street research, Airline Monitor, Forecast International, Company filings, Boeing Current Market Outlook 2015, Honeywell, LMI Aerospace 6/9/16 presentation to Drexel Hamilton Aerospace & Defense Conference

47 Aerospace Product & Parts Manufacturing Employment 2006 Jobs Jobs 1, Change 1,164 Location Quotient 2006 Location Quotient Location Quotient 3.26 Source: EMSI

48 Top 10 Regions for Aerospace Employment QUARTERLY EMPLOYMENT Q3 Q Q Q Seattle-Tacoma-Bellevue, WA MSA 93,296 93,846 92,100 91, Los Angeles-Long Beach-Anaheim, CA MSA Dallas-Fort Worth-Arlington, TX MSA NA 50,110 49,961 50,015 35,707 34,402 32,265 32,318 4 Wichita, KS MSA 30,438 29,385 28,186 28,071 9% 9% 5 St. Louis, MO-IL MSA 13,139 16,919 17,170 16,146 6 San Diego-Carlsbad, CA MSA 6,847 6,828 7,198 11,528 7 Cincinnati, OH-KY-IN MSA 9,950 9,955 10,373 10,939 8 Boston-Cambridge-Newton, MA-NH MSA 11,311 11,322 10,075 10,378 9 Philadelphia-Camden-Wilmington 10,198 10,080 9,389 8,235 81% St. Charles County St. Louis County All Other Counties 10 Denver-Aurora-Lakewood, CO MSA 6,219 6,088 6,137 6,656 Source: BLS (NAICS 3364)

49 Aerospace Employment Aerospace Employment Growth in St. Charles County Aerospace Employment Growth in St. Louis County 1,750 15,000 1,500 14,500 1,250 14,000 1,000 13, , , St. Charles County 12, St. Louis County Sources: EMSI

50 Net Sales (in Millions of Dollars) St. Charles County Aerospace Employment LMI Aerospace Sales / St. Charles County Aerospace Employment , , ,400 1,200 Large Commercial , Corporate and Regional Aircraft Military Other County Aerospace Employment Sources: EMSI; LMI Aerospace 10-K Annual Reports

51 Sources: BLS, EMSI 2016 Jobs Change % Change Compared to MSA, State, Nation % Faster Growth in St. Charles County or % Slower Growth in St. Charles County Median Hourly Earnings % Lower Wage Rate in St. Charles County or % Higher Wage Rate in St. Charles County STL County County County MSA STL MO Nation County MSA MO Nation Mechanical Engineers % 31% 32% 25% $ % -2% -11% Engineers, All Other % 31% 26% 22% $ % -8% -21% Electrical and Electronics Engineering Technicians % -3% -11% -8% $ % 7% 8% Mechanical Engineering Technicians % 24% 24% 20% $ % 3% -3% Aircraft Mechanics and Service Technicians % 119% 122% 111% $ % -6% -25% First-Line Supervisors of Production and Operating Workers % 29% 28% 23% $ % 8% 0% Engine and Other Machine Assemblers % 55% 46% 32% $ % -14% -28% Structural Metal Fabricators and Fitters % 24% 22% 19% $ % -11% 8% Team Assemblers 3, % 64% 49% 48% $ % -7% -1% Assemblers and Fabricators, All Other % 43% 37% 38% $ % -17% -34% Machinists % 50% 52% 41% $ % 7% 3% Welders, Cutters, Solderers, and Brazers % 34% 29% 24% $ % -2% -5% Welding, Soldering, and Brazing Machine Setters, Operators, and Tenders % 91% 98% 87% $ % -7% -13%

52 Existing Related Businesses LMI Aerospace Seyer Industries Westar Display Technologies Northrop Grumman / Cutting Edge Optronics Patriot Machine Austin Machine

53 Industry Trends: Aerospace Suppliers More suppliers focused on diversifying into commercial aviation Low production quantities = technology and innovation are drivers, more than proximity to OEM

54 54 St. Charles County Industrial Market Dynamics Average Median Vacancy 2.0% Asking Rent 1 / SF (all properties) $6.90 Total Leasable (all properties) 916,389 List Price / SF (all properties) $74.99 $73.21 Average Building Size (all properties) 31,341 12,389 Average Max Contiguous Space (vacant properties) 13,857 9,155 Lot Size in Acres (all properties) Year Built (all properties) Average Clear Height (all properties) Average Number of Dock Doors (all properties) 5 2 Average Number of Drive-Up Doors (all properties) 3 2

55 55 St. Charles County Industrial Market Dynamics 100% Current Supply, Vacancy, Future Supply Industrial Market Share by Municipality 90% 80% 1% 10% 70% 60% 16% 2% 2% 35% 50% 40% 30% 20% 10% 34% 0% Current Usage Vacant Space Under Construction Planned & Proposed Flex / R&D Manufacturing Other Light Industrial Warehouse & Distribution Lake St. Louis O'Fallon St. Charles St. Peters Weldon Spring Wentzville Other

56 56 St. Charles County Industrial Market Dynamics Project Location Park Purpose SF SE of Elm Point Industrial Dr. & Elm Street Saint Charles E Route A Wentzville Wentzville Assembly Light Industrial Clear Height 10, Manufacturing 1,100,000 - NE of I-70 & GTE Drive Wentzville - W/D 153,600 - Premier 370 Lot 29 Saint Peters Premier 370 Flex / R&D 351, Premier 370 Lot 41 Saint Peters Premier 370 W/D 500, Fountain Lakes Commerce Center East Fountain Lakes Commerce Center Planned and Proposed Projects Saint Charles Saint Charles Fountain Lakes Commerce Center Fountain Lakes Commerce Center W/D 180, W/D 194,750 32

57 57 St. Charles County Industrial Market Dynamics 2010 Year Built for Vacant Industrial Spaces Of 30 office spaces listed as vacant in St. Charles County, only 3 are less than 10 years old and 10 are less than 10 years old < 10 Years Old < 20 Years Old Age

58 58 St. Charles County Land Market Dynamics Marketed Use Property Acreage Zoning 3428 Harvester Rd C-3 (General Commercial) Highway 370 at Truman Blvd (Premier 370) Average Asking Price for Land Price Per SF Industrial $3.30 Office $7.38 Mixed Use $8.19 Listed Property Larger Than 40 Acres 505 SL St. Peters Lakeside 370 Special District 1 GTE Drive I-I (Light Industrial) 8196 Highway N 46 AG (Agricultural) 404 Foristell Rd 177 AG (Agricultural) Highway SD -I (Institutional) 910 East Highway N AG (Agricultural) 151 Freymuth Ave 62 C3 (Highway Commercial)

59 Missouri Partnership Site Search Statistics Total number of real estate searches Site acreage requested Average 114 acres 54 acres 40 acres 289 acres Median 50 acres 40 acres 40 acres 40 acres Minimum 10 acres 5 acres 10 acres 7 acres Maximum 1,000 acres 200 acres 100 acres 3,500 acres Industrial building size requested Average 170,682 SF 113,429 SF 154,545 SF 135,109 SF Median 175,000 SF 100,000 SF 80,000 SF 75,000 SF Minimum 4,000 SF 20,000 SF 10,000 SF 15,000 SF Maximum 450,000 SF 400,000 SF 800,000 SF 650,000 SF Ceiling height requested Average 22.3 ft 27.1 ft 23 ft 26 ft Median 21.5 ft Minimum 12 ft 12 ft 12 ft 15 ft Maximum 40 ft 45 ft 35 ft 43 ft Rail requested All searches 19% 24% 29% 38% Greenfield site searches only 13% 33% 67% 75% 59

60 60 Automotive & Aerospace Suppliers Pursue Shovel-Ready Sites Consider Re-Development of Out-Dated Industrial Space Encourage the Development of Supplier Parks & Leasable Space Develop a Marketing Strategy Touting St. Charles County as the Location of Choice for Automotive and Aerospace Suppliers

61 Recommended Project Targets Foundational Automotive & Advanced Manufacturing Aerospace Suppliers Synergistic Industry Data Centers Financial Services & IT Back Office, Shared Management Services, & Administration HQ Entrepreneurship Foundational

62 Entrepreneurship In 2014, startups generated 12,937 jobs in Missouri while exits lost 11,033 jobs. St. Charles has the highest innovation index in the region indicating it can readily adapt to the rapid changes to the knowledge economy. Missouri Private Startup & Exit Rates Innovation Index St. Charles County USA St. Louis County Ilinois St. Louis MSA St. Louis City Missouri Sources: U.S. Small Business Administration, U.S. EDA, statsamerica.org

63 Entrepreneurship St. Charles already has demonstrated a strong commitment to entrepreneurship Over 20 years, more than 200 companies and 1,000 jobs graduated from the EDC s business incubator ( ) EDCSCC commitment to training, counseling, and financing entrepreneurs New co-working center for digital startups provides collaborative environment for tech entrepreneurs

64 Recommended Project Targets Synergistic Target Automotive & Advanced Manufacturing Aerospace Suppliers Data Centers Financial Services & IT Automotive Synergistic & Aerospace Industry Technology Back Office, Shared Management Services, & Administration HQ Entrepreneurship Foundational

65 Source: GM Investor Presentation Auto Industry Trend: Tech Integration

66 Interview with Jim McBride, Technical Leader of Ford s Autonomous Vehicles Team (May 2016) How long do you think it will be before autonomous vehicles are commonplace? I think the more important question is, when are the underlying technologies going to be available?, and I would say the answer to that is probably four or five years. Then you go from there deciding how you will employ that technology. How big a deal are autonomous cars going to be really? I would say it s a paradigm shift that s not terribly dissimilar from [the shift from] horses and carriages going to cars it opens up a whole variety of new business models that weren t previously available. Source: zdnet.com

67 Auto Industry Trend: Tech Integration

68 Auto Industry Trend: Tech Integration

69 Auto Industry Trend: Tech Integration Leading technology opportunities include: Advanced internal combustion engine Transmission Vehicle electrification (hybrids and battery electronics) Advanced lightweight materials, engineering design (CAE) and joining Connected and autonomous vehicles Manufacturing robotics and automation Information technology Source: Center for Automotive Research

70 Aerospace Industry Trend: Tech Integration Source: PWC, Breakthrough innovation and growth. Base: AD&S: 38

71 Aerospace Industry Trend: Tech Integration Q: What level of digitization and integration are you expecting in the next five years? Aerospace, defense and security companies plan on investing nearly 5% of annual revenue in digital operation solutions in the next 5 years Q: What significance does the gathering, analysis and utilization of data for decision making have for your company? Source: PWC, Industry 4.0: Building the digital enterprise Aerospace, defense and security key findings, 2016 As the need for combining internal and external data sources in the industry grows, the demand for better analytical platforms will also grow. A key challenge for growing data analytics within the industry is the current lack of skill.

72 Aerospace & Automotive: Tech Integration In 2012, The BMW Group and Boeing signed a collaboration agreement to participate in joint research for carbon fiber recycling as well as share manufacturing knowledge and explore automation opportunities. - Joint Press Release from Boeing and The BMW Group Aviation manufacturing companies can consider co-opting automation practices from other industries (e.g. automotive) and collaborate with emerging developers of technology (carbon composites, bio-fuels) and manufacturing processes to maintain a leading edge as innovators and to diversify their business. - PWC 2015 Aerospace Manufacturing Attractiveness Rankings

73 73 Action Item Recommendations Target Automotive and Aerospace Technology Businesses for Business Incubation and Acceleration Programs Evaluate the Feasibility of an Automotive and/or Aerospace Technology Innovation Center Pursue Partnership Opportunities with GM and Other Area Automotive and Aerospace Companies Develop a Marketing Strategy Touting St. Charles County as the Home of the Automotive & Aerospace Technology Industry

74 Recommended Project Targets Automotive & Advanced Manufacturing Aerospace Suppliers Data Centers Financial Services & IT Automotive Synergistic & Aerospace Industry Technology Back Office, Shared Management Services, & Administration HQ Entrepreneurship Foundational

75 QUESTIONS? Josh Beck Partner, Location Strategies