St. Louis Regional Economic
Adjustment Strategic Plan
Prepared for:
St. Louis County Economic Council
State of Missouri
City of Fenton
September 30, 2011
Table of Contents
EXECUTIVE SUMMARY.......................................................................................................................................... 1 INTRODUCTION .................................................................................................................................................... 15 STAKEHOLDER INSIGHTS .................................................................................................................................. 25 ECONOMIC AND FISCAL IMPACTS OF CHRYSLER ......................................................................................... 43 ECONOMIC BASE – RECESSION & RECOVERY ............................................................................................... 73 ECONOMIC BASE – ST. LOUIS REGION ............................................................................................................ 87 INDUSTRY WHITE PAPERS ............................................................................................................................... 139 ACTION PLAN PRIORITIES................................................................................................................................ 193 APPENDIX ........................................................................................................................................................... 235 ii
Table of Tables
Table 1: St. Louis Regional Automotive Sector, 2007 .......................................................................... 46 Table 2: Automotive Sector Output Multipliers, 2007 ........................................................................... 49 Table 3: Automotive Sector Employment Multipliers, 2007 .................................................................. 50 Table 4: Total Commodity Inputs for Light Truck Manufacturers, 2007 ............................................... 51 Table 5: Regional Commodity Inputs for Light Truck Manufacturers, 2007 ......................................... 51 Table 6: Job Losses Resulting from Plant Closures ............................................................................. 54 Table 7: Estimated Direct Impact of Plant Closures, 2011 ................................................................... 54 Table 8: Region Employment, Wage and Output Impacts (2011 dollars) ............................................ 54 Table 9: Economic Impacts for Sectors Directly Impacted by Plant Closures...................................... 55 Table 10: Sectors with Largest Output Impacts .................................................................................... 55 Table 11: Sectors with Largest Employment Impacts .......................................................................... 56 Table 12: Sectors with Largest Wage Impacts ..................................................................................... 56 Table 13: Taxable Assessed Values for Top Taxpayers in St. Louis County....................................... 58 Table 14: State and Local Fiscal Impacts, 2011 ................................................................................... 59 Table 15: 2011 Vacancy Status of Key Supplier Sites ......................................................................... 65 Table 16: Chrysler Employee Status Changes, 2008-2009 ................................................................. 67 Table 17: Tri-State Employment Loss in Transportation Equipment MFG, 2006 to 2009 .................... 69 Table 18: Education Requirements for Projected Top and Bottom 30 Occupations (2008-2018) ....... 82 Table 19: St. Louis Region Population Growth (2000-2010) ................................................................ 90 Table 20: Change in Cost of Living vs. Change in Population and Labor Force, 2000-2010 .............. 91 Table 21: Non-Farm Employment, St. Louis Region Jan. 2008-June 2011 (thousands of jobs) ......... 94 Table 22: Change in Non-Farm Employment, St. Louis Region Jan. 2008-June 2011 ....................... 95 Table 23: Firms and Employment by Firm Size, 2001-2008 (in thousands) ........................................ 96 Table 24: St. Louis Region Employment, 2001-2009 ........................................................................... 99 Table 25: Change in Employment, 2001-2009 CAGR.......................................................................... 99 Table 26: St. Louis Region Average Wages, 2001-2009 ................................................................... 100 Table 27: Clean Energy Economy, 2007 ............................................................................................ 103 Table 28: St. Louis Region Output (in millions), 2001-2009 ............................................................... 104 Table 29: St. Louis Region Output per Job, 2001-2009 ..................................................................... 104 Table 30: Industrial Integration of Top Performing Private Sectors, St. Louis Region 2009 .............. 106 Table 31: Federal Government Spending, St. Louis Region (millions) .............................................. 110 Table 32: Intra-Regional Trade as Shown through Exports (billions) ................................................. 111 Table 33: Interstate Trade in the St. Louis Region (millions), 2007 ................................................... 111 Table 34: Select Goods Exported from the St. Louis Region by State, 2007..................................... 112 Table 35: Value of Exports from Illinois and Missouri, 2007 to 2010 (millions) .................................. 113 Table 36: Population Growth, 2000-2010 ........................................................................................... 115 Table 37: Rank of Top 30 Regions by Population (2000-2030) ......................................................... 116 Table 38: Top Regions Cost of Living (Quarter 1, 2011) .................................................................... 117 Table 39: Private Sector Weekly Wage (2001-2010) ......................................................................... 123 Table 40: Violent Crime Rates per 100,000 Residents, 2009 ............................................................ 129 Table 41: Reviewed Programs ........................................................................................................... 147 Table 42: State Wind Resource and Capacity Development, Q3 2010 ............................................. 160 Table 43: Data Unit – Size Reference ................................................................................................ 161 Table 44: Sectors with the Largest Water Use, 2002 (billions of gallons) .......................................... 176 Table 45: Total Water Withdrawals for the St. Louis Region .............................................................. 177 Table 46: Projected Middle-Class Spending, Compound Annual Growth Rate ................................. 188 Table 47: Top US Exports to China, 2010 ($ billions) ........................................................................ 192 Table 48: Top Performing Private Sectors, St. Louis Region 2009 .................................................... 201 Table 49: Retail Margins in St. Louis Region, 2009 ........................................................................... 202 Table 50: Private Sectors with Largest Multipliers and RPCs, St. Louis Region 2009 ...................... 203 Table 51: Largest Economic Impacts in Private Sectors with $25 Million Investment........................ 205 Table 52: Plant and Medical Sciences Sectors, St. Louis Region 2009............................................. 206 Table 53: Performance Metrics for Plant and Medical Sciences, St. Louis Region 2009 .................. 207 iii
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Advanced Manufacturing Sectors, St. Louis Region 2009 ................................................. 208 Performance Metrics for Advanced Manufacturing, St. Louis Region 2009 ....................... 210 Information Technology Sectors, St. Louis Region 2009 ................................................... 213 Performance Metrics for Information Technology, St. Louis Region 2009 ......................... 213 Transportation and Distribution Sectors, St. Louis Region 2009........................................ 214 Performance Metrics for Transportation and Distribution, St. Louis Region 2009 ............. 214 Financial Services Sectors, St. Louis Region 2009 ............................................................ 215 Performance Metrics for Financial Services, St. Louis Region 2009 ................................. 215 Highest Return on $25 Million Investment Among Targeted Clusters................................ 216 St. Louis Region Transportation Sector Output .................................................................. 222 Total Commodity Supplied and Demanded (millions) ........................................................ 223 Regional Purchase and Sales Coefficients ........................................................................ 224 Total Exports ....................................................................................................................... 225 Domestic and Foreign Exports ($ millions) ......................................................................... 225 Total Imports ($ millions) .................................................................................................... 226 Indirect and Induced Output Multipliers (for each $1 direct impact) ................................... 226 Commodity Inputs, Air Transportation (inputs in $ millions) ............................................... 227 Top Commodity Inputs, Rail Transportation (inputs in $ millions) ...................................... 228 Commodity Inputs, Water Transportation (inputs in $ millions) .......................................... 228 Commodity Inputs, Truck Transportation (inputs in $ millions) .......................................... 229 Commodity Inputs, Courier Services (inputs in $ millions) ................................................. 229 Commodity Inputs, Warehousing........................................................................................ 230 Industry Expenditure on Air Transportation (inputs in $ millions) ....................................... 231 Industry Expenditure on Rail Transportation (inputs in $ millions) ..................................... 231 Industry Expenditures on Water Transportation (inputs in $ millions) ................................ 232 Industry Expenditure on Truck Transportation (inputs in $ millions) .................................. 232 Industry Expenditure on Courier Services (inputs in $ millions) ......................................... 233 Industry Expenditures on Warehousing (inputs in $ millions)............................................. 233 iv
Table of Figures
Figure 1: St. Louis Region Automotive Sector Employment, Select Years .......................................... 45 Figure 2: St. Louis Region Auto Production, 2005 - 2010 .................................................................... 47 Figure 3: Annual Truck & Minivan Production (2005-2009).................................................................. 47 Figure 4: Monthly Truck and Minivan Production (2009) ...................................................................... 48 Figure 5: Where Chrysler Workers Live by Census Tract, 2003, 2005, 2007 and 2009 ....................... 57 Figure 6: Commercial Real Estate Construction Trends Since 1982 ................................................... 61 Figure 7: Industrial Real Estate Market Metrics, 1st Qtr 2011 ............................................................... 62 Figure 8: Office Real Estate Market Metrics, 1st Qtr 2011 .................................................................... 62 Figure 9: Retail Real Estate Market Metrics, 1st Qtr 2011 .................................................................... 63 Figure 10: Fenton Industrial Market Vacancy Trend, 1st Qtr 2011 ....................................................... 64 Figure 11: Fenton Industrial Market Rent Trends, Through 1st Qtr 2011 ............................................. 64 Figure 12: Vacancy Rates for Industrial Properties in Fenton, MO (Q1, 2011) .................................... 66 Figure 13: Training Focus for Former Chrysler Workers in St. Louis County....................................... 68 Figure 14: US Banks – Total Assets, 2002-2010 ................................................................................. 77 Figure 15: Missouri Banks – Total Assets, 2002-2010 ......................................................................... 77 Figure 16: Underperforming Assets in US and Missouri Financial Institutions, 2002-2010 ................. 78 Figure 17: National Debt Types, 2004-2011 ......................................................................................... 79 Figure 18: Percent Change in the US Housing Price Index, 1981-2010 .............................................. 80 Figure 19: National Employment, March 1990-2011 ............................................................................ 81 Figure 20: Total Employment vs. Unemployment Rate, 2nd Quarter 2000-2011 .................................. 81 Figure 21: Population Growth Projection (1990-2030) ......................................................................... 83 Figure 22: US Census Map of Population US Center, 1790-2010 ....................................................... 84 Figure 23: Population Center Distance Traveled SW (1790-2010) ...................................................... 85 Figure 24: Changes in Household Structure, 1990 to 2010 ................................................................. 91 Figure 25: Share of the St. Louis Region by Age, 2000-2015 .............................................................. 92 Figure 26: High School Drop Out Rate (2006-2010) ............................................................................ 93 Figure 27: St. Louis Region Labor Force, May 2000-2011................................................................... 93 Figure 28: Selected Super Sector Employment Growth, June 1991-2011........................................... 95 Figure 29: St. Louis Firms as Share of US by Firm Size ...................................................................... 97 Figure 30: Selected Super Sector Wage and Employment Annual Growth (2008-2011) .................... 97 Figure 31: Share of Goods Producing Jobs, 2001-2009 ...................................................................... 98 Figure 32: LQs for St. Louis Manufacturing Relative to the US, 2001 and 2009................................ 101 Figure 33: LQs for St. Louis Sectors that Show Strength Relative to the US, 2001 and 2009 .......... 102 Figure 34: LQs for St. Louis Sectors that Need to Improve Relative to the US, 2001 and 2009 ....... 102 Figure 35: Business Development by Industry Cluster....................................................................... 105 Figure 36: Residential Building Permits Issued in the St. Louis Region ............................................. 107 Figure 37: New Permits by Geography............................................................................................... 107 Figure 38: Compound Average Growth Rate in Gross Regional Product .......................................... 108 Figure 39: Change in Demand Generators......................................................................................... 109 Figure 40: Gross Regional Product for the St. Louis Region by State for Select Years (billions) ...... 109 Figure 41: Distribution of Demand in Illinois and Missouri Counties .................................................. 110 Figure 42: Per Capita Units of Government........................................................................................ 114 Figure 43: Per Capita Regional Bank Deposits .................................................................................. 118 Figure 44: Broadband Accessibility .................................................................................................... 119 Figure 45: Change in Residential Building Permits Issued, 1995-2010 ............................................. 120 Figure 46: Change in Housing Price Index (1991-2011) .................................................................... 121 Figure 47: Annualized Emp. Change: Recession – 05/07 to 05/10 & Recovery – 05/10 to 05/11 ..... 121 Figure 48: Change in Employment Relative to Benchmarks (2008 to 2011) ..................................... 122 Figure 49: Current Unemployment Rate (May, 2011) ........................................................................ 122 Figure 50: Change in Private Sector Weekly Wage, 2001-2010 ........................................................ 123 Figure 51: Per Capita Personal Income (1999-2009) ......................................................................... 124 Figure 52: Annualized Growth - Per Capita Personal Income ............................................................ 124 Figure 53: Industrial Property Inventory.............................................................................................. 125 v
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Industrial Space per Employee per S.F. TTU Super Sector (Q1, 2011) ........................... 125 Share of Population Age 25+ by Education Attainment (2009) ......................................... 126 Doctorate and Professional Degrees Per Capita (2009) ................................................... 127 Percent Change in Real GDP (2001-2009) ....................................................................... 128 Business Climate (2010) ................................................................................................... 129 State and Local Tax Burden vs. US (1999-2009).............................................................. 130 Change in Unemployment, Relative to US (01/2010-06/2011) ......................................... 131 Change in Employment, Relative to US (01/2010-06/2011) ............................................. 131 Annualized Growth - Retail Fuel vs. Inflation (Month of March, 1994-2011) .................... 132 Share of Households within a Quarter Mile of Transit Stations......................................... 133 State and Local Government - Tax Collection Index (Base Year-1988 = 100) ................. 134 Monthly Employment in US Manufacturing, January 1990 to July 2011 ........................... 135 Manufacturing Employment - Right to Work vs. Closed Shop, April 2002-2011 ............... 136 Average Weekly Wage for Manufacturing- Right to Work vs. Closed Shop, 2003-2011 .. 137 Total Auto Production (Month of January, 1986-2011) ..................................................... 141 Auto Production by Vehicle Type (Month of January, 1986-2011).................................... 142 Relative Water Footprint of Select Water-Intensive Industry Sectors ............................... 176 Real GDP Growth Rate (selected countries) ..................................................................... 184 Inflation Rates for Selected Countries, 2000-2010............................................................ 184 Merchandise Export Growth Rates.................................................................................... 185 Hourly Compensation Costs, MFG Employees in Regions, 2009 (US dollar) .................. 186 Hourly Manufacturing Costs in China, India and Philippines, 2003-2008 ......................... 186 Change in Import Prices from Noted Markets to US, 2005-2011 ...................................... 187 Private Consumption as a Percentage of GDP, 2008 ....................................................... 189 Health Expenditure Per Capita in Selected Asian Countries ............................................ 190 Outbound Travelers from China and India (millions) ......................................................... 191 US Exports to China and India ($ billions) ......................................................................... 191 Water Ports - Total Cargo Tonnage, 1998-2008 ............................................................... 218 Annual Passenger Enplanements, 1990-2030 .................................................................. 218 Lambert International Airport - Top 10 Destinations, 2000-2010 ...................................... 219 Transportation Sector as a Share of Total Industry Output, 2001-2009 ........................... 222 Air Transportation Sector as a Share of Total Industry Output, 2001-2009 ...................... 223 vi
Executive Summary
1
Overview
AECOM Technical Services Inc. (AECOM) was engaged by the partnership of the St. Louis County
Economic Council, the State of Missouri and the City of Fenton to evaluate the Regional economic
impact caused by the closure of Chrysler’s Fenton assembly operation and to recommend adjustment
strategies for Regional recovery from the essential collapse of the local vehicle assembly sector, which
has lost more than 20,000 jobs since 1997. Our approach included study of economic data, as well as
interviews with over 100 civic, public, private, and institutional stakeholders involved in economic and
workforce development. The analysis is also supported by AECOM’s experience in other metropolitan
areas that have been hard hit by auto industry restructuring.
It is clear that the economic damage to the Region due to the loss of Chrysler is extensive, with a total
loss of over 40,000 jobs (direct, indirect, and induced) and over $15 billion in lost output. Combined
with the effect of the recession, the Region experienced a total loss of almost 70,000 jobs since 2007.
While the Region has been resilient in responding to past economic challenges, the severity of the
impact caused by Chrysler is a call to action, and the need for determined, sustained and Regionallysupported efforts is apparent.
Our recommendations for the Region were informed by the following observations:

The Region’s self image which is at times surprisingly negative

The challenge of local governance post-recession, with limited financial resources, political
polarization, and disparate views about priorities

The deteriorating condition of Regional infrastructure assets will diminish the Region’s competitive
position if nothing is done to address key problem areas

The need to focus greater resources on business retention and expansion

The Region’s extent of fragmentation in economic development, with an array of organizations
and leaders who function in different capacities with varied constituencies
The local tradition of siloed and fragmented thinking with regard to economic development is a major
hindrance, preventing the Region from living up to its economic potential. If the Region is to recover
from the loss of Chrysler and expand its participation in the global economy, a more deliberate and
inclusive approach to economic development is needed. Core recommendations are:

Build on Regional capacity in advanced manufacturing, Plant and Life Sciences and Clean Tech,
clusters which are clear federal economic development priorities

Streamline and improve resources to assist entrepreneurs and small businesses

Enable local companies to better penetrate global markets

Address critical infrastructure needs to sustain long-term economic growth

Organize and align workforce training with business retention and expansion efforts

Improve Regional economic development collaboration and leadership

Enhance St. Louis City/St. Louis County collaboration
Further detail supporting these recommendations is contained in the body of the report.
2
Introduction
In 2010, the Partnership of St. Louis County Economic Council (SLCEC), the Missouri Department of
Economic Development and the City of Fenton received a grant from the US Economic Development
Administration to develop a Regional Economic Adjustment Strategy (the “Strategy”) to address the
economic impact caused by the closure of the North and South Assembly Plants formerly owned by
Chrysler LLC. AECOM and Vector Communications were engaged to complete this Strategy, using a
multidimensional approach which included identification of economic, fiscal, and real estate impacts on
the 16-county St. Louis Metropolitan Area (the “Region”) caused by the closure.
Interviews were conducted with civic, public, private, and institutional stakeholders to clarify
perceptions, issues, and opportunities that shaped the Strategy. Extensive analysis of local, state,
and national economic data was undertaken to clarify trends and opportunities. The analysis has
framed recommendations for how the Region can recover and reposition for future growth, building on
organizational assets and industries that are best positioned to contribute to future growth.
The economic damage caused by the closure of Chrysler’s North and South Plants in 2008 and 2009
was dramatic, and led to the loss of 6,365 on-site jobs, direct wages of about $880 million, and total
output associated with the two plants of $15.5 billion. The ripple effect of the plant closures extended
across the Region, resulting in a loss of 37,485 indirect and induced jobs (computed using IMPLAN),
for a total loss of over 40,000 jobs. The indirect job losses included about 2,500 actual jobs at local
supplier companies, many of which had been gearing up as part of Chrysler’s 2005 announcement to
invest $1 billion in both plants; by the end of 2009 all of this activity had ceased.
Total Employment, St. Louis Region
1,450,000
Loss of GM
Wentzville 2nd
Shift
South Plant
Closes
1,400,000
North Plant
Closure
1,350,000
1,300,000
1,250,000
Peak
Regional
Employment
Loss of
South Plant
2nd Shift
1,200,000
Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr
2007
2008
2009
2010
2011
While job losses were concentrated in St. Louis County and Jefferson County, other counties in
Missouri and Illinois were impacted (see Residential Locations for Chrysler Workers map on the
following page). The collapse of Chrysler must also be viewed in context with the broader Regional
decline in automotive assembly employment since 1997, during which the Region lost nearly 20,000
jobs, placing the loss of Chrysler on a par with other major economic challenges the Region has faced
since the 1970’s.
3
Residential Locations for Chrysler Workers, 2007
Regional Industry Sector Analysis
Using IMPLAN, an industry standard analysis program, AECOM evaluated over 400 industry sectors
that power the Regional economy, covering traditional sectors as well as evolving industry clusters,
including Plant and Life Sciences and Clean Tech. A location quotient (LQ) analysis was used to
compare the percentage share of employment in each sector to total employment in the Region, which
is then compared to national averages, using 2009 data. Sectors with a LQ ratio greater than 1.0 are
more significant locally compared to the nation. In general, higher location quotients point to industry
sectors which are more integrated in the local economy, and have a greater influence on job creation.
A sample of the sectors evaluated in the analysis follows:
4
Sectors Needing Improvement
Food Processing
Key Factors:
These sectors have an average Location
Quotient of 0.86, and support about 75,000 jobs,
with output per job of about $300,000
Mgmt/Scientific
Consulting
Air Transportation
Air transportation ref lects the loss of hub status
at Lambert
Warehousing
Software Development
Rail and truck transportation could be stronger
Computer Sys.
Programming
Food processing (excluding breweries) could be
stronger
Rail Transportation
Truck Transportation
0.5
0.6
0.7
0.8
0.9
1.0
1.1
Manufacturing Sectors
Key Factors:
These sectors have an average Location
Quotient of 3.35 and support about 30,000 jobs,
*Soybean Processing
*Medicinal Preparations
*Fertilizer & Pesticides
Average output per job is about $965,000 - f ive
times that of services.
*Oilseed Farming
Auto Assembly
Six sectors are part of Plant and Lif e Sciences
*Organic Chemicals
Aircraft assembly is critical to the region
Aircraft Parts & Assembly
*Soap & Cleaning Compounds
General Motors continues to assemble vans in Wentzville, sustaining a trained workforce
Ammunition Manufacturing
Breweries & Distilleries
Breweries and distilleries remain important
0
1
2
3
4
5
6
7
8
9
10
Strong Sectors
Key Factors:
These sectors have an average Location
Quotient of 1.6, and support about 235,000 jobs,
with output per job of about $165,000
Securities & Investments
*Medical Instruments
*Private Hospitals
Three sectors are part of Plant and Lif e
Sciences
*Scientific R & D
Civic, Social, & Professional…
All sectors are focused on service delivery, with lower resulting output per worker
Data Processing & Hosting
Business Support Services
Private colleges and hospitals support about 60,000 jobs
Management of Companies
Private Colleges & Universities
0.5
1.0
1.5
2.0
2.5
* = part of Plant and Life Sciences Cluster
5
The Location Quotient analysis led to the following core findings:

The Region’s strongest sectors for employment are in educational, medical, and financial services;
however, these sectors have significantly lower total output per job compared to manufacturing.

Identified Plant and Life Sciences related sectors (identified above with an “*”) support about
88,000 jobs with an average LQ of 1.83, well above national averages.

Apart from breweries and distilleries, food production should be expanded, particularly with the
Region’s access to fresh water sources.

Although manufacturing employment is a modest share of total Regional employment, output per
worker is more than five times greater than in the services sector. Higher output per worker is
driven by greater integration with suppliers and supply chains, with each step adding value to the
manufacturing process.

Despite the loss of Chrysler, the Regional auto assembly sector remains viable, as evidenced by
the recent announcements by Emerald Automotive and General Motors. Emerald Automotive
announced that it has selected St. Louis as a location for a future plant for assembly of hybrid
electric vans. More recently, GM announced that it would expand its Wentzville assembly site for
production of a new mid-sized truck, creating an estimated 1,850 jobs beginning in 2012.

Although rail, truck, and air transportation make up a modest share of Regional employment,
these sectors have a profound impact on the economy. An efficient and cost effective system for
movement of goods between modes would be a very strong asset, given the Region’s central
location in the country.
Stakeholder Interviews
Interviews were conducted with over 100 people representing more than 80 entities and organizations
involved in civic, economic and workforce development across the Region. The interviews focused on
both the impact of the loss of Chrysler, and how the Region can adjust economically to the loss of over
40,000 jobs. The interviews highlighted perceptions, issues, and opportunities that will influence the
recovery and adjustment process. These insights were evaluated and prioritized based on AECOM
experience, considering facts, perceptions, and biases to arrive at specific observations:
Strengths
Weaknesses
Diverse economic base
Traditional over-reliance on larger firms
Impressive cultural amenities
Achievement gap - High school dropout rates
Importance of quality of life
Insufficient long-term job growth
Competitive cost of living
State leadership and the Metro vs. Rural debate
Concentration of PhD Level research
Underinvestment in Regional logistics infrastructure
Plant and Life Sciences, Aerospace, Financial Services
Lambert and Mid-America Airports have financial challenges
Opportunities
Challenges
Manufacturing employment is recovering
More units of government per capita / fewer resources
The Region has private wealth
Fragmented governance - local, state, and federal
Leadership transitions at key regional ED organizations
Fragmented economic development leadership
Strong educational institutions - Wash U, UMSL, SLU, others
A history of racial tension
Positive and improving City - County relationship
Higher fuel prices
New Mississippi River Bridge will improve access
Shrinking public sector finances
Growing export markets in Asia
Refocus ED funding for business retention and expansion
6
AECOM Observations

Although the Region is currently one of the 20 top US metropolitan areas, its rate of long-term
growth has not kept pace, such that by 2030, the Region is projected to fall out of the top 20 if
accelerated progress does not occur.

The Region’s perceived satisfaction with the status quo and surprisingly negative self-image is
troubling and also ironic, given its significant cultural and economic assets.

Both the State and Region appear reluctant to adjust purposefully to what is an increasingly global
economy, where the claim of being “low cost” is no longer compelling.

That the Region has been able to grow at all is remarkable, given the array of constraints created
by fragmented and parochial local, state, and federal jurisdictional boundaries that exist across the
Region.

Research by institutions such as the Brookings Institution shows that metropolitan areas drive the
majority of US job growth. Effective coalition building with other metros in Missouri and Illinois
could increase collective influence on legislative issues that align with broader Regional interests.

The current Regional economic development framework is a challenge, with an array of entities
(RCGA, individual counties and cities, Civic Progress, RBC, Metro, East-West Gateway, etc.) that
function in different capacities with varied constituencies.

The Region’s economic development structure has found ways to work cooperatively, as
evidenced by the formation of the Great Rivers Greenway District, the Zoo Museum District, and
recent voter approval of a sales tax increase to fund Metro maintenance and expansion.

The Region needs to upgrade its benchmark metropolitan areas. Cities such as Boston,
Minneapolis, Denver, and Dallas are as appropriate as Columbus, Indianapolis, and Memphis.

Regional leaders need to be mindful that people outside the Region (e.g., site selectors) do not
recognize organizational and municipal boundaries, and that irrational competition across such
boundaries is counterproductive at a Regional level.
Historically, the Region has exhibited a measure of resiliency through 2007 in responding to a series
of major economic setbacks, including the stockyards closure in East St. Louis (1970’s), auto /
manufacturing losses (1980’s), and defense adjustment (1990’s). However, with the beginnings of
economic recovery now underway, it is clear that the Region has arrived at an economic development
crossroads, where relying on the status quo will lead in the direction of under-performance and
insufficient growth, and more proactive strategies will require very deliberate decisions about how
organizations, leadership, and resources can be realigned to encourage Regional economic growth.
Specific priorities include:

Ensure that the Region can sustain an environment that is conducive to new business formation

Preserve the Region’s rich quality of life which is attractive to businesses and their workforce

Capitalize on existing Regional assets in the Plant and Life Sciences and evolving strengths in
Clean Tech to rebuild advanced manufacturing through legislative initiatives such as MOSIRA.

Support small businesses through expanded export opportunities and workforce training, as well
as streamlined and better-promoted support services.
7

Restructure economic development toward a more Regionally cohesive platform, anchored by
county-level leadership in business retention and expansion.
Insight
AECOM’s recommendations are built on experience across the country in cities that have been forced
to adjust to the loss of a major employer, including cities impacted by auto industry restructuring and
military base / BRAC realignment. Our experience also reinforces the importance of managing three
specific themes:
Recovery: Between December of 2007 and June of 2009 the US economy endured the longest
stretch of economic decline since World War II, making comparisons with the Great Depression (19291933) relevant. While signs of recovery are emerging, clear public sector fiscal challenges have made
it difficult to separate politics from policy at the national and state levels. For the Region, fiscal stress
has led to a measure of self-interest by municipalities, a perspective which constrains the Region’s
ability to recover.
Boomer Retirements: Over the past 50 years, the Baby Boom generation has exerted an outsized
influence on the nation. With their retirement savings and home values reduced, many Boomer
households are now delaying their retirement and are electing to remain in the workforce. For the
Region, which already supports an aging population, Boomer decisions will continue to influence
demand for health care and workforce training needs.
Higher Energy Prices: Higher energy prices are now focusing serious attention on efficient
transportation options for movement of people and freight. Higher energy prices are driving
considerable investment toward an array of potentially transformative strategies related to renewable
energy.
Action Plan Recommendations
The St. Louis Regional Economic Adjustment Strategy has identified six goals that should become the
basis for economic adjustment in the Region:
1. Sector Specific Research
AECOM noted the laudable success of the Region’s Plant and Life Sciences cluster, which was
established and grown by a deliberate, well-funded and supportive network of collaborative
organizations and institutions. Plant and Life Sciences sectors include agricultural feed stocks and
chemicals (including bio-fuels); drugs, pharmaceuticals, medical services, and medical devices; and
research, testing, and medical labs. Similar opportunities are now emerging locally in the Clean Tech
cluster, which includes industries such as recycling, renewable energy, energy storage, and green
chemistry; information technology; and green transportation
Through supportive federal policy, research efforts in Plant and Life Sciences and Clean Tech are
converging. There is considerable research focused on alternative energy (biofuels) and energy
storage, with linkage to other industries such as agricultural products and chemicals, as well as
research and testing, human / animal health, diagnostics, and plant sciences. With these overlaps in
mind, we identified several areas for deeper investigation, focused on ways to expand evolving
linkages between sectors:
8

Build on recent announcements related to the formation of BioSTL, which will be supported by $30
million in committed funding from entities that include Washington University, BJC HealthCare,
and the St. Louis Life Sciences Project. Funding will be used to support pre-seed and seed
investments in the biosciences.

Evaluate Regional opportunities in emerging fields related to advanced manufacturing, materials,
and alternative energy, beginning with local firms such as Zoltek, MEMC Electronic Materials,
GKN and Boeing. Other areas of focus should include wind power logistics and manufacturing
support.

Explore how the Region’s available supply of fresh water and considerable logistical connections
can be used to grow a more vertically-integrated food processing sector.

Evaluate how existing Regional capacity in Information Technology can be used to grow
opportunities in bioinformatics. Firms in the Region such as Intuitive Genomics, now located at
BRDG Park, are actively shaping the space where computer science, information technology,
biology and medicine are converging.
2. Entrepreneurial / Small Business Development / Export Opportunities
AECOM’s research has confirmed that the Region has traditionally been over-represented by large
companies, and needs to adopt strategies to energize entrepreneurship and grow nascent companies
that have potential to become new economic engines. Priorities include:

Catalog all the Regional entities that are involved in entrepreneurship and develop a plan for
enhanced easy access to existing area entrepreneurship resources. Educational institutions such
as Wash U and SLU should be engaged.

Evaluate the climate and capacity for entrepreneurial / small business development across the
Region, defining local strengths and weaknesses, funding gaps and industry best practices.

Missouri Enterprise and the Illinois Manufacturing Extension Service should have an important
role in training and business development activities aimed at export markets. The future roles of
these entities should be thoughtfully developed.

Help local companies expand export opportunities to global markets, particularly in Asia and Latin
America, building on experience with China Hub efforts.

Research the technical feasibility of a large-scale Regional manufacturing incubator, and the
potential role of local educational institutions in supporting the effort.

Research the role and need for a civic champion to pursue additional “cluster” opportunities, using
the existing Plant and Life Sciences cluster as a model.

Conduct further studies to understand how evolving state legislation for MOSIRA can be used to
support job creation in the Plant and Life Sciences and Clean Tech Clusters.

Work with the Illinois and Missouri US Congressional delegations to determine whether existing
district boundaries for organizations such as SBA, EDA, and FEMA can be redefined to better
serve the Region.

Work with local units of government to standardize planning and development regulations to
ensure greater consistency and efficiency across jurisdictions.
9
3. Infrastructure Investments
While the Region purports to be an impressive location for logistics, with four interstates, six Class 1
railroads, and two major rivers, our analysis confirms that the existing linkages between modes remain
too arbitrary. The Region needs to think strategically about infrastructure investments now underway,
with $1 billion that has already been invested to upgrade rail capacity between Alton and Joliet
(Illinois) for 110-mph passenger service and freight service. With an estimated cost of $4.4 billion, the
project raises questions for how the Region connects with this evolving asset, given the reported poor
condition of both Mississippi River railroad bridges. Priorities include:

There are several freight movement bottlenecks that need to be addressed, beginning with
existing rail bridges over the Mississippi River. Similar bottlenecks in the Chicago area are now
being resolved through the CREATE Program, as the railroad companies proved unable to
address the issue themselves. St. Louis should consider a similar effort to improve connections
between rail, truck and barge transport segments.

Under a consent decree with US EPA, MSD has committed to invest $4.7 billion to upgrade storm
water and sanitary systems in the Region to meet terms under the Clean Water Act of 1972.
Nationally, other cities have re-worked storm water management systems to expand recreational
amenities and revitalize communities, with cities such as San Antonio and Kansas City being good
examples.

We note that the St. Louis Arch reinvestment project includes important infrastructure and
transportation access enhancements. As Millennium Park in Chicago enabled significant
additional real estate development and tourism, so too could the Arch project help transform the
Riverfront area.

Investigating ways to increase access to public transportation, particularly light rail and bus rapid
transit. Analysis confirmed that less than 1% of Regional housing unit inventory falls within a 1/4mile distance of current light rail stations. With inevitable growth in gas prices, demand for
walkable housing will drive greater interest in higher density transit-oriented development sites.
4. Workforce Development
Workforce development remains a clear challenge for the Region, particularly the challenge of
preparing young people for future careers while also ensuring that they actually have practical skills to
enter the workforce. Recommendations focus on the current structure of workforce development in St.
Louis City and St. Louis County, which clearly needs improvement:

Build greater cooperation between St. Louis City and St. Louis County Workforce Investment
Boards (WIB’s) and intermediaries, including St. Louis Community College. Currently, St. Louis
City and St. Louis County have separate WIB’s, which creates an artificial barrier in Regional
workforce efforts.

Ensure that workforce development is aligned with the clear need for a focused business retention
and expansion effort.

Local companies need to be pulled into the workforce training process as partners. The success
of Ranken Technical College in St. Louis is impressive in terms of linking corporate workforce
10
needs with specialized training programs. The Ranken model should be a focus of further study
and emulation.

Sustain focus on early childhood education and support programs, as well as programs in math
and science

Further study of the applicability of Midwestern automotive adjustment programs such as the
Automotive Manufacturing Technical Education Collaborative, which is an organization of
educational institutions in communities across the country that have been impacted by auto
industry restructuring.
5. Regional Economic Development Leadership
There is a clear need for a more integrated and collaborative Regional economic development
structure aligned deliberately with business retention and expansion efforts. Opportunities begin with
leadership transitions now underway at RCGA, Metro / Bi-State, and East-West Gateway. With these
transitions occurring simultaneously for the first time in 20 years, and acknowledging that the current
structure of Regional economic development is quite complex, it is clear that further in-depth research
is needed to map out how the pieces of the Regional economic development puzzle can be better
aligned to provide more seamless and integrated economic development services. Recommendations
include:

Continue to hold annual Regional economic development summits to set the agenda, identify
priorities, develop funding strategies, and support follow-through.

Enable the existing county-level economic development entities to prioritize Regional economic
development around strategies to retain and grow existing businesses as a top priority. There is a
clear need for a cohesive Regional platform for capturing and presenting data regarding
successful business expansion and retention efforts; current reporting is fragmented. County-level
involvement in Regional marketing and job attraction should also be strengthened.

While challenging fiscal conditions make it difficult to broaden economic incentives, consideration
should be given to a temporary economic development sales tax to fund pressing infrastructure
needs, workforce development improvements, and economic development / entrepreneurship
efforts.

The role of SLCEC’s Economic Development Collaborative should be expanded as a mechanism
for connecting with, and establishing common goals among, municipalities across St. Louis
County.

Conduct further research into the Bi-State Development Agency’s ability to implement projects of
Regional importance and provide collaborative economic leadership. Bi-State has the legal ability
to implement truly Regional projects.

Evaluate the RCGA’s current role and financial support for providing external marketing and
attraction services. As part of this evaluation, AECOM recommends that consideration be given to
clearly separating the traditional chamber and economic development functions within RCGA.

Re-engage with Metro East economic development leaders, to ensure their participation in efforts
which move the entire Region forward.
11
6. Enhanced St. Louis City and St. Louis County Collaboration
Enhanced collaboration between the City of St. Louis and St. Louis County must be a key outcome of
this study. Our analysis, supported by 15 years of work experience across the Region, has reinforced
two elements of prevailing wisdom. First, historically, there has been a general lack of cooperation
and coordination between St. Louis City and St. Louis County in basic government services. Notable
exceptions are the cooperation in functional areas such as the establishment of the Convention and
Visitors Commission, Great Rivers Greenway, the Zoo-Museum District, the passage of the Metro
sales tax and certain economic development initiatives. Second, it is clear that the City of St. Louis
faces considerable structural challenges, including constrained financial resources as well as a
fragmented and highly decentralized governance structure. With the outsized economic importance of
St. Louis City and St. Louis County to the Region in mind, it is apparent to AECOM that these factors
have combined to diminish the growth potential and competitive position of the Region nationally and
globally.
For the near-term, this analysis reinforces the practical need for a more integrated St. Louis City/St.
Louis County economic and workforce development platform, with the goal of aligning specialized
workforce training with business retention and expansion. In a similar fashion, consideration should
be given to implementation of a joint St. Louis City/St. Louis County geographic information systems
(GIS) platform to better support planning and economic development efforts. As a first step, the City
of St. Louis’ GIS system needs to be improved to the level of St. Louis County’s current GIS system
which is highly advanced.
Over the long-term, significant attention needs to be focused on resolving fundamental structural, legal
and financial challenges which the City of St. Louis faces. While it is clear that St. Louis City “re-entry”
into St. Louis County (or other fundamental reorganization of government) will not address all of St.
Louis City’s fiscal challenges, our experience suggests that the status quo is equally untenable. The
same is true for St. Louis County, which now finds itself in a fiscal position that the City of St. Louis
enjoyed roughly 50 years ago. The logical extrapolation of current trends raises concern over St.
Louis County’s long-term ability to sustain its current standard of economic performance without
fundamental change.
In total, if the Region is to be competitive as a metropolitan area in the future, substantive further
cooperation between the two jurisdictions is imperative. For this reason, we would argue that the
executive and legislative leadership of both the City and County of St. Louis should actively engage in
a long-term and phased strategy for transforming the St. Louis City/St. Louis County relationship over
the next 20 years.
12
Conclusion
The St. Louis Regional Economic Adjustment Strategy has confirmed that several structural and
organizational challenges effectively prevent the Region from living up to its economic potential.
Some challenges are a result of federal policy; workforce development is a specific example. Other
factors are uniquely local, linked with the distant history of the Region going back to the 1800’s. While
the challenges are clear, the solutions are complex, particularly in light of the diverse components of
the local economy and the fact that the Region has lost a significant industry that needs to be
replaced, likely incrementally, over time. Additional research is recommended to further explore some
of our initial findings. Emphasis will be placed on deeper dives into specific areas where AECOM
research shows that future economic growth is most promising and will best position the Region to
replace jobs lost as a result of the closure of Chrysler’s operations in Fenton.
13
14
Introduction
15
Project Framework
Beginning in January of 2011, AECOM Technical Services, Inc. (AECOM) and Vector
Communications were engaged by a consortium which included the City of Fenton, the St. Louis
County Economic Council (SLCEC), and the State of Missouri to complete an Economic Adjustment
Strategic Action Plan related to the closure of two Chrysler assembly plants in Fenton, Missouri. The
approach focused initially on the evaluation of direct, indirect, and induced economic impacts created
by the closure of Chrysler on the City of Fenton, St. Louis County, and the St. Louis Region.
Additionally, the analysis sought to identify economic adjustment strategies for how the Region should
react to the closure, and reposition for future growth as the “Great Recession” ends.
Our experience shows that economic development strategies can and do encompass the fullest array
of amenities and factors that influence Regional growth, ranging from primary and secondary
education and workforce development to incentives, transportation, cultural institutions, governance
and leadership. In practice, all of these elements need to be understood and placed into context. The
analysis must also understand all of the demographic, economic and policy factors that shape current
and future business development opportunities across the St. Louis Region, including an overview of
broader economic forces in play nationwide and globally that will continue to shape business and
industry. To accomplish these efforts, our approach incorporated an array of steps, including:
Stakeholder Interviews
AECOM conducted interviews with over 100 people representing more than 80 entities and
organizations across the St. Louis Region, on both sides of the Mississippi River. The focus of the
interviews was directed at (1) the impact of Chrysler, and (2) how the Region can adjust economically
to the loss of 6,365 on site-workers as well as approximately 2,500 supplier jobs.
Economic and Fiscal Impacts of Chrysler
AECOM evaluated the direct, indirect, and induced impacts of the Chrysler closure on the St. Louis
Region, evaluating changes in employment, earnings, and output which rippled across the Region,
extending from local auto parts suppliers and area restaurants and hotels, to impacted local units of
government and households. The discussion also focused on broader real estate and workforce
development impacts generated by the closure. Focus groups with former Chrysler employees and
impacted businesses in Fenton were also conducted, under the direction of Vector Communications.
16
Economic Development Opportunities and Diversification
AECOM assessed the St. Louis Region’s current economic situation, documenting how the area is
recovering from the Great Recession, benchmarked against similar metropolitan areas. The approach
focused closely on the economic underpinnings of the Region, including key sectors that drive the
economic base. Broader discussion focused on key trends that will shape the future of St. Louis, as
well as an evaluation of the specific industry sectors and clusters that will be best positioned to drive
job growth through enhanced industry linkage in the future.
Industry White Papers
The past four years have been extreme, marked by both violent economic change as well as
interesting and exciting new opportunities that have potential to drive job growth for the Region over
the next 20 to 40 years. To provide a sense of focus for these evolving areas, AECOM developed a
series of papers covering topics ranging from Asian market opportunities, to container on barge, from
manufacturing to biofuels and venture capital support. Each paper is framed as a literature review,
summarizing key sources, opportunities, and policy implications.
Action Plan
The action plan frames the core results of the analysis, identifying strategies for how the St. Louis
Region can adjust to the closure. As noted earlier, although economic development touches all
aspects of how a community and region function, the nature of resulting recommendations will focus
largely on issues that are within the potential control of public, private and institutional actors across
the St. Louis Region.
Site Reuse Implications
While the question of site reuse was a clear priority at the onset of this project, the realities of the
bankruptcy liquidation process for Chrysler have largely reduced the site reuse question to a
secondary consideration. As of June 2011, the two assembly sites are undergoing demolition, which
is expected to be completed by the fall of 2011. At present, it is assumed that the existing foundation
slabs will remain in place after demolition is complete. While the owner of the site has forwarded a
conceptual site reuse plan for the property, full reuse and redevelopment will likely be a 10 to 20 year
process. Specific factors associated with reuse are noted in this study.
Each section of the report includes Core Findings which frame specific insights that will shape overall
report conclusions.
Acknowledgments
AECOM acknowledges the roles of key individuals who have made substantive contributions to this
process, beginning with the project steering committee:
City of Fenton – Dennis Hancock and Gary Crabtree
State of Missouri – Jason Archer
St. Louis County Economic Council – Barbara Featherston, Doug Rasmussen, Jackie Wellington,
and Denny Coleman
17
The specific contributions of Sally Sowards and Carol Johnson, both formerly with the Regional
Collaboration Center in Fenton are acknowledged for their support in contacting former Chrysler
employees. Jeannie Braun with the Fenton Chamber of Commerce is acknowledged for her support
in connecting with Fenton Area businesses that were impacted by the closure.
The report also acknowledges the insight provided by people such as Jason Archer, Gordon Douglas,
Darin Gilley, Don Akerman, and Nick Robinson who helped frame stories about the history of the two
assembly plants. More broadly, the overall research effort involved a significant number of interviews
with public, private, and institutional leaders in the Region, who volunteered their time to contribute to
the overall effort.
Data Sources
The primary study area for this report is the St. Louis Metropolitan Statistical Area (MSA), which is
otherwise referred to as the St. Louis Region in this report. The 16-county region includes:

Missouri: Counties of Franklin, Jefferson, Lincoln, St. Charles, St. Louis, Warren, Washington,
and the City of St. Louis

Illinois: Counties of Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe and St. Clair
Current economic performance metrics have been extracted from an array of sources. This
information was collected and evaluated to help frame an understanding of strengths, weaknesses,
opportunities, and threats that will influence the entire Region. Individual metrics have been
benchmarked against other comparable metropolitan areas that were chosen based upon AECOM
experience, in conjunction with client team insight. Data sources include:
Federal Sources

Broadband USA

Congressional Budget Office (CBO)

Federal Aviation Administration (FAA)

Federal Bureau of Investigation

Federal Communications Commission (FCC)

Federal Deposit Insurance Corporation
(FDIC)

Federal Housing Finance Agency (FHFA)

Maritime Administration

National Center for Biotechnology Information

National Renewable Energy Laboratory
(NREL)

US Army Corps of Engineers (ACOE)

US Census Bureau

US Council for Automotive Research
(USCAR)

US Department of Agriculture (USDA)

US Department of Commerce, Bureau of
Economic Analysis (BEA)

US Department of Commerce

US Department of Energy

US Department of Labor, Bureau of Labor
Statistics (BLS)

US Department of Transportation

US Economic Development Administration
(EDA)

US Energy Information Administration (EIA)

US Federal Housing Finance Agency

US Federal Reserve System / Federal
Reserve Bank of St. Louis
18

US Geological Survey

US Government Accountability Office
State Sources

Missouri Department of Economic
Development

Missouri Department of Transportation
(MoDOT)

Missouri Department of Education


Missouri Department of Natural Resources
Missouri Economic Research and Information
Center (MERIC)

Missouri Transportation Alliance
Regional Sources

East-West Gateway Council of Governments

St. Louis Regional Chamber & Growth Association (RCGA)
International Sources

Asian Development Bank

International Trade Commission

European Bioinformatics Institute

Internet World Statistics

International Economic Development Council
(IEDC)

National Bureau of Statistics of China

World Bank Group
News and Other Publications

Bloomberg News

Public Broadcast Service, Nova Science Now

Christian Science Monitor

St. Louis Beacon

Economist

St. Louis Business Journal

Environmental Science and Technology

St. Louis Post Dispatch

Journal of Commerce

Wall Street Journal

New York Times
Other Sources

ACCRA Cost of Living Index

Center for Automotive Research

American Water Works Association

The CoStar Group

American Wind Energy Association (AWEA)


Archer Daniels & Midland Company (ADM)
The Council for Community and Economic
Research (C2ER)

Biodiesel Magazine

Council on Competitiveness

Biomass Research & Development Board
(BRDB)

Encyclopedia of Energy

ESRI Business Solutions

The Brookings Institution

Global Industry Analysts, Inc.

Carnegie Mellon Center for Economic
Development

IHS Global Insight
19

IMPLAN

Pacific Institute

Independent Bio-Products Introduction/Policy
Problem

Pew Center on the States

Pew Charitable Trusts

Kaufmann Foundation

PwC

Land Policy Institute

Renewable Energy and International Journal

Location One


McKinsey & Company
Revitalizing Auto Communities Environmental
Response Trust (RACER Trust)

Morgan Stanley

Science Direct

NAI DESCO

Tax Foundation

NASDAQ


The National Biodiesel Board (NBB)
W.E. Upjohn Institute for Employment
Research

National Science Foundation

Water Environment Federation

Nelson A. Rockefeller Institute of Government

Water Reuse Association
In addition, we acknowledge the significant amount of local and statewide research completed under
the auspices of the Missouri Department of Economic Development’s Strategic planning process,
which was completed in the spring of 2011. The RCGA also has been quite active in evaluating
market opportunities. Information from both of these sources was used as a baseline in the analysis.
Chrysler Closure Chronology
The two Chrysler plants in Fenton have been an economic and community anchor for the St. Louis
Region for close to 60 years. The North Plant, otherwise known as the Missouri Truck Plant, opened
in 1966 and built the Dodge Ram and similar vehicles. It was on hiatus from 1980 to 1983, and
reopened in 1983 for the Chrysler 5th Avenue, expanded in 1985 for a minivan, and added a third
shift. In 1994, it added the Dodge Ram truck. The plant closed initially in April 2009 as a result of the
bankruptcy. While most auto assembly plant shutdowns are planned years in advance, this was not
planned; the plant closed with no warning. The South Plant, otherwise known as the St. Louis Car
Assembly Plant, opened 1957/1958. The plant was on hiatus from 1991 to 1994, and reopened in
1995 to build minivans. Both plants were in the process of retooling and reinvestment beginning in
2006, a process which slowed in 2007 and ended in 2009 with the closure of both facilities; closure
was announced in 2007 and the plant closed by October 31, 2008. As the following chronology of
events suggests, the two plants were a minor source of news regionally until 2005, when Chrysler
announced a $1 billion expansion and retooling strategy. The chronology was developed from
research of local media, including the St. Louis Post Dispatch and the St. Louis Business Journal.
2005
Chrysler is stable – 5,000 jobs on site – first year since 1999 for Chrysler with no layoffs
20
Dec 12, 2005 – Chrysler announces $1 billion reinvestment – On site employment: 5,500 jobs (3,200
at South, 2,300 at North). Reported potential for five new suppliers and 500 more jobs is first noted in
media reports.
2006
January – Ford Hazelwood Closes – 1,300 jobs are lost
January – First new supplier announcement – Kelcey Hayes (100 jobs)
June – 2nd supplier announced – HBPO North America – Front end modules (60 – 100 jobs)
October – 3rd supplier announced – Dakkota Integrated Systems – interiors (100 jobs)
December – 4th supplier announced – Exkor Manufacturing Inc. - engine components – 200 jobs
December – New York Times reports that automotive jobs shifting away from core to Midwest and
South – Missouri auto employment up since 1986 – to 33,000 jobs
December – First sign of unease, with no St. Louis Regional job growth in 2006 – Chrysler has an
extended holiday shutdown
2007
January – 5,500 Chrysler jobs on site
February – South Plant second shift elimination announced – Loss of 1,300 south plant jobs by Q2
2008 – Still committed to $1 billion investment in Fenton
February – First rumor: Daimler Chrysler to sell Chrysler unit to GM
March – 635 North Plant job cuts announced by 2010 – $1 billion investment still on track
April – Second rumor: $4.5 billion buyout from Tracinda (Kirk Krekorian) – Chrysler is “for sale”
according to news sources
April – 489 Chrysler workers take buyouts – 193 North Plant workers and 296 South Plant workers
April – Ektor Manufacturing scraps Dupo expansion
May 14 – Daimler Chrysler sells an 80.1 percent stake to Cerberus Capital Management
April – News reports are “clinging to optimism” regarding Chrysler expansion
August – News reports indicate “suppliers are undeterred”
October – Modest UAW strike resolved
November – Chrysler announces broad employment reductions – Fenton impact unclear
2008
January 1 – South Plant second shift layoff happens early: 1,078 positions are released
March – New employment numbers: North Plant: 2,300 jobs / South Plant: 1,500 jobs
April – Nissan and Chrysler announce partnership which should benefit Fenton Plant
June 30 – South Plant closure announcement – North plant reduced to 1 shift
21
September – North Plant employment at 1,085 workers – 2009 Dodge Ram is launched
October – Buyout offers from Chrysler continue. Negotiations to sell Chrysler to GM or Renault SA /
Nissan Motor emerge; 1,000 workers remain at North Plant
October 29 - South Plant closed – 1,500 to 1,700 jobs are lost / JP Morgan Chase / Goldman Sachs
pressures Cerberus regarding Chrysler loans
November – Buyouts extended to 3,500 employees
November – Seven suppliers announce closures – 1 million square feet of vacated space
December – Chrysler sales down 40 percent from 2007 / Bailout discussion begins to evolve – $34
billion to start, tied to restructuring plans. 1,800 Chrysler employees take buyouts. Extended holiday
idle period for North Plant. President George W. Bush approves $17.4 billion emergency loans for GM
/ Chrysler from the federal Troubled Asset Relief Program (TARP), tied to restructuring plans.
2009
January – Fiat takes a 35 percent interest in Chrysler, Cerberus Capital Management is still majority
owner
February – More buyout offers are extended / possibility of closure is considered. The industry begins
to retrench, with key assembly factories moving closer to the supplier base according to news sources.
Chrysler’s viability plan is submitted to the US Treasury.
March – First of several rolling deadlines for Chrysler buyouts
March – The Viability Plan for Chrysler is rejected by the US Treasury
April 27 – Daimler AG gives up its remaining 20 percent stake in Chrysler LLC to Cerberus Capital
Management
April 29-30 – UAW concession deal is reached between the US Treasury, Fiat, and Chrysler. Chrysler
declares bankruptcy.
May 1 – 1,000 workers remain at North Plant. Many employees debate the buyout option, wondering if
the possible plant closure will be temporary, or permanent.
May 2 – Officials announce that up to 8 Chrysler plants will close as part of the restructuring, including
both St. Louis sites.
Summer 2009 – With all auto production either temporarily or permanently idled, it is the first time in at
least 40 years where no cars or trucks are being assembled in greater St. Louis.
June – Chrysler deal with Fiat is completed
June 17 – Limited truck production is started to fill specific orders
July 10 – Final shift for 600 remaining workers
22
News coverage of the Chrysler closure changes abruptly in August of 2010, with fewer articles about
the plants, and greater emphasis on adjustment to the closure with three common themes:
1. Former employees associated with the Chrysler (employees or suppliers)
2. The impact on the host municipality of Fenton, as well as the cities of Eureka and Pacific, the
Rockwood and Lindbergh School Districts, and the Fenton Fire Protection District
3. The question of site reuse
Moving forward to May 2011, Chrysler repaid $7.6 billion in loans to the US and Canadian
governments. By June 2011, final negotiations between Fiat, Chrysler, and the US Treasury were
focused on the remaining six percent stake in Chrysler held by the US Government. News sources
indicated that if the deal plays out, that the US Treasury would have recovered a majority of its initial
$12.5 billion bailout of the company. This point is of minimal consequence to the St. Louis Region,
which absorbed a significant economic impact when both facilities were abruptly closed.
23
24
Stakeholder Insights
25
Core Findings
The St. Louis Regional Economic Adjustment Strategic Plan has incorporated an extensive level of
stakeholder involvement to help clarify and define perceptions, issues, and opportunities that the St.
Louis Regional economy faces as it adjusts to the closure of Chrysler’s operations in Fenton. The
interviews, focus groups, and visioning session output was reflective of St. Louis Region’s tendency of
inward and parochial thinking, with views speaking to both intense dissatisfaction with, and
acceptance of, the status quo regarding economic development and job creation, and the challenge of
ensuring that everyone’s voice is heard. To AECOM, the interviews stressed the need to identify and
build consensus around practical strategies that can help the Region move forward in a more focused
and cohesive manner. Key points identified in the interview process include:

The unique opportunity created by current leadership changes at St. Louis Regional Chamber &
Growth Association (RCGA), Metro (Bi-State), and East-West Gateway to recast the organization
of economic development for the Region, building on the strength of county-level economic
development organizations retention and expansion. The potential role of Bi-State was noted as a
key opportunity, deserving of further research.

Fiscal challenges in Springfield, IL and apparent political gridlock in Jefferson City, MO reinforce
the need for greater local coordination and coalition building in addressing economic development
issues that the St. Louis Region faces. While these efforts would directly challenge the Region’s
traditional predisposition for parochial and inward thinking, they were viewed as essential to help
the Region move forward.

The evolving St. Louis City – St. Louis County relationship was noted as a critical factor that will
significantly impact future economic opportunities for the St. Louis Region, even considering the
array of challenges with City re-entry. In the near-term, greater cooperation in economic and
workforce development was viewed as essential. The City-County question was also placed in
context with the broader debate about governance in St. Louis County, where a number of
municipalities struggle with delivery of basic services.

While the Region benefits from an impressive location for logistics supported by four interstates,
six Class 1 railroads, and two major rivers, the interviews suggest that the Region does not take
these strengths seriously enough.

The loss of Chrysler has highlighted a broader concern about the significant pool of under-skilled
people across the Region who appear to be less prepared for work in advanced, knowledgebased economy sectors where backgrounds in math, science, and IT are increasingly essential.
26

The interviews noted an array of challenges related to workforce development, some of which
relate entirely to state and federal laws that govern workforce development, not all of which are
solvable locally.

Stakeholders reinforced the evolving strength of the St. Louis Region in support of entrepreneurial
activity supported by Regional colleges and universities and other institutions. While the Region
has prioritized growth of the plant and life sciences, the interviews suggest that efforts to
reinvigorate manufacturing are equally important. While there was considerable debate about
access to venture capital in the Region, interviews also suggested that the Region possesses
considerable wealth which could be reinvested in the community.
Introduction
Beginning in January 2011, the stakeholder interview process focused attention on two core areas:

Meetings with a broad array of public, institutional, and private sector leaders to frame core
perceptions of Regional strengths, weaknesses, and opportunities for the St. Louis Region.

Meetings with people associated with the Chrysler operation, including former employees and
suppliers, impacted units of government, UAW leadership, and Regional workforce development
officials. Content from these specific interviews has been included in Chapters 2 and 3 of this
document.
These interviews were also used to identify additional contacts across the Region to better understand
the diverse array of perspectives and opinions regarding economic adjustment and new directions for
growth. We worked initially with SLCEC staff to identify initial interview candidates. The interview list
expanded as interviewees generated additional names of people to contact. The list of stakeholders
who were contacted as part of this effort includes the following individuals and organizations:
Core Team

City of Fenton

St. Louis County Economic Council

State of Missouri
Local Economic Development Organizations

Center of Research Technology &
Entrepreneurial Exchange (Cortex)

Metro/Bi-State Development Agency

Midwest - China Hub Commission

Coalition for Plant and Life Sciences


Danforth Foundation
Missouri Economic Research & Information
Center (MERIC)

Danforth Plant Science Center

Partners for Progress / St. Charles County

East-West Gateway Council of Governments
(East-West Gateway)

The Partnership for Downtown St. Louis

Regional Chamber and Growth Association
(RCGA)

Great Rivers Greenway (GRG)

Innovate St. Louis

Regional Health Commission

Metro East / Leadership Council
Southwestern Illinois

Southwestern Illinois Development Authority
(SWIDA)
27

St. Clair County Economic Development

St. Louis County Council Leadership

St. Louis County Economic Council (SLCEC)

SLCEC - Enterprise Centers

SLCEC - Helix Center

SLCEC - World Trade Center

St. Louis County Human Services / Workforce
Development

St. Louis County Planning Department

St. Louis Development Corporation (SLDC)

St. Louis Regional Health Commission

United Auto Workers Union (UAW)
State Economic Development Organizations

Illinois Department of Commerce & Economic
Opportunity (DCEO)

Missouri Enterprise Program (MEP)

Missouri Partnership

Missouri Department of Economic
Development (MODED)

Missouri Technology Corporation (MTC)

US Small Business Administration (SBA), St.
Louis District Office
Federal Government

Federal Reserve Bank of St. Louis
Impacted Units of Government

City of Eureka

Pacific City

Fenton Chamber of Commerce

Rockwood School District

Lindbergh School District
Elected Leadership

City of St. Louis - Mayor’s office

St. Louis County Executive

St. Louis County elected representatives

State Representatives
Educational and Workforce Institutions

Chrysler Workforce Center

Saint Louis University - School of Business

CityArchRiver 2015 Foundation

St. Louis Community College

Commerce Bancshares, Inc.

UMSL / IT Enterprise

Missouri University of Science & Technology Rolla

University of Missouri - St. Louis (UMSL)

University of Missouri System

Ranken Technical College

Washington University (Wash U)

Saint Louis University (SLU)

St. Louis Minority Supplier Development
Council

Urban League of Metropolitan St. Louis
Local Non-Profit Organizations

Better Family Life

Hispanic Chamber of Commerce

St. Louis County Municipal League
28
Private Sector

Ameren

Energizer

BJC Health Care

Express Scripts

The Boeing Company

Members of Civic Progress

Brown Shoe Company


Commerce Bancshares, Inc.
Members of the Regional Business Council
(RBC)

Edward Jones

Monsanto
Transportation and Infrastructure

Burlington Junction Railway

Norfolk Southern Railway (NS)

Burlington Northern Santa Fe Railroad
(BNSF)

Port of St. Louis

Port Working Group

Lambert St. Louis International Airport


Mid-America Airport
St. Louis County Department of Highways
and Traffic

Missouri Department of Transportation

Tri-Cities Port District
Insights
The range of opinions and perspectives were distilled by AECOM, based on our experience with
economic development around the United States, to frame core principles that influenced the project’s
recommendations. The stakeholder interviews revealed a number of factors that influence how the
Region begins to adjust to the loss of Chrysler. At an overall level, the interviews generally focused on
three core perceptions the Region’s current economic condition. In many ways, all three are
simultaneously true:
“We have been resilient.” – The St. Louis Region has managed to grow while dealing with recurring
economic challenges which began in the 1970’s with the closure of the stockyards and other
manufacturers in East St. Louis, followed by closure of the Corvette plant in St. Louis in the 1980’s,
post-Cold War downsizing of McDonnell Douglas, loss of TWA, military base realignment (BRAC)
decisions in 1995 and 2005, and several notable corporate headquarters departures. Through 2006,
the Region had grown slowly in spite of these challenges, supported by a diverse Regional economic
base. However, the loss of Chrysler has removed one essential leg of support for the Region.
“We have muddled through.” – The St. Louis Region has managed to grow in spite of political and
economic development systems which appear to be as much a part of the problem as the solution.
The Region also struggles with the Mississippi River, which simultaneously anchors the Region and
serves as a practical geopolitical barrier to cooperation. While the Great Recession is ending, the St.
Louis Region’s local units of government will continue to struggle with strained finances, raising the
core question of how the Region aligns scarce resources with extensive near-term community
reinvestment needs over the next two years.
29
“We have not kept pace.” – Although the St. Louis Region supports about 2.8 million residents,
placing it among the top 20 US metropolitan areas for population and gross domestic product, its rate
of growth has not kept pace with similarly sized regions. At current growth rates, St. Louis will fall out
of the top 20 US metropolitan areas by 2030. As such, the Region appears to be at a crossroads,
where the status quo leads in the direction of insufficient growth, and alternative trajectories require
more deliberate choices regarding organization, leadership and resources for economic development.
In distilling the many viewpoints, we noted the following POSITIVE comments about the current
economic position of the St. Louis Region:

The Region enjoys a low cost of living, supports a solid base of cultural underpinnings, enjoys low
utility costs, and has a generally business friendly environment.

For the first time in more than 20 years, there are simultaneous leadership transitions underway at
RCGA, Metro/Bi-State Development Agency, and East-West Gateway Council of Governments.

The new Mississippi River Bridge will benefit the Region, impacting development and land use
decisions on both sides of the Mississippi River for years to come.

Three Metro East counties have passed a special sales tax to raise $160 million for improvements
to existing older levees, with improvements expected to begin in 2011 and 2012. These
investments will begin to address economic development concerns in the Metro East area
regarding possible levee decertification.

The current relationship between the City of St. Louis and St. Louis County is positive, and the St.
Louis County Government and the St. Louis County Economic Council are generally perceived to
be well-run.

The Region is well supplied with available sites for new office headquarters and industrial
development, citing specific projects such as North Park and the 500-year levee protected sites
along the Missouri and Mississippi Rivers.

The pre-eminent local research and technology park (Missouri Research Park) overseen by the
University of Missouri is largely built out, raising a practical opportunity for where local University
of Missouri research and technology efforts will be focused in the future.

While nationally, “Eds and Meds” is currently a popular growth strategy, the Region is already a
clear leader in this area, benefiting from the presence of educational anchors such as Wash U,
UMSL, SLU, and Webster University, which collectively support a large market of undergraduate
and graduate students across the St. Louis Region. These institutions also support a nationally
relevant health care cluster, which captures a relevant share of federal medical research dollars.

Institutions such as Wash U, SLU, Missouri S&T, and UMSL are playing evolving roles in
technology transfer and support of entrepreneurial development. While these institutions play
important roles in these areas, their footprint could and should grow further. In this context, the
strength of Missouri S&T in engineering and advanced manufacturing was noted.

St. Louis supports several private sector companies such as Monsanto and Boeing which support
a significant concentration of graduate and doctoral level research activity in the Region. Boeing’s
defense contracting business delivered its 500th F-18 Block II Super Hornet to the Navy in April
2011, serving as an essential manufacturing anchor for the Region.
30

The General Motors truck assembly site in St. Charles County remains an anchor upon which to
sustain automotive employment in some capacity in the future as demand recovers. This site
could be well-positioned to respond to the immense pressures on the auto industry to increase
fuel economy, which is driving significant interest in a host of advanced technologies.

Considerable progress has been made with reinvestment in downtown St. Louis, with a 2010 total
of almost 8,000 housing units in the downtown area, representing about 1 percent of metropolitan
housing units. Based on Midwestern experience, we would expect that over time, growth in
downtown housing unit market share to 2 to 3 percent of Regional housing units is possible,
representing a dramatic increase in downtown housing inventory.

The recent award of an I-6 challenge grant focusing on the exploration of tech transfer
opportunities associated with Wash U highlights the opportunities and challenges related to
increasing tech transfer across the Region.

The Region has made great strides in the plant and life sciences sector, supported by the efforts
of a broad network of entities such as The Donald Danforth Plant Science Center, CORTEX, the
Coalition for Plant and Life Sciences, Missouri Technology Corporation, and the Helix Fund.

Scott Air Force Base was noted as a specific engine for the Region and a key employer in the
Metro East area. The installation supports the 375th Air Mobility Wing which sustains the entire Air
Mobility Command for the United States Air Force.

The State of Missouri’s financial status is less challenged compared to other Midwestern states.
Missouri’s projected FY 12 budget gap is currently estimated at about $700 million, or about 9
percent of FY 2011 budget. For all US states, the current average FY 12 shortfall is about 17
percent of FY 11 budget.

There is consensus on the core sectors and clusters that drive the St. Louis Region. These
sectors align with priorities identified by the State of Missouri which has just recently completed a
statewide economic strategic plan. They include:
-
Financial, information services, back office services
-
Medical services, pharmaceuticals
-
Logistics and intermodal
-
Advanced manufacturing, aerospace, process engineering
-
Sustainability, plant and life sciences and renewable energy
The assessment also noted an array of WEAKNESSES and CONCERNS about the St. Louis Region:

While the Region has been marketing its central US location and logistics (rail, sea, and truck)
connections to the Mississippi River for more than 30 years, there was a clear sense that the
Region does not market these assets sufficiently or take seriously the need to make deliberate
investments to ensure that connections between modes happen efficiently, in the fashion that
Chicago is now doing with the Chicago Region Environmental and Transportation Efficiency
Program (CREATE), and as the State of Illinois is doing with high speed rail. In this context,
specific concerns about the condition of both railroad bridges over the Mississippi River were
noted as a key bottleneck.
31

The loss of hub status for Lambert St. Louis International Airport was noted consistently as a
major concern and considerable inconvenience for local companies.

The St. Louis Region supports a significant amount of personal wealth. The interviews highlighted
both the depth of private financial capacity in the Region, as well as an equal measure of frugality.
These offsetting comments were reinforced by a specific opinion about local financial capacity, in
that the Region has, “deep pockets and short arms.”

Interviews also suggested that the message of frugality implicit in the “Show Me” state label
frames challenges for how the Region can grow its nascent cluster in plant and life sciences, a
sector which has thrived in higher cost locations on the East and West Coasts. Concern about
frugality and lower taxes was reflected in a broad number of interviews, suggesting that, “If lower
taxes were the key to prosperity, we’d be California.”

Considerable discussion revolved around the status and role of the RCGA as the Region’s
economic development entity. Within the array of discussed concerns (both real and perceived),
regarding RCGA, conversations reinforced several core themes:
1. A need for the Region to get past personalities and focus on the process for improving
Regional economic development.
2. The need to refocus economic development on business retention and expansion, rather than
attraction, and to realign scarce public incentive dollars around efforts to grow existing local
companies as a clear priority.
3. The essential need for strong Regional economic development leadership which is
accountable and credible.
4. Whether the Region’s fragmented and parochial tendencies effectively constrain the ability of
any regional economic development entity to lead under any circumstances.

While the Region is “over-educated” at the doctoral/PhD level, it has an equally pressing challenge
of being “under-educated” at the high school level, reinforcing a clear workforce development
challenge for the Region in manufacturing and advanced technology applications where math and
science skills are critical.

Governance was noted as a core concern for the Region, on multiple levels:
1. St. Louis County and its roughly 90 municipalities, many with less than 5,000 residents.
2. The City of St. Louis struggling with its own long-standing and unique governance challenges,
which stem from a weak form of mayoral leadership paired with strong ward-level leadership.
3. A broader Regional governance problem resulting from a long tradition of inward thinking and
parochial views, as highlighted by apparent competition between Lambert and Mid-America
airports for the China Hub project.

While the recent state legislative session in Jefferson City included a variety of legislative
initiatives that would enhance the competitive position of the State of Missouri, little progress was
made. Given the divisive nature of politics at the state level, for the near-term, the challenge falls
to local leadership to build consensus around key strategies that will move the Region forward.
32

The State of Illinois is dealing with considerable fiscal challenges, with a current FY 12 budget gap
of approximately $4 billion. State income taxes were increased for the first time in recent history.

The Region’s base of attractions includes two nationally relevant attractions (St. Louis Arch and
Jefferson Barracks), as well as the internationally significant Cahokia Mounds (one of only 21 US
UNESCO World Heritage Sites, which includes places such as the Grand Canyon). The
interviews clarified three things about the significant concentration of civic and cultural attractions
in the Region:
1. Key attractions are in need of reinvestment.
2. Residents of St. Louis City and County financially support key Regional museums, although
the entire Region benefits.
3. Local residents do not seem to appreciate the base of cultural options available to them. This
sense was expressed clearly in the following quotation about St. Louis being a “great place to
live, but I wouldn’t want to visit.”

The Region lacks a standard Geographic Information System (GIS) database that combines data
for counties and municipalities. The economic development benefits of a standardized Regional
system would be significant.

Diversity is an important goal though a local history of racial challenges remains

The current drawdown of the Danforth Foundation, a major philanthropic fund directed by the
Danforth family, was noted as a concern.

The extent to which the closure of Chrysler actually was a problem for the Region is inconsistent.
Comments suggested a general lack of a sense of crisis about how the Region was impacted, and
whether adjustment was needed. Focus group meetings suggested that the Chrysler operation
and larger community of employees was somewhat self-contained.

While a majority of respondents identified infrastructure as concerns for the Region, there was
little consensus about priority projects.
Big Ideas
The interviews reinforced five main areas of emphasis for this economic adjustment study:
State and Federal Leadership
In April 2011, the State of Missouri completed its Strategic Initiative for Economic Growth. The goal of
the effort was to define Missouri’s roadmap for future economic growth. This document lays out a
detailed set of priorities, goals, and objectives for the state to pursue, as well as identification of
specific sectors on which to focus. These sectors align with local priorities in the St. Louis Region.
Wrapped within this study was a legislative agenda viewed by many in the Region as essential to
recovery from the recession, however, at the close of the 96th session of the General Assembly, the
following critical economic development bills did not pass:

Aerotropolis Trade Incentive Act

Compete Missouri
33

Missouri Science and Innovation Reinvestment Act (MOSIRA)

Legislative support for major sporting events hosted in the state

Incentives for expansion of data center operations in the state
The lack of progress at the state level through the spring and early summer of 2011 reinforces the
apparent need for an increase of self-reliance and local coalition building in addressing economic
development issues facing the Region. In September of 2011, while MOSIRA was signed into law by
the Governor, the Aerotropolis Trade Incentive Act was not enacted.
Workforce Development
As mentioned above, the loss of Chrysler has exposed a number of underlying workforce challenges
for the St. Louis Region, beginning with the structure of workforce development, largely dictated by
federal guidelines, which channel resources through state agencies down to local workforce
investment boards (WIB) through programs such as Trade Adjustment Assistance (TAA). Challenges
include:

The loss of Chrysler has removed one large component of the Region’s workforce training system.
Chrysler drove significant annual demand for specialized short-term training in a range of
disciplines for both union and temporary part-time workers, serving as a distinct entry point for
“non-traditional” workers. This entry point has been removed, suggesting that the workforce
system now needs replacement conduits for short-term credentials, as well as broader long-term
retraining.

The Regional workforce development system has five separate WIB boards and a significant
number of non-profit and for-profit institutions that provide and compete for training services for
displaced workers, adults, youth, and ex-offenders.

The interviews confirmed that because the workforce system has multiple entry points, it can be
difficult for an individual within in the system to see the full picture or to choose their best path.

Although progress has been made at the state level in creating new workforce centers that offer
“one-stop shopping” for services, the overall system remains challenged by the federal and state
silos that channel resources to the local level.
The interviews reinforced the notion that there is significant need and opportunity for innovation in the
space between middle school and traditional universities which offer a four-year degree. Interviews
suggested that a majority of people in this space face a critical need to be better prepared to enter the
workforce. Interviews emphasized that the St. Louis Region could do a better job of navigating
students from high school toward junior college and technical schools, as well as four-year college or
university programs. Interviews noted the following:

Non-transferability of credit and certifications between community colleges and other workforce
training intermediaries is a clear problem locally and nationally.

Local workforce conditions depend on the sector. For “white collar” service and support
businesses, the Region’s workforce climate was viewed positively by local executives.
34

The climate for manufacturing, plant and life sciences, and IT is more difficult, because these
sectors typically require higher and more specialized skill sets compared to traditional
manufacturing. In the IT sector, certifications can be more valuable than degrees.

Chrysler was different from McDonnell Douglas. After Cold War defense adjustment, a number of
former McDonnell employees went on to create new companies, a path for which a significant
percentage of Chrysler employees, particularly assembly line workers, are arguably less prepared.

A share of Chrysler workers still expected that the plants would re-open, which influenced their
choice between short-term training programs that would allow them to get back to work quickly,
versus long-term retraining that would have the potential to open up new career paths. Once the
recession took hold by 2009, many workers found that there were essentially no jobs available in
career paths related to short-term training. Closure of the Ford Plant in 2006 also impacted career
opportunities.

Nationally, many manufacturers who have technical workforce requirements are becoming bigger
partners in the workforce training system. Understanding ways to better integrate end users in the
training process appears to be an important policy goal.
The interviews reinforced the following core ideas:

The St. Louis Region has a large pool of under-skilled people who are unprepared for work in
advanced manufacturing sectors which are increasingly linked to computers, math and science.
Training in these subjects needs to be reinvigorated locally.

A small percentage of interviews mentioned ideas related to bridge / P-16/20 programs, which
would focus resources more precisely on students that are less likely to follow a traditional path to
college.

Greater cooperation between City and County WIB boards and local workforce intermediaries is a
logical first step.
Entrepreneurship
The interviews reinforced the importance of strategies to sustain and grow entrepreneurship across
the Region. The local base of entrepreneurial support begins with established traditions through firms
such as Ralston Purina, Express Scripts, Enterprise Rent-A-Car and Monsanto. Local efforts to
expand entrepreneurship build from efforts by the anchor educational institutions of Wash U, SLU,
Webster, and UMSL, with a related network of rapidly evolving organizations, such as the Helix
Center, the Center for Emerging Technologies, the BioGenerator, CORTEX, BRDG Park, and the
Coalition for Plant and Life Sciences. Interviews reinforced several key themes:

The strengthening role of local education institutions in driving economic development
opportunities through spin-off commercialization of their research efforts. The process confirmed
that barriers to further progress are not financial, rather, they relate to the evolving personality of
the institutions involved and their risk tolerance in managing intellectual property rights between
institution and its researchers.

Entrepreneurship has a significant social component, influenced by connections which are
simultaneously social, physical and technology related. In all cases, physical proximity is essential
35
in encouraging greater collaboration. Interviews reinforced the need to expand these networks
through deliberate land use choices which favor mixed use and access to transit.

While there are a growing number of researchers in the St. Louis Region with good ideas, the
Region has a limited or fragmented selection of services (legal, administrative) to support growth
of these early stage ideas into commercial ventures. Evolving local incubation programs (Helix
and others) are a critical start, but need to grow further to include the development of a
manufacturing incubator. On a broader level there is a need for someone to help coordinate,
organize and sustain entrepreneurial development across the Region.

Many groups are looking for additional support, with a critical need for seed or pre-seed funding.
For the majority of US Metros that are not Boston or Silicon Valley, access to venture capital (VC)
is a challenge that needs to be kept in perspective. While other regions have imported VC talent
to build local clusters, studies do suggest that a majority of funding for new businesses is
sustained through personal debt and the support of friends and families, rather than VC. The
broader VC system is influenced by a practical reality of short-term returns rather than long-term
opportunity.

IT start-ups are easier to come to market, while startups in plant and life sciences are more risky,
with many failures and few successes. For companies in the plant and life sciences cluster, the
reality is that seed investments of $50 million are relatively small amounts. The interviews also
clearly indicated that investments in the plant and life sciences take time to materialize, and will
not by themselves resolve the Region’s pressing need to replace jobs lost in the recession.

Although the Region makes strong arguments about being business friendly and low cost, the
regulatory framework is a concern, particularly within St. Louis County, where municipal zoning
and permitting processes appear inconsistent.

Initial investments by groups such as the Danforth Foundation have clearly laid the groundwork for
future growth in innovation and entrepreneurship in the plant and life sciences cluster.
If past recessions are a guide, the dramatic extent of creative corporate destruction generated by the
Great Recession will lead to the formation of new companies that we will see as commonplace in
another 20 years. In this context, deliberate choices made in coming years to encourage
entrepreneurial activity will pay long-term dividends. The analysis also suggests that efforts by the
public sector to create a level regulatory playing field locally would pay dividends. The interviews
suggested a number of ideas for how the Region’s entrepreneurial efforts could be advanced:

Tech transfer opportunities linked to Wash U, SLU and UMSL and the broader plant and life
sciences cluster need to be expanded. The current I-6 grant effort is another step in the right
direction.

The Region would benefit from an incubator facility focused on manufacturing. Efforts to partner
with organizations such as Missouri Enterprise and its Illinois state level partner should be
considered.

A lack of tax incentives for angel investment was noted as a concern in Missouri. Other
Midwestern states have developed angel investment tax credits, such as Minnesota. Louisiana is
also evaluating such a program.
36

Consideration should be given to an effort to work with local units of government to clarify the
practical aspects of how the local regulatory process influences starting a business, including such
things as zoning approval processes, as well as the provision of “one-stop-shopping” to streamline
these processes.
Governance
Governance remains a central challenge for the Region. Key insights include:

The Region has new leaders and evolving organizational entities which have successfully
operated across political borders.

The Region faces near-term fiscal challenges, with anticipated state budget deficits for FY 12 and
likely decreases in state shared revenue. While Missouri’s situation is less dire, the situation in
Illinois is clearly tenuous, with a projected deficit in the range of $4 billion.

In St. Louis County, there are a large number of suburban local units of government, many of
which have less than 5,000 residents, and some of which appear to struggle with delivery of basic
services.

While St. Louis County government is judged by a majority of interviewees to be an effective unit
of government, interviews also suggested that the County is at a critical crossroads, sitting in a
position of relative strength, arguably enjoyed by the City of St. Louis 50 years ago. Given the
trajectory that the City has followed over the past 50 years, the County’s current status and
position of strength can only be sustained by deliberate choices from this point forward.

Through a combination of geography and history, the St. Louis Region and the State of Missouri
are challenged by a unique set of issues. Factors include:
1. The City of St. Louis remains challenged by its fragmented governance structure
2. Both Kansas City and St. Louis are divided by major political and geographic boundaries,
reducing their ability to provide local leadership.
3. The state endures a strong divide between urban and rural areas as well as northern and
southern sides.
4. The state is also influenced by patterns of development that are Midwestern in St. Louis, and
more western in Kansas City.

Interviews confirmed an underlying belief that the evolving St. Louis City-County relationship will
significantly impact future economic opportunities for the Region as a whole. While interviews
stressed challenges with the concept of City re-entry into the County, a majority of interviews
noted long-term opportunities for the Region through greater cooperation between City and
County. Short-term opportunities focus on greater cooperation in economic and workforce
development.

The interviews suggest that with a region as large as greater St. Louis, getting all 16 counties to
agree all the time is not likely. In this context, finding coalitions of the willing is essential to move
specific project opportunities forward. The analysis does suggest that the county-level units of
government are a key building block for the future.
37
Economic Development
Interviews focused attention on the broader economic development cluster that serves the St. Louis
Region. Its constituent parts include:
County-level economic development entities: St. Louis County, St. Clair County, Madison County,
St. Charles County, and the City of St. Louis.
Regional Organizations: RCGA, East-West Gateway, Metro/Bi-State Development Agency, and
Southwestern Illinois Development Authority.
Private Sector Leadership: Organizations include Civic Progress, which represents the larger
corporations in the community, and the Regional Business Council (RBC), which represents the
smaller, up and coming corporations in the Region.
Workforce Development Cluster: Includes five workforce investment boards, and many non-profit
and for-profit workforce intermediaries, including community colleges, such as STLCC, and Vatterott
and Ranken technical schools.
State Level Organizations: Includes Missouri Enterprise, the Missouri Partnership, and the
respective state economic development departments, MODED and ILDCEO.
Larger Municipalities: Includes communities that staff an economic development department, as
opposed to a community development department. These communities include Clayton, St. Charles
and Chesterfield.
Stakeholder interviews reinforced the following ideas regarding the current structure of economic
development locally:

There is a clear need for a greater Regional emphasis on business retention and expansion first,
and attraction second. The Regional approach to business retention and expansion appears
fragmented and under-funded at present, even for organizations such as SLCEC.

Leadership changes at RCGA, Metro/Bi-State, and East-West Gateway provide a unique
opportunity for the Region to redefine Regional economic priorities, and move beyond silos and
fragmentation.

The strengthening city-county cooperative relationship is a starting point.

There was considerable stakeholder comment regarding the RCGA related to perceived credibility
problems as well as a sense that this organization has not been as effective as it could be.
Conversations regarding RCGA were tempered by the practical reality that anyone running a
regional organization like RCGA in a highly fragmented place like St. Louis would be challenged.
This comment reinforced an underlying conflict in the Region between those who desire stronger
Regional leadership in economic development, and whether existing municipal governance silos in
the Region will tolerate a stronger Regional economic development structure.

Beyond comments about specific entities, interviews reinforced a sense that the St. Louis Region
seems content with the status quo in many facets of economic development. This sense could
reflect a conservative nature or broader “Midwestern sensibilities.”
38
Ideas that evolved out of the stakeholder conversations include:

Focusing further conversation on how Metro/Bi-State and East-West Gateway can better fit into a
Regional economic development superstructure. On paper, Bi-State has tremendous capacity to
support Regional economic development goals.

Need for a recurring annual economic development summit for the Region, building from the St.
Louis 2004 effort, which led to the formation of the Great Rivers Greenway District. The goal of
the group would be to create, support, and implement one major project per year.

For SLCEC, a serious push into retention and expansion would require greater resources.

Strong arguments were raised that the St. Louis Region needs an economic development entity
that can lead, encourage collaboration, and implement Regional priorities.

Interviews noted that while the RCGA organization includes separate economic development and
chamber organizations, the line between these two related entities can be blurry at times, raising
the potential need to more clearly separate the two functions, while providing a dedicated source
of baseline revenue for operations.
Infrastructure, Transportation and Logistics
Transportation and logistics questions for the St. Louis Region build from recent federal policy
development that has focused on the long term implications of higher fuel prices, as well as more
stringent clean air regulations which have increased the price of diesel fuel. These drivers, along with
a broader trend that favors containerization of freight, are placing greater emphasis on freight
movement by rail and marine corridors. Transportation Investment Generating Economic Recovery
(TIGER) grant funding has been focused on about seven port sites in the US, including the current TriCity Port District site in Granite City, IL. Other sites that benefited from TIGER Funding included
projects in Mobile, AL; Providence, RI; and Norfolk, VA. Many of these projects are focused in part on
Container-on-Barge (COB) opportunities.
Even as the Region is adjusting to the economic recession, our research suggests that St. Louis will
also need to adjust to broader shifts that are anticipated in national logistics markets related to the
Panama Canal expansion, which will enable significantly larger container ships to transit the canal,
and will nearly double the operable capacity of the Canal. The expansion is generating broader
debate on how freight and commodity movement may shift across the US. The entry of the upgraded
and expanded Canal by 2014 carries specific implications for St. Louis, the Mississippi River and New
Orleans, as ports along the Gulf Coast and eastern seaboard reposition to meet this evolving market.
From a geographic perspective, with the Panama Canal location being east of Miami and
approximately due south of Charleston, SC, the Canal expansion will influence East and Gulf Coasts
of North America.
The improvements will enable the size of container vessels transiting the Canal to increase from the
current 4,400/4,500 TEU to 12,600 TEU vessel size. The other market segments served by the
existing and upgraded Panama Canal (dry bulk, vehicle carrier, liquid bulk, reefer segment, cruise
vessel, general cargo, and miscellaneous) will also see a significant increase in the size of vessels
able to transit the Canal, including Capemax and Suezmax vessels. The very large crude and ultra
large crude oil carriers will remain beyond the physical capacity of the system.
39
Beyond the Panama Canal, our experience suggests that cost and Regional logistics issues will also
shape opportunities in St. Louis:

In response to changing transportation costs, shippers are evaluating the movement of shipping
containers by barge along the Mississippi River, rather than by rail or truck.

The Mississippi River rail bridges are a Regional chokepoint and need to be evaluated.

MoDOT is studying the reintroduction of barge traffic on the Missouri River, which could provide
shippers with lower cost alternatives for commodity movement through the Region.

Norfolk Southern has completed their Heartland Corridor, which will improve container capacity
between Norfolk, VA and Chicago.

BNSF has finally upgraded the remaining section of their Los Angeles to Chicago / St. Louis
TransCon route to double track capacity.

Through the CREATE program, rail capacity through the Chicago area will be significantly
improved.
The reverse flow of empty containers loaded with agricultural products has been increasing.
Soybeans and grains with specific hybrid qualities are gradually being segregated from bulk
transportation markets and moved along least cost carriers in separate compartments and containers.
The availability of empty containers has assisted the market / shipping alignment.
Implications
In sifting through the interviewees’ opinions, beginning with the impact of Chrysler, and extending to
how the Region is positioned from an economic development standpoint, it is clear to AECOM that,
with the Great Recession now slowly fading, the St. Louis Region sits at a crossroads. Key near-term
realities include:

The practical challenge of confusion between policy and politics at the federal level relating to
issues such as health care, transportation, debt reduction, alternative energy, and carbon pricing.

Painfully slow recovery in public sector finances after multiple years of decreasing public sector
revenue, forcing increasingly difficult decisions about funding priorities.

Recovering from the loss of more than 70,000 jobs since mid 2007 will be a massive task,
particularly since the loss of Chrysler appears to have accounted for a large share of the
decrease. Efforts to quicken the pace of job growth are essential.

Lingering impact of distressed real estate, linked to ongoing bank failures and apparent
government policy to limit near-term damage by slowing the pace at which distressed real estate
re-enters the market, suppressing growth in real estate values, and government revenue by
association.

The US economy is moving away from traditional manufacturing and moving toward an economy
that is more focused on knowledge, information, services and advanced manufacturing. These
sectors have different requirements for economic development and workforce training.

The world economy is increasingly global in nature. In such an economy, physical, logistical, and
IT connections matter more than ever.
40
The interviews suggest that the St. Louis Region needs to be more active in framing how these issues
evolve. At the same time, the interviews also reinforced the need to carefully evaluate the many
economic and demographic factors impacting the St. Louis Region. Key items to be evaluated in this
report include:

Recession and recovery: Auto assembly, exports, population, consumer credit, mortgage debt,
state and local government tax collections, and industrial production

The impact of rising fuel costs on transportation, freight movement, and job and residential
locations

Metropolitan area rankings for population, violent crimes, Gross Regional Product, ports by
tonnage of cargo, airports by landed weight

Workforce occupational data, high school dropout rates

Cost of living comparisons

Assessment of economic linkages by sector, and analysis of output and employment across the
Region.
41
42
Economic and Fiscal Impacts of Chrysler
43
Core Findings
The economic and fiscal impact assessment reinforces the Regional economic challenge created by
the loss of Chrysler’s assembly facilities in Fenton. It is clear now that the automotive sector was a
critical anchor of the Regional economy, generating $18.9 billion in output during 2007, 7.3 percent of
total output in the St. Louis Region. The automotive sector had an average output per worker of
nearly $1.6 million, 10 times higher than the Regional average of $152,000 per worker. The average
wage for these workers was approximately $107,000 compared to a Regional average wage of
$43,800. The impact analysis identified the following specific impacts associated with the closure:

In 2007, prior to the closure, the two plants employed a total of 6,365 workers on site, which
included full-time Chrysler employees, temporary part-time employees, and on-site contractors.

Total wages supported by these workers were estimated at about $880 million. Total output
associated with the two plants in 2007 was $15.5 billion.

Daimler Chrysler supported the second highest taxable assessed property valuation in St. Louis
County for the 2009 tax year ($184.5 million).

The two plants sustained a large base of suppliers which supported an estimated 2,500 jobs in
Missouri and Illinois. Many of these suppliers had just opened plants in St. Louis as part of the $1
billion retooling effort announced in 2005; by 2009 many of these jobs were gone.

As measured by IMPLAN, direct employment at the North and South assembly plants supported
an additional 37,485 indirect and induced jobs across the Region in other industry sectors.

A majority of Chrysler employees resided in St. Louis County, Franklin County, and Jefferson
County.

For municipalities such as Fenton, plant closure had a direct impact on city finances, which
decreased by about 10 percent compared to pre-closure levels.

2010 traffic counts on I-44 between 141 and I-270 were 96,577 vehicles per day (AADT).
Comparable levels for 2007 were 123,401 vehicles per day. As such, with the closure there are
26,824 fewer cars per day driving past the site.

As a result of the closure and subsequent demolition of the North and South Chrysler Assembly
plants, 5 million square feet of former industrial land was rendered vacant and unused. However,
if the St. Louis Region develops new real estate at the same rate it has for the past 10 years, the
former Chrysler sites will not be fully redeveloped for at least another 12 years into the future.
44
Introduction
The following section quantifies the economic impact of job losses at the North and South assembly
plants. The economic impact is measured in terms of both the direct, as well as indirect and induced
jobs, wages and output lost in the St. Louis Region resulting from the loss of on-site employment. The
economic impact also quantifies the state and local tax revenues impacted as a result of assembly
plant closure. The automotive sector has been a major employer in the St. Louis Region for most of
the last 60 years. This industry, which is highly capital intensive, is unique among industry sectors in
St. Louis for two reasons.
First, the production of autos and light trucks requires a large number of Tier 1, Tier 2, and Tier 3
suppliers, each of whom commits to specific delivery schedules for parts, assemblies and modules on
a “just-in-time” basis to the final assembly plant. These schedules require a majority of suppliers to
locate within specific proximity to the final assembly plant, usually within the metro area. From an
economic standpoint, “just in time” delivery requirements expand industry linkage, boosting the indirect
and induced employment supported by direct final assembly workers, well beyond what other industry
sectors would generate. For this reason, the loss associated with Chrysler is significantly magnified
across the Region.
Second, as a practical matter, final assembly of minivans and light trucks is more involved than
assembly of compact cars. Larger trucks and minivans can command retail prices in the $30,000 to
$45,000 range, which correlates with more steel, plastic, and larger and heavier parts, components
and modules, all of which boost industry output per worker well beyond industry averages. From this
standpoint, the loss of Chrysler is a particular blow to the Region, in that this level of output per worker
will be difficult to replace in the near-term. For the St. Louis Region, the automotive sector has been
challenged for a number of years.
Figure 1: St. Louis Region Automotive Sector Employment, Select Years
25,000
20,000
15,000
10,000
5,000
0
1996
1997
2000
2003
2006
2007
2008
Automobile and light truck manufacturing
Motor vehicle parts manufacturing
Other automotive
Total employment
2009
Source: IMPLAN
The above chart shows employment changes in the sector as compared to total Region employment.
The employment data from IMPLAN includes both private sector salaried and self-employed workers.
In 1997, there were approximately 21,400 people employed in the automotive sector. However, as the
45
total economy grew in terms of employment, the number of jobs in the automotive sector declined
dramatically. By 2009, sector employment had shrunk to nearly 6,100 positions; for 2010, this
estimate would be still lower, reflecting the closure of Chrysler in 2009. Since 1996, the automotive
sector has seen an average annual decline in employment of 8.9 percent. Even with the recent
economic downturn, the St. Louis Region experienced overall employment growth of 0.4 percent per
year since 1996. The largest component of employment in the sector is the manufacturing of
automobiles and light trucks. As this sector has declined, so have jobs in the supporting sectors.
Output, also referred to as revenue or sales volume, is the broadest measure of economic activity, and
covers the cost of materials, labor and profit. As measured by IMPLAN, the automotive sector in St.
Louis generated $18.9 billion in output during 2007, 7.3 percent of total output in the Region. Of the
1.7 million people employed in the Region, nearly 12,000 were in the automotive sector. With such a
significant share of the total economic output and a relatively small share of total employment, it is no
surprise that the average output per worker is significantly higher than the Regional average. In 2007,
the automotive sector had an average output per worker of nearly $1.6 million, 10 times higher than
the Regional average of $152,000. The average wage for these workers was approximately $107,000
compared to a Regional average wage of $43,800.
Table 1: St. Louis Regional Automotive Sector, 2007
Industry Segment
Light truck and utility
vehicle manufacturing
Motor vehicle body
manufacturing
Truck trailer manufacturing
Motor home manufacturing
Travel trailer and camper
manufacturing
Motor vehicle parts
manufacturing
Automotive Sector
Total Region
Output
(000)
Jobs
Wages
(000)
Output
per Job
Average
Wage
$17,507,102
7,010
$959,108
$2,496,300
$136,800
$50,694
300
$14,087
$167,100
$46,400
$232,164
$25,824
870
80
$75,958
$3,302
$265,500
$325,700
$86,900
$41,600
$12,293
60
$1,920
$215,400
$33,700
$1,108,075
3,570
$217,779
$310,500
$61,000
$18,936,475
11,900
$1,272,164
$1,591,600
$106,900
$259,244,478
1,709,720
$74,880,791
$151,600
$43,800
Source: IMPLAN
Within the automotive sector, the largest segment is light truck and utility vehicle manufacturing, which
includes assembly of light trucks and utility vehicles. Vehicles made include light duty vans, pick-up
trucks, minivans and sport utility vehicles. In 2007, there were 7,000 people employed in this segment
with an average output of $2.5 million per worker. For every worker in light truck manufacturing
added, the St. Louis Regional economy will grow by $2.5 million. Job losses would have the opposite
effect in shrinking the economy. In 2007, the average wages in this segment was $136,800. These
realities reinforce the challenge of the loss of Chrysler to the Region and how to replace these lost
positions and their associated output.
46
North and South Assembly Plant Auto Production
From 2005 to 2010, total auto production in the St. Louis Region decreased by an annualized rate of
33 percent. In 2005, the North and South Assembly Plants made up 60 percent of the total auto
production in the Region, increasing as a share to 68 percent in 2006, and subsequently decreasing to
0 percent at the end of 2009, at which time both the North and South plants were closed entirely. Had
Chrysler maintained a 60 percent share of all auto production in the St. Louis region from 2005 to
2010, total auto production would have decreased by 19 percent annually, this is a result of decreased
production in Ford and GM plants. The chart below depicts the decrease in total auto production in
the St. Louis Region from 2005 to 2010, signifying Chrysler’s impact.
Figure 2: St. Louis Region Auto Production, 2005 - 2010
700,000
Chrysler
Total
600,000
500,000
400,000
The adjacent figure shows the
total production volume of
Dodge Ram pickups, Town &
Country minivans, and Dodge
Caravans at the North and
South Assembly Plants located
in Fenton from 2005 to 2009.
300,000
Overall, production of all types
of automobiles came to a halt
by August of 2009. The South
100,000
Plant stopped producing Town
& Country minivans and Dodge
0
2005
2006
2007
2008
2009
2010
Caravan minivans by
Source: Ward's Automotive 2011
November 2008, while the
North plant continued to roll out Dodge Ram pickups until July 2009; however, in 2009 the North plant
produced less than one sixth the amount of Ram pickups as it did annually since 2005.
200,000
Figure 3: Annual Truck & Minivan Production (2005-2009)
250,000
200,000
Pickup Truck
Minivan
150,000
100,000
50,000
Source: Ward's Automotive 2011
47
2009
2008
2007
2006
2005
-
At, their respective peaks, the
South Assembly Plant produced
247,625 Town & Country and
Caravan minivans in 2005, while
the North Plant produced 152,715
Ram pickups in 2006. Within a
matter of three years, each plant
stopped production for good, the
North Assembly plant lagging the
south by nine months.
Figure 4: Monthly Truck and Minivan Production (2009)
7,000
6,000
5,000
Pickup Truck
4,000
Minivan
3,000
2,000
1,000
12/2009
11/2009
10/2009
9/2009
8/2009
7/2009
6/2009
5/2009
4/2009
3/2009
2/2009
1/2009
-
Due to the closure of the North and
South Assembly plants, the St.
Louis Region is no longer
manufacturing any type of
automobile for the first time in over
50 years. The task of producing
new Chrysler minivans and Dodge
Ram pickups has located
elsewhere. In 2010, both plants
were demolished, now the site is
294 acres of vacant industrial
space.
Source: Ward's Automotive 2011
Economic Impact Analysis
AECOM used IMPLAN, proprietary software that runs on data collected by the Minnesota IMPLAN
Group (MIG) to estimate the economic and fiscal impacts of the plant closures on the St. Louis
Region. MIG assembles data from regional and national sources to model the ways in which
businesses and households interact in the study area. Economic impacts can be described as the
sum of economic activity within a defined geographic region (St. Louis Region) resulting from an initial
change in the economy. This initial change, or direct impact, spurs a series of subsequent indirect and
induced (ripple) activities resulting from interconnected economic relationships. The total economic
impact is the sum of the direct, indirect and induced impacts as defined below:

Direct effect: The predicted change in the local economy that is to be studied, in this case the
closures at the Chrysler-Fenton plants.

Indirect effects: Impacts on suppliers to the directly affected businesses (including trade and
services at the retail, wholesale and producer levels). This also includes wages paid to workers to
assemble the good or service. An example of an indirect effect would be job losses at a
dashboard manufacturer resulting from the loss of auto part orders at Chrysler.

Induced effects: These represent the impacts on all local industries caused when households
spend their earnings generated by the direct and indirect effects. An example of an induced effect
would include losses in area retail employment resulting from declining household spending
associated with North and South Assembly Plant job losses.
Economic impact analysis traces the changes in economic activity resulting from some action,
identifies the economic sectors that are impacted by that activity and estimates the resulting changes
in output, employment and income in the Region as defined below:

Output: This is the total value of goods and services produced across all industry sectors and all
stages of production in the study area.
48

Employment: This represents the number of jobs needed to support the given economic activity
across all sectors. It includes all wage and salary employees, both part- and full-time, as well as
self-employed jobs. It is measured in terms of the average number of annual jobs.

Compensation: The total payroll costs (including benefits) of each industry. It includes the
wages and salaries of workers who are paid by employers, as well as benefits such as health and
life insurance, retirement payments and non-cash compensation. It also includes proprietary
income received by self-employed individuals.
Multipliers
A change in demand is said to have a multiplier effect where the initial change ripples through the
study area (i.e., causing indirect and induced impacts). For example, a change in demand for a
product affects the producer of the product, the producer’s employees, the producer’s suppliers, the
supplier’s employees, and so on, ultimately generating a total effect in the economy that is greater
than the initial change in demand. The ratio of the overall effect to the initial change is the multiplier.
The magnitude of the multiplier depends on the industry, the size of the study area and the study area
itself. The larger the study area, the more dollars will be spent locally and not leak to outside areas.
Multipliers for the same industry will vary by study area. For example, a multiplier for the automotive
sector in the St. Louis Region will differ from the Chicago Region since changes in demand will ripple
through the two economies very differently.
AECOM presents the output and employment multipliers for the automotive sector in the St. Louis
Region during 2007 to better understand the impact of changes in the automotive sector on the
Regional economy. In the following table, the output multipliers show the total increase in demand for
all industries per dollar of demand in the specific sector.
Table 2: Automotive Sector Output Multipliers, 2007
Sector
Light truck and utility vehicle manufacturing
Motor vehicle body manufacturing
Truck trailer manufacturing
Motor home manufacturing
Travel trailer and camper manufacturing
Motor vehicle parts manufacturing
Total
1.4226
1.6980
1.6738
1.6994
1.6447
1.6605
Source: IMPLAN
For every dollar spent in the light truck manufacturing sector during 2007, it had a total impact of $1.42
in the St. Louis Region. Each direct dollar generated $0.42 in indirect and induced impacts throughout
other sectors of the Region. Within the automotive sector, the highest multiplier is for motor home
manufacturing where each additional dollar of demand had a total impact of $1.6994 in St. Louis
during 2007. The next table shows two types of employment multipliers for the automotive sector
during 2007.
49
Table 3: Automotive Sector Employment Multipliers, 2007
Industry Segment
Automobile manufacturing
Light truck and utility vehicle manufacturing
Motor vehicle body manufacturing
Truck trailer manufacturing
Motor home manufacturing
Travel trailer and camper manufacturing
Motor vehicle parts manufacturing
Total
Multiplier
5.75
3.02
10.88
8.81
7.45
9.12
7.91
SAM
Multiplier
1.87
7.55
1.82
2.34
2.43
1.96
2.46
Source: IMPLAN
The total multiplier shows the number of jobs supported by $1 million in direct spending. For example,
in the case of light truck manufacturing, every $1 million in direct spending supported three total jobs
(direct, indirect and induced) in the Region. In fact, the $1 million in spending in this industry will yield
0.4 jobs in light truck manufacturing and 2.6 indirect and induced jobs in other sectors indicating a high
level of integration. The SAM multiplier confirms this. For every job directly created in the light truck
manufacturing industry, there were 7.55 total in the economy. That is, each job in light truck
manufacturing supported 6.55 other jobs in the Region.
Regional Inputs
In addition to being a large contributor to the overall economy in the St. Louis Region during 2007, the
automotive sector is integrated with other sectors in the Region. Here we examine the specific
commodities the light truck and utility vehicle manufacturing sector buys from the Region for
production. This sector purchases goods and services from 159 other sectors. We profile the top 10
sectors on several key metrics:

Gross absorption coefficient: This is the percentage of each dollar in industry outlay that is
dedicated to a given input. Recall that not all of an industry’s expenditures go toward other firms,
some portion goes toward employee compensation, dividends, taxes, etc.

Gross inputs: Based on the size of the industry, this is the amount that the industry spends on a
given commodity. Whereas the gross absorption coefficient measures how much of each dollar
goes to a certain commodity, the gross input says how many dollars that is. For example, if an
industry spends $1 million in total outlay, and the gross absorption coefficient for a given
commodity is 10 percent, then the gross input is $100,000.

Regional purchasing coefficient (RPC): This is the share of the commodity input that is
purchased within the local study area.

Regional absorption coefficient: Similar to the gross absorption coefficient, this describes the
percentage of one dollar spent on a given commodity in the local study area. It will be some
portion of the gross absorption coefficient. In the example above, if an industry’s gross absorption
coefficient is 10 percent and it spends half of that in the local study area (the RPC), then its
regional absorption coefficient is 5 percent.

Regional inputs: This is the amount of spending on a given commodity in the local study area. It
is derived by multiplying the regional absorption coefficient by the industry’s total output. Again, in
the example above, the regional input would be $50,000; that is, the industry in question spends
$100,000 on a given commodity, half of which is spent in the local study area.
50
As noted earlier, the light truck manufacturing sector had $17.5 billion in output in 2007. Of that,
approximately $15.7 billion was spent on inputs, $3.6 billion of which came from the local area as
shown below. The majority of inputs for this sector come from motor vehicle parts, $9.2 billion.
However, only 10 percent of those purchases are made locally. Combined, these ten sectors provided
$13 billion of the total inputs needed for the Regional light truck manufacturing sector in 2007.
Table 4: Total Commodity Inputs for Light Truck Manufacturers, 2007
Sector
Total Commodity Demand
Motor vehicle parts
Wholesale trade distribution services
Management of companies and enterprises
Semiconductor and related devices
Other engine equipment
Tires
Other plastics products
Motor vehicle bodies
Totalizing fluid meters and counting devices
Truck transportation services
Subtotal 10 sectors
Gross
Absorption
89.6%
Gross
Inputs (000)
$15,683,383
RPC
23.1%
Regional
Absorption
20.7%
Regional
Inputs (000)
$3,616,118
52.3%
7.1%
2.9%
2.2%
2.2%
1.8%
1.6%
1.5%
1.4%
1.2%
74.2%
$9,153,688
$1,238,501
$511,888
$389,923
$385,204
$314,972
$278,972
$263,261
$251,442
$205,199
$12,993,050
10.0%
99.5%
80.0%
25.3%
7.2%
0.1%
46.7%
10.2%
2.6%
100.0%
23.5%
5.2%
7.0%
2.3%
0.6%
0.2%
0.0%
0.7%
0.2%
0.0%
1.2%
17.4%
$913,270
$1,232,450
$409,5106
$98,661
$27,721
$164
$130,346
$26,805
$6,606
$205,199
$3,050,733
Source: IMPLAN
The following table, though similar to the above, focuses on the top ten sectors in the Region that
provide inputs needed by the light truck and utility vehicle manufacturers during 2007 in St. Louis.
These are the sectors that will be most impacted by changes to the light truck manufacturing sector.
The largest input used by the St. Louis Regional light truck manufacturer was wholesale trade, $1.2
billion in 2007, followed by motor vehicle parts with $913 million of inputs. Due to high output per job,
high average wages and large employment multipliers in the light truck manufacturing sector, any
change in employment in this segment will generate large regional economic impacts. The regional
inputs provide insight as to which sectors will be most impacted by changes in the sector.
Table 5: Regional Commodity Inputs for Light Truck Manufacturers, 2007
Sector
Total Commodity Demand
Wholesale trade distribution services
Motor vehicle parts
Management of companies and enterprises
Truck transportation services
Other plastics products
Semiconductor and related devices
Rail transportation services
Adhesives
Scientific research and development services
Other pressed and blown glass and glassware
Subtotal 10 sectors
Gross
Absorption
89.6%
Gross
Inputs (000)
$15,683,383
RPC
23.1%
Regional
Absorption
20.7%
Regional
Inputs (000)
$3,616,118
7.1%
52.3%
2.9%
1.2%
1.6%
2.2%
0.3%
0.4%
0.3%
0.4%
68.7%
$1,238,501
$9,153,688
$511,888
$205,199
$278,972
$389,923
$57,822
$75,624
$49,825
$67,183
$12,028,625
99.5%
10.0%
80.0%
100.0%
46.7%
25.3%
89.4%
56.9%
80.0%
44.6%
26.2%
7.0%
5.2%
2.3%
1.2%
0.7%
0.6%
0.3%
0.2%
0.2%
0.2%
18.0%
$1,232,450
$913,270
$409,510
$205,199
$130,346
$98,661
$51,711
$43,012
$39,860
$29,933
$3,153,952
Source: IMPLAN
51
Economic Impacts
For the purposes of this analysis, the economic impacts of Plant closure have been separated from
the ripple effects associated with the current recession. To do this, AECOM modeled the North and
South Assembly Plant employment losses in 2007, since the data would not yet reflect employment,
spending and output losses associated with the recession. Therefore, the following figures reflect the
economic impact of direct employment losses at the North and South assembly plants should the
recession not have occurred. Figures below are reported in 2011 dollars.
AECOM measured the economic impact of 6,365 on-site jobs lost in the Region as a result of the
North and South Assembly Plant closures as shown below. These companies were 100 percent tied
to Chrysler, all of which went out of business as the plants closed. These suppliers include Cassens
Corporation, BNSF, Syncreon / LSI, Yazake, Integram Seating, AT&T Telecommunications and
DuPont. An estimated 835 jobs were lost among these suppliers due to the closures. The Cassens
closure is significant in that the firm controlled a 14.84 acre site adjacent to the plant with frontage on
I-44, with two buildings supporting about 42,000 square feet of indoor space. BNSF still owns
extensive property on the site, at least 46 acres.
In addition to the on-site cluster of suppliers, the analysis identified a second tier of off-site suppliers
who were effectively 100 percent tied to Chrysler. Through 2007, many suppliers were scouting
locations and ramping up production to serve an evolving south plant expansion, which was intended
to allow this facility to support up to five vehicle models on a flexible line. At one point, potential
models included Town and Country (domestic and export), VW Minivan, Chrysler Pacifica, and
Chrysler Imperial. A summary of supplier impacts follows:
Kelsey Hayes (TRW) – Braking systems (Fenton). This company signed a letter of intent to lease
84,000 square feet in 2006, and was supporting 80 to 100 jobs by 2007. The facility closed by 2009.
HBPO North America – Front end modules. The company leased 59,000 square feet in 2006 and
supported about 80 jobs. The facility closed by 2009.
Visteon – Dashboards / Interiors (Eureka, MO). This company leased 217,000 square feet in a larger
building and opened by January 2008, following a $26.8 million investment, with plans for up to 200
jobs. The plant was closed by the end of 2009, resulting in a direct loss of 110 positions.
Subsequently, this space was re-leased to a printing company looking to consolidate other locations.
Integram Seating – Seats (Pacific, MO) – this 400,000-square foot facility was closed in stages by
2009 due to closure of Chrysler plant – loss of 800 positions.
Ventra Group – Bumper assemblies (Pacific, MO) – 75,000 square feet, opened in august 2007.
Closed by 2009 with a loss of 75 workers; space is still empty.
Lumbee Enterprises – Quality testing (Fenton, MO) – Cut from 60 to 20 jobs in 2008 to zero in 2009.
Yushin USA – Kirksville, MO – laid off 100 with second shift loss.
Logistics Services Inc. (LSI) – Fenton, MO – won contract and replaced Syncreon at the truck plant,
supporting about 125 jobs before closure.
Syncreon – Logistics / part sequencing provider 65 lost jobs in 2009 with Bankruptcy – closed.
52
Dakkota Integrated Systems – Interiors / panels (St. Louis). This company had leased 100,000
square feet in late 2006 and supported 96 jobs serving the truck plant in 2008. The facility closed by
2009 with a loss of 60 employees.
Decoma International (Magna) – Front end modules – They scouted sites in 2007 and opened a
100,000 square foot site in Dupo, IL in 2008. The facility closed by 2009 with a loss of about 80 jobs.
Kace Logistics – opened in 2007 with 17 positions (average wage of $1.7 million).
Oakley Industries – Green Park, MO – Scouted locations in St. Louis in 2007 and then leased a
150,000 square foot building with a $21.5 million dollar investment. 53 jobs were lost with the closure.
Exkor Manufacturing – Engine components (Dupo, IL). This company signed a letter of intent to
lease 140,000 square feet in early 2007, with plans to hire 200 jobs. This expansion never occurred.
Permacel Automotive – St. Louis, MO – located in a 137,000 square foot building. Portion of building
has been re-occupied.
Johnson Controls – Scouting St. Louis locations in 2007 and opened a facility with a reported 70
employees in Earth City / Hazelwood. They went into 150,000 square feet of company owned space,
which is still vacant.
Lear Corporation – Seat manufacturer for GM, Ford, and Chrysler, with multiple facilities in the
Region – Lear entered bankruptcy in July 2009, with a loss of 250 employees related to Chrysler.
Purcell Tire – Fenton, MO – Linked with trucking companies.
Mahle Engine Components – Manchester, MO – closed and moved out of state in 2008 with a loss
of 210 employees.
Findlay Industries – Chesterfield, MO – closed with a loss of 68 positions in August 2008.
Harman Becker Automotive Systems – Washington, MO – This Tier 2 supplier services a number of
automakers including Chrysler with sound systems; has a reported 300 employees in Washington.
The plant is reported to be closing soon.
In addition, the surveys noted the following closures for which there was no information:

MSX International – wheel supplier

Textron Automotive Exteriors – relocated to Pacific, MO then shut down

Dura Automotive Systems – Moberly, MO
Due to initial planned expansion noted above and subsequent shutdown, the following opportunities
were cancelled before construction started:

Grupo Antolin: 100,000 square feet and 100+ jobs

Linamar/Excor: Canceled project

Magna: related firms were considering 2 expansions totaling 250,000 square feet, which would
have included a metal stamping plant.
In total, AECOM estimates that 6,365 jobs were lost as a direct result of the Chrysler plant closures.
53
Table 6: Job Losses Resulting from Plant Closures
Industry
South Plant
North Plant
Cassens
BNSF
Syncreon
DuPont
Yazake
AT&T
Integram Seating
Total
Jobs
3,200
2,330
500
200
120
10
2
2
1
6,365
This estimate includes approximately 3,200 workers at the South Plant and
2,330 workers at the North Plant as well as up to 800 temporary part-time
workers based on seasonal and special circumstances. In addition, we
identified a significant number of on-site suppliers, who were directly
impacted by the closure. They were responsible for transportation (both rail
and truck), parts, wire harness installation, painting and telecommunications
support.
The following table shows the associated direct output estimated for 2011
with the Chrysler plant closures. As shown earlier, the automotive sector
Source: Interviews
had a high output per job relationship. Therefore the 5,530 jobs lost in light
truck and utility vehicle manufacturing equates to a $15.4 billion in lost economic output and $879
million in lost wages.
Table 7: Estimated Direct Impact of Plant Closures, 2011
Sector
Light truck and utility vehicle
manufacturing
Transport by truck
Transport by rail
Paint and coating manufacturing
Telecommunications
All other miscellaneous electrical
equipment and component
manufacturing
Motor vehicle parts manufacturing
Total
Output
(000)
Jobs
Wages
(000)
$15,388,056
5,530
$822,385
$91,631
$91,308
$7,206
$1,025
620
200
10
2
$32,684
$22,767
$1,008
$182
$525
2
$134,000
$317
$15,580,068
1
6,365
$66,000
$879,225
Source: IMPLAN
As measured by IMPLAN, the direct employment at the North and South plants supported an
additional 37,485 indirect and induced jobs across the Region. When direct, indirect and induced
employment losses are taken into consideration, the total employment impact from plant closure is
estimated at 43,845 jobs throughout the St. Louis Region.
Table 8: Region Employment, Wage and Output Impacts (2011 dollars)
Type of Impact
Direct
Indirect + Induced
Total
Output
(millions)
$15,580
$6,459
$22,039
Jobs
6,365
37,480
43,845
Wages
(millions)
$879
$2,219
$3,008
Source: IMPLAN
Chrysler employment generated $3 billion in total Region wages including $879 million in direct, and
$2.1 billion in indirect and induced wages. Therefore, for every $1,000 in direct wages lost at the
North and South Plants, an additional $2,420 indirect and induced wages were lost in the Region.
Within the Region, direct employment could have generated an estimated $15.6 billion in direct output
during 2011. However, when business to business interactions and household spending are taken
into consideration, the total impact on Region output is estimated at $22 billion.
54
The following table shows the total economic impacts of the sectors directly affected by the closure of
the Chrysler plants in Fenton. Of the $22 billion impact resulting from job losses in the Region, 75.6
percent of the impact, $16.7 billion, occurred in the sectors directly impacted with job losses. Due to
large interaction effects between the sectors, such as light truck manufacturing and motor vehicle
parts manufacturing, the majority of the total economic impact was felt in these sectors.
Table 9: Economic Impacts for Sectors Directly Impacted by Plant Closures
Sector
Light truck and utility vehicle manufacturing
Transport by truck
Transport by rail
Paint and coating manufacturing
Telecommunications
All other miscellaneous electrical equipment
and component manufacturing
Motor vehicle parts manufacturing
Total
Output
(000)
$15,407,361
$325,986
$149,038
$7,740
$67,633
Jobs
5,540
2,210
330
10
130
Wages
(000)
$823,417
$116,275
$37,161
$1,083
$12,008
$991
*
$253
$699,497
$16,658,245
2,200
10,420
$145,443
$1,135,639
* Less than 5 jobs
Source: IMPLAN
Every economic sector in the St. Louis Region was impacted to a varying degree by the closure of the
Chrysler plants. The following table shows the ten largest output impacts felt by sectors not directly
impacted by the closures. With the plant closures, wholesale trade could have an estimated economic
loss of nearly $1.3 billion in 2011.
Table 10: Sectors with Largest Output Impacts
Sector
Wholesale trade businesses
Management of companies and enterprises
Imputed rental activity for owner-occupied
dwellings
Real estate establishments
Petroleum refineries
Food services and drinking places
Other plastics product manufacturing
Private hospitals
Offices of physicians, dentists, and other
health practitioners
Insurance carriers
Total
Output
(000)
$1,251,358
$515,917
Jobs
6,420
1,880
Wages
(000)
$508,272
$217,931
$205,449
0
$0
$182,167
$139,244
$119,650
$115,706
$113,507
1,530
20
2,020
480
950
$26,200
$3,177
$37,544
$28,477
$52,744
$111,670
860
$64,581
$100,739
$2,855,407
290
14,450
$22,087
$961,012
Source: IMPLAN
There were nearly 44,000 jobs lost as a result of the Chrysler plant closures. Of those, 6,365 were
tied directly to the plants. As shown above, the sectors directly impacted experienced a total job loss
of 10,420 jobs meaning more than 4,000 jobs were lost as a result of indirect and induced impacts
within those sectors, again reflecting the significant interdependence of those sectors. The sectors
with the top 10 job losses resulting from indirect and induced impacts are shown below. Wholesale
trade was the sector with the most jobs lost (6,420), which paid an average wage of $79,200.
Restaurants and bars employ many residents and this sector also experienced a large decline. With
so many people impacted by the plant closure, it can be assumed from this data that fewer people
55
would be going out to eat. Combined, the job losses in these 10 sectors represent 37 percent of the
total jobs losses occurring with the plant closures.
Table 11: Sectors with Largest Employment Impacts
Sector
Wholesale trade businesses
Food services and drinking places
Management of companies and enterprises
Real estate establishments
Private hospitals
Offices of physicians, dentists, and other health practitioners
Employment services
Retail Stores - General merchandise
Nursing and residential care facilities
Services to buildings and dwellings
Total
Output (000)
$1,251,358
$119,650
$515,917
$182,167
$113,507
$111,670
$33,223
$35,813
$32,578
$35,672
$2,431,555
Jobs
6,420
2,020
1,880
1,530
950
860
850
650
610
560
16,330
Wages (000)
$508,272
$37,544
$217,931
$26,200
$52,744
$64,581
$24,700
$15,724
$17,849
$13,668
$979,212
Source: IMPLAN
With the Chrysler plant closures, there is an estimated $3 billion loss in wages. Of that, $1.1 billion
occurred in the sectors directly impacted by the closures. The sectors with the largest wage losses
among those not directly impacted by the closure are in the following table. Combined, these 10
sectors accounted for 11 percent of the total economic output as a result of the Chrysler plant closures
but 35 percent of the total wage impacts.
Table 12: Sectors with Largest Wage Impacts
Sector
Wholesale trade businesses
Management of companies and enterprises
Offices of physicians, dentists, and other health practitioners
Private hospitals
Semiconductor and related device manufacturing
Scientific research and development services
Food services and drinking places
Legal services
Other plastics product manufacturing
US Postal Service
Total
Source: IMPLAN
56
Output
(000)
$1,251,358
$515,917
$111,670
$113,507
$70,153
$63,731
$119,650
$72,367
$115,706
$32,717
$2,466,775
Jobs
6,420
1,880
860
950
230
320
2,020
410
480
300
13,870
Wages
(000)
$508,272
$217,931
$64,581
$52,744
$42,842
$40,432
$37,544
$33,448
$28,477
$26,800
$1,053,070
Geographic Dispersion
The following maps the distribution of Chrysler workers living in the St. Louis Region for 2003, 2005,
2007 and 2009. AECOM used Local Employment Dynamics data from the US Census Bureau to
examine these trends. Although data specific to an employer is not available, AECOM was able to
define an area immediately surrounding the Chrysler plants and obtain data on all private, goods
producing jobs which includes construction and manufacturing. Though not all workers reported here
were employed at the two Chrysler plants, based on our understanding of employment at the plant,
they either directly or indirectly employed most of the workers in the vicinity.
Figure 5: Where Chrysler Workers Live by Census Tract, 2003, 2005, 2007 and 2009
57
In 2003, there were approximately 7,200 goods producing workers in the immediate area surrounding
the Chrysler plants. By 2009 this had fallen to approximately 1,800 according to the US Census. The
majority of employees came from the Region ranging from 91 to 94 percent from year to year. The
majority of workers lived in either Jefferson or St. Louis Counties. As the number of jobs fell, the
impact on the surrounding counties is very clear as shown above.
The analysis shows that Chrysler workers were spread across the entire St. Louis Region, with about
42 to 45 percent concentrated in St. Louis City and County, and key subsets in Jefferson and Franklin
Counties, representing about 30 to 35 percent of workers over this time frame. The data indicated that
about 5 to 8 percent of workers commuted from the Illinois side of the Region. The impact associated
with lost UAW positions was mitigated in the short-term by the generous employee buyouts that were
offered, offsetting the loss in wages that would have otherwise occurred in 2009. For non-UAW
positions, the loss in employment had more immediate impacts on the host communities, specifically
reduced spending on goods and services which resulted in lower sales taxes.
Fiscal Impacts
Economic impacts will generate changes in government revenues and expenditures, referred to as
fiscal impacts. Economic impacts on total business sales, wealth or personal income can affect
government revenues by expanding or contracting the tax base. Impacts on employment and
associated population levels can affect government expenditures by changing demand for public
services. Discussion of tax impacts starts with the obvious reality of lost property tax base for St.
Louis County, the City of Fenton, and other taxing districts in the area. The following table
summarizes taxable assessed valuations for top property tax payers in the county for 2000 and 2009.
Table 13: Taxable Assessed Values for Top Taxpayers in St. Louis County
Taxpayer
AmerenUE
Daimler/Chrysler
Duke Realty
Boeing
Missouri American Water Co.
Ford Motor Co.
THF Realty
AT&T
Southwestern Bell
Pfizer, Inc.
Laclede Gas Company
Monsanto
Westfield Corp.
2009 Taxable Assessed Value
Taxable
Share of
Assessed Value Rank
County
$306,473,531
1
1.3%
$184,560,030
2
0.8%
$169,086,090
3
0.7%
$165,205,820
4
0.7%
$85,289,810
5
0.4%
$79,258,100
$70,671,984
6
7
0.3%
0.3%
$70,600,750
$64,751,360
$62,427,300
8
9
10
0.3%
0.3%
0.3%
2000 Taxable Assessed Value
Taxable
Share of
Assessed Value Rank
County
$244,390,823
1
1.5%
$183,416,760
3
1.1%
$83,104,850
4
0.5%
$233,895,050
2
1.4%
$65,066,810
10
0.4%
$79,447,470
5
0.5%
$77,636,544
6
0.5%
$75,815,210
$74,721,110
7
8
0.5%
0.5%
Source: St. Louis County Assessor
The table speaks to the many changes that have occurred in the county, particularly in the automotive
sector with the loss of Ford Motor Company and its $79 million assessed value. More important was
the loss of Chrysler and its 2009 taxable assessed value of $184.5 million, making it the second
largest tax payer in terms of assessed value in the county for both 2000 and 2009.
AECOM used IMPLAN to estimate the tax impacts based upon a particular change in the economy.
Tax impacts are divided into State/Local and Federal government agencies and are estimated based
58
upon the level of direct effect and the industries either directly or indirectly affected. The following data
sources are used by Minnesota IMPLAN Group to model the tax impacts:

Bureau of Economic Analysis’ national income and product accounts (NIPA) values;

Consumer Expenditure Survey (CES); and

Annual Survey of State and Local Government Finances (SLGF).
The estimated Federal and State/Local tax impacts are reported as follows in terms of revenues
generated or lost:

Indirect Business Taxes (IBT): This includes state and local shares of sales, property, motor
vehicle license and severance taxes. IBT does not include employer contributions for social
insurance (e.g., Social Security, unemployment insurance, etc.) and taxes on income.

Households: Major components of this category include income, motor vehicle license and
property taxes. It also includes select nontax sources like fines or fees.

Corporations: This category includes corporate dividends and profit taxes.

Employee compensation: This includes the employee share of the social insurance tax and
employer-paid payroll taxes like social security, unemployment taxes, etc.
The table below summarizes the estimated state and local fiscal impacts from the direct employment
loss at the North and South plants (6,365 total jobs). After accounting for local and state revenue
losses from employee compensation, business taxes, household and corporate taxes, the estimated
state and local fiscal impact in is estimated at $454 million in 2011 dollars. The largest share of this
impact is in the form of indirect business taxes at nearly $319 million, followed by household taxes
including property, income and other fees estimated at $74 million.
Table 14: State and Local Fiscal Impacts, 2011
Revenue Source
Employee Compensation
Indirect Business Tax
Households
Corporations
Total
State and Local
Taxes (millions)
$6.9
$318.8
$74.1
$54.4
$454.2
Source: IMPLAN
Broader Economic Impact Discussion
Aside from the numeric calculations of impact noted above, our interviews documented other impacts
associated with the closure of Chrysler. These impacts relate to municipalities, school districts, fire
districts, and the broader real estate sector.
Municipal Impacts
Each unit of government was impacted in different ways by the plant closure. The magnitude of
impact for local units of government relates largely to the significance to each unit of the direct tax
benefits associated with either the Chrysler operation or its associated suppliers.
59
City of Fenton
As a result of the closure, City revenues are down about 10 percent, with operating budgets falling
from about $6.2 million down to about $5.2 million. Impact included direct tax revenue reductions due
to closure (Chrysler was the second largest tax payer in St. Louis County), as well as arguably more
important losses in sales taxes due to indirect and induced impacts. The impact has been mitigated to
a certain extent by several factors, including the recent opening of a new hospital (SSM / St. Clair
Health Center), and a local policy decision made in 2004 to be less financially dependent on Chrysler’s
assembly operations.
Pacific, Missouri
This City was impacted significantly by the closure of the Integram seating assembly facility, which
employed over 800 people, and closure of the Ventra Group site (bumpers), with a loss of 75
positions. The building which housed Integram has been released to an aerosol manufacturer, with
the potential for 200 jobs. Reportedly, 12 former Integram employees have been hired by this plant.
The City also experienced a significant indirect impact from the closure, in that City sales taxes
increased significantly by 2009 as the recession reached its zenith. Overall City sales tax collections
for 2010 ($660,000) have fallen below 2004 levels ($756,635). City property taxes were modestly
impacted, because taxes for these sites were abated as part of past incentive packages.
Eureka, Missouri
Visteon was in the process of opening an assembly site in Eureka as the recession hit. Although they
had leased space and built out the facility, employees were never hired. The 80,000 square foot
facility was subsequently released to a printing firm. Interviews with Eureka staff confirmed that the
community weathered the recession in reasonable shape, due in part to sales taxes generated by
Wal-Mart and the local Six Flags amusement park.
Rockwood School District
The primary impact to the Rockwood School District due to the closure was the loss of $4 million in
property tax revenue. This loss was made up through the Hancock Amendment, which spread the lost
tax base impact over the remaining tax payers in the community. Essentially, the school district’s tax
revenue maintained stability because remaining property tax payers in the district made up the
difference.
Real Estate Impact Discussion
A key reality of the past three years is the difficulty in separating the impact of the broader economic
recession from the closure of Chrysler’s facilities in St. Louis. The following chart highlights how
overall deliveries of office, industrial, and retail space have changed over the years. In general,
deliveries of space have slowed considerably since 2008, with retail and industrial space being
particularly hard hit. Overall, the impact on local real estate markets cannot be understated. On a
three year moving average basis, the amount of new commercial space built from 2009 to 2011 (about
500,000 square feet in all three sectors) is the single lowest amount in the past 30 years. The prior
low point was set in 1993 with a three year average of about 1.2 million square feet built in all three
sectors.
60
In the past three decades, beginning in 1982, new retail, office, and industrial construction in the St.
Louis Region has increased by an average of 6.8 million square feet annually. During this time the
largest growth took place during the first 10 years of the past 30. However, growth in new construction
has decreased by nearly 20 percent since that time.
Opening in 1959, the North and South Chrysler Assembly plants employed thousands and occupied
valuable real estate for decades. In 2008 and 2009, these plants were closed, rendering the 5 million
square feet of developed real estate out of date and out of mode. Currently, the former Chrysler sites
have been demolished and vacated. In order for these sites to be reused, a significant amount of new
retail, office and industrial space must be delivered to the St. Louis Region.
Assuming that in the future, nearly 7 percent of all new retail, office and industrial construction taking
place in the St. Louis Region will be distributed to the site of the former Chrysler plants, it will take
approximately 12 years to redevelop the 5 million square feet that was demolished following the
Chrysler plant shutdown. This projection was based on the average rate of new construction in St.
Louis for the past ten years; however, if the projection was based on a thirty year average of new
construction, redevelopment of the former Chrysler site would take place in nearly 10.5 years.
Although, given the volatility in the US economy and real estate market, a more conservative
assumption may envisage a longer period of time to fully redevelop this site.
Figure 6: Commercial Real Estate Construction Trends Since 1982
14
12
Millions of Square Feet
10
8
6
4
2
Source: CoStar
Retail
Office
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
0
Industrial
These combined events have impacted local industrial markets (including warehouse, manufacturing,
and flex space) in key ways.
61
Figure 7: Industrial Real Estate Market Metrics, 1st Qtr 2011
Airport
Share of Inventory
Chesterfield/Hwy-40
Share of Vacancy
Earth City
Fenton
Hanley
Illinois
Innerbelt E of 170
Innerbelt W of 170
North County
South County
St Charles County
St Louis City North
St Louis City South
West County
Westport
Source: CoStar
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
17.5%
20.0%
The following two charts
evaluate office and
industrial market vacancy
levels, as well as shares of
inventory and vacant
space. The first chart
looks at industrial space,
followed by office and
retail. These figures
illustrate relationships
between market share of
occupied space versus
vacant space. For
example, the North St.
Louis City submarket
constitutes the largest
share of inventory, about 17 percent, with a comparable level of vacancy.
Figure 8: Office Real Estate Market Metrics, 1st Qtr 2011
At the same time, Fenton
supports a higher share of
Brentwood/Maplewood
Share of Vacancy
vacant space (about 5%)
Bridgeton/I-70
compared to its share of
CBD
inventory (about 3%). This
Chesterfield/Hwy-40
differential reflects the
Clayton
impact of Chrysler and its
Creve Coeur/Hwy-67
supplier base in the
Earth City/Riverport
community. It also
Fenton
reinforces the notion that
I-270/Maryland Heights
I-270/Olive Blvd
the loss of Chrysler has
Illinois
reduced Fenton’s
Kirkwood/Frontenac
competitive position as a
Manchester/I-270
destination office market,
North County
given that the demolition of
South County
Chrysler has removed about
St Charles County
five million square feet of
St Louis City
space from this submarket.
West County
The current vacancy level in
Fenton for industrial space
0.0% 2.5% 5.0% 7.5% 10.0% 12.5%15.0%17.5% 20.0%22.5%25.0% 27.5%30.0%32.5%
Source: CoStar
is about 11 percent, one of
the highest vacancy rates in the Region, with an overall market average vacancy of about 8 percent.
Airport
Share of Inventory
62
Figure 9: Retail Real Estate Market Metrics, 1st Qtr 2011
Calhoun County
Share of Inventory
Central St Louis Cnty
Share of Vacancy
Franklin County
Jefferson County
Lincoln County
Metro East Illinois
NE Metro Illinois
North St Louis
County
Outer Metro Illinois
Outer Monroe County
Outer St Louis
County
SE Metro Illinois
South St Louis
County
St Charles County
St Louis City
SW St Louis County
West St Louis County
Source: CoStar
0.0%
2.5%
5.0%
7.5%
10.0% 12.5% 15.0% 17.5% 20.0% 22.5%
The above charts for office and retail markets paint a different picture for Fenton and the Region. On
the office side, Fenton remains a smaller market, with about 2.5 percent of area office inventory, and a
smaller percentage of vacant office space, less than two percent of Regional inventory. The majority
of Regional office space is in the downtown CBD area, with 22 percent of inventory and more than 30
percent of vacant inventory. For retail, Fenton is captured as part of the Southwest St. Louis County
market, which currently supports about five percent of total inventory, with a slightly higher percentage
of vacant inventory. From a retail standpoint, levels of vacancy in North St. Louis County and St.
Charles County are notable.
The Fenton industrial market was particularly hard hit by the closure. From analysis of industrial and
flex (office/showroom) data provide by CoStar, it was noted that the impact of the Chrysler closure is
also nuanced by the reality that soon after both plants were closed and demolition started, these
plants were removed from marketable inventory by real estate brokers. As such, marketable inventory
through the first quarter of 2010 was about 13.9 million square feet. When Chrysler was removed
from marketable inventory by CoStar in the second quarter of 2010, marketable inventory dropped to
8.9 million square feet.
63
Figure 10: Fenton Industrial Market Vacancy Trend, 1st Qtr 2011
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
2011 1Q
2010 4Q
2010 3Q
2010 2Q
2010 1Q
2009 4Q
2009 3Q
2009 2Q
2009 1Q
2008 4Q
2008 3Q
2008 2Q
2008 1Q
2007 4Q
2007 3Q
2007 2Q
2007 1Q
2006 4Q
2006 3Q
2006 2Q
2006 1Q
0%
Source: CoStar
Fenton remains hard hit by the closure of Chrysler. Current industrial vacancy is about 11 percent,
which is the second highest vacancy level in the Region as of the first quarter 2011. A total of about 1
million square feet is vacant, out of a total inventory of 8.9 million square feet. Before the Chrysler
plant demolition started, vacancy levels had increased from 6.3 to 40 percent, as of the third quarter of
2009. The following chart highlights this trend.
Vacancy levels are also impacted by available space, which is occupied but being marketed as
available. Current analysis shows that available space in the Fenton industrial market is an additional
1.9 million square feet. When vacant and available space is combined, about 20 percent of inventory
would be included.
Figure 11: Fenton Industrial Market Rent Trends, Through 1st Qtr 2011
$8.00
$7.50
$7.00
$6.50
$6.00
$5.50
$5.00
$4.50
$4.00
$3.50
$3.00
2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Source: CoStar
64
Reported average NNN industrial rents in Fenton are now slightly under $5.00 per square foot as
shown in the following chart. While still higher than the current Region average of $4.20 per square
foot, it is well below highs sustained in 2006, when NNN rents of $6.49 per square foot were achieved.
The rate of decrease in rents from third quarter of 2006 is significant, decreasing at an annualized rate
of 6.6 percent. The rate of decrease since the third quarter of 2008 is worse, about 17 percent on an
annualized basis, reflecting a decrease in average rents from $7.33 down to $4.94 per square foot.
While Fenton does not charge a local property tax, other taxing entities would be impacted gradually
by this rate of decreases, as lower occupancies and rents begin to reflect themselves in lower
assessed valuations.
A small portion of vacated space has been backfilled, with leases signed by firms such as Leinco
Technologies (68 jobs in Fenton), as well as Plaze, Inc, in Pacific (100 to 200 jobs), and Cenveo
Printing in Eureka (200 jobs consolidated). In total, we estimate that the closure of Chrysler directly
impacted 5 million square feet of space in the two plants, as well as an additional 2 million square feet
of space in supplier-leased buildings. While these losses are significant in the context of submarkets
around Fenton, where Chrysler accounted for about 35 percent of a 13 million square foot industrial
base, across the Region, seven million square feet is about three percent of the entire Region
industrial base of about 260 million square feet. The second point to be made here is that the impact
of Chrysler is really measured in terms of the output generated within the assembly buildings.
For greater clarity regarding the status of supplier sites, the following table summarizes information
reported from brokerage sites regarding current occupancies for noted properties. Out of a total of 2.7
million square feet of space shown below, about 43 percent is currently occupied. Key vacant spaces
include the large 500,000 square foot site used by Syncreon and LSI adjacent to the Chrysler site.
Table 15: 2011 Vacancy Status of Key Supplier Sites
Company
Mahle Engine Components
Lear Corporation
Findlay Industries
Decoma International / Exkor Mfg
Johnson Controls
Visteon
Kace / HBPO North America
Syncreon / Logistics Services Inc
Lumbee Enterprises
TRW
Oakley Industries
Ventra Group
Dakkota Integrated Systems
MSX International
Permacel Automotive
Textron Automotive
Address
14161 Manchester Rd.
45 Corporate Woods Dr.
18036 Eads Ave.
721 Prairie DuPont Dr.
13333 Lakefront Dr.
101 Workman Ct.
2501 Cassens Drive
2219 - 2231 Hitzert Ct.
1576 Fencorp Drive
2015 Corporate 44 Dr.
10360 Lake Bluff Dr.
800 Jefferson St.
3505 Tree Court Ind. Dr.
11425 Moog Dr.
1218 Central Ind. Ave.
11149 Lindbergh Bus Ct.
City
Ballwin
Bridgeton
Chesterfield
Dupo
Bridgeton
Eureka
Fenton
Fenton
Fenton
Fenton
Green Park
Pacific
St. Louis
St. Louis
St. Louis
St. Louis
Space
(ft2)
216,139
126,400
78,976
160,000
189,555
220,000
127,464
534,600
42,000
84,404
142,800
221,110
100,000
230,800
137,484
91,896
Occupied
(ft2)
0
0
78,976
60,000
0
220,000
29,892
0
42,000
0
117,900
221,110
100,000
198,300
91,896
Vacancy
Rate
100%
100%
0%
63%
100%
0%
77%
100%
0%
100%
17%
0%
0%
14%
100%
0%
Source: CoStar, other brokerage sites
The following map summarizes estimated vacancy rates for industrial properties in Fenton, Missouri as
of first quarter 2011.
65
Figure 12: Vacancy Rates for Industrial Properties in Fenton, MO (Q1, 2011)
66
Workforce Development Impacts
The workforce aspect of the Chrysler closure is a critical element of the overall study. The discussion
begins with key metrics provided by the State of Missouri related to Workforce Adjustment and
Retraining Act Notices (WARN) regarding impacted workers:

4,478 workers were affected by the elimination of shifts and eventual closure of both plants.
Closure process was spread between November 2007 and June 2009.

4,169 Chrysler workers filed Trade Act Claims

600 to 650 workers transferred to other Chrysler plants (some still reside in the Region).

99 percent of UAW workers were transferred, retired, or took “early retirement” buyouts.
Information related to buyouts is as follows:
Table 16: Chrysler Employee Status Changes, 2008-2009
South Plant
Retired (IPR)
Early Retirement (SER)
Buyout / quit (V-TEP)
Skilled Trades buyouts
Subtotal
South
Plant Jobs
228
95
444
122
889
North
Plant Jobs
140
73
1,062
1,275
Source: UAW
From focus groups and interviews, several critical elements related to workforce were defined:

Local Chrysler workers were a unique group, with younger workers who may or may not be UAW,
as well as older workers who are close to retirement. The work force was diverse in race, gender,
and educational attainment. The workforce was distributed across the Region, with a majority on
the Missouri side of the river, as noted previously.

Many of the former workers were generationally connected to Chrysler going back to the 1940’s.
Workers moved their families from city to city as plants opened and closed. Interviews suggested
that as many as three generations of former Chrysler workers live in Pacific, MO. Continuing in
this tradition, a number of workers now work at the Kokomo and Rockford Chrysler facilities, even
as their residence remains in the St. Louis area.

While the buyout packages for UAW employees were considerable (greater than $100,000 in
value), interviews suggest that many former employees are probably running out of money now.
While the closure was seen as a forced buyout which allowed many to collect unemployment
benefits, even these resources would also now be running out.

The analysis highlighted the reality of temporary part-time (TPT) workers who amounted to as
many as 800 positions on an ongoing basis. Interviews suggested that during hunting seasons,
TPT requirements would surge significantly. Overall, many TPT people who lost their jobs didn’t
get benefits or buyout packages.

A minority of the estimated 2,500 lost supplier jobs were UAW linked and received buyouts. For
the non-UAW people, unemployment insurance and retraining funding were the key supports.
67

99 percent of people who didn’t relocate were eligible for $13,000 in Trade Adjustment Assistance
(TAA) for retraining. In addition, many Chrysler workers got an additional $10,000 for retraining
(Workforce Investment Act, or WIA). While these programs were helpful, they also came with
constraints. Interviews suggested that the program constraints limited the ability of former workers
to pursue 2+ year associate or bachelor’s degree programs. For example, medical training was
more difficult for former workers as these jobs require prerequisite courses which are harder to
accomplish in the context of the limited re-training funds available from TAA and WIA.

Interviews suggested that a majority of former line workers went into other types of training –
HVAC repair, electronics training, and truck driving school – however, many did not find jobs.
Employees who were in skilled trades had better luck finding work. Part of this related to timing, in
that the closure of the Ford Plant in Hazelwood created a surge in worker re-training, many of
whom went into HVAC repair. On a broader level, the recession meant that there were fewer
opportunities for Chrysler workers.

Placement rates are now slowly getting better, but still low (25%) according to workforce
development officials. Boeing has had success working with former Chrysler workers.
To highlight where workers sought training, we evaluated data from St. Louis County Workforce
Development, an organization which managed a majority (but not all) of training for former Chrysler
workers. The following figure highlights the percentage share of workers who went through some form
of training, ranging from single classes to more advanced computer certifications, to associate,
bachelors and masters degrees.
Figure 13: Training Focus for Former Chrysler Workers in St. Louis County
Associate Degree
Bachelors Degree
Masters Degree
Building Maintenance
Automotive Maintenance / Repair
Business Administration
Precision Welding & Fabrication
Computer Systems & Networking
Culinary Arts
Electrical
HVAC
Accounting
Legal / Criminal Justice
Cosmetology
Human Services
General Studies
Supply Chain Management
Aviation Repair Training
Nursing & Health Care
Primary Education
Truck Driving / Heavy Equipment Operation
Other Sectors
0%
3%
5%
8%
10%
13%
15%
18%
20%
Source: St. Louis County Workforce Development
Most notable in the following chart is the relatively small share of workers who completed a two- or
four- year advanced degree, 14.5 percent of the sample. For comparative purposes, across the entire
St. Louis Region, about 8 percent of people have an associate degree, 18 percent have a bachelor’s
68
degree, and an additional 12 percent have an advanced degree. This distinction reinforces that the
Chrysler workforce is different from the population as a whole. Within the remaining 85 percent of the
sample, 51 percent went into four specific fields, including electrical, computer systems and
networking, nursing and health care, and HVAC training. Nursing and health care was the single
largest area of re-training, with about 20 percent of the sample covered.
Key issues that underlie these trends include:

While some certification programs for software and networking can generate salary levels equal to
associate or bachelor degrees, the majority of pay levels associated with training programs are
lower, significantly below pay levels at Chrysler.

Interviews suggested that a portion of Chrysler workers expected the plants to re-open at some
point, which influenced their choices regarding re-training.

While the clear focus of the primary educational system is to prepare people for college (since
many careers require a four-year degree), for St. Louis, only about 37 percent of residents achieve
at least an associate degree. As such, there is a clear workforce development question, in that
workforce preparation is becoming more important than educational attainment.
For a broader perspective on the breakdown of job losses, the following table summarizes decreased
employment by occupation for people employed in the transportation equipment sector in Ohio,
Indiana, and Michigan between 2006 and 2009. The table reinforces the importance of production
and assembly jobs for this sector, representing about 25 percent of a total decrease of 232,332
positions in the three states over the noted period.
Table 17: Tri-State Employment Loss in Transportation Equipment MFG, 2006 to 2009
Title
Team Assemblers and Fabricators
Production Workers, All Other
Cutting, Punching, and Press Machine Operators
Inspectors, Testers, Sorters, Samplers, and Weighers
First-Line Supervisors/Managers
Machinists
Tool and Die Makers
Engineers, All Other
Industrial Engineers
Industrial Truck and Tractor Operators
Maintenance and Repair Workers, General
Industrial Machinery Mechanics
Mechanical Engineers
Welders, Cutters, Solderers, and Brazers
Laborers and Freight, Stock, and Material Movers, Hand
Molding, Coremaking, and Casting Machine Operators
Business Operations Specialists, All Other
Multiple Machine Tool Operators
Electricians
Sub-Total
Other Occupations
Total, All Occupations
Source: UAW
69
Loss % of Total
-57,403
25%
-9,676
4%
-8,146
4%
-7,432
3%
-6,940
3%
-6,823
3%
-6,728
3%
-6,585
3%
-5,224
2%
-5,019
2%
-3,531
2%
-3,401
1%
-3,362
1%
-3,277
1%
-3,150
1%
-3,106
1%
-3,097
1%
-2,830
1%
-2,792
1%
-148,522
64%
-83,813
36%
-232,335
100%
Chrysler Employee Focus Group Insights
As part of this study, AECOM contracted with Vector Communications to conduct three focus groups
with displaced Chrysler workers, business owners and other industry representatives in Fenton and
immediate surrounding jurisdictions. The goal of the focus groups was to ensure that the issues,
values and desires of those directly impacted are reflected in the final strategy action plan. The
meetings were designed to obtain information about how workers and businesses have been
impacted by the plants’ closure and how they have adjusted to it. They were also used to determine
what programs have been successful, in helping workers and businesses overcome these impacts.
During March and April 2011, three focus groups were held involving a total of 28 people. Two focus
groups consisted of 16 former Chrysler employees (six women and ten men) and took place at the
Fenton Regional Collaboration Center. Participants were from throughout the Region and had
previously worked in Chrysler’s assembly divisions. Group A contained nine participants, six of whom
had taken Chrysler retirement packages, one who had several part-time jobs and two who had
returned to school or received certification but were unemployed. Those who received retirement
packages considered themselves unemployed as well.
There were seven participants in Group B. Six were employed. Two of them work with the Fenton
Regional Collaboration Center (the Center), three are employment counselors at St. Louis Community
College and one was re-employed with a Regional manufacturing company. The seventh participant
was chronically unemployed. At the time of the focus group, six of the employed workers were
experiencing possible future layoffs or relocations due to the Center’s closing, grants expiring and the
manufacturing company’s relocating out of the Region.
The third focus group involved 12 representatives from the Fenton area business community.
Participants were recruited from the Fenton Area Chamber of Commerce membership roster and the
meeting was held at the organization’s office. They represented the following industries: hotel and
tourism; municipal government; food service; real estate; education; and financial services. Of the
participants, two were entrepreneurs, one a fire district chief and the remaining were managers or
directors at larger organizations.
The information gathered from the three focus groups centered on several recurring themes. The
greatest impact of the plants’ closure was on participants’ earning ability. Those who were displaced
workers continue to struggle with finding new employment, while businesses are laboriously
reorganizing their strategies to adjust to a significantly reduced customer base. The result of the
impacts left the entire community figuring out the “new normal,” as displaced workers, residents and
businesses try to maintain a sense of identity without Chrysler. Networks and neighborhoods are
becoming less stable, at the same time people are more reliant on these networks for support.
When participants were asked about the obstacles hindering their efforts to get back to work or
business, themes emerged that reflected both interpersonal and systematic causes. Interpersonal
hindrances were in the areas of computer skills, age and education. Workers had not been actively
conscious of these areas before the plants’ closure because they believed Chrysler would continue to
be their employer long-term. In addition, systematic themes surfaced, such as workers’ limited access
to vital employment information, business startup loans requiring high-risk collateral and outdated
business regulations and policies from area municipalities and the state. An interesting factor for
these groups was a sense of being discriminated against due to their previous employment with
70
Chrysler. As a Region, workers believed that they would benefit from a repositioning campaign
casting them as vital assets to employers.
In a tough economic environment, many businesses have closed and workers have left the workforce
by retirement or lack of opportunity. Increasingly, workers and surviving businesses are expanding
their geographical boundaries outside of the Fenton area and the Region, as local jobs and customers
are becoming scarcer. To prepare for the next wave of viable jobs, displaced workers are exploring
new opportunities like green technology training. However, these jobs are developing slowly within the
Region. Not only are employees getting new training, but businesses are also taking on new
opportunities. Areas like green certifications have enticed area businesses that want to be specialized
and positioned above the competition as they compete for a very limited customer pool.
Focus group participants were asked about the support they have received in overcoming obstacles
and getting back to work. A few themes that emerged were: the reliance of workers on the Fenton
Regional Collaboration Center, which was established to assist laid-off workers affected by the closing
of Chrysler’s Fenton assembly plants; the effectiveness of the Fenton Area Chamber of Commerce;
and the availability of assistance grant money. While each group had accessed a variety of help
through their adjustment process, these three areas were discussed the most. Other support
mechanisms included tax incentive programs for employee education and training and green
certification programs for individuals and businesses.
Finally, participants were asked to brainstorm additional ideas that could help workers and businesses
around the Region. Themes included: positioning the area and workers as assets to employers
through marketing and advertising; aggressively attracting other job producing industries; reviewing
outdated business regulations to bring them into a post-Chrysler environment; and intensifying the
focus on promising opportunities like the Midwest China Hub and enterprise zones.
Broader Context
The analysis also reinforced the unique nature of work in an auto assembly plant. Interviews with
former employees stressed the following:

The Chrysler plants employed thousands of people per shift, with significant turnover at shift
changes, which creates unique logistical challenges.

Working on the assembly line involves doing the same thing, the same way, in the same order,
over and over and over again. You could have a job that involves going to go to the car, sitting
down to install five bolts then stand up, turn around and face the vehicle, bend over and snap two
different wires together at two places. If the build is 450 jobs a day, you sat down and stood up
450 times, installed 2,250 bolts turned around and bent over 450 times and finally used the same
two fingers to snap two wires together 900 times per day.

A factory of 5,000 employees is the size a small rural town. Just like any town, you are going to
have good people, bad people, happy people, sad people. Sometimes people have good days
and sometimes they have bad days. In the end, they are communities unto themselves, who are
together for years. When someone passes away, the town mourns, but when the entire
community is decimated, outsiders call it an economic adjustment.
71
72
Economic Base – Recession & Recovery
73
Core Findings
To provide a proper national context for the St. Louis Regional Economic Adjustment Strategic Plan,
AECOM evaluated broader economic metrics related to how the US is recovering from the recession.
Key points include:

From October 2008 to June 2011, total US employment decreased by nearly 5.4 million jobs.

For the first time since 1975, the Housing Price Index began to drop, falling nearly 15 percent from
the first quarter of 2007 to the first quarter of 2011.

As of 2010, nearly 1,700 financial institutions either closed or were merged with other financial
institutions across the country.

In 2009, all US financial institutions held a total of approximately $540 million of underperforming
assets on their balance sheets. At the time, about 80 percent of these assets were derived from
real estate securitized loans.

Throughout the past 10 years, both mortgage debt and consumer credit have increased at nearly
the same pace; however, consumer credit has begun to decrease in recent months, whereas
mortgage debt continues to trend at levels equivalent to 2007 levels, parallel with the height of the
US housing bubble.

In 2010, auto production levels in the US were the lowest they have been in past 25 years.

Individuals 65 years of age and older are expected to increase to over 70 million, noting a total
increase of nearly 80 percent since 2010.

Looking over the past 200 years of westward expansion of the US, the period from 2000 to 2010
saw a remarkably slow rate of movement in the center of the US population, comparable to levels
achieved between 1920 and 1930. This lack of mobility is a key challenge for the country
Introduction
In 2008, the United States economy officially entered a recession. Economists consider this recession
as a “generational” recession, or in other words, a severe economic event which happens infrequently
and has a range of impacts much greater than a normal business cycle. More so, this experience has
been described as the deepest economic recession since the Great Depression.
While there are myriad elements accounting for the cause of the current economic downturn, the
underlying cause is generally recognized as the excessive expansion of credit issuance coupled with a
contraction of economic activity and combined with the realities of government policy which favored
74
home ownership while also deregulating financial and banking services. Severe reactions rippled
throughout the US consumer sector, a sector driving growth and health of the nation’s economy.
Credit losses and economic weakness ignited uncertainty and panic within financial markets, which inturn added another layer to the national economic problem, thus accelerating the deterioration of the
US economy which began to be felt sometime between 2007 and 2008.
Arguably, the Midwestern US felt pressures sooner than the rest of the country. In 2006, industrial
sectors slowed, at first by stagnation in the home construction industry and then sweeping throughout
various industries following the collapse of Lehman Brothers in September 2008. This event marks
one of the most profound periods of economic distress in recorded history. By October 2008, financial
markets in the US and overseas essentially stopped working, industries shutdown, layoffs spiked, and
the unemployment rate dramatically accelerated. Many cornerstones of the US economy, such as the
automobile industry, were weakened to the point of bankruptcy and in some cases operations were
terminated entirely. As a result, these deep impacts have caused fissures within the foundation of the
US economy, likely to create long-lasting implications for many sectors, for many years to come. For
example:

Over the years, the US approach to economic growth can be best described as creative
destruction: allowing firms to go bankrupt and then redeploying resources in new ways. Looking
back to the last significant recession in the early 1980’s, it is notable that many companies that are
taken for granted today were formed out of this last period of dramatic instability. Some may
expect the same from the current economic recession.

Dramatic growth in home prices between 2004 and 2007 effectively dampened the initial wave of
the Baby Boomer generation’s housing transition, which may have otherwise happened.
Subsequent impacts on retirement savings also suggest that many Boomers will need to remain in
the workforce, which raises a unique set of workforce development challenges.
An additional concern is the broader impact of the recession on the public sector relative to tax
implications. Across the US, property value growth has halted and begun to decrease. When
combined with decreases in sales tax revenue and a general slowdown in development, the period
from 2009 to 2014 may prove to be the most difficult years that the public sector has faced in recent
history. While some public sector entities are better positioned to ride out these years, other entities
will struggle with insolvency unless restructuring efforts are undertaken.
While recent events have proved dramatic with respect to financial implications and behavioral
economic trends, there are signs of improving economic activity. In the later months of 2010, the US
economy began to show signs of recovery, specifically:

Following a contraction within the financial market, the market itself is showing signs of stability;
however, economic activity is yet to increase due to tight access to capital for consumers and
businesses.

Some benefits of Federal stimulus have begun to emerge, resulting in limited economic activity as
seen in employment, wages and housing prices. At the same time, the influence of policy levers is
now weakening.

Employment has experienced static movement throughout 2010 and since January 2011, the US
has seen gradual increases in hiring, boosting total employment each month.
75

Reaching a peak in the first quarter of 2010, the national unemployment rate has begun to bounce
back, dropping over one percentage point from the beginning of 2010 to quarter four of 2010.

Following years of dramatic growth in the price of homes from 2004 to 2007, home prices in the
US decreased at staggering rates from 2006 to 2009; however, though home prices continue to
lose value, in 2010 home values did not decrease at as slow a pace as they did in 2008 and 2009.
As some economists believe that the US is recovering, there are certain factors that will cause lagtime, resulting in a slower recovery than what may have been anticipated. While some segments of
the US economy are improving, overarching factors may indicate a slow moving process towards a full
recovery of the nation’s financial system. In the following section, AECOM will provide a broad
overview of the current national economic outlook. Most metrics will be analyzed based on how much
the US has recovered since the housing and financial collapse.
Throughout the next two sections, AECOM employed various source data reporting general economic
statistics. This data was used to interpret key indications of local, regional and national economic
conditions. Many concepts and underlying assumptions vary among the sources that were used;
therefore, AECOM has provided a brief description of each source that has been referenced
throughout these sections:
Bureau of Labor Statistics (BLS) Sources:

Local Area Unemployment Statistics (LAUS) – LAUS data is defined as a Federal-State
cooperative effort of prepared employment and unemployment totals, which are aggregated and
extrapolated for “real time” public use. LAUS data may be considered the widest measure of
employment data; the LAUS produces data for multiple geographic levels.

Current Employment Statistics (CES) – Produced for the nation as well as state and regional
geographies, the CES is a monthly survey documenting detailed industry data on employment,
hours worked, and earnings.

Quarterly Census of Employment and Wages (QCEW) – This source reports a quarterly count of
employment and wages tabulated through surveys of employers. The QCEW covers 98 percent
of all US jobs and is available at the county, regional, state and national levels by industry sector.
United States Census Bureau Source:

Local Employment Dynamics (LED) – LED data is a program designed to develop new information
about local labor market conditions. LED data is available at the county, sub-county, and most
notably the local level (i.e., census tract). The metrics that are covered in the LED source are job
creation, turnover, and earnings by industry and gender.
Financial Institutions
The health of financial institutions is measured by a number of factors, one notable factor being the
amount of bad debt a single bank or financial institution is carrying; in other words, what proportion of
a bank’s total assets are made up of loans or leases that are delinquent/underperforming (i.e., assets
past due 30-90 days, assets past due 90 or more days, or assets in nonaccrual status). The following
charts below look at all commercial banks and financial institutions that are insured or assisted by
FDIC. The first chart depicts the total amount of financial assets of all banks in the nation. From 2002
to 2010, total financial assets in the US have increased by an annualized rate of six percent, peaking
76
in 2008 at approximately $1.4 trillion. Since 2008, assets have decreased slightly and leveled off by
2010. The next figure tracks the growth of total assets by banks in Missouri.
Figure 14: US Banks – Total Assets, 2002-2010
(trillions)
$15
$14
$14
$13
$13
$13
2009
2010
$13
$12
$12
$11
$11
$10
$10
$9
$9
$8
$8
2002
2003
2004
2005
2006
2007
2008
US Total Assests
Source: FDIC
Figure 15: Missouri Banks – Total Assets, 2002-2010
(billions)
$150
$138
$140
$130
$114
$120
$107
$110
$98
$100
$90
$129
$129
$87
$92
$80
$80
$70
2002
Source: FDIC
2003
2004
2005
2006
2007
2008
2009
2010
Missouri Total Assests
Total bank assets peaked in 2009, nearing $140 billion. Since then, Missouri has experienced a
sharper decline than the US; however, total assets continue to remain substantially higher than all
years prior to 2009. However, overall, from 2002 to 2010, Missouri is trending at the same pace as
the US, increasing at an annualized rate of 6 percent.
The next chart illustrates the total amount of underperforming assets as a share of total bank assets,
while also showing the growth of underperforming assets which were secured by real estate products
as a share of total underperforming assets in the US and Missouri.
77
Figure 16: Underperforming Assets in US and Missouri Financial Institutions, 2002-2010
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
Missouri Underperforming Assets
US Underperforming Assets
2010
2009
2008
2007
2006
2005
2004
2003
2002
0.0%
Underperforming Real Estate Assets
Source: FDIC
Factors that may suggest the overall rise in underperforming assets among FDIC banks are the
amount of underperforming real estate secured assets. Also represented in the chart above is the
share of underperforming real estate assets in both the US and Missouri:

In the US, from 2002 to 2010, underperforming real estate assets increased at an annualized rate
of 27 percent. In Missouri, underperforming real estate assets increased at an annualized rate of
20 percent.

As compared to the US, Missouri banks are not experiencing the same rate of inflow of
underperforming real estate assets; however, what is troubling is that the share of
underperforming real estate assets is increasing in Missouri as well as the US.

While Missouri banks have experienced a larger share of underperforming real estate assets to
the total underperforming assets over time, underperforming real estate assets, at the national
level, have grown at a more rapid pace from 2002 to 2010, during which time the share of
underperforming real estate assets has increased at an annualized rate of 8 percent in the US and
4 percent in Missouri.

While the US is accruing underperforming assets at a faster pace than Missouri, as of 2010, the
proportion of underperforming real estate secured assets in Missouri made up more of the total
proportion of ailing assets. In 2010, the total share of underperforming real estate assets was 85
percent in Missouri and 80 percent in the US.
Consumer Borrowing
As the nation’s economic recovery approaches year two, it remains weak, only improving at a slow
pace. Among other things, the current slow pace of recovery is due to the arduous process of
deleveraging, as financial institutions and individuals chip away at massive amounts of debt. The
following chart shows the amount of national debt as measured by consumer credit and mortgages.
78
Figure 17: National Debt Types, 2004-2011
(All $ = Trillions)
$9.5
$2.2
$9.0
$2.1
$8.5
$2.0
$8.0
$1.9
$7.5
Consumer Credit (left axis)
2011
$2.3
2010
$10.0
2009
$2.4
2008
$10.5
2007
$11.0
$2.5
2006
$2.6
2005
$11.5
2004
$2.7
Mortgage Debt (right axis)
Source: Federal Reserve
In the early months of 2011, consumer loans (excluding property), shifted upwards despite anti-credit
attitudes born out of the recession; while at the end of 2010, mortgage debt has decreased slightly but
is still far above 2005 levels. The data from the cross-currents is telling, suggesting a possible rise in
confidence and income to boost some forms of consumer credit. Notable statistics include:

Despite a 1.89 percent annual decrease following a peak in home mortgage debt in 2007, home
mortgage debt in the US has increased at an annualized rate of 4.14 percent from 2004 to 2010.
This increase accounts for an actual net increase of nearly $2.3 trillion.

2008 marked the peak for which institutions extended credit (excluding property) to consumers.
Onwards, consumer credit has decreased at an annualized rate of 1.9 percent, a net total of about
$145 billion in two plus years, nearing pre-recession levels.
As consumer credit converges on relative stability, mortgage debt remains the weakest part of the
overall credit market. According to an article published in the Economist in May 2011, in coming
years, mortgage lending standards are likely to tighten. New rules being developed could require
mortgage lending institutions to retain at least five percent of newly originated mortgages, where in the
past it was routine for banks to sell off 100 percent; borrower down-payment commitments will grow.
Housing
Housing market conditions are a strong indication of economic health, more so, the pace of economic
recovery. An all-inclusive measure of the housing market is home values and the cost paid at
transaction. The Housing Price Index (HPI), tracked by the Federal Housing Finance Agency,
measures the movement of single family house prices. The HPI is a weighted, repeat sales index on
the same properties in 363 metro areas across the United States. Data is collected by reviewing
repeat mortgage transactions on single family properties whose mortgages have been purchased or
securitized by Fannie Mae or Freddie Mac since January 1975.
79
Figure 18: Percent Change in the US Housing Price Index, 1981-2010
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-8.0%
Source: U.S. Federal Housing Finance Agency
Changes in housing prices since 1981 are shown in the following chart. Historical data was included
in this time frame to provide a scale portraying the former trends in the US housing market, prior to the
year 2000. Some important events that emerged were:

From 2000 to 2005, the national HPI accelerated upward by 45 percent, the quickest and most
sensational appreciation in home values in US history.

Home values have continued to depreciate, producing staggering decreases from 2007 to 2011, at
which time the nation’s HPI decelerated by 15 percent.

Now hovering near prerecession levels in 2005, home values in the US are decreasing at a slower
rate than prior years, indicating signs of improvement in the economy.
Employment
Commonly cited as a leading metric gauging economic health, employment, as defined by the US
Bureau of Labor Statistics (BLS), includes the total number of persons on establishment payrolls
employed full- or part-time; including, intermittent employees, workers on sick leave, workers on paid
holiday, and striking workers who are paid. Excluded from this measurement are proprietors, selfemployed, unpaid family or volunteer workers, farm workers, and domestic workers.
80
Figure 19: National Employment, March 1990-2011
(Thousands)
150,000
130,000
110,000
90,000
70,000
50,000
30,000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
10,000
Goods Producing
Private Service Providing
Government
Source: BLS - CES
The following chart shows
the US average annual
total employment from
1990-2011 (as of June) for
aggregated industry
sectors. During this time
period, total employment
increased by
approximately 21 million,
increasing at an
annualized growth rate of
0.84 percent. While the
annualized growth rate
over this period of time
has shown an upward
trend, employment has
decreased the past
several years.
The US experienced the most dramatic decrease in employment from the middle of 2008 to the middle
of 2010. Within this three year stretch, total employment decreased at an annualized rate of 3
percent. In June of 2009, the Goods Processing industry sector lost nearly 3.1 million jobs; the Private
Service Providing industry sector lost nearly 3.8 million jobs, while the Government sector saw an
increase of 67,000 jobs. However, there are signs of recovery, from June of 2010 to June of 2011, the
United States economy has gained nearly 1.2 million jobs. Pending for the future may be the loss of
government jobs, due to overbearing debt at all levels of government.
The chart below shows cyclical unemployment in the US, downward shifts in employment and upward
shifts in the unemployment rate as of the second quarter from 2000 through 2011.
Figure 20: Total Employment vs. Unemployment Rate, 2nd Quarter 2000-2011
(Thousands)
139,000
10.0%
138,000
9.0%
137,000
8.0%
136,000
7.0%
135,000
6.0%
134,000
5.0%
133,000
4.0%
132,000
3.0%
131,000
2.0%
1.0%
130,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Q2 Average
Unemployment Rate
Source: BLS - CES & QCEW
81
Cyclical unemployment is
the by-product of a weak
economy. The onset of
the recession occurred
somewhere between 2007
and 2008 during the
collapse of the US housing
market, followed by the
peak, when financial
institutions froze credit.
During the time of
recession, the 2008 total
employment was nearly
136 million in the second
quarter of that year. However, the 2008 quarter two unemployment rate of 5.2 percent was just
beginning to rise, not peaking until quarter two of 2010, at 9.5 percent. It should be noted that the
unemployment rate jumped to 10 percent in quarter one of 2010, reaching 10.4 percent, and marking
the first time in 27 years, since quarter two of 1983 that the unemployment rate in the US jumped over
10 percent. Employment numbers reached a low point in quarter two of 2010; at this time, there were
approximately 130 million individuals in the US labor force, about a nine-percent drop from the peak in
quarter two of 2008. Concurrently, the nation’s unemployment rate was also at its peak.
It should be noted that in a healthy economy, a positive unemployment rate may be considered a good
thing. It is an indication of a fluid available workforce, as well as potential for growth. Therefore, static
unemployment, at some lower capacity, is healthy. In other words, a positive unemployment rate is
the price paid for technological and personal socioeconomic advancement, taking into account
structural unemployment (i.e., factory layoffs) and frictional unemployment (i.e., individuals moving
between industries and locations).
Occupational Education Requirements
In today’s economy, most occupations require a postsecondary degree award/certification or
equivalent training. According to the Bureau of Labor Statistics occupation projections from 2008
(base year) to 2018, nearly one-third of all new job openings will require some sort of post-secondary
degree. The following table summarizes BLS projections for occupations experiencing the most
growth, as well as those experiencing the greatest decline. Insights include:

Short- and moderate-term on-the-job training will be required by more than half of the top 30
growth occupations; of the top 30, 17 occupations indicate this as being a minimum requirement
for education or training needed to become fully qualified for that occupation. Of the bottom 30
declining occupations, 90 percent require at least short- and moderate-term on-the-job training.

Of the top 30 occupations experiencing the most growth, nearly one quarter will require at least a
bachelor’s degree in the next ten years. The bottom 30, declining occupations, are ones that have
not historically required any sort of post-secondary education.
Table 18: Education Requirements for Projected Top and Bottom 30 Occupations (2008-2018)
Requirement
Long-term on-the-job training
Moderate-term on-the-job training
Short-term on-the-job training
Work experience in a related occupation
Associate's degree or Certification
Bachelor's Degree or Higher
Doctoral or Professional Degree
Top 30 Growing
Occupations
3.3%
16.7%
40.0%
6.7%
10.0%
16.7%
6.7%
Source: BLS – Economic News Release
82
Bottom 30 Declining
Occupations
6.7%
33.3%
57.0%
3.3%
0.0%
0.0%
0.0%
Boomer Retirements
Defined by the US Census, Baby Boomers are individuals that were born in the post-World War II
demographic birth boom, between 1946 and 1964. Population projections from 2000 to 2030 are
shown below.
Figure 21: Population Growth Projection (1990-2030)
Currently, the oldest Baby
Boomers (born in 1946) will turn
400
65 years old in 2011, the
350
youngest (born in 1964) are
300
currently 47 years old. By 2029,
250
all of the Baby Boomer
200
generation will be 65 and older,
150
the oldest individuals will be age
100
83. Not until 2031, when the
youngest individuals of the
50
Boomer generation are 67 years
old, will all individuals within this
cohort be eligible for full Social
Security benefits. As Baby
Under 20
20 to 64
65 and Older
Boomers enter their retirement
Source: Census
*Projection
years, some economists believe
that there will be a wide range of implications on the country. The projected growth of the older
population in the US may present challenges to policy makers and programs (i.e. Social Security and
Medicare). Additionally, the aging population may affect the government, businesses, health-care
providers, and families.
2030*
2020*
2010*
2000
1990
(Millions)
Trends in labor force participation among the elderly will have an important impact on the economy
and dependency in the future. Some of these impacts will affect:

The accumulation of credits for pensions, annuities, Medicare and Social Security benefits.

The preemption of time and energy of adult children in supporting parents as dependents.

As boomers reach retirement age they will be dependent on different sources of income, including
a Social Security fund that will deplete as more individual become eligible.

Patterns in labor force involvement in the past 50 years suggest that there is a declining trend in
median age of retirement; however, with the recession affecting the savings of many boomers,
some economists anticipate those reaching 65 (the official retirement age) to remain in the
workforce.

As the economy begins to slowly recover and grow, a workforce swollen with the Baby Boomer
cohort may mean fewer jobs for younger workers, as well as those who became unemployed
during the recession.
83
Population Center
The population center is defined as the geographical location that represents the centroid of a region’s
population. As there are shifts in population and migration, the population center shifts as well.
Throughout history, the US population center has shifted in a line with southwesterly tones.
The National Mean Center of Population, determined by the US Census Bureau, is established by
determining the place where an imaginary, flat, weightless and rigid map of the US would be in perfect
balance. More clearly, the mean center is the geographic point where the US would be in perfect
balance if each of the 308.7 million citizens weighed exactly the same. Since 1790, the population
center has shifted west, reflecting the settling of the frontier, where waves of individuals began to
immigrate west and south. According to the Census, the current location in Texas County, Missouri
has traveled nearly 1,000 miles from the original center in 1790, Kent County, Maryland.
The following figure shows the direction the National Mean Center of Population has traveled since
1790. The mean center has passed through the St. Louis Region on three occasions from 1960 to
1980, in Clinton County, IL; St. Clair County, IL; and Jefferson County, MO; in addition, the nation’s
population center fell in Crawford County, MO in 1990.
Figure 22: US Census Map of Population US Center, 1790-2010
The chart below tracks the number of miles that the mean center of US population has shifted to the
southwest since 1790; thus, the ten-year rate of movement. Particularly notable in the following chart
is the slower rate of movement during times of national economic turmoil; for example, between 1920
and 1940 the average rate of southwesterly movement was nearly 2 miles annually. This is
significant, in that the rate of movement between 2000 and 2010, about 3 miles per year, which
compares to trends from previous periods where the national economy was stressed. On average, the
population center moved nearly 5 miles southwest annually since 1790.
84
Figure 23: Population Center Distance Traveled SW (1790-2010)
1790-1800
1800-1810
1810-1820
1820-1830
1830-1840
1840-1850
1850-1860
1860-1870
1870-1880
1880-1890
1890-1900
1900-1910
1910-1920
1920-1930
1930-1940
1940-1950
1950-1960
1960-1970
1970-1980
1980-1990
1990-2000
2000-2010
0
Source: US Census
20
40
60
Southwest Movement (Miles)
85
80
86
Economic Base – St. Louis Region
87
Core Findings
To provide a proper local economic context for the St. Louis Regional Economic Adjustment Strategic
Plan, AECOM evaluated local metrics related to how the St. Louis Region is recovering from the
recession. Key points include:

The Region offers competitive wages, with relevant levels of educational attainment, with a
generally competitive business tax climate. For PhD level researchers, the St. Louis Region
supports a significant level of activity.

While the St. Louis Region’s low cost of living may be seen as a competitive advantage, which has
been described as a key selling point for attracting young professionals to the Region, population
growth within the Region suggests otherwise. Low cost of living regions, experiencing growth, are
ones that are considered to be centers of innovation, and technology communities; additionally,
these regions are considered to be assets to their host states as well as the nation.

Compared to the US (28 percent), the St. Louis Region ranks higher in the amount of individuals
age 25+ of the total population that have acquired at least a Bachelors degree (29 percent);
however, the rate of individuals who are age 25+ who have only completed high school or
equivalent (GED) is troubling (nearly 28 percent of this population).

While job growth since 2010 has been notable (with the St. Louis Region adding about 3,000 new
jobs per month) as the local economy stabilizes, there is concern about the Region resuming its
longer-term growth rate which is lower than many of its peer metropolitan regions. The analysis
suggests that, at current longer term growth rates, the Region will fall out of the top 20
metropolitan areas by 2030 in terms of population. Sustaining current growth rates will require
more deliberate steps to maintain economic growth, in part through policies that can sustain the
current pace of export growth for the Region.

The analysis shows that people aged 0 to 24 are declining as a share of the Region population,
while workers at or approaching retirement, specifically those aged 55 to 64 and 65+ are growing
as a share of the Regional population.

According to US Census data, the St. Louis Region is more dependent on larger companies than
the US average. For the US, 61 percent of firms are concentrated in businesses with one to four
employees. Across the Region, the comparable factor is 55 percent. The difference largely
relates to the presence of larger companies with greater than 100 employees.
88

The St. Louis Regional economy is diversified, supported by sectors such as professional
services, health and education services, leisure and hospitality, and financial services, all of which
anchor the Region. At the same time, sectors such as information, transportation and
warehousing, and manufacturing seem slightly under-developed.

Clean technology industry segments are often thought of as the future of industrial trade in the US;
thought of as an evolution into industries focused on developing clean, renewable sources of
energy, increasing energy efficiency, and conserving resources with limited supply – which harm
the ecosystem. Relative to the US, there are several clean tech industry segments showing
strength in the St. Louis Region, including scientific and R&D industries, private hospitals, and
surgical & medical instrument industries.

In the past, the St. Louis Region has been described as fragmented and over-governed.
Currently, for every 2,700 individuals there is one single unit of government; however, compared
to the US average there is 3,500 individuals per one governmental unit. This is problematic for
many reasons, having implications on taxes, local policies, infrastructure development, political
strife, to name just some instances.

While Lambert St. Louis International Airport is clearly performing below its historic levels due to
the loss of hub status, the analysis shows that Lambert is still performing well amongst its regional
peers, which include Cincinnati and Indianapolis in terms of passenger traffic.

Reflecting the loss of Chrysler, the St. Louis Region has taken a significant hit in terms of lost
employment and gross regional product. Replacing these lost positions will need to be a priority
for the Region.

While national reports highlight crime issues for the City of St. Louis, analysis of FBI data clearly
shows that the St. Louis Region experiences levels of violent crime that are below other areas,
such as Kansas City or Memphis.

Although the Region has debated the question of “right to work,” our analysis of states which are
either “open shops” or “closed shops” suggests that, in fact, the State of Missouri has positioned
itself in between these two markets, as reflected in wage levels which are generally competitive.
St. Louis Region Economic Base Discussion
In the context of how the St. Louis Region adjusts to the loss of Chrysler, the process must begin with
a clear discussion of economic strengths and weaknesses of the St. Louis Region, as well as
appropriate context for how the Region compares to other benchmark regions. Understanding
historical demographic and economic factors will also help shape opportunities for reuse of the
Chrysler site. Demographic and economic conditions have been classified according to whether or not
they are considered strength or weaknesses when it comes to regional business development. The
primary study area for this analysis is the St. Louis Region, a sixteen-county region that includes the
counties of Franklin, Jefferson, Lincoln, St. Charles, St. Louis, Warren, Washington in Missouri; in
Illinois, Bond, Calhoun, Clinton, Jersey, Macoupin, Madison, Monroe and St. Clair counties, as well as
the City of St. Louis – located on the Missouri side of the Mississippi River.
89
Patterns of Population Decentralization
The following table looks at population growth rates by individual counties within the St. Louis Region,
to see how population distribution across the Region is changing. The data suggests the population
base of the Region is moving away from St. Louis County, Macoupin County (IL) and the City of St.
Louis toward outlying areas. While the Region population grew by an annualized rate of 0.4 percent
between 2000 and 2010, rates of growth varied within the Region.

Population fell in St. Louis County (0.2%), Macoupin County (0.3%) and the City of St. Louis
(0.9%).

Most of the outlying counties in Missouri and Illinois experienced positive population growth.
Population growth was most notable in Lincoln, Warren and St. Charles Counties, where
population grew by 98,212, at an annualized growth of 2.8 percent.
Table 19: St. Louis Region Population Growth (2000-2010)
County
St. Louis City, MO
St. Louis County, MO
Franklin County, MO
Jefferson County, MO
Lincoln County, MO
St. Charles County, MO
Warren County, MO
Washington County, MO
Bond County, IL
Calhoun County, IL
Clinton County, IL
Jersey County, IL
Macoupin County, IL
Madison County, IL
Monroe County, IL
St. Clair County, IL
Regional Total
2000
348,189
1,016,315
93,807
198,099
38,944
283,883
24,525
23,344
17,633
5,084
35,535
21,668
49,019
258,941
27,619
256,082
2,698,687
Total Population
2010 CAGR
319,294 -0.9%
998,954 -0.2%
101,492
0.8%
218,733
1.0%
52,566
3.0%
360,485
2.4%
32,513
2.9%
25,195
0.8%
17,768
0.1%
5,089
0.0%
37,762
0.6%
22,985
0.6%
47,765 -0.3%
269,282
0.4%
32,957
1.8%
270,056
0.5%
2,812,896
0.4%
Net Change
-28,895
-17,361
7,685
20,634
13,622
76,602
7,988
1,851
135
5
2,227
1,317
-1,254
10,341
5,338
13,974
114,209
Population Share
2000
2010 Point Shift
12.9% 11.4%
-1.6%
37.7% 35.5%
-2.1%
3.5%
3.6%
0.1%
7.3%
7.8%
0.4%
1.4%
1.9%
0.4%
10.5% 12.8%
2.3%
0.9%
1.2%
0.2%
0.9%
0.9%
0.0%
0.7%
0.6%
0.0%
0.2%
0.2%
0.0%
1.3%
1.3%
0.0%
0.8%
0.8%
0.0%
1.8%
1.7%
-0.1%
9.6%
9.6%
0.0%
1.0%
1.2%
0.1%
9.5%
9.6%
0.1%
100% 100%
Source: Census
Cost of Living
The cost of living index is a measure of the relative price for goods and services participating in areas
for a mid-management (middle-class) standard of living. Nationally, the composite index always
equals 100, and each regional index represents a share of the national measure. While the cost of
living index does not measure inflation, it compares prices at a single point in time, excluding taxes.
The composite cost of living index is a measure that fluctuates based on the change in population,
labor force, and a number of other factors; the following table illustrates the relationship that
population and labor force movement have on the cost of living in the St. Louis Region. Findings:

Not breaching a score of 100 in either 2000 or 2010, the cost of living in the St. Louis Region
decreased at an annualized rate of 0.67 percent; where in 2000, the index read 96.7 and in 2010
the index dropped to 90.4.
90

St. Louis Region’s cost of living decrease may be explained by the slow pace of population and
labor force growth. From 2000 to 2010, the St. Louis Region population grew at an annual rate of
0.42 percent, and labor force grew at an even slower pace of 0.09 percent annually; in fact, during
this ten year time span, unemployment grew by nearly 11 percent annually.
Table 20: Change in Cost of Living vs. Change in Population and Labor Force, 2000-2010
Cost of Living Index
Population
Labor Force
Employment
Unemployment
2000
97
2,698,687
1,423,746
1,373,227
50,519
2010
90
2,812,896
1,435,946
1,293,624
142,322
CAGR
-0.67%
0.42%
0.09%
-0.60%
10.91%
Source: ACCRA, BLS and Census
Changing Household Structure
Change in household structure from 1990 to 2010 for the US and the St. Louis Region are below.
Figure 24: Changes in Household Structure, 1990 to 2010
Families w/ children
Male householder
1.6%
2.6%
1.7%
1.6%
8.3%
7.7%
7.6%
6.3%
Female householder
26.3%
19.9%
Married couple
26.7%
Families w/o
Axis Title
children
20.1%
5.9%
Other
9.0%
5.7%
8.3%
27.8%
26.7%
28.4%
Married couple
31.5%
Nonfamily
4.3%
Other
6.3%
5.3%
5.4%
25.8%
29.0%
Persons living alone
24.6%
26.8%
Axis Title
St. Louis 1990
St. Louis 2010
US 1990
US 2010
Source: Census
Findings include:

The share of married families with children is expected to decrease by nearly 6.6 percent in the
US and 6.4 percent in the St. Louis Region.

Persons living alone in the St. Louis Region are expected to grow by an actual 3.2 percent, from
25.8 percent to 29 percent, while nationally this segment will increase by 2.2 percent.
91

Married couples without children are projected to grow faster at the national level, as this share
increases by 3.1 percent nationally. In the St. Louis Region, married couples without children will
be 1.1 percent less in 2010 than what it was in 1990.
Age Shifts
The decline in household size reveals a shifting age distribution across the Region. Based on
historical Census data and future projections produced by ESRI, the following chart presents the share
of the St. Louis Region population by age.
Figure 25: Share of the St. Louis Region by Age, 2000-2015
60%
50%
40%
30%
20%
10%
0%
0-24
Source: ESRI
25-64
2000
2010
65+
2015
Younger people, those between the ages of 0 and 24, are declining as a share of the Regional
population. From 2000 to the 2015 projection, individuals between the ages of 0-24 in the St. Louis
Region are expected to decline at an annualized rate of 0.44 percent from 2000 to 2015. At the same
time, residents at or approaching retirement, specifically those aged 65 and older, are growing as a
share of the Regional population. This trend has implications for the future available labor force if the
supply of younger workers is not sufficient to offset the rate at which older workers retire. Segments
expected to grow through 2015 are groups older than 55. In 2000, almost nine percent of the
population was between the ages of 55 and 64. This is expected to increase to a projected 13 percent
by 2015, growing at an annualized rate of 3.2 percent.
High School Performance
Receiving a high school diploma is a societal expectation, shaping an individual’s course for
socioeconomic success in the United States. According to many education professionals, completing
high school on-time is an indicator of success later in life. Additionally, it is a precursor to size of the
future workforce as well as the skills they may bring. At the same time, the rate of individuals’
choosing not to finish their high school careers prior to graduation is an alarming trend. As the number
of citizens who drop out of high school increases, the labor force will grow at a slower pace. Those
individuals lacking a high school diploma will struggle to assimilate and succeed in modern society.
Whether students are from rural areas or urban areas, individuals who choose to drop out share
similar characteristics, according to the Missouri Department of Education. Indications can include
failure of classes and unearned credits, substance abuse issues, low self-esteem, and a disconnection
from engaging in school activities and relationships with peers. Individuals who have dropped out
share similar characteristics in their home lives as well. Dropout rates in both the City of St. Louis and
St. Louis County compared to the State of Missouri can be found in the following chart.
92
Figure 26: High School Drop Out Rate (2006-2010)
5.4%
5.5%
5.3%
4.9%
5.0%
4.4%
4.5%
4.0%
4.3%
3.9%
3.8%
3.7%
3.6%
3.5%
3.5%
3.0%
2006
2007
2008
Missouri
2009
2010
St. Louis (Aggregate of County and City)
Source: Missouri Deptartment of Education
The analysis revealed that
from 2006 to 2010,
Missouri’s high school
dropout rate was lower
than the high school
dropout rate in St. Louis
(County and City).
Overall, the rate of high
school dropouts in the
State of Missouri is
decreasing; from 2006 to
2010 at an annualized rate
of 2.0 percent. At the
same time, drop outs from
public schools in St. Louis
County and City
increased, growing at an
annualized rate of 0.7.
Labor Force
The labor force is defined as all workers aged 16 and over that are either working or are actively
seeking work. This naturally excludes most high school students, stay-at-home parents, retirees,
individuals on medical leave, or other people who choose not to work. The following figure explores
the annual labor force, employment and unemployment rate in the St. Louis Region from May 2000
through May 2011. Between May of 2000 and May of 2007, the Regional labor force grew by
approximately 32,726. Unemployment began increasing during the summer of 2007; however, the
labor force experienced little change from 2007 to 2008. Trends for 2009 through 2011 are reflective
of the impact of the recession.
Figure 27: St. Louis Region Labor Force, May 2000-2011
Thousands
10.0%
1,450
9.0%
1,400
8.0%
7.0%
1,350
6.0%
5.0%
1,300
4.0%
3.0%
1,250
2.0%
1.0%
1,200
Employment
Source: BLS - LAUS
Unemployment
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0.0%
Unemployment Rate
93
Super Sector Employment Growth
According to monthly BLS data on non-farm payrolls, between January 2009 and June 2011 the St.
Louis Region added a total of 14,000 jobs. The table below shows changes in employment by sector,
highlighting how overall employment has begun to recover toward pre-recession levels, shown below
in January of 2008 at 1.34 million non-farm positions. Regional employment bottomed out at about
1.26 million positions in January of 2010, with some sectors lagging others in the recovery. By this
measure of employment, the Region needs to create an additional 27,000 jobs to recover to the
January 2008 threshold. Cells highlighted in yellow speak to the time period where sector growth
started to occur. For example, Education and Health Services has been growing steadily through the
forecast period, while the Information sector has been declining through June of 2011.
Table 21: Non-Farm Employment, St. Louis Region Jan. 2008-June 2011 (thousands of jobs)
Sector
Mining, Logging and Construction
Manufacturing
Durable Goods
Non-Durable Goods
Wholesale Trade
Retail Trade
Transportation and Utilities
Information
Financial Activities
Professional and Business Services
Education and Health Services
Leisure and Hospitality
Other Services
Government
Total Private
Goods Producing
Service-Providing
Private Service Providing
Total Non-Farm
Jan
2008
76
130
80
50
63
148
49
Jan
2009
64
120
73
48
61
140
49
171
173
Jan
2010
55
105
62
43
59
137
46
30
79
179
219
128
55
172
30
80
194
208
135
57
31
78
184
212
131
56
Jan
2011
55
105
63
43
59
136
47
29
79
180
224
132
55
171
June
2011
64
110
66
44
62
140
49
29
79
186
224
148
58
166
1,170
1,126
1,090
1,100
1,147
206
1,135
964
185
1,115
942
160
1,102
929
160
1,112
941
174
1,140
974
1,341
1,299
1,262
1,272
1,313
Source: BLS - CES
The following table summarizes details regarding growth by sector with analysis of monthly growth
rates, as well as total and monthly increases. Since January 2010, manufacturing has begun to pick
up, adding positions at a rate of 283 jobs per month. Education and Health Services and Leisure and
Hospitality both remain as key anchors for the Region having avoided decline over the past four years
while adding the largest number of jobs over the noted period, 17,000 jobs and 14,000 jobs
respectively. On the other hand, Information and Government have lost jobs since January 2010, in
addition to not experiencing growth in the past four years, declining by a total of nearly 2,000 jobs and
5,000 jobs, respectively. Overall, Regional job growth since January 2010 has rebounded, at a
monthly rate of about 2,900 jobs per month. Drivers of job growth include exports, which have grown
strongly over the past year, partially on the Missouri side of the Mississippi River.
94
Table 22: Change in Non-Farm Employment, St. Louis Region Jan. 2008-June 2011
Months of
Total Monthly
Sector
Growth Increase Increase
Mining, Logging and Construction
19 (12,700)
(302)
Manufacturing
14 (19,700)
(469)
Durable Goods
17 (13,300)
(317)
Non-Durable Goods
12
(6,400)
(152)
Wholesale Trade
18
(1,300)
(31)
Retail Trade
23
(8,500)
(202)
Transportation and Utilities
22
(200)
(5)
Information
12
(1,700)
(40)
Financial Activities
22
(1,100)
(26)
Professional and Business Services
19
(8,200)
(195)
Education and Health Services
23
16,900
402
Leisure and Hospitality
20
13,600
324
Other Services
19
800
19
Government
27
(5,000)
(119)
Total Private
24
(526)
Goods Producing
15 (32,400)
(771)
Service-Providing
27
5,300
126
Private Service Providing
27
10,300
245
Total Non-Farm
25 (27,100)
(645)
Source: BLS – CES
As of 1991, the finance industry in the St. Louis Region has performed relatively well; however,
manufacturing has lost jobs in recent years. The decade began and ended within an uneasy climate
for nation’s economy, disrupted by the September 11th terrorist attacks in 2001, and the recession in
2008 through 2011. A comparative look at total employment growth in relation to the manufacturing
and financial industries within the St. Louis Region during the month of June follows.
Figure 28: Selected Super Sector Employment Growth, June 1991-2011
10%
5%
0%
-5%
-10%
-15%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-20%
Total Private
Manufacturing
Financial Activities
Source: BLS - CES
95
Overall, while Regional employment is recovering, the total decrease in lost jobs since 2008 is
significant, at almost 60,000 positions. For the Region to sustain a lasting recovery, growth in the
manufacturing is as important as other sectors, such as finance. Other findings include:

Regional manufacturing employment peaked in 1990 with about 210,000 positions. Since then,
manufacturing employment reached a low in February of 2011, at approximately 105,000
positions. Since February of 2011, manufacturing has added nearly 870 jobs per month.

Finance jobs have remained constant, maintaining employment totals near 76,000 annually in the
past 20 years, with slight fluctuation from year to year. Since January of 2010, the Finance Super
Sector has grown by nearly 0.8 percent; however, from January of 2011 to June of 2011, the
finance industry has slightly dipped, losing nearly 47 jobs per month in the past six months.

Since January of 2010, the private sector has increased at an annualized rate of 1.5 percent
adding nearly 3,200 jobs monthly during this time.
Employment by Firm Size
Data from the US Census Bureau explores employment trends by firm size tracking the number of
firms, establishments, employment and payroll. We examined the St. Louis firm and employment data
relative to the United States for 2001 and 2008, the most current data available. More than half of all
workers in the US work in firms with more than 500 employees. In 2008, 50.6 percent of all workers,
61.2 million people, were employed in large firms. However, firms with less than 5 employees made
up 61 percent of all companies, employing nearly 6.1 million people in the US. This segment of the
labor market has grown considerably since 2001. Most significant is that employment at firms with
fewer than 5 workers grew faster than any other firm size both nationally and in the St. Louis Region.
Since 2001, employment at these small companies grew at a compound annual growth rate of 1.1
percent nationally. This compares to 0.9 percent employment growth for firms with more than 500
workers.
Table 23: Firms and Employment by Firm Size, 2001-2008 (in thousands)
2001
Firm Size Firms
United States
0-4
3,402
5-9
1,019
10-19
616
20-99
518
100-499
85
500+
17
Total
5,658
St. Louis Region
0-4
29.1
5-9
9.5
10-19
6.0
20-99
5.8
100-499
1.5
500+
2.0
Total
53.9
2008
CAGR 2001-2008
Firms
Jobs
Jobs
Firms
Jobs
5,630
6,698
8,275
20,370
16,410
57,678
115,061
3,618
1,044
633
526
90
18
5,930
6,086
6,878
8,497
20,685
17,548
61,210
120,904
0.9%
0.3%
0.4%
0.2%
0.8%
0.9%
0.7%
1.1%
0.4%
0.4%
0.2%
1.0%
0.9%
0.7%
49.5
62.0
81.1
222.3
171.9
633.9
1,220.6
31.1
9.5
6.1
6.0
1.6
2.1
56.6
53.1
62.7
81.7
221.7
179.3
663.9
1,262.4
1.0%
0.1%
0.2%
0.4%
1.2%
0.6%
0.7%
1.0%
0.2%
0.1%
0.0%
0.6%
0.7%
0.5%
Source: US Census Bureau
96
In the St. Louis Region, there were more than 56,600 places of work employing nearly 1.3 million
people during 2008. Job growth was slightly slower in the Region than nationally. Similar to national
trends, more than half of St. Louis companies employ fewer than 5 workers, though it is a smaller
share, 55 percent, and the majority of workers (51.9%) work in firms with more than 500 employees.
Figure 29: St. Louis Firms as Share of US by Firm Size
What is interesting to note
in this data is that there is
12%
an over-representation of
10%
large firms in St. Louis.
8%
Overall, 1 percent of all the
firms in the US are located
6%
in the St. Louis Region.
4%
However, in 2008, 11.5
2%
percent of the firms with
0%
more than 500 workers
0-4
5-9
10-19
20-99
100-499
500+
were located there. Of the
nearly 18,500 firms in the
2001 2008
US with more than 500
Source: U.S. Census Bureau
employees, 2,100 were
located in the St. Louis
Region during 2008. Of the 2,100 St. Louis firms with more than 500 employees, the largest
concentrations are in retail trade with 358 large firms and wholesale trade with 357 firms. Combined,
one-third of the largest firms are in these two sectors.
14%
Super Sector Wage Growth
The following figure depicts annualized growth of total employment and average weekly earnings of
production employees per industry super sector from April 2008 to April 2011. This figure only
includes the super sectors that were made available by the US Bureau of Labor Statistics.
Figure 30: Selected Super Sector Wage and Employment Annual Growth (2008-2011)
0.4%
9.4%
-1.3%
-1.9%
RT
-0.9%
-3.1%
WT
-1.5%
-1.7%
TTU
-5.9%
-6.2%
Manf
-8.5%
MLC
2.2%
Source: BLS - CES
Finance
Employment
Wage
97
Employment in the Mining,
Logging and Construction
(MLC) super sector has
decreased at an
annualized rate of 8.5
percent since 2008, the
greatest annualized
decrease of all the super
sectors measured;
however, in the same
period of time, average
weekly wages have
increased by 2.2 percent
annually, only wages in the
financial activities super
sector have grown at a faster rate, where wages increased by 9.4 percent annually and employment
increased by 0.4 percent annually.
As of 2008, manufacturing employment in the St. Louis Region has decreased by 5.9 percent
annually, losing 158,000 jobs within that time period. Average weekly wages also decreased by 6.2
percent annually during that period. In June of 2008, production employees earned, on average, $906
weekly while in 2011, wages dropped to $737 weekly.
Industrial Sector Analysis
To evaluate changes in Regional employment, wages and output, AECOM used IMPLAN, proprietary
software developed by the Minnesota IMPLAN Group (MIG). To generate these estimates, MIG
assembles data from the Bureau of Labor and Statistics (BLS), County Business Patterns and the
Bureau of Economic Analysis’s (BEA) Regional Economic Information System (REIS). IMPLAN’s
employment and wage estimates are slightly different than those from traditional government data
sources. Whereas the BLS estimates include just wage and salaried employees, IMPLAN estimates
also include self-employed workers, both full- and part-time. For this reason, employment and wage
estimates from IMPLAN may be slightly larger for industry sectors like finance, law, accounting and
other office-using sectors characterized by a large number of self-employed workers.
Employment and Wages
The change in the economy from producing goods to providing service has been well documented.
The chart below shows the magnitude of this change in recent years for St. Louis, Missouri and the
United States.
Figure 31: Share of Goods Producing Jobs, 2001-2009
St. Louis
2001
St. Louis
2009
Missouri
2001
Missouri
2009
United States 2001
United States
2009
0%
Source: IMPLAN
20%
Service Providing
40%
60%
80%
100%
Goods Producing
In the St. Louis Region, 17.5 percent of all jobs during 2001 were in good producing sectors which
include agriculture, mining and construction. By 2009 this had fallen to 14 percent mirroring state and
national trends. However, the drop in share was slightly higher for the Region than Missouri (3.3
percent) though somewhat smaller than the drop in share experienced in the United States, 3.8
percent.
98
Table 24: St. Louis Region Employment, 2001-2009
Super Sector
Goods Producing
Natural Resources and Mining
Construction
Manufacturing
2001
293,830
22,130
107,980
163,720
2009
231,170
19,760
96,380
115,030
CAGR
-3.0%
-1.4%
-1.4%
-4.3%
Next we look more in depth at
employment shifts since 2001.
In 2009, there were 1.65 million
people working in the Region,
which includes self-employed.
This is a slight decrease from
Service Providing
1,386,350 1,421,870
0.3%
2001 when there were 1.68
Trade, Transportation and Utilities
312,920
286,220
-1.1%
Information
34,870
30,890
-1.5%
million people working in the
Financial Activities
135,010
170,180
2.9%
Region. While some of the
Professional and Business Services
245,450
248,720
0.2%
decline can be explained by the
Education and Health Services
213,830
243,730
1.6%
economic downturn, there is
Leisure and Hospitality
160,770
165,190
0.3%
also a fundamental restructuring
Other Services
104,550
92,980
-1.5%
of the local economy with a
Government
178,950
183,960
0.3%
declining manufacturing sector
and a growing service sector in
Total
1,680,180 1,653,040
-0.2%
the St. Louis Region. The
Source: IMPLAN
largest loss in the number of
jobs was in manufacturing. By 2009, there were nearly 49,000 fewer people working in this sector
than in 2001. This represents an average annual decline of 4.3 percent over this time period. At the
same time, the number of people working in financial activities (which includes real estate) grew by a
compound annual growth rate (CAGR) of 2.9 percent, adding more than 35,000 jobs, the majority of
which (79%) were in real estate. For comparison, job growth was stagnant in Missouri over this same
time period and there was a slight gain nationally. Similar to St. Louis, there were considerable job
losses in manufacturing, though they are larger in the Region than the state and nationally.
Table 25: Change in Employment, 2001-2009 CAGR
Super Sector
Goods Producing
Natural Resources and Mining
Construction
Manufacturing
Service Providing
Trade, Transportation and Utilities
Information
Financial Activities
Professional and Business Services
Education and Health Services
Leisure and Hospitality
Other Services
Government
St. Louis
-3.0%
-1.4%
-1.4%
-4.3%
Missouri
-2.2%
-1.2%
-0.8%
-3.5%
US
-2.5%
-0.6%
-1.3%
-3.9%
0.3%
-1.1%
-1.5%
2.9%
0.2%
1.6%
0.3%
-1.5%
0.3%
0.5%
-0.4%
-1.8%
2.1%
0.8%
1.8%
0.1%
-1.1%
0.8%
0.8%
-0.3%
-1.8%
2.5%
0.8%
2.7%
0.5%
0.0%
0.8%
The following table shows the
CAGR for employment in each
sector. The retail sector was
particularly hard hit during the
recession, though job losses were
larger in St. Louis than in Missouri
and the US. Additionally, in sectors
that experienced growth nationally
and in the state did not always grow
as much in the St. Louis Region.
The average wage grew by 3.7
percent annually from 2001 to
2009, ahead of inflation for St.
Louis which grew at an average
Total
-0.2%
0.0%
0.3%
annual rate of 2.2 percent over this
Source: IMPLAN
same time period. Although
employment shrank in the manufacturing sector, wages grew by 5.6 percent annually. The average
99
wage in this sector was more than $78,000, considerably higher than the metro average of $46,290.
Utilities paid among the highest wages in the Region and experienced strong growth over this period,
but relatively few people work in this sector. Also worth noting, the average wage in the real estate
sector, with the large gains in employment, fell 3.4 percent annually from 2001 to 2009. The following
table also shows how average wages in the St. Louis Region are growing at a faster rate in many
sectors than Missouri and the US.
The following table also shows how average wages in the St. Louis Region are growing at a faster rate
in many sectors than Missouri and the US. For example, average wages for trade, transportation and
utility jobs grew 4.0 percent annually from 2001 in St. Louis compared to 3.3 percent in Missouri and
3.1 percent in the US. The average wage for retail jobs increased an average of 5.6 percent per year
from 2001 to 2009 in the St. Louis Region compared to 3.7 percent in Missouri and 3.1 percent in the
US. In fact, the average wage in this sector ($30,140) is also higher in St. Louis than state ($25,410)
and national ($27,410) averages as well.
Table 26: St. Louis Region Average Wages, 2001-2009
Super Sector
Goods Producing
Natural Resources and Mining
Construction
Manufacturing
St. Louis Region
2001
2009
$42,810 $59,620
$10,900 $12,890
$37,460 $47,140
$50,650 $78,100
St. Louis
4.2%
2.1%
2.9%
5.6%
CAGR
Missouri
3.1%
2.0%
1.7%
4.5%
US
3.3%
5.8%
2.1%
4.3%
Service Providing
Trade, Transportation and Utilities
Information
Financial Activities
Professional and Business Services
Education and Health Services
Leisure and Hospitality
Other Services
Government
$33,000
$33,240
$59,610
$29,780
$42,520
$32,530
$14,600
$17,690
$42,830
$44,120
$45,550
$83,400
$32,410
$54,520
$45,110
$21,240
$27,020
$59,940
3.7%
4.0%
4.3%
1.1%
3.2%
4.2%
4.8%
5.4%
4.3%
3.8%
3.3%
4.6%
2.0%
2.8%
4.2%
5.0%
6.4%
4.4%
3.4%
3.1%
3.2%
0.8%
2.9%
4.1%
5.0%
3.6%
4.7%
Total
$34,720
$46,290
3.7%
3.6%
3.3%
Source: IMPLAN
Employment Concentration
Location quotients compare levels of employment between a defined market area to that of a larger
base in order to gauge the concentration of a particular good or service. Underlying location quotients
is the assumption that the local market should have the same distribution of workers as the larger
study area. This may not always be the case, however, since factors such as climate, local tradition or
custom can exert an influence on the demand for a specific good or service. A location quotient higher
than 1 means that the local economy has a larger than expected share of jobs and indicates that the
sector is likely exporting those goods and services outside of the local market; the industry is more
concentrated in the region than the larger study area. A location quotient of 1 indicates that the sector
is performing sufficiently to meet local demand for the given good or service. A location quotient less
than 1 indicates that the number of jobs is proportionally lower than the larger market and is likely
importing goods and services to meet local demand; the industry is less concentrated in the study area
100
than the comparison area. Industries exporting products are considered highly valuable for economic
development. Here we examine employment in the St. Louis Region relative to the US for selected
sectors. Location quotient comparisons over time, from 2001 to 2009, shows if a sector has become
more or less concentrated in the Region relative to the country.
AECOM evaluated more than 400 industry sectors that power the Regional economy, studying both
traditional sectors as well as evolving industry clusters for 2001 and 2009 using IMPLAN. The
distinction between sector and cluster is important, as clusters of industries tend to be more closely
interconnected geographically, creating greater critical mass of resources and skills. Our analysis
focuses on sectors in which the Region is particularly strong, those that need improving, and
manufacturing.
Data from IMPLAN has shown that the manufacturing sector in the St. Louis Region has lost nearly
49,000 jobs from 2001 to 2009, an average annual decline of 4.3 percent. However, despite these
dramatic declines, manufacturing remains a dominant industry in the Region with more than 115,000
people employed in manufacturing sectors, 7 percent of all jobs throughout the Region. The following
chart highlights select manufacturing sectors in which the Region excels as compared to the national
economy. For example, the location quotient for breweries and distilleries was quite high in both 2001
and 2009. This is due to the larger share of jobs in the Region in those two sectors as compared to
the US. In 2001, 0.02 percent of all jobs in the US were in these two sectors which remained
unchanged in 2009. However, in the St. Louis Region, 0.2 percent of all jobs in 2009 were in the
breweries and distilleries, more than nine times as high a share as the US. Because the industry is
over represented in the Region, the location quotients are considerably high. While employment in
this sector declined in both the Region and the US, it declined at a much faster rate nationally than
regionally. Note that a declining location quotient does not necessarily indicate a loss in the number of
jobs, just that the share of jobs in the Region relative to the US fell.
Figure 32: LQs for St. Louis Manufacturing Relative to the US, 2001 and 2009
*Soybean processing
*Medicinal & botanical…
*Fertilizer & pesticides
*Oilseed farming
Auto assembly
*Organic chemicals
Aircraft parts & assembly
*Soap & cleaning compounds
Ammunition / ordinance
Breweries & distilleries
0.0
Source: IMPLAN
2.0
4.0
6.0
2001
8.0
10.0
2009
The next chart looks at sectors with strong location quotients relative to the US meaning that the share
of jobs in the Region is greater than the share of jobs nationally.
101
Figure 33: LQs for St. Louis Sectors that Show Strength Relative to the US, 2001 and 2009
Private colleges and
universities employed
*Surgical & med. instruments
more than 29,000
residents during 2001 and
*Private hospitals
grew to nearly 37,000 by
*Scientific R & D
2009. As a relative share
Civic, social, & prof. orgs
of Regional employment,
Data processing & hosting
jobs at colleges and
Business support svcs
universities made up 2.2
Mgmt. of companies
percent of all jobs in the
Private colleges & univ.
Region in 2009 compared
to 1.7 percent in 2001.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Nationally, these jobs
Source: IMPLAN
2001 2009
made up less than 1
percent of 2009 employment resulting in a Regional location quotient of 2.4.
Securities & investments
Figure 34: LQs for St. Louis Sectors that Need to Improve Relative to the US, 2001 and 2009
All food processing
Mgmt./scientific consulting
Air transportation
Warehousing
Software development
Computer sys. programming
Rail transportation
Truck transportation
0.00
Source: IMPLAN
0.25
0.50
0.75
1.00
2001
2009
1.25
1.50
AECOM also examined
certain sectors of the
Region that could improve,
meaning that their location
quotient relative to the
national share was less
than 1 and/or has been
declining over time. Air
transportation is the most
notable in the following
chart with the location
quotient dropping by
nearly half from 1.4 to 0.76
by 2009.
AECOM also looked at the location quotients for clean technology (clean tech), a sector growing in
importance both nationally and in the Regional economy. A recent study by The Pew Charitable
Trusts, The Clean Energy Economy, found that jobs in the developing clean energy sector grew at a
faster rate than US jobs overall from 1998 to 2007. Businesses in clean tech segments are focused
on developing clean, renewable sources of energy, increasing energy efficiency, reducing greenhouse
gas emissions that cause global warming, and conserving water and other natural resources. There
are several indicators that this sector will continue to grow in importance including:

Public policy decisions at the federal, state and local levels regarding vehicle emissions, fuel
efficiency and environmental conservation, for example.

Consumers are more conscious about environmental issues, sustainability and energy
independence.
102

Both public and private sectors are directing resources into these segments.
According to The Pew report, the clean energy economy comprises five categories shown below.
While the sectors that make up these categories may change over time, the categories themselves will
not. Currently, the following 11 industry sectors represent the production categories of the clean tech
industry as shown below.

Alternative Fuel Vehicles

Fuel Cells and Batteries

Biomass / Waste-to-Energy

Solar Power

Construction

Waste Disposal

Environment Components Distributor

Water Purification

Environment Components Manufacturing

Wind Power
In 2007, there were 68,200 businesses across the US employing nearly 770,000 people in clean tech.
In Missouri, there were 1,062 businesses employing 11,714 people. Between 1998 and 2007, clean
tech jobs grew 5.4 percent compared to 2.1 percent for total jobs in the State.
Table 27: Clean Energy Economy, 2007
Illinois
Missouri
US
Firms
2,176
1,062
68,203
Jobs
28,395
11,714
770,385
Job growth,
1998-2007
Clean
Total
-2.5% -2.5%
5.4%
2.1%
9.1%
3.7%
Source: The Pew Charitable Trusts, 2009
Industry Output
While employment changes are an indication of industry growth or decline, employment does not tell
the whole story. Output is another key measure of economic health and refers to the value of industry
production similar to Gross Domestic Product (GDP). The following tables look at changes in output
by industry sector between 2001 and 2009 to identify industries that are driving economic growth
versus decline in the Region.
103
Table 28: St. Louis Region Output (in millions), 2001-2009
Super Sector
Goods Producing
Natural Resources and Mining
Construction
Manufacturing
Service Providing
Trade, Transportation and Utilities
Information
Financial Activities
Professional and Business Services
Education and Health Services
Leisure and Hospitality
Other Services
Government
Total
2001
$62,584
$1,737
$10,247
$50,599
$114,820
$28,186
$10,016
$19,014
$18,946
$15,143
$6,846
$7,215
$9,454
$177,404
2009
$79,055
$2,373
$12,572
$64,110
$155,870
$34,767
$11,790
$26,725
$28,925
$22,304
$10,363
$6,255
$14,741
$234,925
CAGR
3.0%
4.0%
2.6%
3.0%
3.9%
2.7%
2.1%
4.3%
5.4%
5.0%
5.3%
-1.8%
5.7%
3.6%
Source: IMPLAN
Gross output across all Region industry sectors grew by a compound annual growth rate of 3.6
percent from 2001, reaching $234.9 billion in 2009, despite overall employment declines. The largest
contributor to overall output in the St. Louis Region is manufacturing at $64.1 billion during 2009.
Trade, transportation and utilities follow with $34.8 billion. In general, service providing sectors grew
at a faster rate than goods producing. The super Sector with the fastest growing output was
government which includes local, state and federal employees.
Another common measure of economic health is output per job which is a measure of productivity.
Manufacturing not only has the largest output per job, it grew at the fastest rate since 2001, 7.6
percent annually. Every manufacturing job produced $557,350 in output during 2009, which reflects
both the growing output created in this sector as well as declining employment over this period.
Table 29: St. Louis Region Output per Job, 2001-2009
Super Sector
Goods Producing
Natural Resources and Mining
Construction
Manufacturing
Service Providing
Trade, Transportation and Utilities
Information
Financial Activities
Professional and Business Services
Education and Health Services
Leisure and Hospitality
Other Services
Government
Total
2001
$212,990
$78,500
$94,900
$309,050
$82,820
$90,070
$287,240
$140,840
$77,190
$70,820
$42,580
$69,010
$52,830
$105,590
2009
$341,970
$120,070
$130,430
$557,350
$109,620
$121,470
$381,740
$157,040
$116,290
$91,510
$62,730
$67,270
$80,130
$142,120
CAGR
6.1%
5.5%
4.1%
7.6%
3.6%
3.8%
3.6%
1.4%
5.3%
3.3%
5.0%
-0.3%
5.3%
3.8%
Source: IMPLAN
Within the service providing sectors, information has the highest output per job at $381,740 in 2009.
This sector includes publishing, the motion picture industry, sound recording, broadcasting,
telecommunications and data processing.
104
Business Development
Regional industry clusters like financial services and R&D have been critical to the Region’s
employment growth. To assess the recent growth of the Region’s existing industry clusters, the
following figure summarizes new cluster employment by year, as identified by the St. Louis Regional
Chamber and Growth Association. The data reveals that since 2005, financial services has been the
top driver of new employment in the Region. Since 2005, new employment in financial services has
represented 48 percent of new cluster employment. This is followed by information technology and
advanced manufacturing at 16.8 and 13.6 percent respectively. While employment growth in plant
and life sciences and transportation/distribution has represented only a modest share of new cluster
employment, their employment impact extends beyond their direct employment, a trend that is
explored below by looking at individual industry multipliers.
Figure 35: Business Development by Industry Cluster
7,000
Transportation and Distribution
6,000
R&D
Plant and Life Sciences
5,000
Information Technology
Headquarters
4,000
Financial Services
Advanced Manufacturing
3,000
2,000
1,000
0
2005
2006
2007
2008
2009
2010
Source: St. Louis Regional Chamber & Growth Association
Industry Integration
While employment and output are ways to measure the overall strength of industries in an economy,
there are two other indicators to show how integrated these industries are within the economy – the
regional purchase coefficient and multipliers. The regional purchase coefficient (RPC) estimates how
much of local purchases are met by local sellers. Multipliers, for both output and employment,
measure the ripple effect of spending by an industry on goods, services and wages. Larger values for
both the RPC and multipliers indicate more integration within the local economy. However, there may
be some industries that have very large RPCs and multipliers, but are relatively small in terms of total
employment and output. RPCs and multipliers for a sector will differ by study area and may change
from year to year depending on their supply chain in the area.
Here we concentrate on private sectors with largest output and employment in the St. Louis Region
during 2009. The following table shows the output and jobs for each sector as well as the RPC, output
105
and employment multipliers. The RPC indicates the share of spending that occurs within the Region
by the particular sector. The output multiplier shows for each dollar of direct impact what the total
impact was in St. Louis Region during 2009. The employment multiplier shows the number of total
jobs that would be supported in the economy with a $1 million investment. Therefore, a $1 million
investment by firms that construct new nonresidential structures would be spent 100 percent within the
Region since the RPC is equal to 1. The total economic impact of that direct investment would be
$1.93 million (with $0.93 million in indirect and induced impacts) and 14.77 jobs throughout the
Regional economy, across all sectors.
Table 30: Industrial Integration of Top Performing Private Sectors, St. Louis Region 2009
Sector
Goods Producing
Construction
Construction of new nonresidential structures
Manufacturing
Petroleum refineries
Light truck and utility vehicle manufacturing
Aircraft manufacturing
Service Providing
Trade, Transportation and Utilities
Wholesale trade businesses
Retail Stores - General merchandise
Information
Telecommunications
Financial Activities
Real estate establishments
Professional and Business Services
Management of companies and enterprises
Education and Health Services
Private junior colleges, colleges, universities,
and professional schools
Offices of physicians, dentists, and other health
practitioners
Private hospitals
Nursing and residential care facilities
Leisure and Hospitality
Food services and drinking places
Output
(millions)
Multipliers
Output
Jobs
Jobs
RPC
$4,278
34,140
1.00
1.93
14.77
$6,791
$5,812
$5,227
810
3,010
10,980
0.93
0.37
0.97
1.68
1.49
1.50
2.74
3.35
5.23
$13,408
$1,520
64,700
29,980
1.00
0.95
1.80
1.67
10.92
25.03
$6,229
12,430
0.57
1.61
6.20
$7,630
76,320
0.70
1.40
13.09
$7,516
37,140
0.80
1.93
12.17
$3,202
36,880
0.80
2.00
18.91
$5,421
42,600
0.95
2.03
15.85
$7,743
$1,697
60,080
30,850
0.90
0.90
2.03
1.98
15.68
25.86
$6,499
115,760
0.87
1.83
23.92
Source: IMPLAN
There are sectors in the St. Louis Region that have higher multipliers, such as vegetable and melon
farming which has an output multiplier of 2.36. However, with $20.1 million in output and 80 jobs, it is
a relatively small part of the overall Regional economy. Performing arts companies have one of the
largest employment multipliers. For every $1 million in direct impact during 2009, 57.6 jobs are
created throughout St. Louis. This sector had $91.3 million in total output and employed nearly 4,400
people. Due to the nature of this sector, many of these jobs were likely part-time or seasonal.
106
New Residential Building – St. Louis Region
To further explore the impact of the current recession on the residential housing market, the figure
below looks at the number of single family and multi-family residential building permits issued annually
in the St. Louis Region.
Figure 36: Residential Building Permits Issued in the St. Louis Region
Between 1990 and 2009,
145,400 permits were
14,000
issued for residential units
12,000
in the Region- the majority
10,000
of these units, roughly 85
8,000
percent, were for single
6,000
family residential units.
Since 2004, the number of
4,000
building permits issued in
2,000
the Region has declined.
Between 2004 and 2009,
permits issued for single
Single Family
Multi-Family
Source: Census
and multi- family units
declined from 15,286 units to 4,918, an annualized decline of 21 percent. This decline, however, has
been more dramatic for single family construction as opposed to multi-family.
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1995
1990
16,000
To further explore Regional shifts in residential construction, the following chart looks at the share of
new housing permits by county. Additionally, data for St. Louis County and the City of St. Louis have
been extrapolated to depict the how residential construction has shifted from 1990 to 2009 in these
particular areas.
Figure 37: New Permits by Geography
Over this twenty year
period, a pattern of
1999
residential development
towards outlying areas is
2001
clear. St. Louis County
2003
declined as a share of
2005
Regional residential
2007
construction. Total
residential units in St.
2009
Louis County declined
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
from 33 percent of the
Other MSA Counties
St. Louis County, MO
City of St. Louis
Regional total in 1990 to
Source: Census
just 12 percent in 2009.
As the population center of the Region, residential permits in the City of St. Louis have represented
only a small share of the Regional total. However, even as the City of St. Louis represents a smaller
share of the total Regional residential construction, the share of residential permits have increased at
an annualized growth rate about four percent in the City of St. Louis from 1990 to 2009; noting as of
2009, residential development represented five percent of the Region’s total. Other Regional
1990
107
counties, particularly St. Charles County, Missouri and St. Clair County, Illinois, grew as a share of
Regional residential permits. During this period, St. Charles grew by 8 percentage points from 21
percent of new residential permits to 29 percent in 2009. Similarly, St. Clair County grew by 10
percent from 8 percent of new permits to 18 percent in 2009.
St. Louis Economic Overview
In 2009, the gross Regional product (GRP) for the Region was $132.8 billion, which represents about
one percent of total US GRP. Since 1997, US GRP has grown at a compound annual growth rate
(CAGR) of 4.7 percent through 2009. This compares to a CAGR of 3.8 percent for St. Louis GRP over
the same time period. The following chart compares the cumulative annual growth rate in gross
regional product over three year intervals for the St. Louis Region and the United States.
Figure 38: Compound Average Growth Rate in Gross Regional Product
6.6%
6.3%
5.2%
4.5%
3.7%
3.2%
2.6%
1997-2000
2.3%
2000-2003
St. Louis MSA
2003-2006
U.S.
Source: IMPLAN
2006-2009
GRP growth for the US
has outpaced the St. Louis
Region for all intervals
except the most recent.
Between 2006 and 2009,
which includes a
recession, the GRP in St.
Louis Region grew at an
average annual rate of 3.2
percent. This compares to
a national average growth
rate of 2.3 percent
annually over this same
time period.
Another way to assess economic growth is to look at final demand, that is, the consumption of goods
and services produced in the Region. Specifically AECOM looked at households, state/local
government and the federal government as consumers. Other contributors to final demand include
capital expenditures and exports which are offset by imports and institutional sales. Combined, these
three consumer groups purchased nearly $119 billion in goods and services throughout the St. Louis
Region during 2009. Demand for these consumer groups grew at an average annual rate of 3.3
percent since the $80 billion consumed during 1997. This compares to national growth of 5.4 percent
annually over the same time period.
What is interesting to note is how the distribution of demand has changed over this time period as
shown below. In 1997, household demand represented 72.2 percent of demand among these three
consumer groups in the St. Louis Region. This increased to 80 percent by 2009. Demand by state
and local government grew at an average annual rate of 4.8 percent and increased its share from 10.9
percent to 13 percent.
108
Figure 39: Change in Demand Generators
U.S.
St. Louis MSA
Most notable is the
change in federal demand
1997
dropping from 16.8
percent in 1997 to 7
2009
percent by 2009. This
occurs at a time demand
by the federal government
1997
grew. Between 1997 and
2009, federal demand
2009
decreased four percent
annually in the St. Louis
0%
20%
40%
60%
80%
100%
Region but increased
Households
State/Local government
Federal government
nationally at an average
rate of 6.8 percent per
Source: IMPLAN
year. Nationally, the share
of federal demand increased from 7.3 percent nationally to 8.5 percent. Federal government
purchases are divided between defense, non-defense, and investment. Federal defense purchases
are those made to support national defense – this includes uniformed military services and coast
guard. Goods and services range from food for troops to missile launchers. Non-defense purchases
are made to supply all other government administrative functions. Investment consists of all Federal
government demand for capital goods. Payments made to other governmental units are transfers, as
opposed to consumption of commodities.
Figure 40: Gross Regional Product for the St. Louis Region by State for Select Years (billions)
We also examined these
trends for Missouri and
$120
Illinois counties.
$100
According to data from
$80
IMPLAN, approximately 75
$60
percent of the Region
population lives in the
$40
Missouri counties and 82
$20
percent of the labor force
$0
works there. The Missouri
1997
2000
2003
2006
2009
share of the Regional GRP
Missouri counties
Illinois counties
has been fairly consistent
at 84 percent. In 2009, the
Source: IMPLAN
GRP for the Region was
$132.8 billion of which $111.5 billion was produced in Missouri counties and $21.3 billion in Illinois
counties. Since 1997, the GRP has grown slightly faster in Missouri (an average of 3.9% per year
through 2009) compared to Illinois counties (3.8% annually).
$140
In terms of final demand, the distribution among the major consumer groups, households, state/local
government and federal government is quite different in Missouri and Illinois as shown below.
109
Missouri Counties
Illinois Counties
Figure 41: Distribution of Demand in Illinois and Missouri Counties
1997
2009
1997
2009
0%
20%
Households
40%
60%
80%
State/Local government
100%
Federal government
Source: IMPLAN
In Missouri counties,
household demand
increased from 71 percent
of demand among the
three consumer groups in
1997 to nearly 82 percent
by 2009. The most
significant change was the
drop in federal demand
from almost 19 percent in
1997 to 4.5 percent in
2009. For the Illinois
counties, demand by the
federal government
increased its share over
this same time period to 15 percent, up from 9.4 percent in 1997.
Federal spending can be further examined by type of goods and services purchased. In the Illinois
counties of the Region, the majority of the spending is for defense purposes. However, the growth in
federal spending in Illinois counties is due to investment. This includes construction of new facilities
($95 million) but also included $16 million for search, detection and navigation instruments and $13
million for custom computer programming services.
From 1997 to 2009, there was a significant decline in federal spending on defense in the Missouri
counties of the Region.
Table 31: Federal Government Spending, St. Louis Region (millions)
NonDefense
In 1997, the federal government spent
$7.5 billion on defense, primarily
Illinois counties
aircraft ($2.7 billion) and aircraft and
1997
$194
$963
$11
$1,168
missile equipment ($1.1 billion). In
2009
$594
$1,985
$174
$2,753
2009, it only spent $88.4 million on
Missouri counties
aircraft purchases for defense
1997
$1,162
$7,528
$3,274 $11,964
purposes in Missouri counties of the
2009
$1,562
$1,419
$274
$3,255
Region. This may reflect federal
restructuring on defense spending as
St. Louis Region
well as the consolidation of McDonnell
1997
$1,355
$8,491
$3,285 $13,131
Douglas and Boeing. There was also a
2009
$2,156
$3,404
$448
$6,008
significant decline in investment
CAGR
spending. In 1997, the federal
Illinois
9.8%
6.2%
26.2%
7.4%
government spent $3.3 billion in
Missouri
2.5%
-13.0%
-18.7%
-10.3%
St. Louis Region
3.9%
-7.3%
-15.3%
-6.3%
investment on things such as new
Source: IMPLAN
facilities ($859.5 million), aircraft ($398
million) and electronic computers ($396 million). Investment fell to $274.2 million in 2009 with only
$107.5 million on construction of new facilities.
Defense
Investment
Total
110
Data from IMPLAN also allows us to explore the inter-dependence of Illinois and Missouri counties by
looking at exports. In this case, exports are to regions outside of the study area and can be either
foreign or domestic. In 2009, the Region exported approximately $81 billion of goods and services.
When examining the Regional economy by Illinois and Missouri counties, the exports between the
states is obvious as shown in the table below. Missouri counties of the Region exported $76 billion
worth of goods and services during 2009.
Table 32: Intra-Regional Trade as Shown through Exports (billions)
Exports
St. Louis Region
Illinois counties in Region
Missouri counties in Region
1997
$55.3
$13.1
$47.0
2000
$60.3
$15.7
$51.0
2003
$64.8
$14.3
$57.8
2006
$79.4
$15.7
$72.7
2009
$80.9
$16.9
$76.0
CAGR
3.2%
2.1%
4.1%
Illinois + Missouri counties
Intra-regional trade
$60.1
$4.8
$66.8
$6.5
$72.1
$7.3
$88.4
$9.1
$92.9
$12.0
3.7%
7.8%
Source: IMPLAN
There was an additional $16.9 billion exported from Illinois counties. Since the Regional total is $80.9
billion, the difference is what Illinois and Missouri counties exported to each other. In 2009, that
amounted to $12 billion. While exports have been growing throughout the Region, exports between
Illinois and Missouri have been growing at a much faster rate, a CAGR of 7.8 percent since 1997.
Data from the 2007 Commodity Flow Survey indicates that just over $9 billion of goods were
exchanged within the Region during 2007. Missouri counties in the Region imported nearly $4.6
billion of goods from the Illinois counties in the Region. Illinois counties imported approximately $4.5
billion from the Missouri counties. Of the $27.4 billion imported in Illinois counties, 16.3 percent came
from Missouri counties. Of the $96.8 billion of imported goods to the Missouri counties, 4.7 percent
came from Illinois counties in the Region.
Table 33: Interstate Trade in the St. Louis Region (millions), 2007
Destination within St. Louis Region
Illinois counties, total imports
Imported from Missouri counties in Region
Share of total imports
2002
$16,773
$2,745
16.4%
2007
$27,371
$4,471
16.3%
CAGR
10.3%
10.2%
Missouri counties, total imports
Imported from Illinois counties in Region
Share of total imports
$68,842
$2,645
3.8%
$96,823
$4,553
4.7%
7.1%
11.5%
Source: US Department of Transportation
The amount of goods being imported to the Illinois counties of the Region has grown at a compound
annual growth rate of 10.3 percent from 2002 to 2007. This compares to a CAGR of 7.1 percent for
Missouri counties. However, interstate trade to Missouri from Illinois within the Region has grown at
11.5 percent over this time period compared to 10.2 percent for goods traveling from Missouri to
Illinois counties within the Region.
Data was not readily available to examine what goods are being exchanged between Illinois and
Missouri counties within the Region. However, the Commodity Flow Survey from the US Department
of Transportation does provide information on the value of goods that the counties are exporting. The
111
largest sectors are provided with some detail for 2007 in the following table. Agricultural products are
not included in this data set.
Table 34: Select Goods Exported from the St. Louis Region by State, 2007
Value
(millions)
St. Louis Region (IL counties)
Manufacturing
Petroleum and coal products manufacturing
Chemical manufacturing
Primary metal manufacturing
Fabricated metal product manufacturing
Wholesale trade
Merchant wholesalers, durable goods
Merchant wholesalers, nondurable goods
$25,767
$17,560
$1,198
$3,817
$1,194
$6,343
$2,390
$3,953
St. Louis Region (MO counties)
Manufacturing
Food manufacturing
Beverage and tobacco product manufacturing
Paper manufacturing
Printing and related support activities
Chemical manufacturing
Plastics and rubber products manufacturing
Primary metal manufacturing
Fabricated metal product manufacturing
Machinery manufacturing
Transportation equipment manufacturing
Miscellaneous manufacturing
Wholesale trade
Merchant wholesalers, durable goods
Merchant wholesalers, nondurable goods
Warehousing and storage
Corporate, subsidiary, and regional managing offices
$46,646
$1,878
$2,480
$1,140
$1,183
$10,138
$1,525
$1,156
$2,191
$3,238
$17,646
$1,026
$40,126
$15,514
$24,612
$1,155
$3,548
Source: US Department of Transportation
The Illinois counties in the Region exported approximately $33 billion of goods during 2007, of which
$25.8 billion was manufactured goods. Petroleum and coal products made up nearly half of total
exports from Illinois counties with $17.6 billion. Missouri counties in the Region exported
approximately $95 billion of which $46.6 billion was in manufactured goods and $40.1 billion was
wholesale trade. Non-durable goods in wholesale made up the largest share of exports at $24.6
billion in 2007. This category includes paper products, sundries, drugs, groceries and chemical
products.
The US Census Bureau tracks and reports data on US exports by state of origin. The following table
shows the top ten counties Illinois and Missouri export to as well as the value of those goods for 2007
to 2010. Canada, Mexico and China receive the largest share of exports from both Illinois and
Missouri, however, that share has been decreasing from Missouri. Exports from Illinois to China grew
at a compound annual growth rate of 17.5 percent over this time period reaching nearly $3.2 billion in
2010.
112
Table 35: Value of Exports from Illinois and Missouri, 2007 to 2010 (millions)
Rank
Country
2007
2008
2009
2010
1
2
3
4
5
6
7
8
9
10
Total Illinois Exports
Canada
Mexico
China
Australia
Germany
Brazil
Japan
United Kingdom
Belgium
Singapore
48,896
13,472
3,629
1,959
2,234
2,334
1,379
2,214
2,225
1,662
979
53,677
14,925
4,260
2,513
2,424
2,224
1,907
2,365
1,852
1,652
1,201
41,626
12,125
3,550
2,470
1,595
2,009
1,246
1,779
1,991
929
877
50,058
15,021
4,268
3,178
2,373
2,187
2,066
1,841
1,695
1,158
1,146
1
2
3
4
5
6
7
8
9
10
Total Missouri Exports
Canada
Mexico
China
Korea, South
Japan
Belgium
Singapore
Germany
Brazil
United Kingdom
13,484
5,031
1,354
1,016
1,252
659
424
125
310
222
345
12,852
4,331
1,327
944
1,007
696
333
141
386
256
366
9,522
3,240
1,034
688
275
531
232
190
385
262
297
12,926
3,996
1,304
987
655
596
476
372
345
329
306
Source: US Census Bureau
113
St. Louis Region Benchmark Comparative Analysis
To place the St. Louis Regional economy in a relevant context, it has been measured against the
State of Missouri, the US, and similar-sized metropolitan areas, including the regions of Indianapolis,
Memphis, Kansas City, Columbus, OH, and Cincinnati. In some cases, the St. Louis Region will be
benchmarked against other top ranked Regions that will be mutually exclusive to the particular
analysis corresponding to the data point. Within the following discussion, most figures and context will
include a comparable analysis of one or more types of the benchmark geographies mentioned above.
The St. Louis Region’s demographic and economic base analysis will shape opportunities for nearterm growth at the North and South assembly plants. Trends and growth rates for population,
education, employment and other metrics have been benchmarked against the state to assess the
Region’s performance and inform a set of relevant implications for the defined market.
Units of Government
According to the US Census, Missouri ranks sixth in among states in the number of local
governments. As of 2007, within Missouri there were a total 3,723 units of local government; of these,
the collection of local governments include county governments, sub county governments
(municipalities and townships), and special purpose local governments (school district governments
and special district governments). With the exception of the City of St. Louis, the entire state is
encompassed by county governments. For the purposes of the Census, the City of St. Louis is
counted as a county, rather than municipality, and St. Louis County is a county government, excluding
the city’s land area. The figure below is a per capita measurement of local government; for example,
the number of individuals governed by one body of government.
Figure 42: Per Capita Units of Government
12,000
10,788
10,000
8,000
6,000
4,847
5,217
3,903
4,000
3,449
3,042
2,760
1,609
2,000
0
Cincinatti
Source: Census
Columbus
Indianapolis Kansas City
Memphis
St. Louis
Missouri
US
Population Per Unit of Government
Some interesting points were revealed:

As depicted in the figure, Memphis, on one end of the spectrum, is showing that per every one unit
of local government, there are nearly 11,000 citizens, while the St. Louis Region is showing that
per every one unit of local government, there are approximately 3,000 citizens represented.

Compared to the benchmark Regions and the nation, the St. Louis Region has the lowest
constituency per single unit of government (2,760); the State of Missouri, at 1,609, is below the St.
114
Louis Region by nearly 1,000 citizens. As constituencies shrink per one unit of government, there
is a possibility of over-governance and a duplication of services. This may be true for both the
State of Missouri and the St. Louis Region.
Population and Households
The table below summarizes changes in the St. Louis Region population between 2000 and 2010,
compared to the State of Missouri, the US, and to the benchmark Regions. Some notable facts are:

When compared to the State of Missouri, growing at CAGR of 0.7 percent from 1990 to 2010, the
St. Louis Region is growing at nearly half the speed. When compared to the US, growing at an
annualized rate of 1.1 percent, the pace of population growth more than doubles the St. Louis
Region.

While all of the comparable benchmarks have experienced population growth from 2000 to 2010,
at an annualized growth rate of 0.4 percent from 1990 to 2010, St. Louis is growing at half the
pace of the comparable benchmark Regions. Growing at the quickest pace is Indianapolis, with
an annualized growth rate of 1.4 percent.
Table 36: Population Growth, 2000-2010
Cincinnati
Columbus
Indianapolis
Kansas City
Memphis
St. Louis
Missouri
United States
2000
1,979,202
1,612,694
1,525,104
1,827,069
1,205,204
2,698,687
5,595,211
281,421,906
2010
2,098,576
1,836,536
1,756,241
2,025,910
1,316,100
2,812,896
5,988,927
312,471,327
CAGR
0.6%
1.3%
1.4%
1.0%
0.9%
0.4%
0.7%
1.1%
Net Change
119,374
223,842
231,137
198,841
110,896
114,209
393,716
31,049,421
Source: US Census Bureau
While the population of the St. Louis Region grew by 114,209 between 2000 and 2010, the annualized
rate of growth was less than modest when compared to the State of Missouri, the nation, and
benchmark Regions.
Population Rank
The following table is a depiction of the top 30 Regions in the US as of the year 2000, and how they
will change if growth continues at their specific current rate. About 2.6 million people lived in the St.
Louis metropolitan area in 2000. That number jumped to 2.8 million in 2010. The rate of growth in this
Region is not keeping pace with other comparable sized Regions. In the current scenario, if growth
continues at a rate of 0.4 percent, the St. Louis Region, currently ranked 18th in total population among
Regions, will drop to the 20th position in 2020, and drop out of the top 20 by 2030, ranking 26 by this
time.
115
Table 37: Rank of Top 30 Regions by Population (2000-2030)
Metropolitan
Statistical Area
2000
Rank
2010
Rank
2020
Rank
2030
Rank
CAGR
New York
Los Angeles
Chicago
Philadelphia
Dallas
Miami
Washington DC
Houston
Detroit
Boston
Atlanta
San Francisco
Riverside
Phoenix
Seattle
Minneapolis
San Diego
St. Louis
Baltimore
Pittsburgh
Tampa
Denver
Cleveland
Cincinnati
Portland
Kansas City
Sacramento
San Jose
San Antonio
Orlando
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
1
2
3
5
4
8
7
6
12
10
9
11
13
14
15
16
17
18
20
22
19
21
28
27
23
29
24
31
25
26
1
2
3
8
4
9
7
5
14
12
6
13
10
11
15
16
17
20
21
29
18
19
34
30
26
31
25
35
24
22
1
2
3
11
4
10
7
5
16
12
6
13
8
9
14
15
19
26
27
35
18
21
37
30
28
29
24
36
22
20
0.3%
0.4%
0.4%
0.5%
2.1%
1.1%
1.5%
2.3%
-0.4%
0.4%
2.2%
0.5%
2.6%
2.6%
1.2%
1.0%
1.0%
0.4%
0.6%
-0.3%
1.5%
1.6%
-0.3%
0.6%
1.4%
1.0%
1.8%
0.6%
2.3%
2.6%
Key:
White
Lowest Value/Highest Rank (Region = Rank 1)
Blue
Midpoint Value/Midpoint Rank (Region = Rank 15)
Green
Highest Value/Lowest Rank (Region = Rank 30)
Source: US Census Bureau
Cost of Living-Comparison to Benchmark Regions
The cost of living index of top technology communities (i.e., San Jose, CA – Silicon Valley, etc.), as
well as some of the top tier Regions in the US can be found in the table below. The table illustrates
several interesting points:

The St. Louis Region’s composite cost of living score is the third lowest among selected cities, at
91.3, above only Pittsburgh, at 91.5, and Dallas, at 91.8.

The St. Louis Region was ranked 20 out of the top 20 Regions in terms of total population, but it
will drop from the top 20 by year 2030, if growth continues at its current pace. Therefore, it
appears that the St. Louis Region is growing at the same pace of metro areas like Los Angeles
116
and New York; however, comparatively, the cost of living and total population size in either of
those two metro areas is substantially greater than is in the St. Louis Region.

Ranking in the bottom 3 in terms of cost of living, the St. Louis Region does not appear to be
growing at the pace of its counterparts in this measure. In fact, the Region’s population growth is
more in line with Pittsburgh, a metro area experiencing a population decline of 0.3 percent
annually, as well as producing the lowest cost of living score at 91.5, when compared to the group.

Other notable Regions with lower cost of living scores are Dallas and Houston, producing cost of
living scores of 91.8 and 92.1, with population growing at annual rates of 2.1 percent and 2.3
percent. These figures suggest that, unlike the St. Louis Region, even as population growth
surges, cost of living stays below the national average.
Table 38: Top Regions Cost of Living (Quarter 1, 2011)
US Composite
St. Louis, MO-IL
Composite
Index
100%
Grocery
Items
13%
Housing
29%
Utilities
10%
Transportation
10%
Health
Care
4%
Misc.
Goods
33%
91.3
97.3
74.4
102.4
94.0
99.1
98.7
98.1
83.6
99.6
99.1
108.1
110.0
84.1
79.2
82.2
79.6
101.1
238.1
96.2
101.9
103.8
107.2
111.7
137.9
98.9
101.3
98.4
101.4
100.7
118.7
109.0
96.9
94.7
96.9
104.5
116.3
94.0
104.6
101.0
107.8
99.1
105.6
83.9
90.5
97.4
103.8
104.3
96.4
100.8
108.8
111.8
103.5
109.6
108.8
112.5
111.9
125.5
104.7
106.5
120.5
110.7
84.2
78.3
78.8
81.6
75.9
91.0
75.7
81.7
96.5
112.5
112.8
123.6
133.4
134.4
140.7
189.2
197.3
157.6
231.0
88.3
103.0
96.3
102.1
99.2
89.4
109.3
102.7
101.9
90.3
93.2
91.6
96.6
89.9
130.3
112.3
111.0
146.4
100.7
94.8
97.9
103.2
95.1
111.8
98.2
103.6
108.9
101.7
96.4
112.1
114.6
118.4
112.4
109.6
112.7
109.3
107.1
108.0
98.1
93.2
97.7
101.7
95.0
98.9
104.7
104.4
106.0
107.6
104.6
115.3
107.1
116.1
105.8
113.5
110.5
121.9
102.0
97.2
95.1
96.6
95.1
99.4
99.0
104.0
97.2
107.9
110.1
106.0
105.5
106.3
122.4
119.9
102.9
105.2
135.2
100.8
113.1
154.8
279.6
397.9
90.8
158.9
110.9
119.7
112.7
130.3
126.1
144.3
Comparable Technology Communities
Charlotte, NC
93.0
Austin, TX
93.4
Raleigh, NC
95.1
Orlando, FL
97.2
Richmond, VA
102.6
San Jose, CA
150.0
Major US Metro Areas
Houston, TX
90.5
Detroit, MI
90.6
Tampa, FL
92.2
Cincinnati, OH
93.3
Pittsburgh, PA
94.2
Atlanta, GA
95.2
Dallas, TX
95.8
Phoenix, AZ
96.2
Cleveland, OH
103.8
Denver, CO
106.4
Miami-Dade County, FL
107.7
Portland, OR
111.1
Chicago, IL
115.3
Seattle, WA
120.0
Philadelphia, PA
126.2
San Diego, CA
130.8
Los Angeles, CA
133.6
Boston, MA
137.6
Washington-Arlington141.0
Alexandria, DC-VA
San Francisco, CA
163.6
New York, NY
218.4
Source: The Council for Community and Economic Research (C2ER)
The metro areas experiencing the most population growth are Charlotte, NC; Austin, TX; and Raleigh,
NC; additionally, these Regions are technology communities or those which foster creativity, are
117
centers of innovation and represent important socio-economic assets to the region, state and nation.
Comparatively, the St. Louis Region has a lower cost of living among these metro areas, however, in
Charlotte, Austin and Raleigh, neither Region exceeds the national composite score of 100, indicating
that while these regions are growing at paces more than doubling the St. Louis Region, they can
continue to stay affordable while generating competition, technology innovation and sustaining longterm growth for their regions.
Bank Deposit Analysis
For this analysis, AECOM reviewed total deposits made to Federal Deposit Insurance Corporation
(FDIC) insured commercial bank regional offices, comparing the St. Louis Region to the defined
benchmark regions from 2000 to 2010. According to the FDIC, all deposits made to regional bank
offices refer to a range of products, such as demand deposits, money market deposits, other savings
deposits and time deposits. The figure below represents the total amount of deposited assets per
capita, implying the amount of personal wealth within each region studied and considers how personal
wealth has changed from the year 2000 to 2010.
Figure 43: Per Capita Regional Bank Deposits
$28,000
$26,000
$24,000
$22,000
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
118
St. Louis
Memphis
Kansas City
Indianapolis
Columbus
Cincinnati
From 2000 to 2010, the St.
Louis Region maintained a
larger amount of total
deposits within the Region
when compared to
benchmark regions – in
2000, reporting a total of
approximately $38 billion,
increasing to
approximately $71 billion
by 2010. Cincinnati
reported the next highest
totals in both 2000 and
2010, at nearly $32 billion
2000 2010
and $57 billion
Source: FDIC & Census
respectively. Personal
wealth, as defined by per capita deposits made to commercial banks within the region was the highest
in Cincinnati between the year 2000 and 2010, at $16,133 and $27,047; however, more interesting is
the fact that, relative to the benchmark regions from 2000 to 2010, the St. Louis Region moved from
fourth place, at $13,930 per capita, to second place, at $25,280 per capita. From 2000 to 2010, the
St. Louis Region experienced the quickest growth in per capita deposits made within the Region, at an
annualized rate of 6.1 percent and a total net growth of $11,349 per capita. Columbus slightly trailed
the St. Louis Region, growing at an annualized rate of 5.8 percent, followed by Cincinnati at an
annualized rate of 5.3 percent.
Technology Readiness
The chart below is measurement of per capita broadband technology accessible to the St. Louis
Region, compared to the benchmark Regions, the State of Missouri and the nation. Broadband refers
to a signaling method that supports a wide range of frequencies transferring sound, image and data.
In an ever evolving world, technology is a strong indication of economic and academic progress, or
vice versa. Moving forward, urban centers and states will require the bandwidth and technological
preparedness to stay competitive nationally and internationally.
Figure 44: Broadband Accessibility
Compared to all US metro
areas in bandwidth
98.0%
accessibility, the St. Louis
96.0%
Region ranked 144th in
94.0%
per capita wireline (fiber
92.0%
optic) coverage, and 234th
in per capita wireless
90.0%
coverage. Relative to the
88.0%
benchmark Regions, the
St. Louis Region has less
per capita wireless and
wireline coverage than all
Wireless
Wireline (Fiber Optic)
Source: Broadband USA
Regions surveyed, at 98.4
percent for wireless and 96.8 percent for wireline; however, compared to the State of Missouri and the
nation, bandwidth coverage is greater in the St. Louis Region.
US
Missouri
St. Louis
Memphis
Kansas City
Indianapolis
Columbus
Cincinnati
100.0%
Broadband and information technology access is critical to state and local economies. Economic
development, energy efficiency and advances in health care will become ever more dependent on
adequate broadband technology, as well as the knowledge and tools to leverage that infrastructure.
Being at the top in terms of bandwidth, speed and coverage will allow trade areas to remain viable and
competitive now and in the future.
Housing
Housing starts and building permits are both considered as leading economic indicators, that is, a
measurable economic factor that changes before the economy starts to follow a particular pattern. As
home prices have fallen and credit markets tightened, the number of permits issued for new housing
units nationwide has declined. The growth and decline of the number of residential permits issued
prior to 2005, and following decline in the market are presented below. Between 1995 and 2005, the
number of residential building permits issued in the St. Louis Region grew from about 11,500 to almost
15,500, at an overall rate of 35 percent, nearly on pace with the US, growing at 42 percent. Following
the rupture of the housing bubble, the number of permits in the St. Louis Region declined from
approximately 15,506 in 2005 to 5,452 in 2010, an overall decline of 65 percent during this five-year
period. Within this same period, the number of permits issued for new housing starts in the US
declined at a slightly faster rate, at 68 percent:

Growth in residential building permits issued in the St. Louis Region between 1995 and 2005
(35%) exceeded growth in Missouri (13%), while lagging slightly behind growth in new housing
119
permit issued in the US (42%). Of the Regions surveyed, the St. Louis Region was the second
highest for residential permit growth behind Kansas City (36%).

Following 2005, decline in residential building permits issued in the St. Louis Region (65%) was
comparable to declines nationally (68%). More so, the St. Louis Region experienced a less robust
decline overall when compared to the other Regions surveyed, which ranged from a low of 75
percent in Cincinnati to a high of 83 percent in Kansas City.
11,000
9,000
7,000
Year 2010
13,000
Chart Title
Year 2007
15,000
Year 1995
17,000
Year 2005
Figure 45: Change in Residential Building Permits Issued, 1995-2010
5,000
3,000
1,000
St. Louis
Source: Census
Memphis
Kansas City
Cincinnati
Columbus
Indianapolis
Housing Price Index Analysis
The Housing Price Index (HPI) is a quarterly measure of the movement of single family house prices.
As tracked by the US Federal Housing Finance Agency, the HPI is a weighted, repeat sales index,
measuring appraisals and all transactions on the same properties in 363 metro areas across the
United States. Data is collected by reviewing repeat mortgage transactions on single family properties
whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January
1975. The chart below compares the annual percent change in HPI in the St. Louis Region to other
US cities and nationwide. The following trends are noted:

Historic increases in the St. Louis Region’s HPI exceeded increases of benchmark Regions as
well as statewide. Between the first quarter of 2000 and the St. Louis Region’s market peak in the
first quarter of 2008, the Region’s HPI increased by 33 percent.

From the first quarter of 2005 to the first quarter of 2011, the St. Louis Region experienced a less
dramatic decline in their HPI, at 6.6 percent, than the nation, at 9.3 percent, the State of Missouri,
at 6.6 percent, and Memphis, at 9.8 percent.

While still experiencing a decline in home prices, the St. Louis Region’s decline was less dramatic
from the first quarter of 2010 to first quarter of 2011 when compared to the year prior, the most
dramatic single year decline in the Region’s as well as the nation’s history.
120
Figure 46: Change in Housing Price Index (1991-2011)
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
St. Louis
Memphis
Kansas City
Cincinnati
Columbus
Indianapolis
MO
US
Source: U.S. Federal Housing Finance Agency
Employment
The figure below looks at annualized changes in employment prior to, and following the onset of
downturn in the US economy, comparing how each benchmark region is recovering from the downturn
by measuring percent change in employment from May 2007 to May 2011.
Figure 47: Annualized Emp. Change: Recession – 05/07 to 05/10 & Recovery – 05/10 to 05/11
-2.0%
St. Louis
Memphis
-2.3%
2.8%
-1.5%
Kansas City
Indianapolis
1.9%
0.6%
-2.7%
1.7%
-0.7%
Columbus
Cincinnati
US
Missouri
Source: BLS - LAUS
-1.4%
-1.5%
1.0%
0.5%
0.4%
-1.9%
1.6%
May '07 to May '10
May '10 to May '11
The above chart shows that, from May 2007 to May 2010, the Region saw annual 2 percent decrease
in employment, slightly higher than the average of the other metro areas compared, annually decrease
at 1.7 percent rate. Statewide employment decreased at slightly slower pace, while the US decreased
121
at a slower pace during this period. From May 2010 to May 2011, employment levels in all the
benchmark regions began to recover. Moreover, the St. Louis Region recovered at a pace second
only to Memphis. Compared to the US, recovering by 0.4 percent since May 2010, the St. Louis
Region is recovering at a rate more than tripling the US.
The figure below is a performance measurement of employment growth in the St. Louis Region,
compared to employment in the benchmark geographies.
STL
Figure 48: Change in Employment Relative to Benchmarks (2008 to 2011)
Memphis
0.9%
Kansas City
0.9%
Indianapolis
4.1%
Columbus
-0.5%
Cincinnati
1.4%
US
1.9%
Missouri
0.2%
Source: BLS - LAUS
Since September of 2008,
at the onset of the US
recession, employment in
the St. Louis Region
appears to be performing
better than all of the
benchmarks, with the
exception of Columbus.
For example, while
employment in the St.
Louis Region decreased at
a rate of 1.8 percent during
this time period,
employment in the state of
Missouri, the US, and the
comparable Regions, other than Columbus, decreased at a quicker rate.
Unemployment
As the economy continues to rebound from the ill effects caused by the recession, the Region seems
to be doing better than most of the benchmarks. The figure below compares current unemployment
rates by Region and percentage point shift from May, 2007, ultimately measuring how each economy
is moving towards recovery.
Figure 49: Current Unemployment Rate (May, 2011)
Indianapolis
Columbus
3.7%
4.1%
4.4%
3.0%
Cincinnati
4.7%
3.8%
Kansas City
4.7%
3.7%
Memphis
4.7%
St. Louis
4.8%
US
Missouri
0.0%
Source: BLS - LAUS
5.4%
3.8%
4.3%
4.4%
4.8%
2.0%
4.5%
4.0%
Unemployment Rate May 2007
6.0%
8.0%
Increase as of May 2007
122
10.0%
Prior to closure of the
South Chrysler Plant in
October 2008,
unemployment in the St.
Louis Region was greater
than all of the benchmark
areas surveyed, at 4.8
percent in May of 2007.
Following closure of the
South and North Chrysler
Plants, rates of
unemployment again
increased in the St. Louis
Region. Unemployment in all of the comparable Regions, the state and the US spiked during this time
as well. Currently, with the exception of Memphis, the state of Missouri, and the nation,
unemployment rates in the St. Louis Region were the highest. The unemployment rate ranged from a
low of 7.4 percent in Columbus, to a high of 10.1 percent in Memphis. Since its peak rate of
unemployment in February 2010 at 11 percent, the unemployment rate in the St. Louis Region has
declined by 2.4 percentage points.
Private Sector Weekly Wages
Changes in private sector weekly wages among the St. Louis Region and benchmarks are shown in
the table below, which is a look at quarter four actual average weekly wages by year, in order to gauge
how they have responded within the context of the recession.
Table 39: Private Sector Weekly Wage (2001-2010)
St. Louis
Kansas City
Memphis
Cincinnati
Columbus
Indianapolis
US
2001
$739
$725
$700
$714
$699
$719
2005
$820
$806
$797
$811
$785
$801
2008
$1,008
$895
$870
$878
$850
$857
2010
$946
$943
$940
$941
$902
$899
$730
$829
$920
$973
Source: BLS - QCEW
From 2001 to 2010, the average private sector weekly
wage in the St. Louis Region grew from $739 in 2001 to
$946 in the fourth quarter of 2010, at an annualized
increase of 2.5 percent. This is in comparison to an
average annualized increase of 2.7 percent increase
across the benchmark Regions. The US private sector
weekly wage has increased by 2.9 percent, only slightly
higher than private sector weekly wages in St. Louis.
As of quarter four of 2010, the St. Louis Region’s average weekly wage in the private sector was
below the US average; however, St. Louis tends to fluctuate to levels above and below the US on a
regular basis, whereas in 2001 average weekly wages were $739 in the St. Louis Region and $730 in
the US. Compared to the regional benchmark average, St. Louis has remained a leader in the past
decade.
Figure 50: Change in Private Sector Weekly Wage, 2001-2010
28%
21%
14%
7%
0%
-7%
2001-2005
2005-2008
2008-2010
Source: BLS - QCEW
123
The adjacent chart looks
more closely at change in
the private sector average
weekly wage between the
fourth quarter of 2001, to
the fourth quarter of 2005,
to the fourth quarter of
2008, and the to the fourth
quarter of 2010, and
following the closure of the
South Chrysler plant.
Between 2001 and 2010,
the average private sector
wage in the St. Louis
Region grew by 28
percent over the nine year
period. This rate of growth
lagged comparable regions where growth ranged from a low of 29 percent in Columbus, to a high of
34 percent in Memphis. Average weekly wages increased faster in the St. Louis Region compared to
Indianapolis. Between the fourth quarter of 2008 and the fourth quarter of 2010, the St. Louis Region
was the only area that experienced a decline in average private sector weekly wages when compared
to the benchmark regions and the US, falling by 6 percent during this time period.
Income Growth
Per capita personal income measures money received on a regular basis from wages, in addition to
government and business transfer payments and interest. The following figure summarizes inflationadjusted per capita personal income for the St. Louis Region as compared to benchmark jurisdictions
over a ten-year period.
Figure 51: Per Capita Personal Income (1999-2009)
In 2009, per capita
personal income in the St.
Memphis
Louis Region was
$41,152, considerably
Kansas City
higher than Missouri’s
Indianapolis
statewide per capita
Columbus
personal income at
$36,181, and nationally at
Cincinnati
$39,606. Other than the
Missouri
US and State of Missouri,
United States
the St. Louis Region’s per
capita personal income
$30,000 $32,000 $34,000 $36,000 $38,000 $40,000 $42,000
annualized growth rate
1999
2009
Source: BEA & BLS - CPI
was the highest of the
metropolitan benchmarks areas surveyed. After adjusting for inflation, per capita personal income in
the Region grew by an annualized rate of 0.44 percent, as compared to an average annual decline of
0.02 percent across the other metro areas, with the highest being Kansas City, growing at an
annualized rate of 0.24 percent, and the least being Indianapolis, decreasing at an annualized rate of
0.24 percent.
St. Louis
Figure 52: Annualized Growth - Per Capita Personal Income
St. Louis
0.51%
Memphis
0.26%
Kansas City
Indianapolis
0.30%
-0.17%
Columbus
Cincinnati
-0.04%
-0.12%
Missouri
0.63%
United States
0.77%
Source: BEA & BLS - CPI
124
While per capita personal
income in the St. Louis
Region exceeds US
average, the Region’s per
capita personal income is
slipping against US
average. During this
period, the St. Louis
Region’s share of per
capita personal income
nationwide declined from
105 percent of US average
to 103 percent. Comparable Regions during the same period decreased substantially; in comparison
to the US, per capita personal incomes in Indianapolis have decreased the most, at 9.5 percent.
Industrial Space
Advantageously located, the St. Louis Region sits at the confluence of the Missouri and Mississippi
Rivers, and is connected to the surrounding area by a series of interstate highways as well as freight
railroad lines. However, based on a review of industrial property in the St. Louis Region, it does not
appear that the Region is performing as well as it should be as a major warehousing and distribution
center in the United States.
The table below provides an overview of the St. Louis Region’s industrial property inventory compared
to the selected benchmark regions. Relative to the benchmark regions, the St. Louis Region has the
second most industrial properties, the second most total space per square foot, the second most
occupied space per square foot, and second highest rent per square foot.
Figure 53: Industrial Property Inventory
Area
Cincinnati
Columbus
Indianapolis
Kansas City
Memphis
St. Louis
Properties
6,534
4,868
5,103
6,091
3,093
6,020
Total Space
(in ft2)
298,570,627
265,748,028
251,591,758
248,321,914
219,322,046
269,148,499
Total Occupied
Space (in ft2)
270,548,663
237,584,076
234,604,271
230,536,708
192,861,859
246,895,823
Vacant
Space (in ft2)
28,021,964
28,163,952
16,987,487
17,785,206
26,460,187
22,252,676
Vacancy
Rate
9.4%
10.6%
6.8%
7.2%
12.1%
8.3%
Average
Rent per ft2
$3.18
$2.88
$3.50
$4.64
$3.06
$3.81
Source: CoStar
At first glance, it appears that the St. Louis Region is performing adequately with respect to its
advantageous location, and in comparison to the benchmark regions. However, the St. Louis Region
employs the highest number of individuals in the Trade, Transportation, and Utilities Super Sector.
Furthermore, the St. Louis Region employs nearly 50,000 more individuals in the Trade,
Transportation, and Utilities Super Sector than Cincinnati, the region with the next highest amount of
employees in this super sector.
Figure 54: Industrial Space per Employee per S.F. TTU Super Sector (Q1, 2011)
1,547
1,510
1,370
1,405
1,285
1,107
Cincinnatti Columbus Indianapolis Kansas City Memphis
Source: CoStar & BLS - CES
125
St. Louis
The adjacent chart
portrays the amount of
industrial space per
employee in the Trade,
Transportation, and
Utilities Super Sector,
measured against the
benchmark regions.
Adequate space is a
valuable attraction for
logistics, warehousing,
supply-chain, and
distribution related
industries when
considering locating or relocating operations however, in the context of its superior location
advantages, the St. Louis Region it does not appear to have the appropriate supply of industrial space
per employee. The average amount of industrial space per employee in the Trade, Transportation and
Utilities Super Sector was 1,107 square feet, whereas all five of the benchmark regions ranked higher,
with Cincinnati posting the highest per employee average, at 1,547 square feet. Therefore, it could be
assumed that the St. Louis Region is not living up to its potential in terms of the total supply of
industrial space juxtaposed to the number of employees in industries requiring more industrial property
space.
Educational Attainment
The education of the St. Louis workforce will influence the Region’s business mix moving forward, and
help inform how new jobs may take the place of the jobs lost due to the closing of the Chrysler
assembly plants. Figure 52 examines the St. Louis Region’s share of population aged 25 years and
older by educational attainment as compared to the State of Missouri, the nation and benchmark
Regions.
Figure 55: Share of Population Age 25+ by Education Attainment (2009)
In 2009, nearly 63 percent
of the St. Louis Region’s
United States
population of individuals
Missouri
25 years of age and older
did not possess a higherSt. Louis
level degree (i.e.
Memphis
Associates, Bachelors,
Masters, or Doctorate).
Kansas City
St. Louis was below the
Indianapolis
national and state
averages for this measure;
Columbus
however, St. Louis was in
Cincinnati
the middle of the pack
High School or GED Associates Bachelors Masters Doctorate & Professional
when compared to
Source: Census
benchmark Regions,
where Cincinnati and Memphis show higher a number of individuals 25 and over without any sort of
degree. The data reveals several other notable points:
0%
10%
20%
30%
40%
50%
60%
70%

Slightly more than 35 percent of the St. Louis Region’s residents hold at least an Associate’s
Bachelors, Masters or PhD, exceeding the state average, at 30 percent, and the US average, at
33 percent. A key difference separating St. Louis from the rest of the benchmarks is the
concentration of Bachelors and Masters/Professional degree holders in the St. Louis Region.

The St. Louis Region is in fourth place, ahead of only Cincinnati and Memphis, in its share of
population with a college education. The percent of population with a college education ranged
from a low of 28 percent in Memphis to a high of 38 percent in Columbus.

Compared to the benchmark Regions, Missouri and the US, the St. Louis Region has the lowest
share of individuals that have graduated high school or received a GED, at 27.6 percent. Of the
benchmark Regions, Cincinnati has the largest share of individuals who have received a high
126
school diploma or GED, at 32 percent. Thirty-two percent of individuals in the State of Missouri
also have obtained at least this level of education.
The following figure further explores education by focusing on both doctorate (PhD, EdD) and
professional (MD, DDS, DVM, LLB, JD) degrees per capita. These post-secondary degrees are
important to business investment as they drive research and development, which in turn drives
innovation and business growth.
Figure 56: Doctorate and Professional Degrees Per Capita (2009)
United States
3.10%
Missouri
2.54%
St. Louis
3.11%
Memphis
2.37%
Kansas City
2.81%
Indianapolis
3.11%
Columbus
3.31%
Cincinnati
0.00%
2.64%
0.50%
1.00%
1.50%
2.00%
2.50%
Source: Census
3.00%
3.50%
In St. Louis, 3.11 percent
of the population 25 years
and older hold either a
doctorate or professional
degree. Indianapolis has
the same share whereas
Columbus is slightly higher
at 3.31 percent. However,
the share of adults with
doctorate and professional
degrees in the St. Louis
Region is greater than the
State of Missouri and slightly greater than the nation.
St. Louis has the second highest concentration of doctorate and professional degrees among adults
25 and older compared to benchmark Regions. At 1.13 percent of the total population 25 years of age
and older, St. Louis is behind only the Columbus Region, at 1.21 percent. Compared to the nation, St.
Louis is lagging a bit, however, doctorate degrees per capita in the State of Missouri trail the St. Louis
Region by a considerable margin. Other than Indianapolis and Columbus, the St. Louis Region has
the largest share of professional degrees, at 1.99 percent; this share is greater than both the State of
Missouri and the nation as well.
As the St. Louis Region continues to move forward, an important component to economic recovery will
be the ability to meet the demand for a suitable labor force. Accordingly, some of the most critical
strategies leading the Region out of the recession and on a path for recovering from the Chrysler plant
closures will likely be centered around education and workforce development.
As of 2009, educational attainment was average compared to the benchmark metro areas, but leading
the State of Missouri and the nation. In transition from the recession and the closure of the North and
South Chrysler plants, it will be important for the Region to develop strategies that encourage the
attainment of higher level education. The education and experiences that will be needed in the future
range from degree-bearing higher education programs as well as various training programs and
certification programs.
The following chart illustrates the change in real gross domestic product within the benchmark
Regions, the State of Missouri, and the nation as measured by the Bureau of Economic Analysis
(BEA). The BEA defines the gross domestic product as a true and real measure of the economic
status of regions and the nation, providing a factual account regarding economic activity and growth.
Typically, the real GDP constantly grows, rarely declining from the previous year’s level. For example,
127
from 2001 to 2008, Regional GDP grew at an annualized rate of 3.7 percent; faster than only
Cincinnati and Columbus. From 2008 to 2009, real GDP declined in the St. Louis Region by 2.9
percent, which was the greatest decline of all of the benchmarks surveyed. Overall, in the past 9
years, the St. Louis Region grew slower than the majority of benchmark Regions, the State of Missouri
and the US, while in 2009, declined quicker than all benchmarks surveyed.
Figure 57: Percent Change in Real GDP (2001-2009)
8.0%
6.0%
4.0%
2.0%
0.0%
United States
Missouri
St. Louis
Memphis
Kansas City
Indianapolis
Cincinnati
-4.0%
Columbus
-2.0%
Source: BEA
Violent Crimes Discussion
There is a perception among many that St. Louis is a dangerous environment. While there are risks
associated with many metropolitan regions, when compared to the benchmark cities, the St. Louis
Region, in fact, is not the most dangerous. The Federal Bureau of Investigation (FBI) compiles crime
statistics from local municipalities and aggregates the statistics for comparison as shown in the
following table. The most recent figures available by the FBI are 2009 figures. On a per 100,000
resident basis, the Region is not the most dangerous of the comparable cities as shown in the
following table. For the category of murder, the rates range for many communities between 1 and 7,
however, there are Regions in which the rate is near 10 and a few cases where the rate increases. In
the table below, the 2009 crime rates for murder and non-negligent manslaughter was 7.4 in the St.
Louis Region, down from 7.7 in 2007.
128
Table 40: Violent Crime Rates per 100,000 Residents, 2009
Area
Memphis
Kansas City
St Louis
Indianapolis
Columbus
Cincinnati
Murder and
Non-Negligent
Manslaughter
12.1
7.9
7.4
6.4
5.7
4.1
Population
1,299,027
2,060,705
2,829,698
1,742,101
1,797,471
2,178,158
Forcible
Rape
42.6
34
32.7
46.3
33.1
Aggravated
Assault
740
348.3
297.2
349.8
98.1
140.3
Robbery
352.2
145.8
147.8
239
220.3
164.4
Source: FBI.gov
Missouri vs. State Benchmarks
The following subsection is a review of the State of Missouri vs. other US states. In many cases,
analysis of the State of Missouri is helpful in understanding the broader implications for the St. Louis
Region.
Competitive Business Tax Climate
Taxes directly impact a business’ bottom line. Generally speaking, states with lower tax burdens will
be better advantaged for business investment compared to states with higher tax burdens. The
following figure explores the competitiveness of the State of Missouri from the perspective of taxes in
relation to other Midwest states. For this analysis, AECOM determined that Illinois, Ohio, Kentucky,
Indiana, and Tennessee were viable benchmarks to compare tax indices.
Corporate Tax
Sales Tax
Missouri
Illinois
Kentucky
Source: Tax Foundation
129
5.22
5.48
5.00
5.05
5.34
3.84
4.16
4.39
3.06
2.70
Unemployment
Insurance
Ohio
5.79
6.02
5.58
5.03
4.34
3.98
4.69
2.70
3.54
3.98
4.68
4.97
4.60
4.50
US = 5.0
5.03
5.18
5.78
6.06
6.31
6.71
Figure 58: Business Climate (2010)
Property Tax
Indiana
Tennessee
Overall Score
As reported by the Tax Foundation in 2010, the scores are developed based upon US average (5.0)
with each state falling either above or below this average; according to the Tax Foundation, the higher
the score, the more favorable a state’s tax system is for business. Findings include:

Missouri’s overall score of 5.48 reveals that it is considered a competitive location for business
investment; other than Indiana, with an overall score of 5.79; Missouri had the highest overall
score.

Comparatively, when looking at each individual tax category, the State of Missouri is near the US
average for sales tax and unemployment insurance, both with a share of 5.03, these categories
may be seen as key challenges for Missouri.

Corporate taxes (6.06) and property taxes (6.02) are key strengths for Missouri.
Unlike Missouri’s counterparts, no individual component of Missouri’s tax structure falls below the US
average. While Missouri may not rank number one overall in any component category, being above
average indicates that Missouri has a more favorable business tax system than most other states.
Tax Burden
The per capita state and local tax burden is a collection of various tax assessments placed on citizens.
The levels and assessments themselves are subject to change over time; however, as a composite,
the state and local tax burden measure, tabulated by the Tax Foundation, is made up of five
components: 1) property taxes; 2) general sales taxes; 3) individual income taxes; 4) corporate income
taxes; and 5) other taxes (including selective sales taxes on alcohol, tobacco, motor vehicles, utilities;
licenses; severance taxes; stock transfer taxes; and estate/gift taxes). The pace of growth for the
state and local tax rate burden in the State of Missouri compared to the US state average from 1999 to
2009 is shown below.
Figure 59: State and Local Tax Burden vs. US (1999-2009)
$50,000
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
10.0%
9.8%
9.6%
9.4%
9.2%
9.0%
8.8%
8.6%
8.4%
1999
2000
2001
2002
2003
2004
MO Per Capita Income
MO Per Capita Tax Rate
2005
2006
2007
2008
2009
US Per Capita Income
US Per Capita Tax Rate
Source: Tax Foundation

From 1999 to 2009, the tax burden for the State of Missouri trended, on average, 0.5 percent less
than the US average. Within this time period, in 2008, Missouri’s per capita state and local tax
130
rate peaked at 9.3 percent, whereas the US average also experienced a peak in 2008, reaching
9.9 percent.

Since 1999, Missouri’s tax burden has decreased at an annualized rate of 0.2 percent, while the
US average has increased at an annualized rate of 0.4 percent.

From 1999 to 2009, Missouri’s average rank was 30 (1 being the highest) on a full scale of 51 (50
states plus the District of Columbia), indicating that overall, more than half of the states in US
impose higher tax rates on their citizens than the State of Missouri.
States Pace of Recovery
The charts below depict the performance of individual states as of January of 2010, when employment
bottomed out and unemployment peaked. Since that time, employment in the US has picked up and
unemployment has decreased however, as the US is the composite of all of the states, these charts
are a measurement of how much they have improved (increased employment) or worsened (increased
unemployment), relative to the US. Key findings are described below:
Figure 60: Change in Unemployment, Relative to US (01/2010-06/2011)
From January of 2010,
unemployment in Missouri
decreased, however, at a
pace 3.9 percent slower
than the US (seen in the
US
figure below), whereas
unemployment in Michigan
and Indiana decreased at
pace nearly doubling the
US, at approximately 11
-10.2%
percent during that time
period. Missouri’s weak
MO
KS
IN
KY
OH
IA
MI
WI
MN
IL
pace is second only to
Source: BLS - LAUS
Iowa, where
unemployment increased by 1 percent overall, nearly 10 percent off the pace of the US.
10.9%
2.7%
0.5%
1.2%
-0.7%
-2.6%
-3.9%
3.3%
10.7%
Figure 61: Change in Employment, Relative to US (01/2010-06/2011)
3.2%
1.8%
1.7%
1.3%
1.1%
0.4%
1.1% 1.0%
1.3%
0.3%
US
MO
KS
IN
KY
OH
IA
MI
Source: BLS - LAUS
131
WI
MN
IL
Similar to the above figure,
relative to the US, the
selected states increased
employment at a faster
pace than the US. During
this time period,
employment in Kentucky
increased at a rate 3.2
percent faster than the
US, whereas Missouri,
while still improving at a
better rate than the US, at
a 1.3 percent faster pace, was near the average pace when compared to the benchmark states.
Policy Insights
The following section frames broader policy implications of key factors that will shape the regional
economy in St. Louis. The bullets below are a description of the topics covered in the following
section:

Retail Fuel Costs

Transit Oriented Development

Comparisons of “Right to Work” & “Closed Shop” states
Retail Fuel Prices
Historically, retail gasoline prices and inflation (as measured by the Consumer Price Index for all urban
consumers) are both economic measures indicating growth and the strength of the United States
economy. Viewed from a long-term perspective, inflation tracks movements in global oil prices.
Prices for oil and other energy commodities constitute a portion of the actual CPI, while other
commodity prices have an effect on inflation as well. For example, as commodity prices rise (i.e.
energy, food, and clothing) inflation reacts, thus increasing the cost of living, whereas when the retail
prices for gasoline increases, the demand for gasoline decreases.
The price in gasoline may also indicate a lifestyle change for many individuals who depend on the
automobile, suggesting that as a person spends more to fuel their automobile, that person will spend
less on other commodities, thus creating a reciprocal relationship between the change in fuel costs
and the change in inflation over time. This notion is mirrored in intermodal cargo transit as well,
suggesting that as retail diesel prices increase, the cost of intermodal transit will become a financial
burden for both private corporations as well as government entities – essentially any entity shipping
cargo by heavy truck. The historical annualized change in the US price of retail regular and retail
diesel gasoline, compared to the change in inflation from 1994 to 2011 is below.
Figure 62: Annualized Growth - Retail Fuel vs. Inflation (Month of March, 1994-2011)
From March 1994 to March 2011, both regular
and diesel gas prices in the US have
7.7%
increased at an annual growth rate of 7.7
percent, while inflation in the US has
7.7%
increased at an annual growth rate of 2.5
percent over the same period of time. While
both regular and diesel fuel are growing at the
2.5%
same rate annually, since 1999 retail diesel
fuels costs have outgrown retail regular fuel
Reguler
Diesel
Consumer Price Index
costs by a slight margin, 12 percent to 11.3
Source: EIA & BLS
percent. More staggeringly, since 2009 retail
fuel costs for both regular and diesel have grown at annualized rates of 35 percent for regular and
nearly 37 percent for diesel, while inflation actually dipped below average, growing at 1.5 percent
annually.
132
Overall, retail fuel prices tend to fluctuate at a more dramatic scale than inflation. As of April 2011,
current regular prices were $3.79 per gallon, while retail diesel prices were $4.06. Additionally,
economists believe that rising gas prices will have a negative effect on consumer confidence, sapping
consumer spending and slowing the pace of economic growth in the US – garnering a fear that
heightened fuel prices will depress the US economy further, slowing the pace of recovery.
However, the fact remains that while retail gasoline prices and commodity prices continue to grow at
the current pace, economic recovery may be slowed, potentially causing a reduction in consumption of
goods and a shift in personal transportation habits, negatively affecting the demand for oil.
Furthermore, if fuel prices continue at the current trends, nearly doubling the growth of inflation, the
economy may no longer be capable of absorbing higher retail energy costs, which may begin to affect
the prices of other goods and services, such as food and waste transfer.
Transit Oriented Development
Transit-oriented development (TOD) is considered a mixed-use residential or commercial area
designed to maximize access to public transit by developing high density neighborhoods within
walking distance to a transit station. The chart below looks at the amount of households falling within
0.25 miles of transit stations supporting the St. Louis Region, compared to two other benchmark transit
systems supporting the Chicago and Portland, Oregon regions.
Figure 63: Share of Households within a Quarter Mile of Transit Stations
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
8.1%
7.9%
3.3%
3.3%
0.9%
0.8%
2000
Chicago Region
2010
Portland Region
In both 2000 and 2010, St.
Louis’s share of
households within 0.25
miles of transit stations to
total households within
counties linked by transit
was below 1 percent,
while in the Chicago and
Portland regions the share
was much higher.
St. Louis Region
From 2000 to 2010, the
share of households within
0.25 miles of a transit station in the St. Louis Region has increased at annualized rate of 0.25 percent;
however, the Portland region’s share of households within a quarter mile of transit stations increased
at a slower pace annual rate of 0.11, while the Chicago region’s share of households within a quarter
mile of transit stations decreased at annualized rate of 0.31 percent.
Source: ESRI
As the St. Louis Region experienced an increased share of households within a quarter mile of transit
stations, growing at a faster pace than both Portland and Chicago, the overall proportion is much lower
than both benchmark regions. With that known, this may be an indication that travelers live farther
away from transit stations, or possibly ridership is not being maximized.
133
State and Local Government Revenue
Local government bodies, including counties, cities, municipalities, school districts and special
districts, are pivotal pieces, playing significant roles in lives of many and the nation’s economy. The
following graph depicts an index derived from actual state and local revenues based on tax collections
(inflation-adjusted) from 1988 (base year) to 2010. More so, this figure is a measurement of the fiscal
stress that has been felt by state and local governing bodies.
Figure 64: State and Local Government - Tax Collection Index (Base Year-1988 = 100)
200
180
160
140
120
100
Source: Census
State
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
80
Local
For this analysis it is important to understand how states and localities leverage revenues through tax
collection. Speaking in terms of revenue generated by tax collections, states have collectively
experienced more fiscal stress than their local counterparts due to a greater dependence on more
volatile sources of revenue, such as income and sales taxes. Localities, on the other hand, generate
revenue from a variety of sources. According to the US Congressional Budget Office, local
governments rely on state aid – about a third of total revenues, property taxes – nearly a quarter of
total revenues, sales and other taxes – one tenth of total revenues, a small portion from fees and
miscellaneous revenues, and less than one tenth from direct federal government aid. The chart
exhibits a number of notable points:

Since 1988 local government tax revenues grew in real (inflation-adjusted) terms at an annualized
rate of 2.7 percent, while states have grown at an annualized rate of 1.6 percent.

From the peak year in 2007, state tax collections, generating revenue, have dropped by a
considerable margin, decreasing at an average rate of 4.8 percent annually. In contrast, local
governments began to decrease by 2.6 percent annually from a peak in 2009 to 2010.

Since 1991, local government tax collection has increased as a share of the total local and state
tax collection revenues, whereas in 2001, making up 28 percent of the total share, jumping to 45
percent in 2010; concurrently, state governments’ tax collection revenue as a share of the total
state and local tax collection revenues have decreased.
134

The increase in local government revenue reflects specific policy decisions after September 11,
2001 to increase aid to local municipalities for emergency response.
Manufacturing in the US
In recent years, both labor and shipping costs in Asia have sharply risen. As the cost of doing
business in Asia increases – in some cases equal to US costs – many companies with a primary
distribution base in the US have begun to take notice; for example, a growing number of US
companies including General Electric and Caterpillar are locating and re-locating some their
production operations in the US. The process of relocating operations from Asia to the US, as a result
of higher transportation costs and increasing wage rates has been described variously as reshoring,
home-shoring, on-shoring, back-shoring, and repatriating. An indication of this shift has recently been
corroborated with an increase in US manufacturing employment.
Figure 65: Monthly Employment in US Manufacturing, January 1990 to July 2011
20,000
19,000
 21 year trendline
18,000
17,000
16,000
15,000
14,000
13,000
12,000
11,000
10,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Bureau of Labor Statistics
Right to Work Analysis
“Right-to-work” laws are statutes enforced by 22 US states. Enacted in mostly southern and western
states, the right-to-work provisions are allowed under the Taft-Hartley Act which prohibits deals
between labor unions and employers mandating membership or the payment of union dues/fees as a
contingence of employment. The Taft-Hartley Act applies prior to or after the hiring process, thus
mandating workplaces within right-to-work states to be “open shops.” As counterparty to right-to-work
states, “closed shop” arrangements are between the state, enacting / mandating laws, one or more
employer, and one or more worker organization, according to which an individual can only be
employed or retain his or her job upon conditional membership to a specified labor union.
135
Many believe that right-to-work laws have benefited those states that have enacted them while at the
same time, believing that forced unionization (i.e., closed shop) reduces economic opportunity. While
this may have been true early in the decade, the recession seemingly has impacted right-to-work
states with the same severity as their counterparts. The figures below look at labor force metrics in a
selection of right-to-work states (Arkansas, Kansas, Tennessee, and Texas) a selection of closed shop
states (Illinois, Indiana, and Michigan) relative to Missouri, an historically closed shop state which
recently has debated a statewide right-to-work policy. The first is a comparison analyzing total
employment growth in the manufacturing Super Sector, while the second compares current average
wages of production employees in this Super Sector.
Figure 66: Manufacturing Employment - Right to Work vs. Closed Shop, April 2002-2011
CAGR 01-08
CAGR 08-11
-2.1%
-2.6%
-3.7%
-4.9%
"Right to Work" States
Source: BLS - CES
-5.2%
"Closed Shop" States
-5.3%
Missouri
Overall, the states included in this analysis experienced a mass decrease in manufacturing jobs from
2001 to 2011; however, right-to-work states decreased at an annualized rate of 3 percent, slower than
closed shop states, decreasing at 4.1 percent annually, and the State of Missouri, decreasing at 3.4
percent annually. In this instance, Missouri trended more in line with right-to-work states. From 2001
to 2008, in the midst of the US recession, right-to-work states decreased at slower pace than
unionized states, as well as Missouri. However, during this same period, closed shop states
decreased at almost twice the speed, decreasing at 3.7 percent annually. From the height of the
recession in 2008 to 2011, Missouri experienced the sharpest drop in manufacturing employment,
decreasing at 5.3 percent annually, while right-to-work states dropped at an annual rate of 4.9 percent,
and closed shop states dropped at 5.2 percent annually.
The following figure looks at the average wage of production employees within the manufacturing
Super Sector in right-to-work states relative to closed states, and the State of Missouri. Right-to-work
states have experienced the quickest growth in wages, increasing by an annualized rate of 2.1 percent
from 2003 to 2011, while the State of Missouri increased by only 0.29 percent over this same period of
time. While right-to-work states are increasing at the quickest pace from 2003 to 2008, the average
wage of the right-to-work states surveyed for this analysis lag the average wage of closed shop states
surveyed, as well as the State of Missouri. More specifically, as of 2011, right-to-work states reached
a high in terms of average wage however, at this level, average wages were still lower than 2003
levels for both closed shop states and the State of Missouri.
136
$650
$600
Year 2003
($570)
$700
Year 2008
($617)
$550
"Right to Work"
Source : BLS - CES
"Closed Shop"
Missouri
137
Year 2011
($718)
Year 2008
($707)
Year 2003
($701)
$750
Year 2011
($675)
$800
Year 2003
($742)
$850
Year 2011
($794)
Chart Title
Year 2008
($795)
Figure 67: Average Weekly Wage for Manufacturing- Right to Work vs. Closed Shop, 2003-2011
138
Industry White Papers
139
Introduction
The following topics consider progressive innovations in energy, technology, manufacturing, human
capital, and logistics. Each trending innovation is summarized in a white paper, highlighting the
opportunities and implications for the St. Louis Region. White papers were developed looking at
value-added opportunity areas that have potential for application within the St. Louis Region. A
primary goal was to focus on trends that would diversify the Regional economy and drive job growth,
allowing the St. Louis Region to stay competitive by capitalizing on advanced industry innovations in
concert with the currently existing economic strengths of the Region. This section provides an
overview of innovative ideas, addressing ways to improve the competitive position of the Region and
as a response to the Chrysler dislocation, clarifying strengths, weaknesses, opportunities and threats
that will influence the ideal strategic outcome. The white papers cover the following subjects:

Automotive sector

Venture capital and business investment programs and tools

Renewable energy

Biofuels

Wind energy

Computer science and information technology

Innovations in technology

Water intensive industries

Containers on barge

Asian market opportunities
These profiles are meant to provide an overview of the topics as they presently exist, as well as
providing an indication of their future direction, and how they may be relevant for the St. Louis Region.
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Automotive Sector
Technically, auto assembly is comprised of parts manufacturing and vehicle manufacturing, ranging
from small-parts plants supporting few workers to sizable assembly plants employing hundreds and
even thousands of individuals. Types of vehicles manufactured include automobiles, sport-utility
vehicles (SUVs), vans and pick-up trucks (light trucks), heavy duty trucks, buses, truck trailers, and
motor homes. Manufacturing also includes parts such as engines, seats, breaks, and electrical
systems. Overall, the largest sector of the auto assembly industry is the manufacturing of motor
vehicle parts.
The US auto industry began to feel the devastating effects of the recession as early as December
2007 at which time, new car purchases dropped considerably, spurring a reduction in automotive
production. Consumption slowed, jobs were lost, and factories closed or consolidated. By 2009, two
of the three domestic automakers (Chrysler and General Motors) were forced to reorganize, both filing
for Chapter 11 bankruptcy. Even as domestic automakers are a critical fixture in auto production, this
industry is evermore a global one, with many domestic automakers assembling vehicles with parts
manufactured from outside of the US, as well as many foreign firms producing auto vehicles in US
plants.
Figure 68: Total Auto Production (Month of January, 1986-2011)
The adjacent chart is a
snapshot look of how the
13.0
auto assembly industry
has performed in the past
11.0
and what the current
trends are doing post9.0
recession. Total vehicle
production of automobiles
(cars), light trucks, and
7.0
heavy trucks ascended a
peak in 2000, reaching
5.0
nearly 14 million units,
which represents the
3.0
highest level of production
by domestic automakers
Total Auto …
Source: Federal Reserve
seen in the past 25 years.
Prior to 2000, vehicle production maintained a level of output above 10 million units annually, with the
exception of 1990 through 1992. Other observations include:
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
(Millions)

The average output of vehicle production from 1989 to 1999, producing nearly 11 million units
annually, was higher than the average output from 2001 to 2011, producing an average of 10.1
million units. Additionally, the total average annual production from 1986 to 2011 was 10.7 million
units. These statistics indicate how negatively the recession affected domestic vehicle production.

Prior to 2009, the lowest point in production was in 1990, when levels of output were nearly double
what they were in 2009.
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In the earliest years of vehicle production, automobiles represented the largest share of total vehicle
production. Trends in motor vehicle production by type of auto vehicle, specifically examining the
historical shift in production of automobiles and light trucks, are shown below.
Figure 69: Auto Production by Vehicle Type (Month of January, 1986-2011)
Chart Title
(Millions)
8.0
7.0
6.0
5.0
4.0
3.0
2.0
Source: Federal Reserve
Automobile
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1.0
Light Truck
Notable findings:

For eleven years prior to 1997, automobile production exhibited the larger share of total
production; however, in 1997 light truck production broke that threshold, becoming and
maintaining the larger share of total vehicle production from 1997 to 2011.

Peaking production in 1986, at 8.2 million units of output, automobile production experienced an
86 percent decrease to the lowest point in production in 2009; moreover, light truck production
peaked in 2004, at 7.84 million units, enduring a decrease of 70 percent to its lowest point in 2009.

From 1986 to 2011, average production of cars and light trucks amounted to about 5.2 million
units annually. As mentioned earlier, however, there was a major shift in the type of vehicle
produced from a majority of automobiles to light trucks between 1996 and 1997.
Overall, this illustrates that during the collapse of the auto industry, automobile production was
affected in a more negative way than light truck production. Domestic vehicle production is only now
beginning to rebound following the worst recession in US history. While it is clear that St. Louis is no
longer the automotive center that used to be, the Region still supports one assembly plant as well as a
specialized workforce that can adapt to evolving manufacturing processes in the industry. The goal is
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to sustain existing assembly operations and supplier activity such that recovery can occur as
automotive sales recover. For the moment, the auto sector is impacted by key realities:

Although auto industry sales levels have recovered from historic lows in 2009, current production
remains well below pre-recession levels which trended in the 9 million to 12 million units per year
range. The resulting decrease in volume is a practical challenge for the Regional supplier base,
which now needs to diversify. It has also impacted logistics providers, who are facing similar
challenges.

Although bankruptcy restructurings at Chrysler and GM have allowed these companies to
approach profitability and reduce capacity, the industry is still challenged by the reality of overcapacity, particularly in export markets, as evidenced by the bankruptcy announcement at Saab.
For the US market, further change is expected by 2013, when Mazda is reported to leave the US
Market.

Other future developments include the integration of more fuel-efficient vehicles in response to
concern about US dependence on foreign oil, rising fuel costs, and energy efficiency derived from
general environmental concerns. On July 29,, 2011, President Obama announced the
administration’s new fuel standards for all new light trucks and cars sold in the US. By 2025, all
new cars and trucks, model years 2017-2025, will be required to meet a performance requirement
equivalent to 54.5 miles per gallon (mpg); in addition, these vehicles must reduce emissions to
163 grams per mile. The White House projects that consumers will save nearly $1.7 trillion at the
gas pump, the US will save 12 billion barrels of oil and eliminate 6 billion metric tons of carbon
dioxide pollution. This requirement more than doubles the current Corporate Average Fuel
Economy (CAFE) standard of 24.1 mpg, an active step in reducing the nation’s dependence on
foreign oil and oil based fuel. This policy implies a structural change in the types of vehicles
manufactured in the next 20 years and beyond, thus manifesting a potential demand for new
investments in automobile production and retooling plants.

The 2011 Japan tsunami exposed weaknesses in the supply chains for both US and Japanese
manufacturers.
While the auto industry in the US remains challenged, the following elements also need to be kept in
mind. Research shows that the major domestic and international auto producers are looking at their
production processes to reduce the number of activities required to build a car, with the goal of
streamlining the assembly line, reducing costs, waste, and the amount of time needed to complete
fabrication. The biggest change in this area is the emerging role of Tier 1 auto suppliers, who now
provide larger car components (called modules), such as dash boards, instrument panels, and seats to
the big auto makers for final car assembly, as opposed to smaller individual car parts. While in the
past, auto manufacturers had the in-house capacity to make all their car parts, economic realities have
changed this practice. The Japanese auto makers were the first to move to outside parts suppliers,
which led to the formation of Denso, Inc. now one of the largest Tier 1 suppliers, producing heating,
ventilation, and air conditioning systems for American, Japanese, and European car makers. Firms
such as Magna and Eaton are now in position to compete with the “Big Three” and assemble cars.
The growth of Tier 1 suppliers is important for several reasons. First, to facilitate development of new
models, the auto manufacturers are sharing more information with suppliers such as new car design
information, with the expectation that the suppliers will develop in-house design and R&D capabilities
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to develop new components. As well, the contracts signed by the auto manufacturers are increasingly
long-term, i.e. over the length of a model production run, with far greater emphasis on quality,
compared to price. For the big auto companies, one additional benefit is that they are able to shift a
larger share of factory retooling costs for new models to their Tier 1 suppliers. Industry experts expect
the current period of rationalization in the supplier chain to continue, as companies find that they need
to get bigger and more diversified to remain profitable.
As a second notable process improvement example, suppliers are adapting traditional assembly
approaches to reduce costs. In one example, a traditional steel fabrication production process, called
roll-forming, could be adapted to build truck beds. Before roll-forming, the truck bed was stamped
from a sheet of steel. The problems with stamping were that it required a heavier gauge steel which
was more expensive, produced a product with inconsistent metal thickness and quality, and created
excess waste. Sources indicated that the innovation of roll forming for this manufacturing process was
significant in that it created a stronger, higher-quality product using lower gauge steel with lower cost,
reduced weight and almost no excess waste. The innovation of this process is important in that it
demonstrates that competitive forces in the auto industry are growing stronger, forcing companies to
be more innovative, which requires investment in R&D.
Just-in-time-Manufacturing (JIT) – The Japanese car makers pioneered this manufacturing
approach which requires the delivery of auto components and parts to the final assembly destination
only as they are needed on a continual basis. The approach is significant because it reduces
warehousing and overhead costs for the primary auto manufacturers and streamlines the production
process. It also creates other benefits, reducing the number of Japanese suppliers and encouraging
tighter links between these companies and the auto manufacturer which has simplified the process of
organizing and planning the delivery of parts and components. Events related to the 2011 Tsunami
aside, JIT remains a clear standard for vehicle production, offset by the broader strategic question for
firms whose supply chains have grown too long over the past 10 years.
The Car Platform Concept – Car producers are in the process of developing car platforms, in which a
basic auto frame can support a number of car design variations, with the ultimate goal of developing
one frame to support designs in different countries. As one example, the Audi A4 and Volkswagen
Passat passenger sedans share the same basic frame and engine components, while offering
different amenities and extras to support their particular market segments. For Volkswagen, which
owns Audi as well as Porsche, the benefits of sharing components between cars while preserving the
distinct markets for each brand is significant, allowing them to reduce costs and generate increased
economies of scale. At the same time, companies such as VW need to take care that the consumer
can see differences between a VW and an Audi in terms of appearance, handling, value, and cost. As
a related theme, these platforms are increasingly global in nature.
Materials – Auto makers are looking for stronger, lighter weight, lower cost materials, including
composites, powdered metals, plastics, ceramics, and aluminum. Obviously, lighter-weight stronger
materials are attractive to the industry, which is always aware of the fuel economy and car safety
issues. Further research in this area is a key for the industry.
The Nature of the Auto Industry – This industry, which is highly capital intensive with associated
high costs of entry, tends to discourage new entrants. Moreover, the industry is driven by a constant
need for process innovation, i.e. finding cheaper and faster ways to build the same thing or make it
better/safer. According to the Economist, these incremental innovations need to occur on a regular
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basis, driven by communication with suppliers and customers, whose needs and expectations change
constantly. Given the high costs of producing autos, as noted above, more radical innovation tends to
be discouraged. These more radical “product” innovations occur infrequently. On a broader level,
because the auto industry pulls information and resources from so many areas (materials, computers,
aerodynamics, design, engineering, etc.) linkages to other industries and areas of the country and
world are significant, and create opportunities for spin-off of new ideas.
The Great Recession – One clear result of the recession is that the auto industry has retreated
geographically back towards its core regional location, anchored by the I-75 and I-65 corridors (also
known as “Auto Alley”), which extends down from Michigan to newer automotive locations in the
southeast. The majority of plants that were closed were on the periphery of the system.
AECOM also noted the potential for attraction of domestic auto industry R&D, partially through
collaborative efforts among the big three domestic auto producers, but also through a growing
segment of new, smaller start-up electric vehicle manufacturers including Coda Automotive, Tesla
Motors, Fisker Automotive, and Global Electric Motor Cars.
It is clear that the need for collaboration has grown, as cars and trucks are significantly more complex
compared to 10 years ago. One platform for collaboration is the United States Council for Automotive
Research (USCAR), an umbrella organization supported by General Motors, Ford, and Chrysler which
structures collaborative groups or consortiums which focus on specific auto-related concepts. The
organization currently has research programs in a large number of areas, including:

Advanced powertrains

Aerodynamics

Hydrogen and fuel cells

Fasteners and adhesives

Materials and composites

Emissions

Energy storage

Electrical systems, software, and controls

USCAR is also partnering with US automakers (including Tesla), energy producers, utilities, and
the US Department of Energy to improve vehicle efficiency, infrastructure, engine performance,
and use of advanced materials. The program called US Drive will encourage technical information
exchange and implementation of new technologies. The US Department of Energy is taking a
similar approach with trucks as well.

The need for research in these areas is on-going. On the manufacturing side alone, there is work
looking at new welding technologies for aluminum, and new machining and forming techniques for
steel, including hydroforming and superplastic forming. Also under research are new and more
environmentally friendly painting processes, and efforts to streamline and standardize electrical
systems and connections in cars. This last point is part of two specific and evolving concerns with
modern cars, which relate to their increasing complexity:

Vehicle electrical distribution systems are complex, requiring as many as 2000 terminals, 300
connectors, up to 80 electronic control units, and 60 or more miniature light bulbs, which are not
interchangeable between car platforms, or between companies.

Newer models also come with more advanced computer systems and software, of which only a
small portion relates to on-board entertainment systems. Of greater concern is the growing need /
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use of software to manage vehicle performance, safety systems, systems communication, engine
and break systems, electronic control units, and overall emissions. The 2010 recall of certain
Toyota vehicles related in part to software concerns speaks to the growth of these systems.
One last challenge which the transition to alternative fuels is impacting relates to the federal gasoline
tax and the growth of plug-in electric vehicles. While the gasoline tax is the primary funding
mechanism for federal road improvement programs, the arrival of electric vehicles creates an obvious
dilemma for how funding for road improvements can be sustained. Policy conversations have
included discussion of electric vehicles being assessed a special tax to offset road improvement costs.
Implications for Missouri include:

The State of Missouri’s Economic Development plan includes recommendations to look at
statewide deployment of plug-in vehicles and charging stations.

A review of ARRA stimulus investments related to electric drive and battery components indicates
that Missouri benefited only modestly from this investment.

Similar to past military base closure rounds, several impacted Midwestern states have formed
more formalized partnerships to respond to the closures. One such program is called AMTEC, the
Automotive Manufacturing Technical Education Collaborative. Since starting in 2005, the program
has grown to include educational institutions in Alabama, Indiana, Kentucky, Michigan,
Mississippi, Ohio, South Carolina, Tennessee, Texas, and Virginia. The program encourages
collaboration between community and technical colleges and industry partners. Missouri does not
appear to be a participant.
Venture Capital / Business Investment Programs and Tools
Capital formation for early stage investment in new and small businesses can be accomplished in a
number of ways. Three key groupings of investment types are profiled in this section. Each of these
has been used in varying ways and to a different extent in several states and regions in the US. The
groupings are categorized as:

Pre-seed and grant programs

Investment and loan programs

Venture and angel capital
Pre-Seed and Grant Programs
These programs are typically modest dollar amount – tens of thousands to a couple hundred thousand
dollars – which aim to support early business and technology concept development. Some funds also
leverage Federal research grants. Funds are non-recoverable and uses of funds include product
research and development, product demonstration, pre-revenue and pre-feasibility activities, and
support in securing other resources for business development and growth. While these programs
have a net-negative financial cost, they are supportive of some of the earliest stages of business
development which are often the most difficult to secure resources for. A drawback of this type of
funding is that sometimes ideas which are funded do not have a viable commercial application as they
are merely at an ‘idea stage’.
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Investment and Loan Programs
Investment and loan programs are often structured to return capital to the fund which can then be reused for continued business investment activities. Some of the more effective forms of these
programs are highly attuned to the private sector which is valuable to the program for two main
reasons:

The private sector can help to guide the selection of businesses that get funding, and this insight
may be valuable in selecting businesses most likely to succeed in the marketplace.

When public sector investment is targeted to businesses with private sector potential, much larger
sums of money can be leveraged from the initial public sector investment.
Equity and debt investments are sometimes made through “fund of fund” investments – pools of
capital managed by venture capital investors – or special hybrid venture capital corporations. When
leveraging private sector capital for additional sources of funds, such programs often turn to major
regional banks with a vested interest in the community, organizations of regional businesses, pension
and retirement funds of area businesses, or CAPCOs (special tax-advantaged Certified Capital
Companies funded by insurance companies which operate in the states). With respect to loans there
are a number of structures to consider including taking the first-loss position in a loan structure,
subsidized interest rates, or using loans as complements to other Small Business Administration
(SBA) programs.
Table 41: Reviewed Programs
State
Ohio
Florida
Kentucky
Maryland
California
New York
Pennsylvania
Other
Program
Entrepreneurial Signature Program
Pre-Seed Fund Initiative
Ohio Venture Capital Authority
Ohio Technology Investment Tax Credit Program
Florida Opportunity Fund
Institute for the Commercialization of Public Research
State University Research Commercialization Assistance Grant Program
Commonwealth Seed Capital LLC
Kentucky New Energy Ventures Fund
Innovation and Commercialization Center Program
Kentucky Enterprise Fund
Maryland Venture Fund
Pacific Community Ventures
Tri-County Economic Development Corporation
Prospect Street Discovery Fund
Queens County Overall Economic Development Corporation
First Industries Fund
Keystone Green Investment Strategy
Ben Franklin Technology Partners
Pennsylvania Angel Network
Certified Capital Company (CAPCO) programs
Venture and Angel Capital
Venture Capital (VC) investment in the traditional sense has matured and evolved over the last several
decades for a couple of key reasons. First, VC now is generally more risk averse, seeking
investments in companies in later stages of development with somewhat proven concepts, and is now
less likely to be regionally specific. Second, the quantity of capital many VC funds are mandated to
147
invest requires focus on larger deal types of $500,000 and $1 million and greater, whereas most early
stage companies require capitalization below this threshold. As a result, early stage and pre-seed
investment below the $500,000 and $1 million threshold is increasingly filled by Angel Investment
networks and funds of relatively affluent individuals, sometimes coupled with one or more of the
aforementioned program types.
Angel investor groups often have regional or “quasi-philanthropic” or civic-oriented mandates for
investments. This is to say that they seek return on capital but balance this need with other mandatespecific goals such as businesses in particular communities or which fit a certain profile unlikely to be
met by VC funds. Some examples include the SDSU/Brookings Angel Fund which helps fund preseed and concept stage enterprises in the upper Midwest that are located in incubators with economic
development (jobs) potential, and Robin Hood Ventures which focuses on early stage investment in
new companies in the Philadelphia region.
In some cases, and increasingly in recent years, such funds couple with public-sponsored programs
(some mentioned previously) to provide a first-loss protection, co-investment, or tax advantaged
investment status. A more recent proposal along these lines is the Angel Investment Tax Credit
proposed for Pennsylvania which has the potential to benefit early stage capital formation. The
Pennsylvania proposal would enable a 25 percent tax credit on funds invested in Pennsylvania startup businesses related to technology. Similar to other state tax credit programs, out-of-state investors
can typically resell credits at a discount in secondary markets, and local investors with high state tax
levels can achieve the full 25 percent credit less associated legal fees. Another example of policy
moving towards support of early stage investment is Tennessee’s INCITE fund program. Tennessee
has developed INCITE as a $50 million fund under its Department of Economic and Community
Development to accomplish similar functions as angel funds, namely early-stage, seed, and coinvestment funding.
It is important to note that the models for early stage business investments are evolving. Venture
capital (VC) investment in the traditional sense has matured and evolved over the last several
decades leaving more open the space for early stage investments of less than $1 million, which
accounts for a notable share of new and small business capital needs. Increasingly, states and
regional agencies or groups are moving to address this early stage need. As has been done to
different extents in other states and regions, this process of early stage business investment can be
enhanced and made more robust with co-investment by the public sector through first-loss protection,
direct co-investment, tax advantaged investment status, or a combination of the three.
Renewable Energy
This section highlights trends in renewable energy development in the US. The industry has important
implications for business growth in the Midwest, and in the St. Louis Region. For this section, AECOM
reviewed the following industry and expert publications for a general overview of renewable energies:

Energy Information Association (EIA)

Encyclopedia of Energy

Land Policy Institute

The Christian Science Monitor
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Types of Energy Sources
Renewable energy encompasses a broad array of power generation sources. It generally refers to
power derived from renewable sources such as wind and solar, as opposed to finite sources like oil.
Renewable energy technologies turn renewable sources of fuel into usable forms of energy, most
often electricity but also heat, chemicals, or mechanical power. Three areas of renewable energy are
summarized below:
Solar
Solar energy is produced when the sun’s light and heat is captured to create energy. Solar energy
may be used passively to heat and light buildings, or actively to generate electricity (solar photovoltaic)
or heat (solar thermal). Solar power can be used both in smaller systems for the home and in large,
utility-scale applications. While solar capacity is greatest in the US southwest, as technologies
improve, solar is becoming more feasible as an alternative energy source in other US regions,
including the Midwest.
Wind
Winds are created by uneven heating of the atmosphere by the sun, irregularities in the Earth’s
topography, and the rotation of the Earth, and winds are also influenced by local terrain, bodies of
water, weather patterns, vegetative cover and other factors. Harvested by wind turbines, wind energy
is one of the top growing sources of energy in the US. Wind energy is produced when spinning blades
around a central hub power a generator which produces electricity. There are a number of factors that
determine the feasibility of wind energy development at a particular site, primarily wind speed.
Between 2006 and 2030, wind generating capacity is projected to grow by an annualized rate of 9.5
percent, as compared to 0.8 percent for hydropower, and 3.8 percent for wood and biomass.
Biofuels
Biofuel is a gas or liquid fuel made from plant and animal materials (biomass) such as wood, wood
waste, peat, railroad ties, wood sludge, agricultural waste, straw, fish oils, sludge waste, municipal
solid waste and landfill gases. There are several types of biofuels. Two commonly produced in the
Midwest are tied to corn and soybean bases, and include ethanol and biodiesel:

Ethanol: Ethanol is an alcohol-based alternative fuel produced by fermenting and distilling starch
crops that have been converted into simple sugars. Feedstock for this fuel includes corn, barley,
and wheat. Ethanol can also be produced from “cellulosic biomass” such as trees and grasses
and is called bioethanol. Although, as Ethanol was considered a long-term strategy for alternative
fuel production in the US, in June 2011 the US Senate voted to end a $6 billion annual tax subsidy
due to several consecutive years of poor production performance.

Biodiesel: Biodiesel (fatty acid alkyl esters) is a diesel replacement fuel made from natural,
renewable sources such as new and used vegetable oils and animal fats, and algal oil. Just like
petroleum, biodiesel operates in compression-ignition engines. Soy-diesel is a blend of filtered and
clarified crude soybean oil with diesel fuel and can contain up to 20 percent soybean or algal oil.
Generally, oils must be converted to biodiesel in a process called transesterfication (adding
alcohol to the oil) in order to be used effectively in a compression ignition engine.
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Demand
The use of renewable fuels nationwide continues to grow. The most recent release of energy
consumption statistics reported that between 2004 and 2008, renewable energy consumption in the
US grew by an annualized rate of 4.2 percent despite a 0.7 percent annualized decline in fossil fuel
consumption. Of various renewable energy sources, wind was the top growth sector at an annualized
rate of 40 percent, which was followed by biofuels at 28.7 percent and Solar Thermal/PV Energy at
10.5 percent. Several trends have supported growing demand for renewable energy in the US:

Growing energy demand. Over the past thirty years, demand for energy in the US has been
growing steadily, a trend driven by population increases and industrial growth. This growing
demand has been particularly strong in electricity and liquid fuels.

Concerns over climate change and energy independence. Growing concerns over the impact of
fossil fuels on climate and a need for enhanced energy security and self-sufficiency is driving a
shift in US energy policy in favor of renewable energies. Growing political support for renewable
energy is based upon the premise that renewable energy will ultimately decrease greenhouse gas
emissions, decrease US reliance on foreign oil, and bolster US agriculture.

Incentives. Increasingly, federal, state and local governments are incentivizing renewable energy
through the use of market and production-based incentives to help offset the price disadvantage
renewable energies have over traditional fuels sources.
Market Barriers to Renewable Energy Development
Despite growing demand for renewable energy in the US, regulatory, economic and policy barriers
continue to place renewable energies at a disadvantage when compared to traditional sources of
energy like coal and natural gas. Among these disadvantages:

Costs and pricing. Short-term cost driven decisions continue to hinder renewable energy
development. Some have argued that public subsidies for traditional sources of fuel unfairly
“distort” the market, placing renewable energies at a distinct price disadvantage.

Higher initial capital costs. Higher initial capital costs as well as the potential for import taxes and
duties on renewable energy technologies exacerbate up-front costs over traditional fuel sources.

Infrastructure. Developing new renewable resources will require significant capital investments to
upgrade and modernize the US energy infrastructure. Michigan, Texas and other US states are
currently in the process of trying to remedy these constraints by investing in existing and new
transmission grids.

Restrictions on siting and construction. Siting wind turbines, photovoltaic installations, or biomass
facilities may face significant opposition related to aesthetics or noise, particularly in urban areas.
In addition, renewable energy facilities compete for land with agricultural, recreational, scenic, or
development interests.
Advantages
Since the late 1990's, a series of studies have evaluated the employment opportunities that could be
generated by the renewable-energy and energy-efficiency industries. These studies have consistently
concluded that investments in renewable energy could provide significant benefits over traditional
fossil resources through:
150

Additional employment. As compared to coal-fired power plants, renewable energy components
(i.e. wind towers) are smaller and increasingly produced locally rather than by out-of-state
contractors. As such, more employment benefits accrue in-state. Further, renewable energy
developments like wind farms rely upon a large number of installers, contractors, and laborers that
cannot be outsourced, thus generating local economic benefits.

New markets for existing industry. US manufacturers that have traditionally supplied the
automotive, machinery and electrical industries are beginning to generate new employment and
revenues by manufacturing renewable energy components, particularly in wind and solar.

Brownfield reuse. Renewable energy is also becoming a way for communities to redevelop
brownfields and other former industrial sites. Renewable energy development on brownfields is
logical, especially when fragmented land ownership and local policy tends to limit renewable
energy development on greenfields. Three characteristics tend to make brownfields particularly
suited to renewable energy development:

Proximity to grid transmission. Former industrial sites are often located in populated areas that
can easily access the energy grid.

Immediate energy demand. Urban brownfields are typically located in proximity to consumers and
homeowners which may allow more localized energy supply.

Available land with few current competing uses

Job growth and economic stimulation, strengthening the competiveness of the US

Reducing pollution and carbon emissions released into the Earth’s atmosphere

Natural resource preservation and conservation
Role of the Public Sector
Compared to traditional sources of energy, most renewable energies are still in the early stages of
technological development and have higher up-front costs. As such, financial incentives for the
manufacture, purchase, and installation of alternative systems have become critical to near-term
supply development. In addition to new and impending federal policies, individual states and
municipalities have taken the lead to provide incentives and supportive policies for renewable energy
development. These incentives and policies generally fall into one of three categories:

Market-based. Market-based policies are structured to capitalize upon the inevitable growth in US
energy consumption by mandating that a share of the increase in demand is provided by
renewable sources. Direct initiatives to generate demand for renewables vary by state depending
upon whether the state sets a hopeful goal for renewable energy use or mandates a specific result
through a Renewable Portfolio Standard (RPS).

Production-based. Production-based incentives provide direct financial benefit for the production
of renewable energy in two primary ways: (1) income tax credits to producers based on the
amount of energy generated; and (2) direct payments to producers based on the amount of
energy generated.

Non-production. Non-production incentives generally look to reduce construction or operational
costs. These incentives commonly include provisions for accelerated depreciation of wind-related
151
assets, tax credits based upon installation costs, property and sales tax reductions or exemptions,
and permit expedition for siting of renewable energy developments.
Public Policies Currently in Place
Undoubtedly, to advance the clean energy agenda, public policy and public sector support is needed.
Currently, renewable energy policies are underway at both the state and federal level in the form of
comprehensive energy plans, renewable energy standards and energy efficiency metrics for the
development of alternative fuels, waste reduction efforts and job training. Many levels of the public
sector have adopted or considered the need and value for complementary renewable energy policies.
Public policy supporting renewable energy is enforced at either the state or federal level, below is an
overview of the current types – as of 2009 – of assistance programs in place:
State Policies

46 states offer some type of incentive programs for corporations and residents to adopt energy
efficiency systems, processes and equipment.

23 states offer loan financing for residential, commercial and industrial property owners for the
purchase of energy efficient systems, processes, and equipment.

22 states as well as the District of Columbia offer rebate programs, promoting the installation of
solar water heaters and solar panels for electricity generation.

29 states as well as the District of Columbia have mandated renewable energy policies requiring
electricity providers to supply a minimum amount of power generated by renewable energy.

19 states have established standards for process of renewable energy generation, transmission
and use.

23 states are partnering together in major regional initiatives to increase renewable energy
generation and use, with the goal to reduce carbon pollution released by power plants.

14 states as well as the District of Columbia have adopted vehicle emission standards, requiring
automakers to produce automobiles which will release fewer carbon emissions, in line with
California’s vehicle emissions standards.
Federal Policies

In the 1960's and 1970's, laws were enacted to assist recycling, waste reduction and waste
management industries.

The EPA’s EnergyStar and WaterSense certification was enacted to certify commercial consumer
products which conserve energy and water.

In 2007, President George W. Bush signed a bill enacting the first congressionally mandated fuel
efficiency policy for cars and light trucks (the Energy Independence and Security Act of 2007)
expected to save consumers $25 billion, resulting in the savings of 1.1 billion barrels of oil per day.

The 2009 American Recovery and Reinvestment Act (ARRA) – federal stimulus bill – included
several clean energy provisions with multiple implications, such as renewable energy generation,
energy efficient industry, green jobs, and investments. Within the bill there are billions of dollars
allocated towards renewable energy and “green” practices; for example, $85 billion for energy and
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transportation; $21 billion for tax incentives for wind, solar, and other renewable energies; $30
billion for direct spending in clean/renewable energy programs (within this allocation $11 billion is
dedicated for the modernization of the nation’s electricity grid), $2 billion for innovative battery
technology, $6 billion for state and local government renewable energy efforts, $5 billion for home
weatherization programs at the local level, $500 million for job training in renewable energy
occupations, and $300 million for the purchase fuel efficient vehicles from American automobile
companies for the new federal fleet.
Real Estate Considerations
Key considerations that firms face when deciding where to locate a wind farm or solar field:

Incentives. Incentives including production tax credits, net metering and direct payments have
become critical to luring renewable energy developments to their area. Increasingly, smaller units
of government such as cities and counties are establishing their own renewable energy goals and
portfolio standards.

Entitlement. Entitlement is the legal method of obtaining approvals for the right to develop
property for a particular use. Renewable energy developers must often endure a long,
complicated and costly entitlement process to pursue their projects. Local governments and
municipalities, however, can help facilitate renewable energy development by standardizing and
streamlining the entitlement process for these projects.

Environmental permitting. As with any type of energy facility, renewable energy developments
may have environmental impacts including aesthetics, threats to wildlife and noise emission.
Some renewable energy projects must comply with environmental standards or permitting prior to
construction, a process which can be timely and time consuming.

Ownership. There are three primary types of arrangements landowners and developers make
regarding renewable energy development: 1) Leasing land: A renewable energy developer may
lease or rent land for the life of the development; 2) Easements: An easement is a deed or will
executed by the owner of a particular plot of land or air space to ensure a renewable energy
developer adequate exposure to the wind or other resources; or 3) Land purchase: Renewable
energy developers will sometimes purchase land outright to build their developments.
Future of Renewables
Renewable energy, especially solar and wind power, present significant growth opportunities in the
US. By 2030, the EIA projects energy generated from solar will grow at an annualized rate of 9.1
percent followed closely by wind at 2.4 percent. According to projections by the US Department of
Energy, of renewable energy sources, wind has the top growth potential in the East Central region, an
area which includes the states of Michigan, Indiana, Ohio, Kentucky, West Virginia and Western
Pennsylvania. The offshore wind resource of the Great Lakes places these states at a unique
advantage for future wind energy development.
Biofuels
This section is a more expansive look at alternative fuel technology, specifically focusing on the growth
of biodiesel fuel as a substitute for liquid petroleum. For the purposes of this section, AECOM
conducted extensive research within the study area of biodiesel – a renewable fuel designed for diesel
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engines derived from natural oils. The list of sources which were examined as a part of this effort
include the following journals, magazines, federal and state government data bases, as well as private
industry press and multimedia:

US Energy Information Administration (EIA)

Science Direct

Renewable Energy and International Journal

United States Department of Energy (DOE)

United States Department of Agriculture (USDA)

National Renewable Energy Laboratory (NREL)

NASDAQ

Bloomberg

Archer Daniels & Midland Company (ADM)

The National Biodiesel Board (NBB)

Biomass Research & Development Board (BRDB)

Christian Science Monitor

Biodiesel Magazine

Independent Bio-Products Introduction/Policy Problem
As a result of global population growth, increasing the amount of fuel consumption worldwide, the finite
supply of oil reservoirs are currently depleting at a pace that is unsustainable environmentally and
economically. Ancillary to this notion, the use of petroleum fuels has given rise to energy security
concerns, contributions to climate change, and other environmental as well as economic challenges in
the future.
The US contains one-third of the world’s automobiles, consuming 25 percent of the world’s oil,
annually using over 50 billion gallons of gasoline. The US economy depends on liquid fuels for
transportation, principally derived from petroleum, to power cars, buses, trucks, locomotives, barges
and airplanes. By 2030, the US Energy Information Administration projects that reliance on foreign oil
will increase by 30 percent, while greenhouse gas emissions will increase by 40 percent.
As a response to these growing concerns, alternative fuel research has become an initiative
championed by the public and private sector alike. Leading the charge as a long-term alternative fuel
strategy, biodiesel fuels have emerged as an innovative solution which will allow the US to withdraw its
dependence on foreign oil production, while at the same time improving the nation’s economy by
injecting new industries into the market, and contributing to the process of making the world’s natural
environment a healthier place by reducing carbon emissions into the Earth’s atmosphere.
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Biodiesel Overview
The National Biodiesel Board (NBB) defines biodiesel and the biodiesel fuel blend as follows:

Biodiesel is a fuel comprised of fatty acids recovered from vegetable oils or animal fats, meeting
the requirements of ASTM (American Society for Testing Materials) standard specification for
biodiesel fuel blend stock (B100) for middle distillate fuels.

The biodiesel blend is the fuel blend meeting ASTM D6751 with petroleum-based diesel fuel,
designated BXX, where XX equals the share percentage of biodiesel fuel mixed in the blend (i.e.,
B20 equals 20 percent biodiesel, 80 percent petroleum based).
Biodiesel is a clean burning alternative-liquid fuel capable of replacing conventional diesel fuel. While
the purest biodiesel contains no petroleum, biodiesel fuel can be blended with petroleum. Current US
Environmental Protection Agency (EPA) regulations mandate strict specifications to insure proper
performance. The biodiesel fuel grade blend, ASTM D6751, is the only alternative energy fuel to have
fully completed the health effects testing requirements of the 1990 Clean Air Act Amendments,
registered under section 211(b).
Production
The rapid response of the biodiesel industry has been advanced by private sector innovation,
supported by federal policies and state initiatives to sustain growth within the industry. Biodiesel is
manufactured from domestic renewable oil feedstock resources such as animal fats, soybeans, algae
and waste cooking oil. Near- and longer-term goals for biodiesel oil feedstock production include:

Most of the biodiesel that is currently produced in the US made from oils derived from soybeans.
Soybean feed stocks are currently in use and their yields have been increasing. However,
soybean formulated biodiesel is considered a finite resource due to a limited supply of arable land.

Considered by many as the future of alternative liquid biodiesel fuels, the next generation feed
stocks are crops requiring further research and development (R&D) to commercialize, such as
algae. These feed stocks are designed exclusively for biodiesel fuel production and are
commonly referred to as “energy crops,” representing a key long-term component to the
sustainable biodiesel industry.
Converting feedstock to biodiesel is done by employing a multistep process called transesterfication,
which is simply described as the reaction of the feedstock with an alcohol such as methanol or ethanol
in the presence of a catalyst to yield mono-alkyl esters (biodiesel) and glycerin. From there, this
process requires precision and care to separate the finished biodiesel from glycerin, catalysts, soaps
and any excess that may remain.
Testing is the next step in the production process. Fuel grade biodiesel must comply with ASTM
D6751 requirements. While conversion techniques and the feedstock used does not skew
specification results one way or another, performance criteria may vary based upon the feedstock
used. In order to qualify for tax incentives and credits, conformance to ASTM specifications is
required.
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Innovation
Expanding biodiesel into the future will require a combination of policy, R&D, as well as public and
private investment. The more prevalent innovations in this area are derived from the production of
microalgae.
Microalgae are very small aquatic plants, producing natural vegetable oils suitable for conversion to
biodiesel fuel. Biodiesel manufactured from microalgae is considered the long-term strategy for
transitioning from conventional diesel fuels to biodiesel fuels. Biodiesel produced from microalgae can
be grown in circulated fresh water ponds on non-arable lane, as well as salt water and even
wastewater, to prevent arable land and fresh water from being drawn away from food crops resulting
in a low impact on food production and prices.
Algal oils suitable for conversion into biodiesel produce potential yields 50 to 100 times greater than
yields from soybean oils. Furthermore, biodiesel conversion productivity can be enhanced directly
from the addition of waste CO2 from fossil-fuel powered plants and other high carbon emitting
facilities, thus the sustainability theory is clear: large microalgae farms, located near carbon emitting
plants, would not only yield a large volume of oil feedstock for biodiesel, but also recycle waste CO2
emissions and reduce their buildup in the Earth’s atmosphere. Procuring algal oils from microalgae
involves several steps, which are summarized and listed below:

Step 1: Growing algae in engineered ponds

Step 2: Harvesting the biomass in settling ponds

Step 3: Extracting the algal oils from the biomass

Step 4: Converting the algal oil into biodiesel
Formerly, the Aquatic Species Program (ASP) researched innovations in alternative energies, focusing
on microalgae as a source for biodiesel. The ASP was championed by the US Department of Energy
from 1978 to 1996. Prompted by the middle-east oil crisis in the 1970’s, the DOE discontinued
research due to budget cutbacks and the relatively low cost of crude oil (about $20/barrel) in 1996; as
the cost of crude oil dropped, alternative fuels could not stay competitive. The DOE’s findings
produced several important points. In summary, the DOE suggested that biodiesel, converted from
microalgae, could easily serve as a reliable long-term substitute to conventional diesel. However, the
major conclusion from their analysis explained that production costs for algal biodiesel were too high,
implying that production costs were more than double that of crude oil.
In this age of sustainability, engineering algae to churn out oil feedstock for biodiesel fuel has once
again become a priority approach of the federal government as well as the private sector, but similar
economic threats remain. Listed below, threats are identified as biological factors keeping the costs of
production high, thus, requiring more innovation and R&D to become fully competitive in the open
market:

Algae farms require energy for controlling water temperature, harvesting cells, and supplying
concentrated carbon dioxide needed to produce high yields of biomass. While scientists and
engineers are taking positive steps, this process has not been standardized, therefore production
costs remain high.
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
Fertilizer is also a problem that needs an economical solution. For example, replacing
conventional diesel with algal biodiesel would require nearly double the amount of the world’s
fertilizer per year, in turn forcing prices up at the pump.
In order to reduce production costs, impacting distribution and end user costs, algae farmers and
engineers must continue to make substantial reductions in cost through improvements and innovations
in the engineering and production of algal biodiesel. Initially, economically viable algal-biodiesel
commercialization will depend on government subsidies, global environmental policies, the future price
of crude oil, and the optimization of biomass yields.
Scenarios where an algal biodiesel market can maintain sustainability are ones where the cost of
crude oil exceeds $100 per barrel in the US – in 2011, the average weekly price for crude oil was
estimated at nearly $100 per barrel, whereas the 2010 average weekly price for crude oil was nearly 3
percent less than the current price, $70 per barrel. While the US has experienced a steep rise in
current crude oil prices, possibly influenced by a number of external factors (i.e., foreign military
action, supply tightening, natural disaster, rise in global demand, reserve speculation, et. al.),
economists believe that, in the short-term, demand is unlikely to stay dormant, thus allowing prices to
reduce. However, recent activities such as the unreliability of crude oil demand – impacting costs, in
conjunction with global environmental awareness, a response to carbon emissions and global warming
– has inspired biotechnology companies, governments and farmers to develop carbon-neutral fuels
processed from algae feedstock oil converted into biodiesel.
Recent Developments
Several biotech companies have begun to take the lead in developing algal biodiesel fuel.
Independent Bio-Products (IPB), based in Ohio, developed a method for recovering carbon waste from
power plants and manufacturing facilities, in order to heat raceway ponds (algae farms). Concurrently,
IPB has designed a pond covering apparatus to maintain a constant temperature within algae ponds.
Both developments are major breakthroughs in algal biodiesel technology, reducing energy costs for
production, increasing efficiency, and allowing algae to be harvested year-round in both warm and
cold weather geographies.
Based on various reports, algae can produce more than 30 times the biodiesel feedstock per acre
than soybeans. Additionally, innovations in algae feedstock production has allowed engineers to
manufacture biodiesel, green diesel, and renewable biojet fuel powerful enough to provide energy for
air travel.

In May 2011, algae oil was converted into biojet fuel, a chemically indistinguishable alternative
matching fossil-fuel based JP-8 jet fuel at a rate of 99 percent, and tested by the US Air force
Research Laboratory at Wright Patterson Air Force Base near Dayton, OH.

In June 2011, airlines gained support from ASTM international for the use of biojet fuel in
passenger flights.
Airlines have researched alternatives to standard jet fuel for some time, and consider biojet fuel as a
more efficient and cost effective fuel technology than electricity and ethanol. According to a
spokesman from AirTran Airways, fuel processed from algae may comprise of as much as 50 percent
of the total fuel burned to power passenger flights in the future.
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In order to increase the return on investments (ROI), many algae farming companies have developed
other uses for algal feedstock, such as biodiesel and other biologically based lipid products.
Furthermore, some companies are selling higher priced carotenoids and omega-3 fatty acids that are
common in foods, while others are researching the use of algae proteins (separated in the lysing
process) in livestock feed.
For the time being, chemical commodities remain the most logical entry point for algae farming
companies. However, to meet the long-term challenge of producing a viable, cost effective and
competitive algae based biodiesel, government agencies and the private sector must work together to
develop a qualified workforce, improve efficiencies by increasing drought and stress tolerance,
increase fertilizer and water use efficiencies, and enact favorable policies and incentives that will guide
the engineering, conversion and distribution process of the algae based biodiesel fuel market.
Case Study Examples
AECOM conducted a case study of two pilot algal bio-refinery programs. Each facility engaged in a
bio-manufacturing process to produce multiple advanced bio-fuels.
Sapphire Energy Integrated Algal Bio-Refinery (IABR):
Sitting on 300 cultivated acres of land, the IABR facility is proposed to be developed near Columbus,
New Mexico. Recycling approximately 56 metric tons of CO2 per day, the facility expects to produce
approximately 1 million gallons per year of finished algal biodiesel fuel product. In full operational
mode, the IABR facility will employ 30 workers to develop and run the facility, projecting the creation of
750 direct and indirect jobs by 2011, and 16,000 new ‘green collar’ jobs by 2030.
Overall, Sapphire IABR’s goal is to demonstrate that algal oil conversion process scales with favorable
economics. Formerly, Sapphire established credibility that algal oil can be successfully refined to
produce liquid gasoline, diesel and jet fuel. In 2009, Sapphire participated in the first 2-engine 737800 2-hour test flight powered by synthetic jet fuel manufactured from algae.
Solazyme Integrated Bio-refinery (SzIBR): Diesel Fuels from Heterotrophic Algae
Located in Riverside, Pennsylvania, Solazyme’s technology transforms high-impact, domestic,
renewable algae and other feed stocks to oil-based fuels which can leverage and remain fully
compatible and competitive with the petroleum-based economy. Solazyme’s goal is to enhance
national energy security and help the US to reach Renewable Fuel Standard (RFS) goals by
displacing petroleum imports and sustaining bio-fuel compatibility with the existing petroleum refining,
distribution, storage, retailing and vehicle infrastructure. The proposed project, in Riverside, will be the
first commercial-scale bio-refinery facility, projecting the creation and preservation of 88 direct jobs
and 256 indirect jobs annually. Bio-fuels derived from Solyzyme’s feed stocks are expected to reduce
commercial-scale fossil fuel products by over 90 percent.
Wind Energy
This section begins with a brief overview and discusses the current capacity and uses of wind energy,
the potential and future of wind energy and what potential implications the wind energy sector might
have in the St. Louis Region. For this section, AECOM reviewed a selection of various sources,
including:

American Wind Energy Association (AWEA)
158

US Energy Information Administration (EIA)

National Renewable Energy Laboratory (NREL)

International Economic Development Council (IEDC)
Overview
Throughout history, human civilizations have been capturing the power of the wind. Dating back to as
early as 5000 B.C., humans have been utilizing wind energy to propel boats traveling about the Nile
River and in 200 B.C., basic windmills were used for pumping water in China, while in Persia and the
Middle East, vertical-axis windmills were used to grind grain, a practice that was used by the first
American colonists. During the early twentieth century in American rural areas lacking electrical
service, small windmills were used to generate electricity. This practice fell out of style as the US
electrical grid spread to most rural areas by the 1930’s.
Today, wind energy generates electricity from wind turbines, which use elevated blades to collect
kinetic energy stored within wind. Described simply, energy is generated as wind flows over the
blades in order to create lift, thus setting them in motion. Subsequently, energy is produced from an
electric generator which is fed from a drive shaft connected to the blades.
The reemergence of wind energy began in the 1970’s, when oil shortages had shifted focus from finite
energy sources to renewable energies. By 1980, wind energy began to take shape in California where
state policies encouraged R&D and use of renewable energy sources. By the 1990’s, studies of
global climate change emerged from labs and was recognized by the public as real threat to the
world’s natural environment, as well as the future of human civilization. Due to its economic value and
low carbon emissions, wind energy became a beacon of renewable energy.
While wind energy is a popular alternative for electricity production in the US, nearly doubling its
utilization between 2006 and 2008, many issues continue to hinder the growth of what is considered
as a viable substitute to natural gas and coal. For example, policies, storage and cost competition
with natural gas remain the most pronounced impediments to the growth of the wind energy sector. In
particular, recent discoveries of shale gas have boosted US inventories and lowered prices, which has
made wind energy less competitive in the short-term.
Current Capacity and Utilization
In comparison to other renewable energy resources, wind power has been the fastest growing source
of new renewable energy in the past decade. From 1999 to 2010, the total capacity generated by
installed wind turbines has increased at an annualized rate of 29 percent. As of the first quarter in
2011, the US wind power capacity was 41,400 MW, whereas the total US wind resource potential was
15 million MW, meaning that the US is harnessing less than 1 percent of its total wind potential.
In 2009, wind energy accounted for nearly 2 percent of the nation’s electric power, and it is safe to
assume that wind energy is a trend that will continue to grow. In a 2008 comparison of the total share
of electricity generation from wind with other countries throughout the world, the US ranked below
Germany at 6.5 percent, Ireland at 8.6 percent, Spain at 10.4 percent, Portugal at 12.6 percent, and
Denmark at 19.2 percent; However, electricity generated from wind energy in the US will likely show
increases in the years to come as renewable energy initiatives have been adopted by states and the
federal government.
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Replacing wind energy with other forms of energy will not take place until a number of factors fall into
place. Electricity from wind power is currently more expensive to produce than power plants burning
fossil fuels, therefore favorable policies and incentives must continue to assist wind energy in order for
this initiative to grow.
St. Louis Opportunities
Obviously, available wind resource will be a significant factor when developers determine where to
locate future wind farms. Generally, the Midwest and Great Plains regions have good wind resource
availability. Furthermore, Missouri and its surrounding states have a total undeveloped potential wind
resource of nearly 5.7 million megawatts of energy, as shown in the following table.
Table 42: State Wind Resource and Capacity Development, Q3 2010
State
IA
IL
KS
MN
MO
ND
NE
OK
SD
TN
WI
Total
Installed
Capacity(MW)
3,670
1,848
1,026
1,817
457
1,222
153
1,130
412
29
449
12,213
Estimated Total
Resource (MW)
570,714
249,882
952,370
489,270
274,855
770,195
917,998
516,822
882,412
309
103,757
5,728,584
Installed Capacity as
% of Total Potential
1%
1%
0%
0%
0%
0%
0%
0%
0%
9%
0%
12%
Undeveloped Potential
Resource (MW)
567,044
248,034
951,344
487,453
274,398
768,973
917,845
515,692
882,000
280
103,308
5,716,371
Source: AWEA
Missouri is located east of Kansas, south of Iowa, and north of Arkansas with the Mississippi River
separating the state from Illinois and Kentucky to the east, and the state has a long tradition of
manufacturing, particularly in chemicals, fabricated metals and transportation equipment. At the
confluence of the Mississippi and Missouri River, the St. Louis Region is logistically in an
advantageous location to capitalizing on the manufacturing and supply chain needs of the wind energy
industry in the Midwest.
Computer Science and Information Technology
As digital data continues to amass exponentially, mandating the deployment of technologies capable
of supporting and complementing big data sets, the development of compatible technologies has
reshaped how the world operates. New developments such cloud computing have enabled
businesses to relocate and reduce technology costs, usage patterns, and anticipate market trends,
while at the same time creating new avenues for individuals to consume goods and services. The
rapid and constant evolution and shifting of the digital environment raises serious questions regarding
the way individuals, industries and governments will capitalize on opportunities emerging from the vast
amount of information generated. This section will discuss new technologies reshaping the structure
of the IT industry and the implications that these innovations have across all industry sectors.
Specifically, AECOM will highlight three innovative IT processes: Big Data, Cloud Computing, and
Bioinformatics.
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Big Data
The world contains an unimaginable amount of digital information which is getting ever vaster, ever
more rapidly. This section is a review the world’s digital landscape, specifically looking at how the
combined effects of emerging Internet technologies, increased computing power and storage, and
instantaneous, pervasive digital communications have spawned new ways to manage and process
information more effectively and efficiently.
Introduction/Policy Problem
“Big Data” can be defined as the characterization of the never-ending accumulation of all kinds of
data. As it stands, global data is projected to grow by 40 percent annually. For the most part, big data
is unstructured, described as data sets that are growing exponentially and that are too large or too raw
for analysis using relational database techniques. To clarify, structured data sets are ones which are
recognized by computers in standard formats such as word and/or number files – only 5 percent of
data that is generated is structured. Conversely, unstructured data sets are ones that are less easily
retrievable and usable such as image, audio, and video files (et. al), representing the remainder of
data that exists. Big data is not defined by a certain number of terabytes, but assumed that as
technology advances, the size of data sets that qualify as big data will also increase, thus creating an
inflation of data.
Overview
Big data is a growing torrent, expanding into every area sector of the global economy and capturing
trillions of bytes of information about consumers, customers, suppliers and operations, as well as
churning out a burgeoning volume of transactional data. Additionally, in the age of the “Internet of
Things,” sensors have been embedded in the physical world. For example, sensors have been placed
in mobile devices, smart energy meters, automobiles, and in industrial machines, generating data
which is being transferred from machine to machine, in a sequence where individuals are tangential.
Digital information created through the interaction of individuals with businesses generates a
tremendous amount of digital “exhaust data.” For example, users communicating, browsing, buying,
and searching creates enormous trails of data. Whereas traditional businesses typically have the
capability to collect information about customers from purchase transactions or from surveys, internet
companies have the luxury of being able to gather data from every interaction taking place on their
sites, directly resulting in value creation derived from a deeper understanding of the market.
Table 43: Data Unit – Size Reference
Unit
Size
What it Means
Bit (b)
1 or 0
Short for "binary digit,” after the binary code (1 or 0) computers use to
store and process data.
Byte (B)
8 bits
Enough information to create and English letter or number in computer
code. It is the basic unit of computing
Kilobyte (KB)
1,000 Bytes
From "thousand" in Greek. One page typed text is 2 KB.
Megabyte (MB)
1,000 KB
From "large" in Greek. The complete works of Shakespeare total 5
MB. A typical pop song is about 4 MB
Gigabyte (GB)
1,000 MB
From "giant" in Greek. A two-hour film can be compressed into 1-2 GB
Terabyte (TB)
1,000 GB
From "monster" in Greek. All catalogued books in America's Library of
Congress total 15 TB.
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Petabyte (PB)
1,000 TB
All letters delivered by America's postal service this year will amount to
around 5 PB. Google processes around 1 PB every hour.
Exabyte (EB)
1,000 PB
Equivalent to 10 billion copies of The Economist
Zettabyte (ZB)
1,000 EB
The total amount of information in existence this year is forecasted to
be around 1.27 ZB.
Yottabyte (YB)
1,000 ZB
Currently too big to imagine.
Source: The Economist; Prefixes are set by an intergovernmental group, the International Bureau of Weights and
Measures. Yotta and Zetta were added in 1991; terms for larger amounts have not been established
In 2010, estimates suggest that throughout the world all public and private industry sectors have
generated and stored more than 7 exabytes of data on disk drives while in the same year, consumers
stored more than six exabytes of data on personal computer devices such as computers, notebooks
and mobile phones. At the current growth rates, data is physically impossible to store. In one
instance, it has been estimated that health care providers discard nearly 90 percent of the data they
generate. For the most part, healthcare facilities produce unstructured data such as real-time video
feeds during surgery.
As big data has made its way into every sector of the global economy, developed economies in
countries such as the US and Europe currently have a larger potential to create value through the use
of big data in the near-term. However, lying on the horizon is the enormous potential for developing
economies to create value from big data.
While the sheer volume of data produced is a global phenomenon, whether the amount of terabytes or
petabytes (see table above) generated, the exact amount is less of an issue than the origins for which
data is stored and how it is used. While many individuals at the user level are skeptical, regarding the
constant collection of personal information as an intrusion, there is overwhelming evidence suggesting
that big data is a significant value to the world, enhancing the productivity and competitive advantage
of companies as well as allowing governments to function more efficiently. A few examples of big data
capturing value include:

If harnessed completely and subsequently managed creatively and effectively, some experts
estimate the potential for a $300 billion added value to the US health care system.

Experts believe there is a projected $600 billion in potential annual consumer surplus from using
personal location data globally. For example, real-time traffic information displayed on a handheld
global positioning systems (GPS) having the ability to inform navigation, thus creating a
quantifiable per person consumer surplus through savings on time spent traveling in an
automobile, as well as fuel consumption, equating to dollars spent on retail gasoline.

Big data analysis methodologies allow private sector retailers the opportunity to increase operating
margins by 60 percent. This can be done by utilizing big data to target and segment markets
more accurately.

In developed economies such as European economies, it has been estimated that governments
could save upwards of $149 billion in capital budgets by improving operating efficiencies through
the evaluation of big data sets.
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Certainly, as big data can be used in many ways to create value across all sectors of the global
economy, both the public and private sectors need to address considerable challenges in order to fully
capture the full potential of big data. For example:

The US is currently lacking the capable workforce necessary to make the most of big data.
According to MGI, the US is facing a shortage of an estimated 200,000 professionals possessing
the requisite analytical abilities, as well as nearly 1.5 million managerial professionals needed to
take advantage of value and efficiencies hidden within big data accumulation.

An additional challenge, as a result of the sheer size of big data, is the need for an appropriate
infrastructure capable of storing and processing big data. Similar to other essential components of
production, much of the world’s modern economic activity, innovation, growth and development
would not be possible but for the presence of big data.
Values and Benefits of Big Data
In a report released in May 2011, MGI outlined five applicable methods for which big data can be
utilized in order to capture kinetic potential and how value can be created and sustained in the future.
Below are notes providing an overview of the broad applications referred to in this release, while at the
same time offering implications of each methodology:

Creating Transparency: This is a process of making big data more easily accessible to decision
makers and key personnel. This can be done in the public sector by allowing data to be more
accessible across divided and/or fragmented departments, thus cutting down on the time spent for
research and processing. The private sector, on the other hand, specifically manufacturing, has
the opportunity to significantly reduce time to market and improve quality by integrating data from
R&D engineering and manufacturing units to enable concurrent engineering practices.

Enabling experimentation: As more digital transactional data is generated, companies and
organizations can collect more real time performance data, on everything including product
inventories to personal sick days. Advanced information technology affords companies and
organizations the instruments to conduct controlled experiments. The benefit of controlled
experiments is to allow individuals the understanding and root causes for how variability in
performance occurs and to improve performance based on these results.

Population Segmentation: Well known in marketing, risk management, and policy formulation,
market segmentation is enhanced by big data. This provides both the public and private sector
the ability to deploy sophisticated techniques, such as real-time micro-segmentation, in order to
advance information to target populations and subpopulations.

Substituting human decision making with automated algorithms: With the goal in mind to minimize
risks, unearth valuable insights and improve decision making, sophisticated analytics has been
employed by both the public and private sector to optimize these processes by implanting
automated algorithms accounting for the most likely probabilities. For example, those sectors
having the capability of utilizing automated risk engines to indicate which candidates require
further examination, or retailers employing algorithms to inform decisions, such as the fine-tuning
of inventories, as well as the adjusting prices in response to real-time in-store and online sales
transactions.
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
Innovations in business, products, and services: Enabling public and private entities with the
ability to develop and enhance new services or products, while in some instances developing
entirely new business models, complemented by public policies and regulations, big data has
transformed the marketplace in which economies function. For example, manufacturers have
used data captured from embedded sensors in actual products to improve the development of
newer, more advanced technological products. Additionally, emerging real-time location data has
spawned an entirely new array of location based services from personal navigation to pricing
property and casualty insurance based on driver tendencies.
Industry Sector Potential
While all industry sectors have barriers, whether they are derived from lack of capital, policy
constraints, or cultural differences, not all have the same potential to substantially gain value from the
use of big data. Structurally, barriers appear to be higher for some sectors when compared to others,
for example:

Historically, computer, electronic products and information sectors have benefited from the use of
big data, experiencing increases in productivity and profit. These industry sectors are in a position
to continue to function as innovators and trend setters in managing, storing, and analyzing data in
advanced manners, capitalizing on value opportunities by eliminating redundancies and
unearthing trends hidden within big data sets.

In order to realize a very strong potential benefit, both the finance/insurance and government
sectors must overcome barriers prior to capitalizing on these assumptions. For example, both
sectors are based on transactions derived from an intensive core customer audience, both have
the opportunity to leverage big data by employing market segmentation techniques as well as
employing automated algorithms. As these sectors experience elevated degrees of performance
variance, the application of advanced analysis is necessary to extract more value from big data.

Enhanced from a low priority data-driven mind-set, the education sector must overcome large
structural barriers, hindering the sector’s ability to capture worth from big data sets, in order to
increase productivity in the education system. However, if barriers were trampled, the opportunity
can be realized by performance based analysis of big data. For example, correlating academic
achievements made by students with the variations in performance in teachers, establishing
performance from a series of benchmarks.

The manufacturing sector is poised to experience only modest value gains from the usage of big
data sets. As a result of industry fragmentation, inter-company data sharing does not exist,
therefore, value derived from big data is contingent on the ability with which companies can
develop data pools, accessible across supply chains.

Relative to size, value and importance, many consider that challenges existing in the US
healthcare system are a result of low investments made in the sector’s information technology (IT)
infrastructure. Additionally, barriers exist in the form of personal record privacy, placing
constraints on the ability for data to transfer freely between healthcare networks.
Issues to Overcome
In order to capture the full potential of big data, there are several issues that first must be addressed.
The points below shed light on some of the more apparent issues:
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
As access to data becomes less and less challenged, many public policies tailing the expansion of
digital data will become increasingly important in what may otherwise seem as an under-governed
marketplace. Such policies might set the precedence for data exchange and usage, privacy,
security, intellectual property, and liability.

Technology lags the rate at which data is generated. In order to maximize big data potential,
incompatible legacy systems must be replaced with a newly crafted infrastructure capable of
meeting the standards necessary for extraction, transformation, and loading of large datasets from
multiple sources.

Understanding that big data represents a key used to unlock value, leaders in both the public and
private sector must begin to focus energies on the development and employment of a skilled
workforce worthy of mining datasets for complex insights, and allowing for a more informed
decision making process.

Data access will play a pivotal role in the future value of big data. Currently, no efficient third party
sources exist as a pass-through for large aggregate data from one company to another. Fully
realizing the potential of big data will require that, first and foremost, accessibility barriers must be
overcome.

Industry evolution in a big data world may be compared to the phrase, “you are only as strong as
your weakest link.” This is true because in some cases industry sectors do not have the incentive
to evolve for big data. Sectors with a relative lack of competitive intensity, derived from limited
competitive pressures may not concern themselves with the benefits of big data, feeling as if the
short-term investments are not worth, or do not support, the long-term gains. However, if
optimizing big data is the goal, all sectors must adjust and restructure in concert in order to
accomplish this goal.
To capitalize on the potential value of big data with maximum effectiveness will require the necessary
policies in place, adequate infrastructure, reliable workforce, and a common belief that big data will
create value for all industry sectors, in all areas of the world.
Cloud Computing
Cloud computing, a metaphor for the internet, is a catch-all term that describes data storage,
processes, and computer functions taking place in a large data center rather than on a user’s
individual computer or in a company’s office. The paradigm which is cloud computing, is a highly
scalable computing resource, often configured as distribution of data serviceable through a network.
Cloud computing is a resource assisting the new uses of data. For most of the computer era, most
computer work took place on individual units in homes and offices. Users ran programs installed on
their computers and saved their data (documents, spreadsheets, photos, digital music) to their hard
drives.
While that is still the bedrock computer experience for many users, much computing takes place in
vast server farms in data centers in remote locations. This is the essence of cloud computing: much
of the important computing work takes place far from where the user sits, in large warehouses
humming with thousands of servers, all working on queries from users around the globe.
Examples of cloud computing are everywhere. For consumers, the most popular example is webbased e-mail like Yahoo! and Google mail. Rather than store individual e-mails and address books on
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a single computer, many (if not most) e-mail users prefer to access the service online, able to see their
messages and send e-mail from any web browser. Their messages (data, really) are said to be stored
“in the cloud”; actually, they are stored in one of Yahoo!’s or Microsoft’s or Google’s large data centers
around the world.
But consumers are not the whole story as many businesses operate critical functions in the cloud. One
of the earliest examples of business cloud computing is Salesforce.com. The company has a basic
programming architecture that can be adjusted to support almost any type of business that relies on
multiple salespeople. The key advantage to using such a system is that Salesforce hosts the data on
its own servers, while a company’s users – its salespeople – use their web browsers to conduct
business. Avon, which has a force of six million salespeople, is currently switching all its sales
management to a cloud based system.
Another important example is Amazon.com. During the company’s massive expansion from online
bookseller to online mega-mall, it bulked up its own data hosting and cloud computing. Today,
Amazon offers other businesses (retailers and non-retailers) cloud computing services based on its
own experience managing large amounts of information. Microsoft is developing a version of Windows
called Azure that will allow developers to write and run applications in the cloud rather than on local
servers. (Ironically, azure refers to a cloudless sky.)
Microsoft, Yahoo!, Google, Amazon, and Apple are some of the major players in cloud computing.
They offer services to the public built on their own extensive network of massive data centers. Other
companies operate with more anonymity by building large data centers and renting out the use of their
servers to companies to build their own applications. While Google might build a data center to offer
Google applications like search, voice chat, documents, and e-mail, other IT developers might build a
data center and then allow their clients to run whatever they like on the servers for a fee.
Advantages
There are a number of advantages to cloud computing. At its core, it is simply a matter of comparative
advantage. It may be more sensible for Microsoft to build a massive data center and let hundreds or
thousands of smaller companies take advantage of this architecture than to have these individual
companies buy and maintain their own servers in their offices. In this way, Microsoft can specialize in
buying equipment, maintaining it, powering it, cooling it, and replacing it as it ages. For a fee, its users
can effectively outsource their server needs to Microsoft; they are renting their computing power rather
than buying it.
Still, there are some drawbacks. Many companies worry about privacy and data security, and there
are legal considerations. If data is confidential, its presence on a server farm in another state may be
considered a confidentiality violation. One solution is a “private cloud,” where a single company hosts
all its own data in a cloud-like data center run by the company’s own staff. While this loses some
advantages of scale, it still shows other advantages of cloud computing and avoids data security
issues.
Users
There are several types of users of cloud computing data centers:
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
Global consumer service providers. These including Microsoft, Yahoo!, Google, Apple,
Amazon.com, and other similar companies. They do not trust other companies to manage their
data, therefore they build their own data centers in which to run their own applications.

Global business service providers. The list of companies overlaps slightly, with Microsoft and
Amazon especially. These companies offer smaller firms access to their technology. They
generally provide some support or basic software (like Microsoft’s Azure).

Data operators. Unlike Google or Microsoft, these operators have no product running on their
machines; instead, they let small internet companies run their own businesses on their machines.

Small businesses. These are the firms that take advantage of cloud computing services. It is
possible for a small technology startup to get storage space, web hosting, and powerful computing
capabilities for no capital investment and just a small fee. The world of software as a service and
cloud computing has enabled many of these small companies to get started without seed capital,
an IT department, or even office space.
Real Estate Considerations
The main real estate implication is where to locate the massive data centers. There are several
considerations that firms face when deciding where to locate a data center:

Weather: Data centers generate massive amounts of heat, so the operators often spend almost
as much on chilled water to cool the servers as they do on electricity for computing power. As a
result, many location experts will look for cool climates. Data centers are being located in Iceland,
Siberia, and in various underground locations to take advantage of the cool atmosphere. (Other
locations are Oregon, Washington State, Chicago area, and Buffalo area.)

Natural disasters: The data is extremely sensitive and uptime is very important. In May, Google
Mail was shut down for two hours. T-Mobile users were without access to their data for a period of
24 hours because of an outage at a Microsoft data center. In both cases, the companies faced a
global consumer backlash. While neither of these instances was caused by a natural disaster, the
threat of hurricanes, earthquakes, or major power outages can threaten the stability of a data
center. In the developing world, a volatile political climate can cause similar anxieties.

Cost and availability of power: The data centers consume extreme quantities of power.
Google’s data center in Oregon requires as much power as 82,000 homes. Google, Yahoo, and
Microsoft have all built data centers near the Columbia River in the Pacific Northwest – a river that
provides abundant, clean, and very inexpensive hydroelectric power. Other data centers often
negotiate with local energy suppliers for preferred rates; in fact, providing cheap power is part of
the recruitment process. Energy use in data centers is generally 500 watts per square foot, and
each facility can be between 50,000 and 500,000 square feet.

Fiber optics: Underground fiber optic cables are the highways of information, but not every
location is in a prime place. Chicago, for example, is located near a major north-south and a major
east-west fiber optic cable link; that made the Chicago region ideal for Microsoft’s $500 million
data center in Northlake, Illinois. Both Google and Yahoo have worked with local governments to
provide an extremely fast fiber optic network near planned data centers around the United States.
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
Incentives: Local governments often pledge tax incentives to lure the firms to their area. State
governments often negotiate with telecoms providers and electric utilities to provide preferred
rates to the data operators.

Discretion: A company’s data center is a critical part of its company. Google, Microsoft, Yahoo!,
and others are famously tight-lipped when it comes to details about their data centers. Microsoft
will not reveal the exact location of its Chicago-area data center. Google shuns attention and
publicity. Yahoo uses code names in the early stages of their location practices. Local
governments need to be able to promise discretion and confidentiality in the entire process of
recruiting a data center. Further, the companies need to be somewhat assured of some privacy
and building security once their centers are developed.

Geographic proximity to customers: Microsoft is considering building a data center in Siberia,
but this will not be the ideal place to run its search engine. The servers need to be close to the end
users, as delays of a few microseconds in delivering search results cause customer
dissatisfaction. Major corporate users, therefore, like to spread their computing power so that they
have wide geographic coverage.
Future of Data Centers
In 2009, in the midst of the most severe economic recession since the Great Depression, data centers
were a rare ray of sunshine in the technology economy. The industry changes very rapidly; shortly
after Microsoft announced what it thought was the biggest data center in the world, its $500 million
facility near Chicago, Apple announced a $1 billion facility in North Carolina. Future data center
designs will become more modular, as there are greater efficiencies in power consumption and cooling
that can yet take place. Some observers think the system of thousands of individual servers can be
replaced by larger machines.
But no matter the efficiencies, power consumption will be a large – if not the primary – concern of
cloud computing stakeholders. The US currently dominates this market, but firms may look abroad to
countries where energy is cheaper but also dirtier. Consumer firms like Google and Microsoft will
always need to be near their customers, so they may look to power some of their own centers through
alternative energy. Google is “giving back” some energy production from its data center in The Dalles,
Oregon. Others may seek to power some of their servers with solar, wind, or geothermal energy.
Bioinformatics
Simply put, bioinformatics uses technology to increase our understanding of biological systems and
processes, especially those as they relate to molecular genetics and genomics. According to the
National Institutes of Health (NIH), bioinformatics is a “scientific discipline that encompasses all
aspects of biological information acquisition, processing, storage, distribution, analysis and
interpretation that combines the tools and techniques of mathematical and computer science and
biology with the aim of understanding the biological significance of a variety of data.” This emerging
field evolved from biotechnology. Once we began to unravel and understand our own genetic
makeup, there was an almost immediate need for a way to collect, store and analyze this complex
information. The underlying goals of bioinformatics are to explain normal biological processes and
understand malfunctions of these processes. This will ultimately lead to advances in the diagnosis,
treatment and prevention of many genetic diseases.
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This section provides a brief introduction to bioinformatics as well as real world applications and future
trends and how they may be relevant for the St. Louis Region. The research is based on the following
sources:

National Center for Biotechnology Information

European Bioinformatics Institute

Global Industry Analysts, Inc.
Advances in biology coupled with advances in computing and statistical programming allowed for this
science to rapidly evolve. The most widely recognized project that relies on bioinformatics is the
Human Genome Project (HGP), begun in 1990 and led by the US Department of Energy’s Office of
Science. Completed in 2003, according to the DOE’s website, the goals of the project were to:

Identify all the approximately 20,000 to 25,000 genes in human DNA

Determine the sequences of the 3 billion chemical base pairs that make up human DNA

Store this information in databases

Improve tools for data analysis

Transfer related technologies to the private sector and

Address the ethical, legal, and social issues that may arise from the project
The first working draft of the entire human genome was completed in June 2000 with a high quality
reference sequence completed three years later marking the end of the HGP. In the human genome,
there are approximately three billion bases, the chemical building blocks of our DNA. In terms of
computer storage, it takes three gigabytes to store the entire genome. This information is publicly
available and stored by the National Center for Biotechnology Information in a database knows as
GenBank, which is a data repository for publicly available nucleotide sequences for more than
380,000 organisms. Since inception, the number of bases in GenBank doubled every 18 months.
Access to this complex information forms the foundation of the bioinformatics field according to several
sources.
As outlined by the European Bioinformatics Institute, there are many ways in which bioinformatics is
being used today, most of which have their roots in genomics and the Human Genome Project.

Molecular medicine

Microbial genome applications

Agriculture

Animals

Comparative studies
Future Development
As with biotechnology, bioinformatics has been a key source of economic growth and employment
with hundreds of pharmaceutical companies, biotech firms, research centers and university programs
across the country. A 2011 report by Global Industry Analysts, Inc., found that the global
bioinformatics market will reach $5 billion in the US by 2015. Growth in the sector is being driven by
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the demand for new drugs and significant development in the field of genomics, a set of advanced
tools designed for large data acquisition and analysis. The success of the Human Genome Project
and continued advancements in technology will only grow this sector further.
Innovations in Technology
Many cities have developed programs and support to encourage innovation in research and
development, as it typically attracts higher wage employment, spin-off development, and related
economic value added. Attraction of R&D activity is seen as a key route to expand an area’s
economic base, creating industries that foster productivity improvement and constant innovation,
creating new spin-off businesses opportunities. Universities have been at the forefront of this effort,
sponsoring the development of research parks all over the world. While many of these facilities have
not met with the level of success envisioned by their creators, significant successes have also been
achieved. Key insights include:

A local university presence, with a more aggressive focus on creating links with industry and
commerce, both formally and informally. Universities are important to R&D for several reasons.
First, they are a source of new knowledge, particularly in basic science. Second, they offer the
chance to create/train a local base of scientists and engineers with appropriate skills. Third, they
can more aggressively support spin-off development, by allowing professors to develop outside
research projects and new independent start-up companies. Reportedly, universities that focus
largely on academics have a more difficult time facilitating these linkages with the private sector.

For R&D activity to generate significant new spin-off job and business creation, there needs to be
a local culture of innovation, with links between companies, and to other markets. The nature of
the local economic base also drives spin-off potentials, particularly through larger companies.

A competitive environment, with linkages to other regions and an ability to attract skilled
employment, driven by area amenities and quality of life features as well as existing area
companies. These amenities are important, both in initially attracting qualified employees and
keeping them over the long term.

Creation of local networks for information exchange. These networks need to evolve into more
complex linkages between companies and with their subcontractors. To the extent that
confidentiality and proprietary structures are in place to prevent information flow, these linkages
will have more difficulty forming. Such links and networks also have an informal social
component, as employees meet for social functions, talk, exchange ideas, etc. after business
hours. Social networks become a key source of information exchange as well.

The need for a regional approach to economic development and R&D attraction, combined with
local understanding of existing area R&D activities, and a willingness to create policies at the local
level which foster additional regional economic linkages. Bureaucratic issues and regulations can
inhibit innovation and R&D success.

The time factor – the most successful R&D complexes, such as Silicon Valley, have taken many
years to form and mature, suggesting that the critical need is to put the pieces in place and then
let the kettle stew.
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
Access to government research and development contracts. With changes in federal legislation,
which now allow research conducted for government goals to benefit the private sector, the
likelihood for spin offs is greater.

The nature of the local economic base also defines potentials for R&D, particularly if the base is
driven by industries that are stable or growing versus declining. The extent of local control in key
industries is also a factor.
For this section, AECOM will discuss a series of advanced technologies, all of which have implications
for how they will influence shifts in societies throughout the world. Many resources were examined in
the development of this section, including:

The Christian Science Monitor

Public Broadcast Service – Nova Science Now

The Economist
Overview
For most of human civilization, the pace of innovation has grown at a pace slow enough that decades
have passed by before a discovery would influence human life, culture, or the conduct of nations.
Now, major innovations and changes are expected to take place several times within a decade,
especially in developed countries. Some are obvious, such as the countless ways of communication,
and some are not as obvious, such as the steady growth and power of the internet. The next
innovations are ones that are unknown, or in some cases, believed to be unnecessary. However,
before realizing it, these innovations are the ones taking society by surprise – where societies and
human activity would be helpless but for the existence of that innovation.
In an age where computers have multiplied productivity, modern technological advances make millions
of individuals wonder about technological limitations and which technologies will have the economic
and social impacts comparable to that of the industrial revolution. The most bewitching and
captivating innovations are often conceived without much societal impact while on the other hand, the
everyday inventions such as the Haber-Bosch process – harnessing the atmospheric abundance of
nitrogen to create ammonia (fertilizer) – eventually altered the fundamental economics of basic human
need, changing the face of the planet forever.
This section will focus on technologies that are destined to change the world; specifically exploring
those that will cause a shift in the fundamental resource base for the commodities of the 21st century –
including technologies that will reduce bottlenecks in energy (i.e., dependence on oil and gas) and
shortages in natural resources (i.e., lithium and rare earth metals used in batteries and electric
motors). Additionally, this section will cover the implications that high tech innovations have on
advanced manufacturing. Oftentimes, high tech innovations are slow to emerge due to the high costs
of production; thus, there is a demand for advanced manufacturing – the rapid, low cost development
process needed to manufacture products with various complexities in design and function – advanced
manufacturing often includes products that are on the cutting edge of technology.
Indeed, as many topics mentioned in this section will not live up to their world changing predictions,
AECOM will provide a brief overview of some cutting edge technologies, produced in an advanced
manufacturing process, and believed to have the best chance of survival, specifically:
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
Battery Technology

Low Energy Transistors

Three-Dimensional Printing

Quantum Dots
Battery Technology
As more and more innovations in renewable energy become viable, such as wind and solar power, the
problem of wasted energy becomes apparent. An example of this problem has been experienced in
the nation’s Pacific Northwest, when in 2011, the Bonneville Power Administration (BPA), a federal
power agency in favor of electricity produced by federal dams, pushed private companies producing
power generated from wind turbines off the electricity grid because they were already generating too
much electricity from hydropower, and lacked a means to otherwise store excess generation capacity.
Many engineers and clean energy experts relate the opportunity costs of clean energy as a major
problem, which is exacerbated by the inability to store and reuse electric energy in an effective
manner. However, recent developments in battery technology, such as an experimental battery
printed on a paper thin substance – thin-film printing – is being discussed as an innovation capable of
powering off-grid economies in developing countries.
The process of printing batteries is technically known as roll-to-roll processing – manufactured by
printing ceramic electrolytes (a gel), with battery electrodes, onto a sheet of metal or plastic, passing
from roll to roll on a printing machine, similar to the traditional printing press.
Printed batteries could solve the problem of electricity storage, allowing electricity which is produced
by wind or solar farms during the day, to be captured and used during idle times, such as night or
windless moments. Currently, the cost and scale to manufacture lithium batteries to function in this
manner is out of reach; additionally, it is believed that lithium batteries do not have the capacity to
store enough energy needed to be utilized at a massive scale, suggesting the need for a technology
capable of storing the overabundant energy. At the moment, experts would like to see the emergence
of printed batteries as the technology capable of electricity storage.
Low Energy Transistors
Arguably one of the greatest inventions of the 20th century, transistors, first released in the early
1950's, is a fundamental building block of all modern electronic devices. Since this time, the number
of transistors on computer chips has doubled annually. This phenomenon is known as Moore’s Law,
describing a long-term historical trend of computing power. As innovations in high-tech computer
products increase, such as more efficient computers and intelligent devices, there is a need for new
chips which will complement such instruments.
Many scientists believe that the future of computer hardware/infrastructure (computers, servers,
monitors, towers, etc.) will be replaced by smart-phones and tablets tapping into a cloud network;
however, in order to fully realize this notion, the production of less energy-hungry chips is necessary.
Currently, nanotechnologists are working on approaches to reduce power needs of computers by a
factor of 100 to 1,000. One possible approach is the fabrication of chips with new materials, which are
expected to require less power and conduct electricity more efficiently. Examples:
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
Transistors made from graphene – structurally, a one-atom thick planar sheet of bonded carbon
atoms, packed in a honeycomb-like pattern – have the potential to consume a tenth to a
hundredth the power that current transistors consume.

Carbon nanotubes are transistors which are carbon sheets rolled into a tube one thousandth the
width of a red blood cell. Emitting different wavelengths of light energy, nanotubes are capable of
forming low-power electronic screens.
Some experts believe that the full replacement of silicon to newly designed type of transistors in
computer chips will take upwards of 30 years, costing approximately $100 billion. If and when new
chips, derived from concepts such as graphene or nanotubes, break into the market, they are
expected to appear first in high-end military, medical and aerospace applications. However, until that
time, some questions remain; can new chips be mass produced in a highly productive manner, quickly
enough, and at a competitive price?
Three-Dimensional Printing
Commonly, the laborious process of manufacturing metal or plastics can be referred to as
“subtractive,” the process of cutting, drilling and bashing materials. Throughout history, it has been the
goal of industry to produce in the most efficient manner possible; remarkably, many technological
innovations have increased utilization, and cut down on processing time. However, innovators are
always and will forever seek out any way to maximize profit and efficiency by employing new
advanced methods.
Initially intended to make prototypes, in recent years, scientists, engineers, and designers have been
homing in on three-dimensional (3D) printing technology, which is an “additive” manufacturing process
where three-dimensional objects are manufactured through a complex process of the successive
layering of material. This process requires fewer raw materials; furthermore, because this method is
driven from computer software communicating with 3D printers, each unit/item can be custom made
without high retooling costs. Additionally, 3D printing can produce ready-made objects, requiring less
assembly; for example, a tech student at the Massachusetts Institute of Technology (MIT) printed a
fully assembled and fully functioning clock. 3D Manufacturing is redefining advanced manufacturing;
printing parts and products has the potential reduce costs and risks, allowing companies to no longer
rely on the mass production of items to recover fixed costs.
While some objects still require machining upon finishing, the process of 3D printing would require
only 10 percent of raw material that would be needed in mass production manufacturing. The 3D
printing process only needs what materials are used as inputs, therefore, reducing material surplus.
Additionally, 3D printing requires less energy than conventional factories; speed, on the other hand, is
comparable at this point.
The production of customized, low-volume and high-value components is unlikely to completely
replace conventional mass production manufacturing; however, many experts believe that 3D printers
have earned their spot in factories, working alongside milling machines, presses, foundries and plastic
injection-molding machines, at the same time capable of taking on more work that had been previously
done by those machines. A future with 3D printing implies that manufacturing will depend less on
scale and more on quality.
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Quantum Dots
In today’s world, curbing energy consumption is a goal of many scientists, researchers and engineers.
Contrary to this notion is the world’s growing dependence on devices requiring screens (smart phones,
televisions, monitors, tablets, displays, etc.). Most screen technology uses power-hungry liquid crystal
displays (LCDs); however, innovations in display technology suggest the ability to be more energyefficient, more cost-effective and perform better than current technologies.
Quantum-dots are semiconductor nanocrystals which emit a glow when exposed to an electrical
current or light. Depending on the size and material they are made from, quantum dots can emit a
variety of colors and can be controlled using an active matrix, having the ability to power quantum dots
using a thin-film transistor, similar to that used for energy storage.
Current researchers at Samsung Electronics have developed prototypes on glass as well as flexible
plastic, suggesting the potential for screen technology. In order to produce prototypes, the process
begins by coating a solution of quantum dots on a silicon plate and evaporating the solution; from this
point the quantum-dot layer is pressed with a rigid-layered rubber stamp, and pressed onto the desired
screen surface, either plastic or glass substrate, transferring the quantum-dots on the substrate
surface.
According to experts there are a number of issues to be solved prior to hitting the market for
commercialization, suggesting power, longevity, functionality, cost and production issues. However,
quantum-dot technology, when fully developed, has the potential to consume a fraction of the power
LCD technology currently consumes (one-fifth), while promising to be brighter, longer-lasting, and
potentially cost less than LCD or organic light-emitting diode (OLED) technologies.
Water Intensive Industries
The following section looks at water-dependent industries and their potential for growth in the St. Louis
metropolitan Region. Access to clean water has become a critical issue affecting economic activity,
development and business around the world. In certain parts of the world, water is becoming scarce
due to climate change and population growth making it an even more valuable commodity since
virtually every industry relies on it. Water contamination is another threat. Decreasing availability,
increasing demand and declining quality make those areas with access to freshwater more valuable to
water intensive industries. In addition, as water resources diminish, policymakers are increasingly
focusing on regulating water use which has significant implications for businesses in regard to site
selection and profitability.
Information for the following section comes from several sources including policy centers, academic
journals and the Missouri Department of Natural Resources. Below is a list of sources that were
reviewed for this section:

Missouri Department of Natural Resources

Environmental Science and Technology

Pacific Institute

Water Reuse Association

Water Environment Federation
174

American Water Works Association

US Geological Survey

US Government Accountability Office
Demand vs. Supply
Demand for water increases with population growth and associated economic development.
According to a 2009 study by the Pacific Institute, freshwater consumption worldwide has more than
doubled since World War II and is expected to rise another 25 percent by 2030. Much of the growth is
the result of expected increase in the world population to 8 billion by 2030, up from 6.6 billion currently.
At the same time, changes in precipitation patterns, diminishing glaciers and snowpack, higher
temperatures, more severe droughts and warmer sea surface temperatures have been documented
across the world, all of which negatively affect the water supply. According to the Pacific Institute, the
percentage of global land classified as “very dry” has doubled since 1970. In the US, as reported in a
2005 report by the US Government Accountability Office, water managers in 36 states expect to face
serious water shortages by 2015. Since water is a critical input for many industries, contamination and
degradation can require significant costs to treat it before use. As the water supply worldwide has
become increasingly strained, businesses are immediately affected in three ways:

Higher costs for water. With diminishing supplies, water has become increasingly expensive for
business. Areas with less expensive water supplies are advantaged for investment by waterintensive industries.

Regulatory caps for water use. As supplies diminish, local, state and federal governments are
implementing controls over water use by industry.

Increasing demand for water-efficient products and technologies. Technologies and
products that allow businesses to use water in a more efficient manner are benefiting businesses
through lower water bills, reduced wastewater charges and lower energy costs.
As worldwide water supplies decline, regions with access to clean, fresh water are advantaged for
growth in these water-intensive industries.
Users
Worldwide, agriculture accounts for more than two thirds of water use compared to 10 percent for
residential use and 20 percent for industry. By 2025, the International Water Management Institute
projects that one third of the world’s population, approximately 2 billion people, will live in countries or
regions with water scarcity. This means that they may not have sufficient water resources to grow
enough food. As reported in a 2008 article in The Economist, “A Water Warning,” it takes
approximately 3,000-6,000 daily liters per capita for farming the food we eat. Biofuels, seen as a way
to alleviate our overreliance on fossil fuels, have further burdened water supplies. It takes up to 9,100
liters of water to grow the soy for one liter of biodiesel and up to 4,000 liters for the corn to be
processed into bioethanol. Recent rapid growth in biofuel production due in large part to significant
government subsidies has raised concerns about the impacts on food production.
As urbanization spreads, water has become even more critical to the world economy with industries
relying upon clean, potable water for raw material processing, production and distribution. For many
industries like biotech/pharmaceuticals, the largest share of their consumption is embedded in direct
175
operations where it is used as a pasteurizing agent. Other industries use water for process of raw
materials like food crops and metals where water is used for irrigation and dust control.
A recent article published in the journal Environmental Science and Technology examined direct and
indirect water withdrawals in the US by industrial sector. The following table shows the total water use
for the top 10 sectors with the most water use in the US.
Table 44: Sectors with the Largest Water Use, 2002 (billions of gallons)
Sector
Power generation and supply
Grain farming
Food services and drinking places
Animal (except poultry) slaughtering and processing
General state and local government services
Cattle ranching and farming
Other animal food manufacturing
Poultry and egg production
Fruit farming
Real estate
Direct
62,700
35,800
200
16
1,900
2,440
139
32
4,890
326
Indirect
183
399
8,770
8,680
6,620
5,850
5,630
5,650
277
4,820
Total
62,900
36,200
8,970
8,690
8,530
8,280
5,770
5,680
5,160
5,140
Source: Blackhurst, Hendrickson and Vidal (2010)
Similar to worldwide trends, power generation, agriculture and food processing are the largest water
users. In the US, power generation and supply was the largest consumer of water with 62,900 billion
gallons used either directly (water use by the sector itself) or indirectly (water used in the supply chain
of the sector) during 2002. Power generation water use is primarily for cooling water and much of it is
returned to the natural system, although there are evaporative losses in storage reservoirs.
Residential or domestic water use constitutes 23,300 billion gallons per year.
The Pacific Institute profiled eight industries that are highly dependent on water resources and
assessed their water footprint. The water footprint is the “total volume of freshwater that is used to
produce the goods and services produced by the business.” For each sector, they examined direct
and indirect water use by type of water.
Figure 70: Relative Water Footprint of Select Water-Intensive Industry Sectors
Source: Morrison 2009
176
A summary of water-related industries with relevance to the St. Louis metropolitan area are discussed
below:

Beverage: Potable water is the primary and most important ingredient for the majority of
beverage products, making beverage companies’ direct operations especially vulnerable to water
availability and quality concerns. Beverage manufacturing requires high quality source water,
putting the water use of this industry in direct competition with local populations and their drinking
water needs.

Biotech/Pharmaceuticals: The pharmaceutical industry relies upon water for raw material
processing and in the production of basic chemicals. The availability of water in the Midwest has
been key to pharmaceutical industry growth in states like Michigan and Indiana.

Electric Power/Energy: The electric power industry uses considerable amounts of water
although there are disparities in water usage between different types of power. For example,
renewable energy sources like wind and solar typically consume small amounts of water as
compared to nuclear, coal, hydropower and biofuels, where there is intensive water use for oil
refinement, crop irrigation and for cooling. The Pacific Institute estimates that the electric power
industry accounts for 39 percent of total freshwater withdrawals in the US.

Food Manufacturing: Water plays a fundamental role in the food industry, the largest share of
which is used for irrigation. Water is also relied upon during operations for meat and food
processing, and in the product end-life for cooking and preparation of food products. Water
availability in the food industry has a direct impact upon commodity prices.
Water Use in Missouri
Every five years the US Geological Survey (USGS) collects data on water use for the US. According
to this data, as reported by the Missouri Department of Natural Resources, water use outpaced the
growth of Missouri’s population during the 1990’s. Between 1990 and 2000, total statewide water use
increased by nearly 26 percent while population increased 9 percent. Per capita water use grew from
1,358 gallons per person per day in 1990 to 1,470 per person per day in 2000.
Table 45: Total Water Withdrawals for the St. Louis Region
2000
3,729.0
4%
96%
2005
3,968.1
3%
97%
Per capita total withdrawals, gal/d
1,382
1,428
Share of total withdrawals by use
Public Supply
Domestic
Industrial
Irrigation
Livestock
Aquaculture
Mining
Thermoelectric
13.0%
0.8%
1.6%
0.1%
0.2%
0.0%
0.4%
84.0%
11.8%
0.5%
1.1%
0.3%
0.2%
0.0%
0.3%
85.8%
Total withdrawals, in Mgal/d
Share groundwater
Share surface water
Source: US Geological Survey
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AECOM examined the water use for the St.
Louis Region for 2000 and 2005. In 2000, the
St. Louis Region used 3.7 billion gallons per day
of water. This increased to nearly 4 billion by
2005. Per capita use increased from 1,382
gallons per person per day to 1,428 gallons.
The majority of the water came from surface
water sources, 97 percent in 2005, the rest came
from groundwater. Electrical generation is the
largest user of water with nearly 86 percent of all
water used in the Region. However, much of
this water is used for cooling and then returned
to the water source. Public supply was the next
largest user with 12 percent of total withdrawals.
Most water use concerns in Missouri’s Eastern region, in which the St. Louis Region is located, are
urban in nature. The water infrastructure is aging, contaminants have been found in the supply,
pollution resulting from barge traffic exists and heavy rain creates runoff which pollutes surface waters.
How the St. Louis Region uses water is also important. One example of the abundance of water in the
Region, and the challenges of managing it, relates to the current dewatering operation managed by
the Illinois Department of Transportation, covering about 16 to 20 million gallons of groundwater which
are pumped daily from more than 60 wells dewatering sections of I-64 and I-70 around the Tri-Level
Interchange in East St. Louis, IL. The wells pump water to a centralized pump station at the IDOT
Bowman St. Service Center where it is discharged to an unnamed drainage ditch that is tributary to
Schoenberger Creek, and eventually the Mississippi River.
There are currently efforts underway to evaluate the geothermal use of this water, which could support
between 6,500 to 8,000 tons of heating and cooling capacity, or about 80 to 100 million BTU heating
and cooling resource for industrial or business development. When compared with natural gas for
heating, fuel savings could be about $750,000 annually with full utilization of the resource. Additional
savings in air-conditioning during the summer season would increase the total savings to over $1 to
$1.2 million per year. The key is that IDOT needs to continue to pump water out of the Tri-Level
Interchange, or it will flood.
A second factor related to water is a recent agreement between US EPA and the Metropolitan St.
Louis Sewer District to invest about $4.7 billion over the next 20 years to fix challenges associated
with combined sanitary and storm sewer overflows as well as illegal sanitary sewer bypasses, which
have allowed untreated sewage to enter waterways such as River des Peres and the Mississippi. The
program also requires investments in green infrastructure.
Future of Water-Intensive Industries
Industries like agriculture and foods will remain linked to water despite diminishing supplies worldwide.
As the price of water increases and businesses seek to demonstrate a commitment to conservation
and minimize consumption, they are implementing new policies and procedures:

Dramatic increases in purification technologies. Food and beverage companies like CocaCola and Nestle are increasingly investing in water purification technologies to reuse grey water in
their production processes.

Negotiated water contracts with municipalities. Water-intensive industries are beginning to
negotiate long-term water contracts with municipalities to ensure the future supply of fresh water.
This action is to prevent water rights losses when groundwater supplies diminish in local wells.

Investment in water delivery and management services. The agriculture industry is investing
in water saving technologies like micro-irrigation, improved irrigation scheduling and water
metering systems that deliver water on demand.

Water conservation initiatives. Cities and countries worldwide under stress for water are
increasingly blocking investment by water-intensive industries that do not implement some type of
water saving technology or initiative. In response, companies like Kodak and Coca-Cola are
implementing annualized water reduction targets and conservation initiatives. In St. Louis,
Anheuser Busch, as part of its Better World commitment, has reduced water use by 34 percent in
the last three years according to its website. By 2013 they want to reduce water use for beer and
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soft drinks to 3.5 hectoliters of water per hectoliter of production. Current levels are 3.6
hectoliters, but down from 4.04 hectoliters in 2010.
Water Reuse
In response to the threat of water shortages, water reuse is a potential way to offset demand. Many
cities are implementing and encouraging residential and commercial conservation programs that
include the use of reclaimed water. As the technology has advanced to make reclaimed water safer,
water reuse has become more socially acceptable and affordable. According to the Environmental
Protection Agency, more than 2 billion gallons of water per day are reused in the US and the volume is
growing at an estimated 15 percent per year. Reused water is not for drinking. A white paper by
American Water discusses the two ways in which water is reused:

Non-potable (non-drinking) re-use which involves taking treated wastewater to use for agriculture
and landscape irrigation (especially golf courses and parks), industrial use (such as cooling
processes), construction, cement mixing, toilet flushing and fire protection; and

Indirect reuse, which involves using wastewater to recharge ground water supplies. Indirect
reuse, also called land application, allows treated wastewater to percolate down to aquifers to
replenish water sources.
Non-potable reuse is already a widely accepted practice that will continue to grow, and indirect potable
reuse is becoming an increasingly favored and applied method of reuse over discharging water into
surface water, which ultimately evaporates or runs off into the ocean. In this section we discuss gray
water and wastewater treatment and reuse.
Gray water is untreated wastewater generated from activities such as bathing, washing dishes and
laundry but does not contain human waste. According to a study by the American Water Works
Association, Residential End Uses of Water, gray water can make up as much as 50 to 80 percent of
residential water usage. However, without a dual plumbing system, most gray water is often combined
with sewage which contains human waste. If separated, gray water can supply half of the landscape
irrigation needs of the residence. It is also commonly used for toilet water. Gray water recycling can
result in cost savings for the consumer, some water conservation in the local area as well as cost
savings for wastewater treatment due to diversion.
There are no national guidelines regarding the use of gray water since states are responsible for
regulation of water and plumbing. Gray water use in the US is most prevalent in western and southern
states. Both California and Arizona are among the states that have enacted legislation to allow gray
water use. In total, 30 states have regulations allowing, prohibiting or regulating gray water use.
Concern over the use of gray water due to health and safety reasons has limited its development.
However, there is little research on the potential harmful effects of gray water, if any.
Everyone generates wastewater. Wastewater, also referred to as black water or sewage, contains
nutrients, pathogens, solids, chemicals and water. It must be treated before it can be returned to the
environment. Treatment can occur in a decentralized way on a small scale such as on-site septic
systems or at centralized systems used by municipalities. The amount and type of treatment is
determined by how the water will be recycled. When there is a greater chance of human exposure to
the water, more treatment is required. Unlike gray water, once treated, wastewater can be stored.
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Container-on-Barge (COB)
This white paper is intended to provide a general overview for the status of container-on- barge (COB)
transportation, development initiatives, opportunities, and potential issues. The nascent industry
involves trans-loading containers to and from standard hopper barges to take advantage of the United
States’ vast inland waterway system. Its potential is reportedly greatest for select types of cargo while
other types continue to evolve. Containerizable product is generally higher in value due to the cost
level versus bulk transportation. In addition, barge transportation offers a lower travel speed that is
partially offset by reduced congestion versus rail and truck modes. Cargo that can withstand the
additional 1-2 week transit time can likely achieve cost savings over rail via West Coast ports.
Furthermore, COB could help alleviate port, road, and rail congestion throughout the United States
assuming that containers currently passing through seaports and travelling on domestic rail lines and
roadways would shift to inland waterway transport routes outside of existing congested intermodal
terminals.
Introduction
Containerization has been one of the major transportation trends of the last three decades. Growth in
container throughput globally and in the United States has been substantial. US total container traffic
more than doubled in volume between 1995 and 2010, from 22.3 to 42.3 million twenty-foot equivalent
units (TEU). TEU are intermodal cargo containers approximately 20 feet long and 8 feet wide that can
be easily transferred between different modes of transportation such as ships, trains and trucks. Asian
trade accounts for a reported 24.4 percent of all US containers trade in 2010, with China comprising
40 percent of the total.
This growth pattern of containerized shipments has created both issues and opportunities for
businesses and locations involved in the container transportation industry. West Coast US ports have
become severely congested, as the west coast handles approximately 75 percent of Asian trade with
the United States. Ideally, the Trans-Pacific Ocean carriers prefer to only travel from Asia to the West
Coast ports and back thereby reducing their total transit time. However, ports in Los Angeles, Long
Beach, Oakland, Seattle, Tacoma, and elsewhere are approaching or have reached capacity levels. In
many cases, it is not just a matter of increasing lift capacity at the ports as the movement of containers
on rail and trucks is affecting cities’ passenger transportation and local communities as well.
The container trip through the Panama Canal is a somewhat longer route for Trans-Pacific vessels,
but container carriers have been forced to bypass the West Coast to a degree due to congestion,
unloading at Gulf of Mexico or Atlantic ports in order to get to US population centers. In the Gulf of
Mexico, the main container ports include Houston, New Orleans, and Gulfport, with new capacity in
Mobile, Alabama. Houston receives the major share of containers due to its geographic proximity to
the Canal and its major population and distribution center status. New Orleans, in particular, enjoys a
robust break-bulk business because of its location and legacy as the sea port gateway into the river
system. Additionally, six Class 1 railroads meet in or near New Orleans providing bulk carriers with an
extensive network of potential connections with barge access to the inland waterway system and
efficient rail access. Container ships have been reluctant to travel the 120 miles upriver and back as
the journey is longer and more expensive than alternative Gulf locations and the regional accessible
population is smaller.
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Current Status
COB is widely used in Europe and Asia as an efficient method of moving cargo from open water
through the inland waterway system. One example is the development of the Rhine River inland
waterway system. Canada also is increasingly using COB. In the United States, efforts have focused
on expanding COB use and creating economies of scale within the waterway system opening the door
for full economic benefit of COB. These efforts are being supported by the Federal Maritime
Administration (MARAD) through initiatives and limited grant funding, as well as inland states with
strategic locations along the river system and select middle America producers and consumers.
Osprey Lines has provided COB transportation to a limited degree in the US. The original route
involved domestic moves from New Orleans/Baton Rouge to Pittsburgh and vice versa. The success
of this initial foray was reportedly moderate due, in large part, to the substantial travel time along the
Ohio River. Based on the estimated 100 miles per day capacity of barge tows, the journey from the
Gulf to the Ohio River is roughly 15 days in transit to Cairo, Illinois with an additional 15 days along the
Ohio River to Pittsburgh. Osprey is currently operating inter-harbor COB moves within the Houston
area port system. In addition, the company opened a COB terminal facility in Memphis. In addition to
Osprey Lines service, the following are examples from MARAD of container-on-barge or short-sea
shipping services operating in the United States:

Coastal container service from New York to Boston

James River COB service between Norfolk and Richmond, Virginia

Great Lakes cargo runs

Tacoma, Washington coastal movements

Intracoastal waterway service from Houston to Pascagoula, Mississippi

COB service from Port Manatee, FL to Brownsville, Texas
Infrastructure Requirements
Infrastructure investments in select areas are necessary to expand COB opportunities. However,
moving a portion of the cargo transportation route from the nation’s road and rail system to the inland
waterway system could result in less ongoing investment necessary to repair the road and rail
framework. One container ship loading 2,500 containers and unloading 2,500 containers would create
an estimated 220 miles of road traffic, 18 miles of double-stack rail traffic, and only 1 mile of barge
traffic. The Port of Pittsburgh estimates that one tow of 15 barges equates to two-and-a half 100-car
unit trains or 870 semi-trucks in terms of transport capacity. Many industry experts believe that the
capital requirements necessary to facilitate COB movements are far less than the current ongoing
requirements generated by moving cargo by rail and truck.
Two proposals exist to build Gulf access transloading facilities at the mouth of the Mississippi River in
Louisiana. Reportedly, these facilities would provide a necessary efficient link from the inland
waterway system to the ocean carriers. Estimated up-front capital costs for these facilities range from
$400 million to over $1 billion. The potential of COB, especially for export cargo, would increase if one
of these facilities were constructed along with container handling capability on the inland waterways.
Three tiers of existing and possible future inland ports would likely be needed to develop COB
capacity to generate larger volume barge tows which could create economies of scale. The hub ports,
181
or Level 1 ports, may be represented by Chicago, Memphis, Pittsburgh, and the Gulf of Mexico
gateway. Buy-in and capacity development at these ports is likely key to achieve system-wide critical
mass. Level 2, or intermediate ports, may include Louisville, St. Louis, Cincinnati, Minneapolis/St.
Paul, etc. Finally, smaller ports with advantageous locations for rail and road connections along with
large import/export companies with river system locations could add further value to the over-arching
cargo transportation system. Concentrated industrial centers, e. g. steel mills and grain processors,
might fit into this category.
Additional infrastructure would be necessary upriver at trans-loading locations. Strategic locations
would likely have to be set up along the river system to transfer the containers to/from efficient rail
connections. Large manufacturers with riverfront locations could potentially operate their own facilities
with capacity to load and unload container-filled barges. The estimated necessary equipment for these
facilities could be substantial for major access points where gantry cranes would move containers
directly from barge to rail and vice versa. For businesses or smaller operations, less equipment is
required with some estimates as low as $8 to $10 million for necessary startup equipment including a
reach-stacker crane.
Opportunities
COB transportation has the potential to generate opportunities for businesses and consumers. The
predicted cost efficiencies are based on the following forecast advantages:

Cheap daily barge rates compared to rail

Recent high fuel costs would have less impact on overall transportation costs (MARAD estimates
the number of ton miles per gallon of fuel at 514 for inland barges, 202 for rail, and 59 for trucks).

Positive environmental impact (reduction of harmful emissions) of barge movement vs. truck and
rail movements, most notably in urbanized areas.

Possible heavier loading of containers depending on location of on- and offloading

New transportation spokes along the rivers relieving massive congestion in sea ports and rail hubs

Backhaul movements where currently empty containers are being shipped/railed because of a
lack of export product – possibly creates economic feasibility for containerized movement of
agricultural product.

Minimization of federal, state, and local responsibility for high-cost infrastructure renovation and
replacement relative to rail and road transport.

Possible future grant incentive similar to incentives currently provided to sea ports

Anticipation of the impacts of US Army Corps of Engineers locks and dam projects along the
Mississippi and Ohio Rivers.
Achieving a reduction in shipment costs from this method of transportation, US consumers will
presumably be able to purchase imported goods at cheaper prices thus saving money while increasing
aggregate demand.
182
Asian Market Opportunities
Over the past three decades, remarkable economic growth has occurred in Asia, especially in the East
Asian economies of China, India, Singapore, Thailand, Philippines, Indonesia, and Vietnam. The
impacts of Asia’s rapid economic development on the US are multifaceted. In this white paper,
AECOM will identify factors addressing ways to improve the competitive position of the US and as a
response to the Asian market change, clarifying strengths and opportunities that will influence the ideal
strategic outcome. The research is based on the following sources:

World Bank Group

Asian Development Bank

Bureau of Labor Statistics, US Department of Labor

US Census Bureau

International Trade Commission

National Bureau of Statistics of China

Internet World Statistics

Morgan Stanley Service as of June 2011
Introduction
The following topics are ones that are considered the economic development trends of Asian markets.
Each trend is summarized, with discussion of opportunities, and implications for the US doing
business in Asia. A primary goal was to focus on trends that will change the economic structures and
provide opportunities.

Current Asian economic situation

The comparison of manufacturing in Asia and in US

Economic trends in Asia and opportunities for the US

Implications for the St. Louis Region
Current Asian Economic Situation
This section highlights the current economic situation in the high growth nations in Asia, including
China, India, Vietnam, Thailand, Philippines, and Singapore. These nations have recovered strongly
from the 2008-2009 global economic downturns, with 8.2 percent growth in 2010. In contrast, the
major industrial economies grew only 2.2 percent in this period. Countries in Asia witnessed an
impressive recovery in economic growth in 2010 following the 2008-2009 recession. In particular,
many export-oriented economies started to grow positively in the third quarter of 2009. Exporting
economies began their recoveries through intraregional sales to the large robust economies,
particularly China which further encouraged its domestic demand with significant stimulus, and
eventually to developed economies.
183
Figure 71: Real GDP Growth Rate (selected countries)
15
13
11
9
7
5
3
1
‐1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
‐3
China
Singapore
Philippines
India
Thailand
Vietnam
Source: World Bank Group
Inflation Rates
Inflationary pressures across Asia have been increasing in 2011 due both to the growth recovery and
to price increases for imported food and energy. Most economies are forecast to see an increase in
inflation in 2011. External supply-led increases in food and energy prices are slowing economic
growth. As well, there are concerns that the excess liquidity resulting from monetary easing in
developed economies could spill over into speculative asset price bubbles, as well as general inflation
and real currency appreciation due to incomplete stabilization of capital inflows. The Chinese
government has been attempting to manage this challenge for the last several quarters.
Figure 72: Inflation Rates for Selected Countries, 2000-2010
25
20
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
‐5
China
Singapore
Philippines
India
Thailand
Vietnam
Source: World Bank Group
General consumption and demand for exports from Asian countries continues to be restrained as the
economies’ recovery process continues. This can be seen from the fact that absolute GDP in these
184
economies has yet to recover to pre-crisis levels. Sluggish recovery in the developed world is partly
responsible for the lower export growth numbers being witnessed in the region in recent months.
Exports
It is clear that demand was an important factor in export recovery in the initial part of the crisis. The
imports of China from major suppliers of parts and components in Asian countries fell several months
prior to the time when the US began cutting its imports from China. In 2010, the Asia-Pacific region
remained the world’s remittance-receiving region. India and China were the largest remittancereceiving countries in the Asia-Pacific region, followed by the Philippines, Vietnam and Indonesia.
Figure 73: Merchandise Export Growth Rates
40
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
‐10
‐20
‐30
China
India
Philippines
Singapore
Thailand
Vietnam
Source: U.S. Census Bureau
Manufacturing in Asia Compared to in the US
Historically, the reasons for manufacturing in Asia generally focused on reducing manufacturing costs,
especially mass market products, as well as the fully evolved logistics pipeline that was created from
Asian Markets to US ports such as LA-Long Beach. However, recently these labor cost advantages
have begun to erode. Looking at prices overall, costs to locate manufacturing in Asian countries like
China and India is now approximately twice what it was five years ago. While labor costs in Asia are
still low in absolute terms, (hourly manufacturing pay in China is only $1.36, compared to $33.60 in the
US), growth in labor and logistics costs are changing views about China in particular.
185
Figure 74: Hourly Compensation Costs, MFG Employees in Regions, 2009 (US dollar)
45
40
35
30
25
20
15
10
5
0
US
China
Philippines
East Asia(exclude Japan)
Japan
Euro Area
Source: Bureau of Labor Statistics, U.S. Department of Labor
Labor costs are rising in Asia, particularly China and India, where wealth is building and a middle class
is being created. In China, wage increases for migrant workers are part of the driver in increased
labor costs. The figure below summarizes growth in labor costs for noted markets since 2003.
Figure 75: Hourly Manufacturing Costs in China, India and Philippines, 2003-2008
$1.80
$1.60
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
2003
2004
China
2005
India
2006
2007
2008
Philippines
Source: World Bank Group
Labor market conditions in manufacturing may tighten in Asia for several reasons:

The overall education level has gone up, as younger Asians are seeking office jobs requiring less
manual labor and work in better paying industries such as electronics.

The change of demographics: China, the major manufacturing outsourcing country of the US, will
have a further tightened labor market in the years ahead because of demographics. According to
the National Bureau of Statistics of China, Chinese under age 14 made up 23 percent of the
population in 2000 but are just 16.6 percent now. This means the portion of the population
heading into the work force will decrease.
186
Cheap labor has not been the only factor impacting the debate about imports from Asia. Inflation
pressures have been real in Asia, especially in India. The rising Asian currencies against the dollar
will increase import prices for Asian goods in the US. For example, Chinese Yuan is up 28 percent
against the US dollar in the past six years. While a weak US dollar clearly helps US exporters, the
stronger Yuan and the higher costs within China press upward on the costs of things US consumers
have traditionally wanted, through discount retailers such as Wal-Mart.
Figure 76: Change in Import Prices from Noted Markets to US, 2005-2011
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
2005
2006
2007
2008
2009
2010
2011
‐5.00%
‐10.00%
‐15.00%
Japan
Asian NICs*
China
Source: Bureau of Labor Statistics, U.S. Department of Labor
Mexico
European Union
* Asian NICs: Asian Newly Industrilized
Countries, including China, Inida,
Malaysia, Philippines andThailand
Other factors that influence inflationary pressures include:

Increasing material prices: prices of cotton, leather, plastic and freight have surged, which is
pressuring makers and retailers to push up their prices. The US consumer price index rose 3.6
percent in the year that ended in May.

High shipping and transportation cost: Transportation costs have increased, with prices for 40foot containers from Asia to the US. Moreover, current political events in Egypt, Libya and the
Middle East are pushing the cost of oil to record highs, which also significantly influenced shipping
and transportation costs. Several sources indicate that ship captains are being urged to sail at
slower speeds to reduce fuel consumption.
Poor Quality Control
One of the largest disadvantages of outsourcing is undesirable results, as Asian countries do not have
the same standards as the United States. In the event that the finished products do not meet quality
standards, the manufacturing process must be repeated by a different vendor. It is not only a waste of
time and materials, but very costly for the company who outsourced the project.
187
Government Policies
The Chinese Government listed the main problems for China in the path of economic development in
China’s 12th five year guideline (2011-2015) as unbalanced development and the imbalance between
investment and consumption. The new five-year plan suggests that the economy will be pointed
toward more sustainable and consumption-driven models linked with higher value-added sectors, such
as education and innovation, and that manufacturing will no longer be a primary factor considered by
Chinese government to stimulate the economic growth.
Economic Trends in Asia and Opportunities for the US
In this section, we highlight the economic trends in the Asian market and the opportunities for the
United States to develop trade with Asia in order to stimulate local economics. Middle-class
consumers are emerging very quickly in developing nations in Asia. As prominent drivers of growth
and expanding consumer tendencies, the middle-class represents a force that may be characterized
with higher incomes, advanced educational backgrounds and evolving appetites for global goods and
services. Spending growth in Asia will likely be stimulated by middle-class consumers. According to a
memo released by Morgan Stanley Smith Barney in June 2011, the transition from export-and
investment-led economy to a more consumer friendly economy, will define the evolution and
maturation of Asia – realigning investments and the global middle-class.
Table 46: Projected Middle-Class Spending, Compound Annual Growth Rate
2020
China
India
Japan
US
EU
Other Asia
2030
16%
25%
2%
0%
2%
8%
12%
19%
1%
0%
1%
7%
Source: Morgan Stanley Service as of June 2011
Providing evidence supporting economic growth in Asian countries, the above table highlights annual
growth rate projections of consumer spending. According to the table, consumer spending will
increase by annual rate of 16 percent in China by 2020 and 12 percent annually by 2030. India will
also see profound increases on annual basis; for example, by 2020, consumer spending is projected
to increase by an annual rate of 25 percent, and an annual rate of 19 percent by 2030. Consumer
spending growth in the US is projected to stay flat during this time period, and grow slightly in
European counties. As future consumer spending in Asian counties is expected to increase,
prompting more competition for goods and commodities (driving prices up), this transition may make
western economies more unbalanced. For example, as the price for commodities increase, due to
Chinese and Indian demand as well as scarcity, implies the need for the west to move more workers
into export-driven sectors, but as the west transitions into more of a service-oriented economy, jobs in
export-driven sectors may not be as freely available when looking 20 or 30 years into the future.
188
Figure 77: Private Consumption as a Percentage of GDP, 2008
80%
71%
70%
60%
55%
57%
Japan
India
50%
37%
40%
30%
20%
10%
0%
China
US
Source: Morgan Stanley Service as of June 2011
Unlike the case of other developing countries, private consumption has proved to be a significant
factor deciding India’s economic growth. Shown in the figure below, India’s consumption to GDP level
(57 percent) is closer to that of developed nations, like the US (71 percent) and Japan (55 percent)
than China (37 percent). However, if China were to fully realize its potential, they would shift from a
leading producer of globally distributed foods to the world’s largest consumer. According to Morgan
Stanley Smith Barney, China’s middle class remains to be a smaller proportion of the Chinese
population, at 12 percent; suggesting that without external factors, especially exports, the Chinese
middle class might not be strong enough to solely drive China’s rapid economic growth.
Shifting Area of Spending
As wealth increases, spending tends to shift away from necessities and more toward discretionary
items. As the absolute size of a household’s budget increases, the relative share toward basic
necessities, such as food and clothes, within those budgets decreases, while spending on luxury
items, such as leisure, travel and health care, increases. Fast growth is projected in the following
sections:

Health Care

Communications (e.g., Internet, mobile phones, PCs)

Recreation (e.g., travel, casinos)
As wealth increases, spending trends to shift away from necessities and more toward discretionary
items.
Health Care
The increasing demand for health care products (medical devices for hospitals, personal dietary
supplements, etc.) provides export manufacturing opportunities for US companies. Middle-class
consumers in emerging markets are likely to increase their spending on this category, in part reflecting
inadequate public health care systems. According to recent studies by Morgan Stanley, consumer
spending on health care in China is forecast to grow at a rate over 11 percent. Also, the trend should
boost the market of medical devices, including diagnostic equipment used in hospitals, which has
substantial growth potential.
189
Figure 78: Health Expenditure Per Capita in Selected Asian Countries
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
2001
2002
China
2003
2004
Thailand
2005
India
2006
Philippines
2007
2008
2009
Vietnam
Source: World Bank Group
India’s rapidly growing healthcare market is providing significant trade opportunities for US medical
device firms. According to the India Healthcare and Pharmaceuticals Report, from 2005-2009, US
exports of medical goods to India increased by 73 percent. The growth of US medical goods exports to
India is expected to continue as a result of India’s growing middle-class, medical tourism industry,
private-sector healthcare investment, and heightened government commitment to provide health
services to the rural population. India generally assigns lower tariffs to finished medical devices –
which US firms specialize in manufacturing – than to component parts.
Tourism
Outbound travel and tourism from Asia is growing quickly. With its increasing disposable incomes,
liberalized economies, the rapid growth of low-cost airlines and the lowering of both physical and
political borders, millions of Asians are able to travel overseas. In 2009 there was a nine-percent drop
in outbound trips by Asians due to the impact from the worldwide economic downturn, but the region
more than bounced back in 2010, according to the ITB World Travel Trends Report. Asian outbound
travel showed strong growth of 15 percent over the first eight months and is expected to end the year
showing a 14 percent rise over 2009. The booming outbound Asian markets for 2011 are expected to
include China, South Korea and Malaysia, which are all increasing at more than 20 percent, while
Taiwan, Japan, Singapore and India are also growing at double-digit rates. In terms of destinations,
76 percent of Asian trips are to countries within the region, while 13 percent are to Europe and only 10
percent to America, reportedly due to visa issues.
190
Figure 79: Outbound Travelers from China and India (millions)
millions
60
50
47.7
45.9
40.9
40
30
20.2
16.6
20
12.1
10.5
10
34.5
31
28.9
4.3
4.9
4.6
5.4
6.2
8.3
7.2
0
2000
2001
2002
2003
2004
Outbound Travelers from China
2005
2006
2007
2008
Outbound Travelers from India
2009
Source: National Bureau of Statistics of China, Indian Tour Operators Promotion Council
China’s National Tourism Administration reports that the number of trips made by domestic tourists
grew 12 percent in 2009 and is expected to have grown 14 percent in 2010, and 60 percent by 2015.
Similar phenomena can be witnessed in India. Outbound traveling especially will increase largely in
the future. In this case the US, with the second largest tourist arrivals rate by 2008, can expand travel
business with Asian countries. The latest outbound tourism report by the China Tourism Academy
said China will be the fourth largest source of outbound tourism in the world by 2020.
Advanced Manufacturing Exports
Asia, Europe, and North America together purchase over 80 percent of all US exports of advanced
technology products. In 2006, Asia was the destination for about 40 percent, Europe about 26 percent,
and Canada and Mexico together about 17 percent.
Figure 80: US Exports to China and India ($ billions)
$ billions
100
91.9
90
80
71.5
65.2
70
55.2
60
50
41.8
34.7
40
30
20
10
69.6
28.4
19.2
3.75
22.1
4.1
4.98
6.11
7.92
9.67
14.97
17.68
16.44
19.25
0
2001
2002
2003
2004
2005
US export to China
Source: U.S. International Trade Commission
2006
2007
US export to India
191
2008
2009
2010
Table 47: Top US Exports to China, 2010 ($ billions)
Rank
1
2
3
4
5
6
7
8
9
10
Commodity description
Electrical machinery and equipment
Power generation equipment
Oil seeds and oleaginous fruits(fruits that contain oil)
Aircraft and spacecraft
optics and articles thereof
Plastics and articles thereof
Vehicles, excluding rail
Inorganic and organic chemicals
Pulp and paperboard
Copper and articles thereof
Volume
11.5
11.2
11
5.8
5.2
4.8
4.5
4.5
3
2.9
% change
over 2009
21.9
33.6
18.1
8
31.2
10.5
134.4
34.2
22
62
Source: US International Trade Commission
Asia is a major export market for the United States which represents two of the top three US
customers. The latest data show Taiwan among the top three customers in optoelectronics, flexible
manufacturing, and nuclear technologies. China is among the top three customers in aerospace,
advanced materials, computer software, electronics, and in information and communications. South
Korea is among the top three in flexible manufacturing technologies and weapons. Malaysia is an
important export market in electronics technologies. China and Singapore remain in the top ten US
aerospace export markets and China became the second largest market for US export of aero-craft.
192
Action Plan Priorities
193
Introduction
Action Plan recommendations build from AECOM experience in regions that have been forced to
adjust to the loss of a major employer, particularly through auto industry restructuring or military base /
BRAC realignment. From this experience, it is clear that plans such as the St. Louis Regional
Economic Adjustment Strategic Plan have a role to play in actively encouraging Regional stakeholders
to resist passive reliance on the status quo, acknowledge challenges, and move forward.
The need to embrace change is emphasized through current employment data from the US Bureau of
Labor Statistics. Research shows that the St. Louis Region has been adding jobs at a rate of about
3,000 per month since January of 2010, which is faster than rates of job growth recovery in Columbus,
Indianapolis, and Cincinnati, and well above job creation rates sustained by the Region between 2001
and 2007, during which time an average of only 50 new jobs per month was sustained. As such, while
the Region is recovering at a notable pace, sustaining this pace into the future is the fundamental
challenge.
The Strategic Plan also acknowledges the critical need to actively manage public sector recovery from
the Great Recession. Since the recession took hold in 2008, the public sector has been forced to
contend with recurring fiscal challenges caused by simultaneous decreases in property and sales
taxes, and state shared revenue. Although sales taxes have started to recover, underlying weakness
in property values related to distressed assets as well as the reduced pace in housing construction will
slow the pace of recovery.
The bottom line is that many municipalities still find themselves operating with 5 to 10 percent less
revenue compared to pre-recession levels. States such as Michigan have resorted to very aggressive
policies to manage their fiscal situations, with budget priorities that include incentives to encourage
municipal consolidations. While fiscal challenges have made it difficult to separate politics from policy
at the national and state levels, limited resources at the municipal level have also led to a measure of
self-interest by municipalities, a perspective which constrains the Region’s ability to recover.
Choices made in addressing these factors will dictate the future pace and success in achieving
Regional economic development priorities. Put another way, and paraphrasing John Maynard
Keynes, the difficulty for St. Louis lies not in the new ideas, but in escaping the old ones.
194
Strategic Context
With St. Louis and the US now slowly emerging from the Great Recession, it is important to consider
how local opportunities align with identified national economic development priorities, as identified by
the US Economic Development Administration (EDA). These priorities include:
1. Is the program a national strategic priority?
2. Is it in an economically distressed or underserved market?
3. Is there a positive return on investment from EDA spending on the project?
4. Does it encourage regional collaboration?
5. Does it support public / private partnerships?
Within these five priorities, there is a clear focus on efforts to bolster technology-led economic
development, with a focus on support to small- and medium-sized businesses, aligned with efforts to
improve global competitiveness and innovation through commercialization of research, and/or
environmentally sustainable development. Also remarkable is the stated goal of encouraging regional
collaboration and moving beyond existing governance silos, which is a specific challenge for the
Region.
Strategic Priorities
With these priorities in mind, the Chrysler Regional Economic Adjustment Strategy has identified six
goals that should become the basis for economic adjustment in the Region:
1. Sector Specific Research
AECOM notes the laudable success of the Region’s Plant and Life Sciences cluster, which was
established and grown by a deliberate, well-funded and supportive network of collaborative
organizations and institutions, as well as private sector firms such as Monsanto. Plant and Life
Sciences sectors include:

Agricultural feed stocks and chemicals (including bio-fuels)

Drugs and pharmaceuticals

Medical services, medical devices and equipment

Research, testing, and medical labs
Similar opportunities are now emerging locally in the evolving clean tech cluster, which covers an
equally expansive array of traditional industry sectors with a general focus on the “green economy”.
What makes the green economy difficult to capture is that while there are a number of industries that
are specifically concerned with green activities, the majority of industry sectors and businesses that
offer green products and services do so as part of a larger range of offerings.
There are a number of terms associated with the green economy. The three most-often used terms
are greentech, cleantech, and enviro/eco tech. While there is debate about the nuanced differences
between these three terms, for the purposes of this report, the three may be used interchangeably to
refer to technologies, products, and services, which produce similar or greater benefits as traditional
technologies while minimizing the effects of their use on the natural environment and maximizing the
195
efficient use of various natural resources, including water and energy. Key areas of emphasis
include:

Recycling, renewable energy and energy storage

Information technology

Green transportation

Electric motors and lighting systems

Building efficiency

Green chemistry
Through supportive federal policy, research efforts in plant and life sciences and clean tech are
converging, with considerable research focused on alternative energy (biofuels) and energy storage,
with linkage to other industries such as agricultural products and chemicals, as well as research and
testing, human / animal health, diagnostics, and plant sciences. With these overlaps in mind, we
identified several areas for deeper investigation, focused on ways to expand evolving linkages
between sectors:

Build on recent announcements related to the formation of BioSTL, which will be supported by $30
million in committed funding from entities that include Washington University, BJC HealthCare,
and the St. Louis Life Sciences Project. Funding will be used to support pre-seed and seed
investments in the biosciences.

Evaluate Regional opportunities in emerging fields related to advanced manufacturing, materials,
and alternative energy, beginning with local firms such as Zoltek, MEMC Electronic Materials,
GKN and Boeing. Other areas of focus should include wind power logistics and manufacturing
support.

Explore how the Region’s available supply of fresh water and considerable logistical connections
can be used to grow a more vertically integrated food processing sector.

Evaluate how existing Regional capacity in Information Technology can be used to grow
opportunities in bioinformatics. Firms in the Region such as Intuitive Genomics, now located at
BRDG Park, are actively shaping the space where computer science, information technology,
biology and medicine are converging.

Research the role and need for leadership in potential sector clusters, using the existing Plant and
Life Sciences cluster as a model.
2. Entrepreneurial / Small Business Development / Export Opportunities
AECOM’s research has confirmed that the Region has traditionally been over-represented by large
companies. The Region needs to adopt strategies to energize entrepreneurship and grow nascent
companies that have potential to become new economic engines. Priorities include:

Catalog all the Regional entities that are involved in entrepreneurship and develop a plan for
enhanced easy access to existing area entrepreneurship resources. Educational institutions such
as Wash U and SLU should be engaged.
196

Evaluate the climate and capacity for entrepreneurial / small business development across the
Region, defining local strengths and weaknesses, funding gaps and industry best practices.

Missouri Enterprise and the Illinois Manufacturing Extension Service should have an important
role in training and business development activities aimed at export markets. The future roles of
these entities should be thoughtfully developed.

Help local companies expand export opportunities to global markets, particularly in Asia and Latin
America, building on experience with China Hub efforts.

Research the technical feasibility of a large-scale Regional manufacturing incubator, and the
potential role of local educational institutions in supporting the effort.

Research the role and need for a civic champion to pursue additional “cluster” opportunities, using
the existing Plant and Life Sciences cluster as a model.

Conduct further studies to understand how evolving state legislation for MOSIRA can be used to
support job creation in the Plant and Life Sciences and Clean Tech Clusters.

Work with the Illinois and Missouri US Congressional delegations to determine whether existing
district boundaries for organizations such as SBA, EDA, and FEMA can be redefined to better
serve the Region.

Work with local units of government to standardize planning and development regulations to
ensure greater consistency and efficiency across jurisdictions.
3. Infrastructure Investments
While the Region purports to be an impressive location for logistics, with four interstates, six Class 1
railroads, and two major rivers, our analysis confirms that the linkages between modes remain too
arbitrary. A renewed focus on infrastructure is essential if the Region is to respond to other major
investments.

There are already infrastructure investments underway that will benefit the Region beginning with
about $1 billion that has been invested to upgrade rail capacity between Alton and Joliet (Illinois)
for 110-mph passenger and freight service. With an estimated cost of $4.4 billion, the project
raises obvious questions for how the Region connects with this evolving asset, given the reported
poor condition of both Mississippi River railroad bridges.

In the Chicago area, one of three places where all seven Class 1 railroads meet, significant
bottlenecks are now being resolved through CREATE, as the railroad companies proved unwilling
to address the issue. CREATE includes more than 70 specific projects, with a total investment of
about $3 billion, to be funded through a public-private partnership.

The $5.25 billion expansion of the Panama Canal is now underway and set to open in 2014. Once
completed, the canal is expected to see an increase in container shipments, which have already
grown considerably, from approximately 200,000 in 1995 to more than 4.5 million in 2009. The
impact of the canal expansion relates in part to transit times, which will be enhanced for traffic
bound to the US East Coast which would otherwise go through Suez. While shipment times from
Asia to the US West Coast are shorter, the combined impact of rail transit time to the East Coast
as well as current inefficiencies and bottlenecks (i.e., Chicago) in the US logistics system suggest
that the Panama Canal will be competitive.
197

In response to the Panama Canal project, the Norfolk Southern Railroad recently completed a
major upgrade to the Heartland Corridor, which effectively doubled container-train capacity from
Norfolk to Chicago. The project involved raising tunnel clearances on 28 tunnels and removal of
24 overhead obstructions in Virginia, West Virginia, Kentucky and Ohio, at an estimated cost of
$191 million, shared between NS and impacted state governments. Improvements to corridors
such as the Heartland is important, in that as the Panama Canal is further east than the mouth of
the Mississippi River, it is anticipated that increased container traffic will shift to East Coast ports
once the Panama Canal expansion is complete.

Lastly, since 1999 BNSF has invested $800 million to increase capacity on its southern TransCon
Line, which now provides double-track service from Los Angeles to both Chicago and St. Louis.
Of 13 states served by this line, Missouri ranks about 7th in total annual carloads in 2009.
With these competitive forces in mind, Regional priorities should include:

There are several freight movement bottlenecks that need to be addressed, beginning with
existing rail bridges over the Mississippi. St. Louis should consider an effort similar to CREATE to
improve connections between rail, truck and barge segments.

Investigating ways to increase access to public transportation, particularly light rail and bus rapid
transit. Analysis confirmed that less than 1% of Regional housing unit inventory falls within a 1/4mile distance of current light rail stations. With inevitable growth in gas prices, demand for
walkable housing will drive greater interest in higher density transit-oriented development sites.

Under a consent decree with US EPA, MSD has committed to invest $4.7 billion to upgrade storm
water and sanitary systems in the Region to meet terms under the Clean Water Act of 1972.
Nationally, other cities have re-worked storm water management systems to expand recreational
amenities and revitalize communities, with cities such as San Antonio and Kansas City being
obvious examples. The project in Kansas City along Brush Creek, completed in the 1990’s,
encouraged additional development along the corridor.

We note that the St. Louis Arch reinvestment project includes important infrastructure and
transportation access enhancements. The plan allows for a more deliberate connection between
Illinois and Missouri, which is important from a policy standpoint. As Millennium Park in Chicago
transformed an area and drove significant additional real estate development and tourism, so too
could the Arch project help transform the Riverfront area.
4. Workforce Development
Workforce development remains a clear challenge for the Region, particularly the very practical
challenge of preparing young people for future careers while also ensuring that they actually have
practical skills to enter the workforce. Recommendations focus on the current structure of workforce
development in St. Louis City and County, which clearly needs improvement:

Build greater cooperation between St. Louis City and St. Louis County Workforce Investment
Boards (WIB’s) and intermediaries, including St. Louis Community College. Currently, St. Louis
City and St. Louis County have separate WIB’s, which creates an artificial barrier in Regional
workforce efforts.

Ensure that workforce development is aligned with the clear need for a focused business retention
and expansion effort.
198

Local companies need to be pulled into the workforce training process as partners. The success
of Ranken Technical College in St. Louis is impressive in terms of linking corporate workforce
needs with specialized training programs. The Ranken model should be a focus of further study
and emulation.

Sustain focus on early childhood education and support programs, as well as programs in math
and science

Further study of the applicability of Midwestern automotive adjustment programs such as the
Automotive Manufacturing Technical Education Collaborative, which is an organization of
educational institutions in communities across the country that have been impacted by auto
industry restructuring. That the St. Louis Region does not appear to be a participant is notable,
given the Region’s traditional strength in automotive manufacturing.
Specific challenges with respect to workforce development reinforce the need for greater resources to
fund City-County workforce development efforts, possibly including the use of a temporary economic
development sales tax.
5. Regional Economic Development Leadership
There is a clear need for a more integrated and collaborative Regional economic development
structure aligned deliberately with business retention and expansion efforts. Opportunities begin with
leadership transitions now underway at RCGA, Metro / Bi-State, and East-West Gateway. With these
transitions occurring simultaneously for the first time in 20 years, and acknowledging that the current
structure of Regional economic development is quite complex, further in-depth research is needed to
map out how the pieces of the Regional economic development puzzle can be better aligned to
provide more seamless and integrated economic development services. Recommendations include:

Continue to hold annual Regional economic development summits to set the agenda, identify
priorities, develop funding strategies, and support follow-through.

Enable the existing county-level economic development entities to prioritize Regional economic
development around strategies to retain and grow existing businesses as a top priority. There is a
clear need for a cohesive Regional platform for capturing and presenting data regarding
successful business expansion and retention efforts; current reporting is fragmented.

While challenging fiscal conditions make it difficult to broaden economic incentives, consideration
should be given to a temporary economic development sales tax to fund pressing infrastructure
and workforce development improvements.

The role of SLCEC’s Economic Development Collaborative should be expanded as a mechanism
for connecting with and establishing common goals among municipalities across St. Louis County.

Conduct further research into the Bi-State Development Agency’s ability to implement projects of
Regional importance and provide collaborative economic leadership. Bi-State is the one Regional
entity that has the legal ability to implement truly Regional projects.

Evaluate the RCGA’s current role and financial support for providing external marketing and
attraction services. As part of this evaluation, AECOM recommends that consideration be given to
clearly separating the traditional chamber and economic development functions within RCGA.
199

Re-engage with Metro East economic development leaders, to ensure their participation in efforts
which move the entire Region forward.
5. Enhanced City-County Collaboration
Enhanced collaboration between the City of St. Louis and St. Louis County must be a key outcome of
this study. Our analysis, supported by 15 years of work experience across the Region, has reinforced
two elements of prevailing wisdom. First, historically, there has been a general lack of cooperation
and coordination between St. Louis City and St. Louis County in basic government services. Notable
exceptions are the cooperation in functional areas such as the establishment of the Convention and
Visitors Commission, Great Rivers Greenway, the Zoo-Museum District, the passage of the Metro
sales tax and certain economic development initiatives. Second, it is clear that the City of St. Louis
faces considerable structural challenges, including constrained financial resources as well as a
fragmented and highly decentralized governance structure. With the outsized economic importance of
St. Louis City and St. Louis County to the Region in mind, it is apparent to AECOM that these factors
have combined to diminish the growth potential and competitive position of the Region nationally and
globally.
For the near-term, this analysis reinforces the practical need for a more integrated St. Louis City/St.
Louis County economic and workforce development platform, with the goal of aligning specialized
workforce training with business retention and expansion. In a similar fashion, consideration should
be given to implementation of a joint St. Louis City/St. Louis County geographic information systems
(GIS) platform to better support planning and economic development efforts. As a first step, the City
of St. Louis’ GIS system needs to be improved to the level of St. Louis County’s current GIS system
which is highly advanced.
Over the long-term, significant attention needs to be focused on resolving fundamental structural, legal
and financial challenges which the City of St. Louis faces. While it is clear that St. Louis City “re-entry”
into St. Louis County (or other fundamental reorganization of government) will not address all of St.
Louis City’s fiscal challenges, our experience suggests that the status quo is equally untenable. The
same is true for St. Louis County, which now finds itself in a fiscal position that the City of St. Louis
enjoyed roughly 50 years ago. The logical extrapolation of current trends raises concern over St.
Louis County’s long-term ability to sustain its current standard of economic performance without
fundamental change.
In total, if the Region is to be competitive as a metropolitan area in the future, substantive further
cooperation between the two jurisdictions is imperative. For this reason, we would argue that the
executive and legislative leadership of both the City and County of St. Louis should actively engage in
a long-term and phased strategy for transforming the St. Louis City/St. Louis County relationship over
the next 20 years.
200
Priority Sector Return on Investment Analysis
As Regional economic development leaders will be contending with limited resources in coming years,
our approach includes a detailed analysis of industry sectors that stand to generate the biggest return
on an initial investment of $25 million in each sector of the St. Louis Regional economy. We looked at
the amount of that investment that would remain in the Region, how it is re-spent and how many jobs
are supported by it. This was done in an effort to show how economic development incentives will
yield different outcomes depending on where the investment is made. Research has shown that
economic development efforts are more successful when built on a region’s existing base industries
and by fortifying industrial clusters that exist. By understanding how the local economy is currently
working, economic development officials will be better able to capitalize on their competitive
advantages when considering offering incentives for future development.
Specifically the data here examines how the overall Region economy will grow with this investment
directly and indirectly in terms of total output, employment and wages. AECOM used 2009 data from
IMPLAN for the St. Louis Region for this analysis, the most current available. The IMPLAN data is not
organized by NAICS. Instead IMPLAN uses the Bureau of Economic Analysis’s Benchmark InputOutput Study from 20002 that classifies industries into 440 sectors. The focus of this analysis is on
private sectors only.
Top Performing Sectors
The following table presents the top 20 performing private sectors in terms of output, jobs and wages.
Often a top performing sector on one variable is also a top 20 sector variable on another. For
example, the construction of other new nonresidential commercial and health care structures (which
includes commercial buildings, warehouses, schools, hospitals, hotels, office buildings, etc.) had $2.5
billion in total output during 2009. The more than 21,000 workers earned $1 billion in wages.
Table 48: Top Performing Private Sectors, St. Louis Region 2009
Sector
34
36
71
115
277
284
319
324
329
335
351
352
354
355
356
357
358
360
367
369
371
376
Description
Construction of new nonresidential commercial structures
Construction of other new nonresidential structures
Breweries
Petroleum refineries
Light truck and utility vehicle manufacturing
Aircraft manufacturing
Wholesale trade businesses
Retail Stores - Food and beverage
Retail Stores - General merchandise
Transport by truck
Telecommunications
Data processing, hosting, ISP, web search portals
Monetary authorities and depository credit intermediation
Non-depository credit intermediation and related activities
Securities, commodity contracts, investments
Insurance carriers
Insurance agencies, brokerages, and related activities
Real estate establishments
Legal services
Architectural, engineering, and related services
Custom computer programming services
Scientific research and development services
201
Total
Output
(millions)
$2,518
$4,278
$3,490
$6,791
$5,812
$5,227
$13,408
$1,443
$1,520
$2,802
$6,229
$2,491
$4,855
$3,553
$2,005
$4,112
$1,933
$7,630
$2,759
$2,152
$1,513
$2,483
Jobs
(000)
21
34
2
1
3
11
65
24
30
20
12
5
19
9
29
14
12
76
17
18
13
13
Total
Wages
(millions)
$1,005
$1,617
$399
$124
$622
$1,340
$4,686
$726
$782
$803
$1,108
$703
$1,210
$672
$902
$958
$839
$593
$1,050
$1,008
$844
$1,252
Sector
381
382
386
388
392
394
397
398
413
425
Description
Management of companies and enterprises
Employment services
Business support services
Services to buildings and dwellings
Private junior colleges, colleges, universities, schools
Offices of physicians, dentists, and other health practitioners
Private hospitals
Nursing and residential care facilities
Food services and drinking places
Civic, social, professional, and similar organizations
Subtotal
Total all industries
Share of total
Top 20 sector
Source: IMPLAN
Total
Output
(millions)
$7,516
$1,491
$1,298
$1,656
$3,202
$5,421
$7,743
$1,697
$6,499
$1,509
$127,035
$246,257
51.6%
Jobs
(000)
37
29
20
27
37
43
60
31
116
28
877
1,653
53.0%
Total
Wages
(millions)
$3,970
$843
$653
$556
$1,733
$2,738
$3,534
$937
$2,212
$817
$41,233
$76,514
53.9%
There are nine such sectors that are top performing on all three variables. Retail sectors also appear
since they employ thousands of workers however, they have comparatively low output and wages. In
total there are 32 sectors that rank among the top twenty on one or more of these indicators.
Combined, they had $127 billion in total output, nearly 52 percent of the total for all industries in the
Region. They employed more than half (53%) of St. Louis workers and paid 54 percent of all the
wages paid in the metro area during 2009.
Using a $25 million investment as the direct impact in each sector, AECOM used the regional
purchasing coefficients as well as multipliers for output, employment and wages to estimate the
indirect and induced economic impacts measured in output, jobs and wages. The regional purchasing
coefficient indicates what share of the goods and services purchased by a sector are made in the local
study area. For retail sectors, we also applied the retail margins. The purchase price of a retail good
includes the raw cost of the item along with mark ups for the retailer and wholesalers as well as costs
for transporting and storing the product. Typically the item is not produced locally so only the portion
of the spending that benefits the local economy is the retailer mark up and a portion of the
transportation and storage costs. The retail margin represents that share of the purchaser cost that
remains locally. In the St. Louis Region, the retail margins range from 16.4 percent to 48.1 percent as
shown below. There are no retail margins for retail purchases made through catalogs or online.
Table 49: Retail Margins in St. Louis Region, 2009
Sector
320
321
322
323
324
325
326
327
328
329
330
Retail Sector
Motor vehicle and parts
Furniture and home furnishings
Electronics and appliances
Building material and garden supply
Food and beverage
Health and personal care
Gasoline stations
Clothing and clothing accessories
Sporting goods, hobby, book and music
General merchandise
Miscellaneous
Margin
19.1%
48.1%
26.5%
32.6%
29.4%
30.8%
16.4%
47.9%
39.8%
27.3%
43.8%
Source: IMPLAN
202
Our analysis does not include any construction impacts that may be associated with growing a sector
with a $25 million investment. It should be noted that for some sectors, a significant investment may
change the way firms operate in terms of purchasing goods and services from within the local study
area. This analysis does not account for any such potential changes. Often, similar analyses focus
solely on the output multipliers. While a valid measure of how many times a dollar spent by an
industry circulates throughout the study area, it does not tell the whole story. The regional purchase
coefficient (RPC) indicates how much of purchases by the sector are sourced by local sellers. For
example, the RPC for aircraft manufacturing is 0.972 indicating that 97.2 percent of the goods and
services it needs to produce its product are purchased in the Region.
The following table shows the top twenty sectors for output multipliers, RPCs and the effective
multipliers which account for both. To get a sense of the size of the industry, we also included total
output from 2009. As shown below, some of the sectors with the largest output multipliers have low
RPCs, many are also very small industries in the Region such as tree nut farming. Among sectors
with the highest effective multiplier, only two also have one of the top 20 output multipliers. More
relevant is the high RPC. Of the sectors with the highest effective multiplier, 14 also had the highest
RPCs. Truck transportation is one of the top twenty private sectors in the Region and also has the top
20 multiplier, RPC, and effective multiplier, making it an attractive sector for further investment since it
is well developed and yields a high return.
Table 50: Private Sectors with Largest Multipliers and RPCs, St. Louis Region 2009
Sector
3
4
5
6
33
34
35
36
37
38
39
40
63
118
134
135
138
145
213
284
Description
Vegetable and melon farming
Fruit farming
Tree nut farming
Greenhouse, nursery, and floriculture production
Water, sewage and other treatment and delivery
systems
Construction of new nonresidential commercial
and health care structures
Construction of new nonresidential manufacturing
structures
Construction of other new nonresidential
structures
Construction of new residential permanent site
single- and multi-family structures
Construction of other new residential structures
Maintenance and repair construction of
nonresidential structures
Maintenance and repair construction of
residential structures
Cookie, cracker, and pasta manufacturing
Petroleum lubricating oil and grease mfg
In-vitro diagnostic substance manufacturing
Biological product manufacturing
Soap and cleaning compound manufacturing
Laminated plastics plate, sheet (except
packaging), and shape manufacturing
Other commercial and service industry machinery
manufacturing
Aircraft manufacturing
203
Total
Output
(millions)
$20
$10
$1
$65
$213
Output
Multiplier
2.2436
2.3579
2.1627
2.0424
1.8061
RPC
0.0222
0.0068
0.0004
0.0894
1.0000
Effective
Multiplier
0.0498
0.0160
0.0008
0.1826
1.8061
$2,518
1.8582
1.0000
1.8582
$710
1.8158
1.0000
1.8158
$4,278
1.9315
1.0000
1.9315
$1,765
1.8685
1.0000
1.8685
$1,478
$1,265
1.8634
1.9156
1.0000
1.0000
1.8634
1.9156
$558
1.8414
1.0000
1.8414
$281
$499
$53
$45
$2,235
$70
1.6909
2.0348
2.1621
2.0796
2.0624
1.7250
0.9577
0.9962
0.6207
0.2607
0.7475
1.0000
1.6193
2.0271
1.3420
0.5421
1.5417
1.7250
$376
1.6826
0.9697
1.6316
$5,227
1.5006
0.9724
1.4591
Sector
295
309
319
333
334
335
337
353
359
363
369
372
379
384
394
397
399
400
402
404
405
419
423
424
Description
Wood kitchen cabinet and countertop
manufacturing
Dental laboratories manufacturing
Wholesale trade businesses
Transport by rail
Transport by water
Transport by truck
Transport by pipeline
Other information services
Funds, trusts, and other financial vehicles
General and consumer goods rental
Architectural, engineering, and related services
Computer systems design services
Veterinary services
Office administrative services
Offices of physicians, dentists, and other health
practitioners
Private hospitals
Child day care services
Individual and family services
Performing arts companies
Promoters of performing arts and sports
Independent artists, writers, and performers
Personal care services
Religious organizations
Grantmaking, giving, and social advocacy
organizations
Total
Output
(millions)
$122
Output
Multiplier
2.0577
RPC
0.8327
$63
$13,408
$772
$482
$2,802
$35
$34
$635
$159
$2,152
1.9917
1.7987
1.9874
1.7482
2.0742
2.0442
2.0426
2.1773
2.0846
2.0285
0.9941
0.9960
1.0000
1.0000
1.0000
0.1287
0.1873
0.4867
0.6569
0.9000
$628
$197
$342
$5,421
2.3285
2.0349
2.0642
2.0280
0.8000
0.9353
0.5573
0.9500
1.9798
1.7915
1.9874
1.7482
2.0742
0.2631
0.3827
1.0596
1.3693
1.8256
1.8628
1.9033
1.1504
1.9266
$7,743
$416
$593
$91
$276
$44
$552
$394
$470
2.0265
1.9524
1.9853
2.0773
2.0949
2.1182
2.0067
2.1932
2.0464
0.9000
1.0000
0.9933
0.6311
0.8001
0.1870
0.9000
0.6443
0.7018
1.8239
1.9524
1.9720
1.3109
1.6761
0.3960
1.8061
1.4130
1.4362
Effective
Multiplier
1.7135
Top 20 sector
Bottom 20 sector
Source: IMPLAN
The following table presents the sectors with the largest economic impact in terms of total output, jobs
and wages with a $25 million investment. This includes both the direct, indirect and induced impacts.
As shown above, the sectors with the largest economic impact are those with the largest effective
multipliers which factor in both the output multiplier and the regional purchase coefficient. The largest
total economic impact with a $25 million investment was the sector transportation by truck yielding a
nearly $52 million total impact followed closely by petroleum lubricating oil and grease manufacturing
with approximately $51 million. The sector yielding the highest number of jobs with a $25 million
investment was private household operations with 1,890 jobs. This sector represents workers in
private homes such as cooks, maids, butlers, nannies, gardeners and other maintenance workers.
However similar to the output, the jobs are across all sectors, not just in the sector in which the direct
investment occurs. They include both indirect and induced impacts.
204
Table 51: Largest Economic Impacts in Private Sectors with $25 Million Investment
Sector
33
34
35
36
37
38
39
40
118
309
333
335
336
368
369
371
372
376
379
382
387
391
394
395
397
398
399
400
401
402
403
404
407
408
413
415
419
421
425
426
Description
Water, sewage and other treatment and delivery systems
Construction of new commercial and health care structures
Construction of new nonresidential manufacturing structures
Construction of other new nonresidential structures
Construction of new residential permanent site single- and
multi-family structures
Construction of other new residential structures
Maintenance and repair of nonresidential structures
Maintenance and repair construction of residential structures
Petroleum lubricating oil and grease manufacturing
Dental laboratories manufacturing
Transport by rail
Transport by truck
Transit and ground passenger transportation
Accounting, tax preparation, bookkeeping, and payroll
Architectural, engineering, and related services
Custom computer programming services
Computer systems design services
Scientific research and development services
Veterinary services
Employment services
Investigation and security services
Private elementary and secondary schools
Offices of physicians, dentists, and other health practitioners
Home health care services
Private hospitals
Nursing and residential care facilities
Child day care services
Individual and family services
Community food, housing, and other relief services,
including rehabilitation services
Performing arts companies
Spectator sports companies
Promoters of performing arts and sports and agents
Fitness and recreational sports centers
Bowling centers
Food services and drinking places
Car washes
Personal care services
Dry-cleaning and laundry services
Civic, social, professional, and similar organizations
Private household operations
Top 20 sector
Source: IMPLAN
205
Total
Impact (000)
$45,154
$46,456
$45,395
$48,288
$46,712
Jobs
270
370
380
370
310
Wages
(000)
$16,315
$18,920
$19,249
$18,823
$46,584
$47,889
$46,035
$50,678
$49,496
$49,684
$51,856
$37,609
$41,840
$45,641
$39,814
$46,570
$40,710
$47,581
$37,535
$37,107
$39,211
$48,165
$42,105
$45,596
$44,493
$48,810
$49,300
$44,020
320
390
380
110
500
230
370
550
390
370
330
460
270
580
530
600
620
380
540
350
580
840
930
680
$15,691
$19,655
$18,117
$7,504
$23,341
$14,501
$17,550
$15,740
$19,334
$20,984
$19,442
$30,488
$19,511
$20,551
$19,657
$18,071
$19,999
$22,277
$20,710
$17,655
$19,761
$21,421
$24,776
$32,774
$42,568
$41,904
$41,651
$36,387
$39,614
$26,687
$45,152
$42,194
$40,619
$28,769
910
380
670
760
530
520
640
600
600
530
1,890
$13,131
$21,868
$12,793
$17,618
$12,577
$13,630
$11,658
$20,637
$24,169
$17,774
$19,450
$15,299
$20,596
These sectors may yield the largest impacts, but may not necessarily be the best investment of public
incentives since they may not be as developed as other sectors. For example, the petroleum
lubricating oil and grease manufacturing sector had nearly $500 million in output and employed 489
people, whereas transportation by truck had $2.8 billion in output and employed 20,000 people.
However both sectors have high multipliers and very high RPCs indicating that much of their spending
occurs within the Region.
Targeted Clusters for Economic Development
The St. Louis Regional Chamber and Growth Association (RCGA) currently serves as the lead
economic development agency for the 16-county metropolitan area. They have identified 6 clusters
targeted for economic development in the Region:

Advanced medical technology

Plant and medical sciences

Advanced manufacturing

Information technology

Transportation and distribution

Financial services
These clusters are well-established in the Region and there are resources within the Region to support
their future growth. Here we briefly summarize each cluster and identify the IMPLAN sectors that form
it. We then present the data to show the impact of a $25 million investment for each of the sectors
within the cluster. Due to overlapping sectors, we grouped two clusters together – advanced medical
technology and plant and medical sciences – and refer to this combined cluster as plant and medical
sciences.
Plant and Medical Sciences
As identified by the St. Louis Regional Chamber & Growth Association (RCGA), companies in plant
and medical sciences are engaged in the development and production of medicines, agricultural
chemicals, organic chemical manufacturing, medical equipment manufacturing and research and
development. This definition is more narrow than other approaches. As measured by IMPLAN, this
cluster employed nearly 23,000 residents and had a total output of $10.3 billion in 2009. The average
wage in this sector was $93,200. This sector has very high output per job and high average wages,
but only employs 1.4 percent of the metro area workforce. Scientific research and development
services generate one-quarter of the output and employ 55 percent of the workers in this cluster.
Table 52: Plant and Medical Sciences Sectors, St. Louis Region 2009
Sector
120
121
122
125
126
130
131
Description
Petrochemical manufacturing
Industrial gas manufacturing
Synthetic dye and pigment manufacturing
All other basic inorganic chemical manufacturing
Other basic organic chemical manufacturing
Fertilizer manufacturing
Pesticide and other agricultural chemical manufacturing
206
Output
(millions)
$455
$48
$320
$318
$1,983
$199
$563
Jobs
80
40
420
410
1,290
120
300
Wages
(millions)
$15
$4
$57
$42
$115
$10
$29
Sector
132
133
134
135
305
306
307
308
309
376
Description
Medicinal and botanical manufacturing
Pharmaceutical preparation manufacturing
In-vitro diagnostic substance manufacturing
Biological product (except diagnostic) manufacturing
Surgical and medical instrument, laboratory and
medical instrument manufacturing
Surgical appliance and supplies manufacturing
Dental equipment and supplies manufacturing
Ophthalmic goods manufacturing
Dental laboratories manufacturing
Scientific research and development services
Subtotal
Total all sectors
Share
Output
(millions)
$377
$2,307
$53
$45
$1,002
Jobs
780
2,040
120
60
3,330
Wages
(millions)
$99
$184
$11
$6
$245
$54
$28
$37
$63
$2,483
$10,335
210
140
150
800
12,600
22,880
$12
$6
$9
$36
$1,252
$2,132
$246,257
4.2%
1,653,035
1.4%
$76,514
2.8%
Source: IMPLAN
The following table shows the output multiplier and the regional purchase coefficient (RPC) for the
sectors in the plant and medical sciences cluster. Dental laboratories manufacturing has the highest
RPC with 99.4 percent of all goods and services purchased locally. This sector also has a large
output multiplier at 1.99 giving the sector the largest effective multiplier in the cluster at 1.9798. For
every dollar invested in this sector, the total economic output, the total dollars being spent throughout
the Regional economy, would be approximately $1.98. As shown above, this sector employs
approximately 800 workers and had $63 million in total output during 2009.
Table 53: Performance Metrics for Plant and Medical Sciences, St. Louis Region 2009
Sector
120
121
122
125
126
130
131
132
133
134
135
305
306
Description
Petrochemical
manufacturing
Industrial gas
manufacturing
Synthetic dye and pigment
manufacturing
All other basic inorganic
chemical manufacturing
Other basic organic
chemical manufacturing
Fertilizer manufacturing
Pesticide and other
agricultural chemical mfg
Medicinal and botanical
manufacturing
Pharmaceutical preparation
manufacturing
In-vitro diagnostic
substance manufacturing
Biological product (except
diagnostic) manufacturing
Surgical instrument, lab
and medical instrument mfg
Surgical appliance and
Impacts resulting from
$25 million investment
Total Impact
Wages
(000)
Jobs
(000)
$27,556
50
$2,902
Output
multiplier
1.9440
RPC
0.5670
Effective
multiplier
1.1022
1.9275
0.2216
0.4271
$10,678
30
$1,887
2.0334
0.6257
1.2723
$31,807
100
$7,248
1.7987
0.4343
0.7811
$19,527
60
$4,109
2.0310
0.4949
1.0050
$25,126
60
$3,448
1.8842
1.9159
0.0973
0.2827
0.1833
0.5417
$4,582
$13,542
10
40
$681
$2,387
1.9449
0.1315
0.2558
$6,396
30
$1,916
1.9899
0.7386
1.4698
$36,744
120
$8,154
2.1621
0.6207
1.3420
$33,551
150
$9,859
2.0796
0.2607
0.5421
$13,553
50
$3,562
1.8428
0.9173
1.6904
$42,261
210
$12,643
1.6772
0.1505
0.2524
$6,310
30
$1,865
207
Sector
307
308
309
376
Description
supplies manufacturing
Dental equipment and
supplies manufacturing
Ophthalmic goods
manufacturing
Dental laboratories
manufacturing
Scientific research and
development services
Impacts resulting from
$25 million investment
Total Impact
Wages
(000)
Jobs
(000)
Output
multiplier
RPC
Effective
multiplier
1.6210
0.6745
1.0934
$27,334
160
$7,910
1.6772
0.3139
0.5264
$13,160
70
$3,900
1.9917
0.9941
1.9798
$49,496
500
$23,341
2.0355
0.8000
1.6284
$40,710
270
$19,511
Source: IMPLAN
The above table also shows the impact of $25 million in each sector of the plant and medical sciences
cluster. Due to the low employment in several of these clusters, a $25 million investment yields few
jobs. However output per job is quite high as shown earlier.
Advanced Manufacturing
Advanced manufacturing incorporates technology to produce high value added products and services
as well as to streamline production and business processes. According to the RCGA, the St. Louis
Region is well positioned for growth in the following key manufacturing sectors:

Beverages

Aerospace and parts

Electrical equipment manufacturing and appliances

Motor vehicles

Computer and electronic products

Primary metals
The top three sectors in advanced manufacturing are light truck manufacturing with $5.8 billion in
output, aircraft manufacturing at $5.2 billion and breweries with $3.5 billion in output during 2009.
These sectors are also the largest employers. Combined, the cluster generated $25 billion in output
with 36,800 jobs paying an average wage of $107,550 during 2009. Advanced manufacturing sectors
represented 10 percent of the total economic output in the Region.
Table 54: Advanced Manufacturing Sectors, St. Louis Region 2009
Sector Description
Beverages
70
Soft drink and ice manufacturing
71
Breweries
72
Wineries
73
Distilleries
Primary Metals
170
Iron and steel mills and ferroalloy manufacturing
171
Steel product manufacturing from purchased steel
173
Secondary smelting and alloying of aluminum
208
Output
(millions)
Jobs
Wages
(millions)
$1,024
$3,490
$52
$704
1,540
2,500
180
490
$89
$399
$4
$66
$1,510
$129
$107
1,260
210
110
$154
$15
$7
Sector
174
176
177
178
179
180
Description
Aluminum product manufacturing from purchased aluminum
Primary smelting and refining of nonferrous metal
Copper rolling, drawing, extruding and alloying
Nonferrous metal (except copper and aluminum) rolling,
drawing, extruding and alloying
Ferrous metal foundries
Nonferrous metal foundries
Computer and Electronic Products
234
Electronic computer manufacturing
236
Computer terminals and peripheral equipment
237
Telephone apparatus manufacturing
238
Broadcast and wireless communications equipment
239
Other communications equipment manufacturing
240
Audio and video equipment manufacturing
241
Electron tube manufacturing
243
Semiconductor and related device manufacturing
244
Electronic capacitor, resistor, coil, transformer
246
Printed circuit assembly (electronic assembly)
manufacturing
247
Other electronic component manufacturing
248
Electro medical and electrotherapeutic apparatus
249
Search, detection, and navigation instruments
250
251
253
254
256
257
Automatic environmental control manufacturing
Industrial process variable instruments manufacturing
Electricity and signal testing instruments manufacturing
Analytical laboratory instrument manufacturing
Watch, clock, and other measuring and controlling device
Software, audio, and video media for reproduction
Electrical Equipment and Appliances
259
Electric lamp bulb and part manufacturing
260
Lighting fixture manufacturing
261
Small electrical appliance manufacturing
262
Household cooking appliance manufacturing
266
Power, distribution, and specialty transformer manufacturing
267
Motor and generator manufacturing
268
Switchgear and switchboard apparatus manufacturing
269
Relay and industrial control manufacturing
270
Storage battery manufacturing
272
Communication and energy wire and cable manufacturing
273
Wiring device manufacturing
274
Carbon and graphite product manufacturing
275
All other miscellaneous electrical equipment
Motor Vehicles
276
Automobile manufacturing
277
Light truck and utility vehicle manufacturing
279
Motor vehicle body manufacturing
280
Truck trailer manufacturing
209
Output
(millions)
$168
$326
$1,593
$287
Jobs
270
360
1,500
410
Wages
(millions)
$18
$31
$126
$27
$217
$226
950
1,000
$59
$66
$33
$29
$25
$18
$73
$14
$1
$512
$18
$242
30
70
50
30
220
20
*
850
110
740
$3
$5
$4
$3
$13
$1
$0
$94
$5
$43
$32
$9
$138
160
20
390
$10
$2
$27
$109
$61
$24
$25
$50
$56
360
230
90
80
140
170
$30
$14
$6
$4
$16
$16
$18
$48
$0
$52
$258
$335
$183
$46
$3
$4
$241
$3
$37
80
150
*
120
620
540
480
160
10
10
770
10
150
$4
$12
$0
$5
$44
$92
$44
$9
$1
$0
$49
$0
$10
$1
$5,812
$83
$169
*
3,010
290
580
$0
$622
$16
$49
Sector
282
283
Description
Travel trailer and camper manufacturing
Motor vehicle parts manufacturing
Aerospace and Parts
284
Aircraft manufacturing
285
Aircraft engine and engine parts manufacturing
286
Other aircraft parts and auxiliary equipment manufacturing
Subtotal
Total all sectors
Share
Output
(millions)
$10
$742
Jobs
50
2,120
Wages
(millions)
$2
$116
$5,227
$43
$601
$25,220
10,980
80
2,000
36,750
$1,340
$6
$177
$3,955
$246,257
10.2%
1,653,035
2.2%
$76,514
5.2%
* Less than 10 jobs
Source: IMPLAN
The following table shows the performance metrics for sectors in the advanced manufacturing cluster
as well as the impacts resulting from a $25 million investment. While the output multipliers are high for
many of these sectors, peaking at 1.9454 for soft drink and ice manufacturing, the RPCs are low
making the effective multiplier much smaller. For example, in soft drink manufacturing, the RPC is
0.0793 indicating that less than 8 percent of the goods and services needed to produce their product
are purchased locally. Therefore the effective output multiplier becomes 0.1542. A $25 million
investment in this sector yields a total economic output of $154,000. Aircraft manufacturing, however,
had an effective multiplier of 1.4591 due in large part to its high RPC of 0.9724. This is a $5.2 billion
sector employing nearly 11,000 residents in 2009.
Table 55: Performance Metrics for Advanced Manufacturing, St. Louis Region 2009
Sector Description
Beverages
70
Soft drink and ice manufacturing
71
Breweries
72
Wineries
73
Distilleries
Primary Metals
170
Iron and steel mills and ferroalloy
manufacturing
171
Steel product manufacturing from
purchased steel
173
Secondary smelting and alloying
of aluminum
174
Aluminum product manufacturing
from purchased aluminum
176
Primary smelting and refining of
nonferrous metal
177
Copper rolling, drawing,
extruding and alloying
178
Nonferrous metal rolling,
drawing, extruding and alloying
179
Ferrous metal foundries
180
Nonferrous metal foundries
Impacts resulting from
$25 million investment
Total
Impact
Wages
(000)
Jobs
(000)
Output
multiplier
RPC
Effective
multiplier
1.9454
1.4648
1.7890
1.3362
0.0793
0.1810
0.0285
0.1035
0.1542
0.2651
0.0511
0.1382
$3,855
$6,628
$1,277
$3,456
10
20
10
10
$611
$1,188
$241
$534
1.6997
0.0825
0.1402
$3,505
10
$672
1.5794
0.0989
0.1563
$3,907
10
$750
1.6909
0.0335
0.0566
$1,416
*
$249
1.4732
0.0327
0.0482
$1,205
*
$210
1.3159
0.0000
0.0000
$0
*
$0
1.4192
0.0756
0.1072
$2,681
10
$401
1.4746
0.0439
0.0647
$1,617
*
$277
1.7716
1.7493
0.0010
0.0473
0.0018
0.0827
$46
$2,069
*
10
$14
$659
210
Sector
Description
Computer and Electronic Products
234
Electronic computer
manufacturing
236
Computer terminals and other
computer peripheral equipment
manufacturing
237
Telephone apparatus
manufacturing
238
Broadcast and wireless
communications equipment
manufacturing
239
Other communications
equipment manufacturing
240
Audio and video equipment
manufacturing
241
Electron tube manufacturing
243
Semiconductor and related
device manufacturing
244
Electronic capacitor, resistor,
coil, transformer, manufacturing
246
Printed circuit assembly
manufacturing
247
Other electronic component
manufacturing
248
Electromedical and
electrotherapeutic apparatus
249
250
251
253
254
256
257
Search, detection, and
navigation instruments
Automatic environmental control
manufacturing
Industrial process variable
instruments manufacturing
Electricity and signal testing
instruments manufacturing
Analytical laboratory instrument
manufacturing
Watch, clock, and other
measuring and controlling device
Software, audio, and video
media for reproduction
Electrical Equipment and Appliances
259
Electric lamp bulb and part
manufacturing
260
Lighting fixture manufacturing
261
Small electrical appliance
manufacturing
262
Household cooking appliance
manufacturing
266
Power, distribution, and specialty
transformer manufacturing
Impacts resulting from
$25 million investment
Total
Impact
Wages
(000)
Jobs
(000)
Output
multiplier
RPC
Effective
multiplier
1.4355
0.0679
0.0974
$2,435
10
$387
1.8143
0.0198
0.0359
$898
*
$218
1.6918
0.2702
0.4571
$11,427
40
$2,593
1.7183
0.1576
0.2708
$6,770
30
$1,653
1.7650
0.7342
1.2959
$32,398
150
$7,978
1.8515
0.0340
0.0630
$1,576
10
$341
1.8820
1.8099
0.1922
0.3541
0.3617
0.6409
$9,043
$16,023
40
60
$3,057
$4,084
1.8515
0.4095
0.7582
$18,956
120
$5,978
1.8760
0.5068
0.9508
$23,769
100
$5,687
1.9216
0.2541
0.4883
$12,208
70
$3,992
1.7487
0.0999
0.1747
$4,367
20
$1,110
1.8584
0.1994
0.3705
$9,262
40
$2,497
1.7314
0.6745
1.1678
$29,196
140
$9,016
1.8216
0.3194
0.5818
$14,546
70
$4,112
1.7236
0.1816
0.3130
$7,826
40
$2,244
1.8130
0.1749
0.3171
$7,927
40
$2,008
1.7574
0.2204
0.3874
$9,685
40
$3,160
1.8451
0.8025
1.4807
$37,016
170
$11,324
1.7681
0.0006
0.0010
$26
*
$7
1.6986
1.6336
0.0006
0.0002
0.0009
0.0003
$24
$9
*
*
$7
$2
1.6053
0.0142
0.0228
$571
*
$106
1.6121
0.4319
0.6963
$17,408
70
$3,959
211
Sector
267
268
269
270
272
273
274
275
Description
Motor and generator
manufacturing
Switchgear and switchboard
apparatus manufacturing
Relay and industrial control
manufacturing
Storage battery manufacturing
Communication and energy wire
and cable manufacturing
Wiring device manufacturing
Carbon and graphite product
manufacturing
All other electrical equipment
Motor Vehicles
276
Automobile manufacturing
277
Light truck and utility vehicle
manufacturing
279
Motor vehicle body
manufacturing
280
Truck trailer manufacturing
282
Travel trailer and camper
manufacturing
283
Motor vehicle parts
manufacturing
Aerospace and Parts
284
Aircraft manufacturing
285
Aircraft engine and engine parts
manufacturing
286
Other aircraft parts
Impacts resulting from
$25 million investment
Total
Impact
Wages
(000)
Jobs
(000)
$12,050
40
$3,516
Output
multiplier
1.5348
RPC
0.3141
Effective
multiplier
0.4820
1.6163
0.4046
0.6539
$16,347
70
$4,495
1.7564
0.2086
0.3664
$9,160
40
$2,379
1.6404
1.4432
0.0441
0.1683
0.0724
0.2429
$1,810
$6,072
10
20
$449
$841
1.5481
1.9367
0.0009
0.0851
0.0014
0.1648
$35
$4,119
*
20
$9
$884
1.8068
0.4051
0.7320
$18,300
100
$5,527
1.5239
1.4904
0.2296
0.3734
0.3499
0.5566
$8,747
$13,914
20
30
$978
$2,393
1.6058
0.3330
0.5348
$13,369
60
$3,251
1.6435
1.6474
0.5314
0.2120
0.8734
0.3492
$21,835
$8,729
110
50
$6,763
$2,101
1.6150
0.2141
0.3457
$8,643
40
$1,942
1.5006
1.2561
0.9724
0.0456
1.4591
0.0573
$36,478
$1,433
130
*
$10,123
$266
1.7414
0.5949
1.0360
$25,901
120
$8,041
* Less than 10 jobs
Source: IMPLAN
Information Technology
The information technology (IT) cluster includes sectors that develop, maintain and use computer
systems, software and networks to process and distribute data. IT refers to anything related to
computing technology such as networking, hardware, software, the Internet or the people that work
with these technologies. The table below shows that the sectors making up this cluster generated
$11.6 billion in total output during 2009, 4.7 percent of all Regional output. Telecommunication
dominates this sector with $6.2 billion in output and more than 12,400 employees. Average wages
were highest for the nearly 5,100 people working in the data processing sector at $139,000.
212
Table 56: Information Technology Sectors, St. Louis Region 2009
Sector
350
351
352
353
371
372
373
Description
Internet publishing and broadcasting
Telecommunications
Data processing, hosting, ISP, web search
portals and related services
Other information services
Custom computer programming services
Computer systems design services
Other computer related services
Subtotal
Total all sectors
Share of total
Output
(millions)
$63
$6,229
$2,491
Jobs
580
12,430
5,060
Wages
(millions)
$22
$1,108
$703
$34
$1,513
$628
$595
$11,554
$246,257
4.7%
530
12,830
7,840
2,860
42,140
1,653,035
2.5%
$17
$844
$527
$172
$3,394
$76,514
4.4%
Source: IMPLAN
Computer systems design services, though a very small sector in this cluster, yields the highest return
on a $25 million investment with approximately $47 million in total impacts. In addition this investment
would support 460 jobs paying an average wage of $65,700. Recall that these 460 jobs are
throughout the Region, not just in the computer systems design services sector.
Table 57: Performance Metrics for Information Technology, St. Louis Region 2009
Sector
350
351
352
353
371
372
373
Description
Internet publishing and
broadcasting
Telecommunications
Data processing, hosting,
ISP, web search portals
Other information services
Custom computer
programming services
Computer systems design
services
Other computer svcs
Impacts from $25 million
investment
Total Impact
Wages
(000) Jobs
(000)
$8,863
70
$3,398
Output
Multiplier
1.8797
RPC
0.1886
Effective
Multiplier
0.3545
1.6067
1.6482
0.5680
0.2689
0.9126
0.4431
$22,815
$11,079
90
50
$5,302
$3,341
2.0426
1.9907
0.1873
0.8000
0.3827
1.5926
$9,566
$39,814
110
330
$4,543
$19,442
2.3285
0.8000
1.8628
$46,570
460
$30,488
1.6575
0.8000
1.3260
$33,151
200
$11,607
Source: IMPLAN
Transportation and Distribution
St. Louis is a multi-modal transportation center with two airports, four interstate highways, six major
railroads and lies at the confluence of the Mississippi, Missouri and Illinois rivers. According to the
RCGA, there are more than 75 companies with distribution facilities in the St. Louis Region occupying
more than 30 million square feet of space. While the RCGA included the US Postal Service in its
definition of this cluster, we focused solely on private industries. According to 2009 data from
IMPLAN, the transportation cluster as defined below employed 118,000 residents and generated
$20.6 billion in output. Wholesale trade was the largest sector with $13.4 billion in output and 65,000
jobs.
213
Table 58: Transportation and Distribution Sectors, St. Louis Region 2009
Sector
319
332
333
334
335
336
337
338
339
340
Description
Wholesale trade businesses
Transport by air
Transport by rail
Transport by water
Transport by truck
Transit and ground passenger transportation
Transport by pipeline
Scenic and sightseeing
Couriers and messengers
Warehousing and storage
Subtotal
Total all sectors
Share of total
* Less than 100 jobs
Source: IMPLAN
Output
(millions)
$13,408
$995
$772
$482
$2,802
$314
$35
$571
$758
$497
$20,634
Jobs
64,700
3,430
1,790
1,040
20,030
6,660
90
6,150
9,130
5,410
118,410
Wages
(millions)
$4,686
$290
$209
$70
$803
$144
$9
$333
$265
$261
$7,070
$246,257
8.4%
1,653,035
7.2%
$76,514
9.2%
The RPCs for many of these sectors is at or close to 1, indicating that many of their purchases are
made locally. With a high RPC combined with a high multiplier, the truck transportation sector yields
the largest impact from a $25 million investment, nearly $52 million, followed by rail transportation.
Table 59: Performance Metrics for Transportation and Distribution, St. Louis Region 2009
Sector
319
332
333
334
335
336
337
338
339
340
Description
Wholesale trade
businesses
Transport by air
Transport by rail
Transport by water
Transport by truck
Transit and ground
passenger transportation
Transport by pipeline
Scenic and sightseeing
Couriers and messengers
Warehousing and storage
Impacts from $25 million
investment
Total Impact
Wages
(000) Jobs
(000)
$44,787
270 $16,367
Output
Multiplier
1.7987
RPC
0.9960
Effective
Multiplier
1.7915
1.9418
1.9874
1.7482
2.0742
1.8809
0.4620
1.0000
1.0000
1.0000
0.7998
0.8971
1.9874
1.7482
2.0742
1.5044
$22,428
$49,684
$43,705
$51,856
$37,609
100
230
200
370
550
$6,308
$14,501
$10,970
$17,550
$15,740
2.0442
1.9904
1.7923
1.8918
0.1287
0.7003
0.7003
0.8495
0.2631
1.3939
1.2552
1.6071
$6,579
$34,847
$31,379
$40,177
30
330
300
380
$1,811
$17,264
$10,436
$17,595
Source: IMPLAN
Financial Services
St. Louis serves as the regional financial hub and a national center of banking, finance and insurance.
Financial sectors include banks, investment firms, insurance companies and real estate. The financial
services cluster includes a diverse array of local, regional and national firms. Nearly 177,000 people
work in this sector, representing more than 10 percent of the Region’s workforce. The largest sector is
real estate establishments with $7.6 billion in output and more than 76,300 people employed.
214
Table 60: Financial Services Sectors, St. Louis Region 2009
Sector
354
Description
Monetary authorities and depository credit intermediation
activities
Non-depository credit intermediation and related activities
Securities, commodity contracts, investments, and related
activities
Insurance carriers
Insurance agencies, brokerages, and related activities
Funds, trusts, and other financial vehicles
Real estate establishments
Accounting, tax preparation, bookkeeping, and payroll services
Subtotal
355
356
357
358
359
360
368
Total all sectors
Share of total
Output
(millions)
$4,855
Jobs
19,280
Wages
(millions)
$1,210
$3,553
$2,005
8,700
29,460
$672
$902
$4,112
$1,933
$635
$7,630
$1,362
$26,085
14,200
12,270
2,610
76,310
14,100
176,930
$958
$839
$40
$593
$653
$5,867
$246,257
10.6%
1,653,035
10.7%
$76,514
7.7%
Source: IMPLAN
Though real estate is one of the largest sectors in the financial services cluster, it has the lowest
effective multiplier, attributed mostly to a low output multiplier. A $25 million investment in this sector
generates a total economic impact of $24 million and 230 jobs. Accounting, tax preparation,
bookkeeping and payroll services has a higher effective multiplier yielding a total impact of almost $42
million with a $25 million direct investment.
Table 61: Performance Metrics for Financial Services, St. Louis Region 2009
Sector
354
355
356
357
358
359
360
368
Description
Monetary authorities and
depository credit
intermediation activities
Non-depository credit
intermediation and related
activities
Securities, commodity
contracts, investments, and
related activities
Insurance carriers
Insurance agencies,
brokerages, and related
activities
Funds, trusts, and other
financial vehicles
Real estate establishments
Accounting, tax preparation,
bookkeeping, and payroll
services
Impacts from $25 million
investment
Total Impact
Wages
(000)
Jobs
(000)
$32,715
190
$9,672
Output
Multiplier
1.8694
RPC
0.7000
Effective
Multiplier
1.3086
1.8615
0.7000
1.3030
$32,576
160
$8,494
1.9901
0.7000
1.3931
$34,827
400
$14,710
1.6479
1.8566
0.6824
0.6824
1.1246
1.2669
$28,114
$31,674
140
230
$8,242
$12,993
2.1773
0.4867
1.0596
$26,491
190
$6,921
1.3967
1.8596
0.7000
0.9000
0.9777
1.6736
$24,443
$41,840
230
390
$3,903
$19,334
Source: IMPLAN
Summary
The following table presents those sectors in targeted clusters that generate the largest total impact
with a $25 million investment or the largest number of jobs amongst all the sectors. Truck
transportation has the largest total impact with $52 million followed by rail transportation with
215
approximately $50 million in total impact. For each of these sectors, a $25 million investment would
generate between 230 and 370 jobs. Total jobs and wages include the indirect and induced impacts
as well, so jobs are generated throughout the economy, not just the sector.
Table 62: Highest Return on $25 Million Investment Among Targeted Clusters
Sector
Description
Financial Services
356
Securities, commodity
contracts, investments, and
related activities
368
Accounting, tax preparation,
bookkeeping, and payroll
services
Information Technology
371
Custom computer
programming services
372
Computer systems design
services
Plant and Medical Sciences
305
Surgical and medical
instrument, laboratory and
medical instrument
manufacturing
309
Dental laboratories
manufacturing
376
Scientific research and
development services
Transportation and Distribution
319
Wholesale trade businesses
333
Transport by rail
334
Transport by water
335
Transport by truck
336
Transit and ground
passenger transportation
338
Scenic and sightseeing
transportation and support
activities for transportation
339
Couriers and messengers
340
Warehousing and storage
Total Impact
(000)
Jobs
Wages
(000)
Output
per Job
Average
Wage
$34,827
400
$14,710
$88,200
$37,200
$41,840
390
$19,334
$107,500
$49,700
$39,814
330
$19,442
$121,300
$59,200
$46,570
460
$30,488
$100,300
$65,700
$42,261
210
$12,643
$204,200
$61,100
$49,496
500
$23,341
$98,500
$46,500
$40,710
270
$19,511
$153,000
$73,300
$44,787
$49,684
$43,705
$51,856
$37,609
270
230
200
370
550
$16,367
$14,501
$10,970
$17,550
$15,740
$164,700
$219,100
$213,700
$141,200
$68,600
$60,200
$64,000
$53,600
$47,800
$28,700
$34,847
330
$17,264
$106,400
$52,700
$31,379
$40,177
300
380
$10,436
$17,595
$103,200
$104,800
$34,300
$45,900
Source: IMPLAN
Recognizing that output and jobs are not the only measures of return on investment, we have also
provided the average output per job and average wages. Output per job is highest in sectors where
there is a lot of value added to the good or service produced. Among the top targeted sectors, rail
transportation had the highest output per job generated from a $25 million investment at $219,100.
Average wages ranged from a low of $28,700 in transit and ground passenger transportation to a high
of $73,300 for jobs resulting from a $25 million investment in scientific research and development
services.
216
Key findings include:

The largest output multipliers were for agricultural sectors which are very small in the St. Louis
Region as a share of total output. Other sectors with large output multipliers are in manufacturing,
finance and professional services.

Sectors with the largest share of dollars being re-spent within the Region are labor intensive such
as construction, utilities, some manufacturing sectors and social services.

Truck transportation yielded the highest total impact with a $25 million investment, nearly $52
million. For every dollar invested in this sector, $1.07 is generated within the St. Louis Region to
support production of this service.

Among the sectors targeted for economic development by the St. Louis Regional Chamber and
Growth Association, transportation (truck and rail) had the highest return. A $25 million
investment in truck transportation would generate 370 jobs throughout the Region economy
paying an average wage of $47,800.

Impacts resulting from a $25 million investment in advanced manufacturing sectors resulted in
surprisingly low impacts. While the output multipliers range from 1.6 to 1.9, the share of goods
and services purchased locally by these firms (as measured by the regional purchase coefficient)
are very low. To increase the return on investment and grow these impacts, investment needs to
be made in the supplier networks of these firms so more of their dollars are spent within the
Region.
Transportation Industry Linkage Analysis
AECOM examined the transportation industry in detail to assess the historical growth pattern, identify
key customers and suppliers and highlight areas for potential future investment to facilitate further
growth. This analysis will show the economic linkage between transportation sectors and the larger
economy as well as highlight potential areas for investment in the industry. Although the
transportation sector makes up a relatively small share of the St. Louis Region economy, it performs a
vital role in the movement of goods in, out and through the metropolitan area.
The City of St. Louis Port Authority, located on the Mississippi River above the Ohio River is the third
largest inland port in the Midwest according to the RCGA. According to the Missouri Port Authority,
the St. Louis facility operates more than 100 docking stations with 16 public terminals, containing 19.3
miles of riverbank. Other advantageous characteristics include the proximity to major interstates, the
ease of access to the Illinois and Missouri Rivers, and unimpeded marine expressway between St.
Louis and New Orleans, a route containing zero locks or dams. Primarily handling grain, coal,
petroleum, and chemical products, the St. Louis port facility shipped an average of 31 million tons of
cargo annually between 1998 and 2008. The chart below compares cargo handled by port facilities,
both inland water ports (Huntington-Tristate, Pittsburgh, St. Louis, and Cincinnati) and seaports (South
Louisiana).
The chart reveals that the volume of cargo at the Huntington-Tristate port, located on the Ohio River,
is growing at the quickest rate, at annual rate of 10.9 percent, handling an average of nearly 57 million
tons of cargo annually. The port of St. Louis, however, is experiencing a decline in the volume of
cargo that passes through its docks. For example, in 1998 the total volume of cargo handled by the
217
St. Louis port was 31.8 million tons, whereas in 2008, the St. Louis port only handled 29.5 million tons.
Overall, the St. Louis water port was still within the top 30 of all US ports in terms of tons of cargo
handled on an annual basis, however, this rank has dropped from 21, in 1998, to 27 in 2008.
Figure 81: Water Ports - Total Cargo Tonnage, 1998-2008
(Millions)
250
224
197
200
150
100
69
53
50
42
25
32
30
12
13
0
South Louisiana,
Huntington Pittsburgh, PA St.Louis, MO and Cincinnati, OH
LA (Rank #1) Tristate (Rank #8)
(Rank #18)
IL (Rank #27)
(Rank #44)
1998
Source: USACOE
2008
Air Travel Analysis
The major airport in St. Louis is the Lambert International Airport. The following analysis will look at
the benchmark regions, comparing the performance at each region’s major airport to St. Louis’s
Lambert International Airport; overall, rating each airport’s strength in terms of destinations and
passenger flow using data provided by the Federal Aviation Administration (FAA). The benchmark
airports are Memphis International (MEM), Indianapolis International (IND), Columbus International
(CMH), Cincinnati/Northern Kentucky International (CVG) and Kansas City International (MCI).
Figure 82: Annual Passenger Enplanements, 1990-2030
Thousands
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010*
2012*
2014*
2016*
2018*
2020*
2022*
2024*
2026*
2028*
2030*
0
St. Louis
Kansas City
Indianapolis
Columbus
Cincinatti
Memphis
Source: FAA
218
A high-level examination
of historical annual
passenger enplanement
data for the Lambert
airport compared to the
benchmark airports
follows. Lambert
International Airport is
projected to have the
highest annual passenger
enplanements among
selected airports.
Historically, Lambert
International had
significantly higher
passenger volumes since
it was the hub for TWA
operations – which ended with TWA’s bankruptcy and merger with American Airlines. Following the
2001 merger, there is a visible drop in passenger enplanements as those operations were shifted to
American’s O’Hare hub in Chicago.
Airport Key Destinations
The following section delves further into how the top 10 destinations for St. Louis Lambert Airport have
changed since 2000.
Figure 83: Lambert International Airport - Top 10 Destinations, 2000-2010
Thousands
700
600
500
400
300
200
100
0
2000 2001 2002 2003 2004
Chi O'Hare
Denver
Phoenix
Source: Transtats.bts.gov
2005 2006 2007 2008 2009 2010
Atlanta
Dallas FW
Chi Midway
Mississippi
Dallas
Detroit
There are a few key takeaways to be learned which will be illustrated in the following chart and
discussion. The major change that occurred was the 2005 addition of Dallas to the destination
airports, as this route now provides slightly over 200,000 annual passenger enplanements, likely on
Southwest. The other change which occurred is the continuous decline in enplanements to O’Hare
which began in 2000, decreasing at 600,000 annually, and in 2010 declining by 460,000. In 2006,
Atlanta also saw significant gains in enplanements which have continued to increase through the
recession.
Linkage Analysis
The primary tool for this analysis is the IMPLAN economic impact model. Widely used to gauge the
economic impact of new local demand, such as a new factory or government spending, the IMPLAN
model contains extensive data regarding how well firms are linked to others in a local economy.
IMPLAN’s system of social accounts shows how dollars flow among various institutions: firms,
households, government agencies as well as exports and imports.
The metrics investigated during this portion of the analysis include the following:
219

Total output

Total commodity supply and demand

Regional purchase and sales coefficients

Domestic and foreign exports

Indirect and induced economic multipliers (economic growth measures related to industries buying
from other industries, as well as induced household spending derived from household income
generated from a development)

Commodity demand
AECOM examined the economic linkages between select transportation sectors in the St. Louis
Region and the broader economy to understand the interdependence between industries. Using
IMPLAN economic impact model data from years 2001 and 2009, AECOM analyzed these linkages
within the local economy for air, rail, water and truck transportation as well as warehousing and
storage and courier services. This definition of the sector is slightly different from the one used by the
St. Louis Regional Chamber and Growth Association (RCGA). The metrics summarized in this section
can be updated on an ongoing basis to provide current performance evaluation, system monitoring
and benchmarking. Key findings include:

Overall the transportation industry is growing. However, from 2001 to 2009 there was a dramatic
decline in the air transportation sector as result of American Airlines purchasing TWA. However,
there was strong growth in other sectors within this industry.

The transportation sector is well integrated in the Regional economy. For most of the individual
sectors, supply exceeds demand. Therefore local companies are importing demand from outside
of the Region. However, there is excess demand in the St. Louis Region for both air
transportation and warehousing as measured by commodity supply and demand. Therefore local
consumers must go outside of the Region to meet their needs.

Other indicators of integration are the regional purchase and sales coefficients which are close to
1 for most transportation sectors indicating that local buyers and sellers of the good are meeting in
the local market. Regional sales coefficients, which indicate how much suppliers are selling
locally could be improved for air and water transportation sectors. There is a disconnect in air
transportation. The 2009 RPC is 0.46 indicating that local buyers spent 46 percent of their dollars
locally. The RSC in 2009 is 0.56 meaning that local suppliers of air transportation made 56
percent of their sales to local consumers.

Exports make up about one-quarter of transportation sector output, but that varies from a low of
1.9 percent for warehousing in 2009 to a high of 49.3 percent for water transportation. Exports
grew most significantly for the water transportation sector, up from 20 percent of output in 2001.

AECOM also examined the top goods and services needed (i.e., inputs) for each of the
transportation sectors and what share were purchased within the Region. Opportunities for
economic development exist when top inputs, such as railroad rolling stock for the rail
transportation sector, are purchased outside of the Region.
220
Transportation Sector
AECOM has identified several sectors within the transportation industry to track in this analysis.
Because our primary data source is IMPLAN’s social accounting matrix, we are restricted to using
industries tracked in this particular model which roughly align with three-digit NAICS codes. It is also
important to note that data are collected by firms, and each firm belongs to one industry. Therefore,
although a firm may provide many different services, it is classified in only one industry category. We
examined the following sectors:

Air Transportation (NAICS 481)
This industry is comprised of air transportation for passengers and cargo on both scheduled and
non-scheduled routes. Scheduled air transportation covers the largest part of the industry,
including air cargo operations. Non-scheduled service can include both cargo and passengers
and comprises general aviation for special, corporate, personal or other unscheduled aviation.
This industry does not include courier services; see below.

Rail Transportation (NAICS 482)
This industry includes both short line and line haul railroads. Line haul railroads operate networks
over wide geographic areas with multiple facilities throughout the US. Short line railroads are
often confined to a small geographic area. This industry also includes passenger rail service.

Water Transportation (NAICS 483)
This industry includes firms that provide deep sea, Great Lakes, intra-coastal and inland water
transportation, including freight.

Truck Transportation (NAICS 484)
The truck transportation industry includes firms that provide over the road freight transportation,
usually in a trailer or standard shipping container. This includes local pickup and delivery, sorting,
line haul and terminal operations. It also includes specialized freight trucking, which would be
freight that has specialized requirements – whether from a large size to refrigeration requirements,
tankers or other type of special equipment.

Couriers and Messengers (NAICS 492)
These firms provide delivery of parcels, whether in one city or among different cities. A courier
service primarily handles small parcels that can be picked up and delivered by hand – large
shipments of commodities, for example, would be handled by truck, rail, or by a specialized
shipper. Firms in this industry can range from a messenger on bicycle in one city to a large
international shipping network like UPS or FedEx. It does not include the postal service.

Warehousing and Storage (NAICS 493)
Firms in this industry primarily provide warehousing and storage to other firms; they do not sell
goods to consumers or other businesses. Specialized warehousing is also included (such as
refrigeration). These firms can sometimes provide a range of warehouse-related services, such
as sorting, packing, order fulfillment and other logistical services.
Transportation Industry Output
Total output is the value of all goods and services provided by a particular industry or total revenue for
the firm. The sum of all the industries in an economy is akin to GDP.
221
Table 63: St. Louis Region Transportation Sector Output
Total Output (millions)
2001
2009
$1,639
$995
$595
$772
$301
$482
$2,160
$2,802
$676
$758
$345
$497
$5,716
$6,306
In 2001, the St. Louis Region had nearly
$184 billion in total output which grew at a
compound annual growth rate (CAGR) of
3.7 percent through 2009, reaching $246
billion. Output in the transportation sectors
grew much slower at 1.2 percent annual
over this same time period. The most
significant contributing factor was the
decline in air transportation. Trans World
Total all industries
$183,973 $246,257
3.7%
Airlines (TWA) had its dominant hub at
Note: Totals may not add due to rounding.
Lambert Airport. However, when TWA was
Source: IMPLAN
purchased by American Airlines in 2001,
which uses Chicago’s O’Hare Airport as a hub, flights dropped off dramatically at Lambert and
transatlantic service was discontinued. The transportation sector with the largest growth from 2001 to
2009 was water transportation which grew from $301 million to $482 million, a CAGR of 6.1 percent.
Sector
Air transportation
Rail transportation
Water transportation
Truck transportation
Couriers and messengers
Warehousing and storage
Total select industries
CAGR
-6.0%
3.3%
6.1%
3.3%
1.4%
4.7%
1.2%
As shown in the following chart, the transportation sector made up 2.3 percent of total industry output
in the St. Louis Region during 2009, a drop from 2.7 percent in 2001. While declines occurred in both
Missouri and the US for comparison, they were not as large as those experienced in St. Louis.
However, the transportation sector in St. Louis still makes up a larger share of the overall economy
than the national average of 2.2 percent. Compared to the St. Louis Region and the nation, the
transportation sector in the state of Missouri constitutes a larger share of total output as a share of the
total economy, experiencing a less profound decline than St. Louis or the US from 2001 to 2009.
Strong growth in both rail and water transportation, with compound annual growth rates exceeding 8
percent annually in both sectors, can be attributed to the resilience of the transportation sector in the
state of Missouri.
Figure 84: Transportation Sector as a Share of Total Industry Output, 2001-2009
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
St. Louis MSA
Source: IMPLAN
Missouri
2001
U.S.
2009
As noted previously, the air transportation sector has shrunk dramatically in the St. Louis Region. The
following chart shows that in 2001, air transportation made up close to 0.9 percent of total output, $1.6
billion. This compares to 0.6 percent in Missouri and nearly 0.7 percent in the US. While air
222
transportation decreased as a share of total output in Missouri and the US, it did not fall as much as in
St. Louis. By 2009, air transportation made up only 0.4 percent of the Region output, $995 million.
Figure 85: Air Transportation Sector as a Share of Total Industry Output, 2001-2009
1.0%
0.9%
0.8%
0.7%
0.6%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
St. Louis MSA
Source: IMPLAN
Missouri
2001
U.S.
2009
Total Commodity Supply and Demand
Commodity supply and demand describes how much of a given commodity is made in the local area
and compares it to how much is demanded by other local firms and households. It should be noted
here that although commodity supply is closely related to total output, commodity supply measures the
total amount produced by all sectors. Firms often produce several commodities and are classified
according to their primary products. Here we focus on the commodities produced regardless of which
sector produces them. For example, as shown above, the air transportation sector in the St. Louis
Region produced $995 million in output during 2009. However, the total commodity supply is slightly
more than $1 billion. The difference is attributed to $33.2 million in output produced by scenic and
sightseeing transportation, i.e., helicopter and small plane tours. The majority of the commodities
profiled are produced by the same sectors and the difference in all cases is made up by sightseeing.
Table 64: Total Commodity Supplied and Demanded (millions)
Commodity
Air transportation
Rail transportation
Water transportation
Truck transportation
Couriers and messengers
Warehousing and storage
Total select industries
Total all industries
Total Supplied
2001
2009
$1,694
$1,028
$607
$787
$304
$490
$2,186
$2,878
$677
$758
$346
$497
$5,814
$6,439
$187,292
$253,363
Total Demanded
2001
2009
$1,242
$1,237
$358
$660
$271
$249
$1,967
$2,444
$611
$753
$370
$574
$4,820
$5,918
$193,874
$254,619
Supply/Demand Ratio
2001
2009
1.00
0.83
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.93
0.87
1.00
1.00
0.97
1.00
Source: IMPLAN
The ratio of supply to demand shows whether a region has more or less of a given commodity than its
firms and households are demanding. The ratio ranges from 0 to 1 with 1 indicating that the market is
satisfied. A ratio lower than 1 indicates that there is more demand than local businesses can supply.
A low ratio in this table means that local firms must look elsewhere to buy that commodity. The table
223
above shows that by 2009, there was more demand for air transportation than was supplied in the
Region, a dramatic shift from 2001 when the opposite was true. However, for most of these sectors,
local demand could be met by local suppliers indicating that the transportation sector is well integrated
within the local economy. In fact, since supply exceeds demand for most transportation commodities,
the surplus goods and services are exported outside of the Region.
Regional Purchase and Sales Coefficients
The commodity supply/demand ratio does not say anything about whether local buyers and sellers
actually meet in the marketplace. It only shows how much is supplied and how much is demanded.
The regional purchase coefficient (RPC) estimates how much of local purchases are indeed sourced
by local sellers. Conversely, the regional sales coefficient (RSC) estimates how much of a local
seller’s revenues come from local buyers. Even if the market is in balance, local buyers may choose
to buy from outside of the region; local sellers may find customers elsewhere, as well. The RPC and
RSC describe the extent to which local buyers and sellers make exchanges with other local firms. The
RPC and RSC are scaled from 0 to 1. High values for the RPC and RSC indicate that industries are
well-integrated with each other.
The table below shows that the RPCs have been relatively stable within the St. Louis Region’s
transportation industry with growth occurring in water transportation. This means that a growing share
of local demand for water transportation is being met by local producers, up from 90 percent to 100
percent. The regional sales coefficient (RSC) shows how much of a commodity being supplied in the
local market is sold to local buyers. The RSC for water transportation fell from 0.8 to 0.51 over the
same time period. Recall from above that the total amount of water transportation supplied grew while
demand fell. If all of the local demand is being satisfied (i.e., the RPC = 1), the remainder of the
supply is being exported outside of the Region. Therefore the amount sold locally will fall.
Table 65: Regional Purchase and Sales Coefficients
Regional Purchase
Coefficient
2001
2009
0.46
0.46
1.00
1.00
0.90
1.00
1.00
1.00
0.70
0.70
0.92
0.85
0.81
0.84
Regional Sales
Coefficient
2001
2009
0.34
0.56
0.59
0.84
0.80
0.51
0.90
0.85
0.63
0.70
0.99
0.98
0.68
0.79
The RPC for air transportation at
0.46 indicates local buyers who
Commodity
required these services spent 46
Air transportation
Rail transportation
percent of their dollars locally in
Water transportation
2001 and that 54 percent of demand
Truck transportation
in the local economy is being
Couriers and messengers
satisfied through imports. Recall
Warehousing and storage
that the commodity supply/demand
Average
ratio was 0.83 for air transportation
Source: IMPLAN
in 2009 meaning that 83 percent of
demand could have been met by local suppliers. However, the 2009 RSC is 0.56 meaning that local
suppliers of air transportation make 56 percent of their sales to local consumers.
For industries that have a commodity supply/demand ratio at or near 1, the RPC is typically larger than
the RSC as shown here. The ratio indicates that there is more supply than demand meaning that
suppliers will have to go outside of the Region in order to sell their commodities. When the RSC is
greater than the RPC, local firms and households demand more of these commodities than can be
produced in the region. Sellers, who face a very large pool of buyers, can satisfy many of their sales
224
locally. By contrast, buyers, who all compete for relatively small pool of suppliers, must look
elsewhere.
Domestic and Foreign Exports
Exports, both domestic and foreign, quantify the value of goods and services that are exported to
other regions (domestic) or outside the US (foreign) by local sellers.
Table 66: Total Exports
Total Exports
2001
2009
$1,084
$442
$244
$124
$60
$237
$217
$422
$248
$231
$5
$9
$1,857
$1,466
Share of Total Output
2001
2009
66.1%
44.4%
41.0%
16.1%
20.0%
49.3%
10.1%
15.1%
36.7%
30.4%
1.4%
1.9%
32.5%
23.2%
In the St. Louis Region,
exports make up
approximately one-third of
total output. This is slightly
lower for the transportation
sectors though it varies. Both
water and truck transportation
saw an increase from 2001 to
2009 whereas the share of
Total all industries
$61,547 $80,916
33.5%
32.9%
exports for air transportation
Source: IMPLAN
fell. As a share of total output,
exports in rail transportation made up 16.1 percent of total output in 2009, down from 41 percent in
2001.
Sector
Air transportation
Rail transportation
Water transportation
Truck transportation
Couriers and messengers
Warehousing and storage
Total select industries
Although there was a declining share of total exports from 2001 to 2009, foreign exports increased
over this time period, most significantly for water transportation and couriers. In 2001, domestic
exports made up 68.8 percent of all exports in the transportation sector. By 2009 this had decreased
to 43.5 percent. Although domestic imports decreased overall, there were two sectors that saw
growth, water transportation and truck transportation.
Table 67: Domestic and Foreign Exports ($ millions)
Sector
Air transportation
Rail transportation
Water transportation
Truck transportation
Couriers and messengers
Warehousing and storage
Total select industries
Total all industries
Domestic Exports
2001
2009
CAGR
$807
$181 -17.0%
$164
$34 -17.8%
$0
$65 104.2%
$58
$218
18.0%
$248
$140
-6.9%
$0
$0
NA
$1,277
$638
-8.3%
$50,689
$65,483
3.3%
Foreign Exports
2001
2009
CAGR
$277
$261
-0.7%
$79
$90
1.6%
$60
$173
14.1%
$160
$204
3.1%
$0
$91 141.7%
$5
$9
9.0%
$580
$828
4.5%
$10,858
$15,433
4.5%
NA = not applicable
Source: IMPLAN
Total imports in the transportation sector grew slightly over this period, though there were significant
declines in air transportation.
225
Table 68: Total Imports ($ millions)
Sector
Air transportation
Rail transportation
Water transportation
Truck transportation
Couriers and messengers
Warehousing and storage
Total select industries
Total all industries
2001
$337
$108
$101
$204
$69
$24
$842
2009
$136
$123
$168
$337
$51
$46
$861
CAGR
-10.7%
1.7%
6.7%
6.5%
-3.8%
8.6%
0.3%
$39,242
$49,060
2.8%
Source: IMPLAN
Multipliers
The economic impact multiplier is the most succinct summary of how industries interact with each
other. In general, a higher multiplier means that new business to firms in a given industry has a higher
effect on the local economy than it would have previously. However, it should be noted that a smaller
multiplier over time may simply represent a variety of factors, observable and not observable, and can
be caused by things entirely out of control of the policymakers or even the business leaders in the
area. For example, suppose an industry expands its production in the market area. If many of its
inputs come from outside the study area, it is possible that the indirect multiplier for this industry may
decrease. However, it is still better to have the industry expand since it will likely draw workers from
the local area.
Below we present indirect and induced multipliers. The indirect multiplier indicates the extent to which
firms buy from other firms in the local study area. A high indirect multiplier indicates that the industry
has a high level of local suppliers; a low multiplier suggests the opposite. The induced multipliers
indicate the extent to which the local economy benefits by the employees of these firms having higher
incomes – which they re-spend in the economy on goods and services.
As a result of the job losses in the air transportation sector, the induced multiplier decreased as a
result of the lost wages. For rail transportation, the indirect multiplier grew from 0.35 in 2001 to 0.57 in
2009. This means for every $1 invested locally in this industry, there was an additional $0.22 recirculated throughout the Region as the rail industry became more integrated. This implies that more
of its inputs are being purchased locally. In water transportation, the indirect multiplier shrank from
0.66 to 0.43 over this same time frame which reflects, in part, the higher share of imports used by this
sector.
Table 69: Indirect and Induced Output Multipliers (for each $1 direct impact)
Description
Air transportation
Rail transportation
Water transportation
Truck transportation
Couriers and messengers
Warehousing and storage
2001
Indirect
Induced
Multiplier Multiplier
0.53
0.44
0.35
0.40
0.66
0.31
0.56
0.43
0.44
0.47
0.21
0.57
2009
Indirect
Induced
Multiplier Multiplier
0.55
0.39
0.57
0.41
0.43
0.31
0.57
0.50
0.37
0.43
0.30
0.59
Source: IMPLAN
226
Commodity Inputs and Imports
Commodity inputs are the goods and services the industry buys in order to produce its product. Each
of the transportation sectors uses between 100 to 150 inputs. The following tables show the top 10
inputs for each transportation sector during 2009 as well as the share purchased locally which shows
the types of local firms that are most affected by the presence of the transportation sector. The
metrics included in his table are the following:

Gross absorption coefficient
This is the percentage of each $1 in industry outlay that is dedicated to a given input. Recall that
not all of an industry’s dollar goes toward other firms; some portion goes toward employee
compensation, dividends, taxes, etc. Therefore, the gross absorption coefficients usually add up
to 0.25 or 0.75.

Gross inputs
Based on the size of the industry, this is the amount, in millions of dollars, that the entire industry
spends on a given commodity. Whereas the gross absorption coefficient measures how much of
each dollar goes to a certain commodity, the gross input says how many dollars that is. For
example, if an industry spends $1 million in total outlay, and the gross absorption coefficient for a
given commodity is 0.02, then the gross input is $20,000. In other words, the industry spends 2
percent of its dollars on this commodity which equates to $20,000 in total spending.

Regional absorption coefficient
Similar to the gross absorption coefficient, this describes the percentage of $1 spent on a given
commodity in the local study area. It will be some portion of the gross absorption coefficient. In
the example above, if an industry’s gross absorption coefficient is 0.02 and it spends half of that in
the local study area, then its regional absorption coefficient is 0.01.

Regional inputs
Regional inputs describe the dollar amount of spending on a given commodity in the local study
area. It is derived by multiplying the regional absorption coefficient by the industry’s total output.
Again, in the example above, the regional input would be $10,000; that is, the industry in question
spends $20,000 on a given commodity, $10,000 of which is spent in the local study area.
In the table below, air transportation requires $541 million in inputs, approximately 54.4 percent of total
output. Of these, nearly three-quarters (74.8%) are purchased locally. The largest input is refined
petroleum products, $179 million, of which 93.3 percent of $167 million is purchased within the St.
Louis Region. This is also the largest regional input for air transportation. Combined, the top ten
inputs represent 88.9 percent of inputs needed.
Table 70: Commodity Inputs, Air Transportation (inputs in $ millions)
Input
Refined petroleum products
Other aircraft parts and auxiliary equipment
Scenic and sightseeing transportation services
and support activities for transportation
Aircraft
Used and secondhand goods
Commercial and industrial machinery and
equipment rental and leasing services
Gross
Absorption
0.180
0.065
0.059
Gross
Inputs
$179
$64
$59
RPC
93.3%
59.5%
70.0%
Regional
Absorption
0.168
0.038
0.042
Regional
Inputs
$167
$38
$41
0.053
0.036
0.028
$53
$36
$27
97.2%
0.0%
80.0%
0.052
0.000
0.022
$51
$0
$22
227
Input
Restaurant, bar, and drinking place services
Real estate buying and selling, leasing,
managing, and related services
Insurance
Telecommunications
Top Ten Inputs
Total Commodity Demand
Gross
Absorption
0.023
0.016
Gross
Inputs
$23
$16
RPC
86.7%
70.0%
Regional
Absorption
0.020
0.011
Regional
Inputs
$20
$11
0.013
0.011
0.484
$13
$11
$481
68.2%
56.8%
76.1%
0.009
0.006
0.368
$9
$6
$366
0.544
$541
74.8%
0.407
$405
Source: IMPLAN
Table 71: Top Commodity Inputs, Rail Transportation (inputs in $ millions)
Input
Refined petroleum products
Non-depository credit intermediation and
related services
Commercial and industrial machinery and
equipment rental and leasing services
Maintained and repaired nonresidential
structures
Railroad rolling stock
Securities, commodity contracts, investments,
and related services
Wholesale trade distribution services
Dimension lumber and preserved wood
products
Accounting, tax preparation, bookkeeping, and
payroll services
Legal services
Top Ten Inputs
Total Commodity Demand
Gross
Absorption
0.094
0.076
Gross
Inputs
$72
$58
RPC
93.3%
70.0%
Regional
Absorption
0.087
0.053
Regional
Inputs
$67
$41
0.067
$52
80.0%
0.054
$42
0.040
$31
0.040
$31
0.028
0.023
$22
$18
100.0
%
0.5%
70.0%
0.000
0.016
$0
$12
0.021
0.017
$16
$13
99.6%
17.7%
0.021
0.003
$16
$2
0.015
$12
90.0%
0.014
$11
0.015
0.396
0.561
$12
$306
$433
90.0%
76.2%
71.5%
0.014
0.302
0.401
$11
$233
$310
Source: IMPLAN
Table 72: Commodity Inputs, Water Transportation (inputs in $ millions)
Input
Scenic and sightseeing transportation services
and support activities for transportation
Used and secondhand goods
Plates and fabricated structural products
Real estate buying and selling, leasing,
managing, and related services
Couriers and messengers services
Ships
Insurance
US Postal delivery services
Waste management and remediation services
Coated, engraved, heat treated products
Top Ten Inputs
Total Commodity Demand
Gross
Absorption
0.116
Gross
Inputs
$56
RPC
70.0%
Regional
Absorption
0.081
Regional
Inputs
$39
0.088
0.082
0.065
$43
$40
$32
0.0%
1.6%
70.0%
0.000
0.001
0.046
$0
$1
$22
0.049
0.039
0.038
0.024
0.022
0.015
0.540
0.678
$24
$19
$19
$12
$11
$7
$260
$327
70.0%
0.2%
68.2%
75.0%
80.0%
24.8%
42.3%
48.5%
0.034
0.000
0.026
0.018
0.018
0.004
0.229
0.329
$17
$0
$13
$9
$9
$2
$110
$158
Source: IMPLAN
228
Table 73: Commodity Inputs, Truck Transportation (inputs in $ millions)
Gross
Absorption
0.122
0.053
Gross
Inputs
$343
$149
Couriers and messengers services
Insurance
Employment services
US Postal delivery services
Motor vehicle parts
Scenic and sightseeing transportation services
and support activities for transportation
Wholesale trade distribution services
Real estate buying and selling, leasing,
managing, and related services
Top Ten Inputs
0.051
0.038
0.026
0.025
0.022
0.019
$144
$108
$74
$70
$62
$54
RPC
93.3%
100.0
%
70.0%
68.2%
80.0%
75.0%
21.4%
70.0%
0.017
0.014
$49
$40
0.390
Total Commodity Demand
0.530
Input
Refined petroleum products
Truck transportation services
Regional
Absorption
0.114
0.053
Regional
Inputs
$320
$149
0.036
0.026
0.021
0.019
0.005
0.013
$101
$73
$59
$52
$13
$37
99.6%
70.0%
0.017
0.010
$49
$28
$1,09
2
80.8%
0.315
$883
$1,48
5
77.3%
0.410
$1,148
Source: IMPLAN
Table 74: Commodity Inputs, Courier Services (inputs in $ millions)
Input
Refined petroleum products
Couriers and messengers services
Scenic and sightseeing transportation services
and support activities for transportation
Aircraft
Real estate buying and selling, leasing,
managing, and related services
Management of companies and enterprises
Employment services
Wholesale trade distribution services
US Postal delivery services
General and consumer goods rental services
except video tapes and discs
Top Ten Inputs
Total Commodity Demand
Gross
Absorption
0.113
0.022
0.018
Gross
Inputs
$86
$17
$13
RPC
93.3%
70.0%
70.0%
Regional
Absorption
0.106
0.015
0.012
Regional
Inputs
$80
$12
$9
0.015
0.014
$11
$11
97.2%
70.0%
0.014
0.010
$11
$8
0.014
0.013
0.012
0.011
0.009
$10
$10
$9
$8
$7
80.0%
80.0%
99.6%
75.0%
65.7%
0.011
0.010
0.012
0.008
0.006
$8
$8
$9
$6
$4
0.240
$182
85.3%
0.205
$155
0.333
$252
80.0%
0.266
$202
Source: IMPLAN
229
Table 75: Commodity Inputs, Warehousing
Input
Real estate buying and selling, leasing,
managing, and related services
Warehousing and storage services
Electricity, and distribution services
Couriers and messengers services
Employment services
Refined petroleum products
Wholesale trade distribution services
Management of companies and enterprises
Motor vehicle parts
Insurance
Top Ten Inputs
Total Commodity Demand
Gross
Absorption
0.058
Gross
Inputs
$29
RPC
70.0%
Regional
Absorption
0.040
Regional
Inputs
$20
0.054
0.021
0.014
0.009
0.009
0.009
0.008
0.008
0.008
0.198
$27
$11
$7
$5
$4
$4
$4
$4
$4
$99
85.0%
61.7%
70.0%
80.0%
93.3%
99.6%
80.0%
21.4%
68.2%
74.2%
0.046
0.013
0.010
0.007
0.008
0.009
0.007
0.002
0.006
0.147
$23
$7
$5
$4
$4
$4
$3
$1
$3
$73
0.321
$160
71.4%
0.229
$114
Source: IMPLAN
The difference between gross inputs and regional inputs is the amount imported from outside of the
local economy. For example, in the table above, the warehousing sector needs $160 million of goods
and services to produce its product. Of that, $114 million comes from within the St. Louis Region.
The remaining share is imported from outside of the Region. There are several instances where all of
the commodity is imported which could represent economic development opportunities within the
Region such as railroad rolling stock. The rail transportation sector needed $22 million of this input
during 2009 and all of it was imported from outside the Region.
Industry Expenditures
The tables below show the various industries that buy the services of selected transportation
industries. Whereas above, the tables showed where transportation industries spent their dollars, the
tables below show where they get their dollars. The industries listed below are the customers of the
logistics industry in the St. Louis Region. As above, there are usually more than one hundred
industries that buy the services of any given transportation industry. For convenience, we list the top
ten sorted by “Gross Input,” which is the amount spent by the industry listed.
In many cases, the industry listed above roughly corresponds to the good or service being transported.
For example, breweries are a key customer in several industries. This likely indicates that the product
being shipped or stored is beer. A key exception is the top customer of rail transportation, electric
power generation. This energy-intensive industry, in turn, buys (and likely requires shipment of)
significant amounts of petroleum, coal natural gas, and similar energy products.
The following table shows that monetary authorities are the largest local consumer of air
transportation. During 2009, this industry spent a total of $26 million on air transportation, $12 million
from local providers. For rail, water and truck transportation, all demand for local purchasers is met
within the Region.
230
Table 76: Industry Expenditure on Air Transportation (inputs in $ millions)
Description
Monetary authorities and depository credit
intermediation activities
Wholesale trade businesses
Non-depository credit intermediation and related
activities
Data processing, hosting, ISP, web search
portals and related services
Food services and drinking places
US Postal Service
Offices of physicians, dentists, and other health
practitioners
Telecommunications
Architectural, engineering, and related services
Private junior colleges, colleges, universities, and
professional schools
Top ten
Gross
Absorption
0.005
Gross
Inputs
$26
Regional
Inputs
$12
0.002
0.006
$24
$20
$11
$9
0.006
$14
$7
0.002
0.012
0.002
$12
$11
$11
$6
$5
$5
0.002
0.004
0.003
$11
$9
$9
$5
$4
$4
0.043
$147
$68
0.723
$414
$191
Total industry demand
Source: IMPLAN
Table 77: Industry Expenditure on Rail Transportation (inputs in $ millions)
Description
Electric power generation, transmission, and
distribution
Iron and steel mills and ferroalloy manufacturing
Flour milling and malt manufacturing
Breweries
Transport by truck
Soybean and other oilseed processing
Other basic organic chemical manufacturing
Soap and cleaning compound manufacturing
Dog and cat food manufacturing
Petroleum refineries
Top ten
Gross
Absorption
0.039
Gross
Inputs
$67
Regional
Inputs
$67
0.030
0.067
0.009
0.011
0.037
0.008
0.007
0.013
0.002
0.224
$46
$40
$32
$31
$24
$17
$16
$15
$15
$301
$46
$40
$32
$31
$24
$17
$16
$15
$15
$301
1.372
$551
$551
Total industry demand
Source: IMPLAN
231
Table 78: Industry Expenditures on Water Transportation (inputs in $ millions)
Description
Scientific research and development services
Flour milling and malt manufacturing
Petroleum refineries
Soybean and other oilseed processing
Iron and steel mills and ferroalloy manufacturing
US Postal Service
Copper rolling, drawing, extruding and alloying
Other basic organic chemical manufacturing
Construction of other new nonresidential
structures
Electric power generation, transmission, and
distribution
Top ten
Gross
Absorption
0.010
0.035
0.001
0.005
0.001
0.002
0.001
0.001
0.000
Gross
Inputs
$24
$21
$4
$3
$2
$2
$1
$1
$1
Regional
Inputs
$24
$21
$4
$3
$2
$2
$1
$1
$1
0.001
$1
$1
0.056
$61
$61
0.120
$79
$79
Total industry demand
Source: IMPLAN
Table 79: Industry Expenditure on Truck Transportation (inputs in $ millions)
Description
Transport by truck
Breweries
Light truck and utility vehicle manufacturing
Wholesale trade businesses
Construction of other new nonresidential
structures
Petroleum refineries
Ready-mix concrete manufacturing
Iron and steel mills and ferroalloy manufacturing
Food services and drinking places
Construction of new residential permanent site
single- and multi-family structures
Top ten
Gross
Absorption
0.053
0.020
0.010
0.004
0.012
Gross
Inputs
$149
$70
$56
$54
$50
Regional
Inputs
$149
$70
$56
$54
$50
0.007
0.123
0.030
0.007
0.021
$48
$45
$45
$43
$37
$48
$45
$45
$43
$37
0.286
$596
$596
4.716
$1,632
$1,632
Total industry demand
Source: IMPLAN
232
Table 80: Industry Expenditure on Courier Services (inputs in $ millions)
Description
Wholesale trade businesses
Transport by truck
Scenic and sightseeing transportation and
support activities for transportation
Transport by water
Business support services
Couriers and messengers
Private hospitals
Accounting, tax preparation, bookkeeping, and
payroll services
Civic, social, professional, and similar
organizations
Monetary authorities and depository credit
intermediation activities
Top ten
Gross
Absorption
0.017
0.051
0.046
Gross
Inputs
$228
$144
$26
Regional
Inputs
$160
$101
$18
0.049
0.015
0.022
0.001
0.007
$24
$19
$17
$10
$9
$17
$13
$12
$7
$6
0.006
$9
$6
0.002
$9
$6
0.216
$494
$346
0.624
$723
$506
Total industry demand
Source: IMPLAN
Table 81: Industry Expenditures on Warehousing (inputs in $ millions)
Description
Wholesale trade businesses
Transport by truck
Warehousing and storage
Private hospitals
Retail Stores - General merchandise
Retail Stores - Food and beverage
Retail Stores - Motor vehicle and parts
Pharmaceutical preparation manufacturing
Food services and drinking places
Retail Nonstores - Direct and electronic sales
Top ten
Gross
Absorption
0.013
0.012
0.054
0.002
0.007
0.007
0.007
0.003
0.001
0.007
0.113
Gross
Inputs
$173
$33
$27
$14
$10
$10
$9
$7
$7
$7
$297
Regional
Inputs
$147
$28
$23
$12
$9
$9
$7
$6
$6
$6
$252
1.052
$533
$452
Total industry demand
Source: IMPLAN
233
234
Appendix
235
General Limiting Conditions
Every reasonable effort has been made to ensure that the data contained in this report are accurate
as of the date of this study; however, factors exist that are outside the control of AECOM and that may
affect the estimates and/or projections noted herein. This study is based on estimates, assumptions
and other information developed by AECOM from its independent research effort, general knowledge
of the industry, and information provided by and consultations with the client and the client's
representatives. No responsibility is assumed for inaccuracies in reporting by the client, the client's
agent and representatives, or any other data source used in preparing or presenting this study.
This report is based on information that was current as of September 2011 and AECOM has not
undertaken any update of its research effort since such date. Because future events and
circumstances, many of which are not known as of the date of this study, may affect the estimates
contained therein, no warranty or representation is made by AECOM that any of the projected values
or results contained in this study will actually be achieved.
Possession of this study does not carry with it the right of publication thereof or to use the name of
"AECOM" or “Economics Research Associates” in any manner without first obtaining the prior written
consent of AECOM. No abstracting, excerpting or summarization of this study may be made without
first obtaining the prior written consent of AECOM. Further, AECOM has served solely in the capacity
of consultant and has not rendered any expert opinions. This report is not to be used in conjunction
with any public or private offering of securities, debt, equity, or other similar purpose where it may be
relied upon to any degree by any person other than the client, nor is any third party entitled to rely
upon this report, without first obtaining the prior written consent of AECOM. This study may not be
used for purposes other than that for which it is prepared or for which prior written consent has first
been obtained from AECOM. Any changes made to the study, or any use of the study not specifically
prescribed under agreement between the parties or otherwise expressly approved by AECOM, shall
be at the sole risk of the party making such changes or adopting such use.
This study is qualified in its entirety by, and should be considered in light of, these limitations,
conditions and considerations.
236