ADVANCED MANUFACTURING INNOVATION CENTER (AMIC) “This study was prepared under contract with the St. Louis Economic Development Partnership, Missouri, with financial support from the Office of Economic Adjustment, Department of Defense. The content reflects to views of the St. Louis Economic Development Partnership and does not necessarily reflect the views of the Office of Economic Adjustment.” November 16 2017 DRAFT 2 AGENDA 01 Project Initiation: Introduction & Economic Context 02 Interviews and Visioning 03 Site Selection 04 Space and Functional Programming 05 Conceptual Design 06 Cost Estimate DRAFT 3 THE CRITICAL PATH AMIC QUESTIONS 01 What does industry need? 02 At what do the regions industries excel? 03 Who is the Champion? 04 What manufacturing innovation model do we pursue? 05 Who are other public, workforce, and higher education partners? 06 Where does consequential funding come from? 07 What about all that expensive fabrication equipment? 08 Does “place” matter? DRAFT 4 “Building new markets is slow, hard work. You don’t just wake up one morning and say.... ... I think I’ll take the Chinese market today.” Philip Hammond British Chancellor of the Exchequer DRAFT 5 ....”You build. You build your product’s presence, your business, your networks, your distribution capability, confidence in your brand.” It all takes time DRAFT 6 01 ECONOMIC INTRODUCTION DRAFT 7 MFG MARKETS ARE IN TRANSITION 01 US Manufacturing is recovering Growing Robustly, but very different from what it was 10 years ago growth in output/ 1.1% growth in jobs 2.5% ٠ 02 Impact of the 4th Industrial Revolution- big data, advanced materials, additive manufacturing 03 Food manufacturing and water 04 Impact of recent environmental regulation enforcement in China 05 There is no level playing field for global manufacturing US manufacturing workforce policy is pivoting, but 06 how to replace retiring workers remains the big question DRAFT 8 NATIONAL MANUFACTURING OUTPUT VS. EMPLOYMENTManufacturing Output Pre-Recession Manufacturing Output Post-Recession Manufacturing Employment Pre-Recession Manufacturing Employment Post-Recession $6.5 18 $6.0 17 ) 16 s n $5.5 o i l T l i r 15 N T E $ $5.0 M ( Y T U 14 O L P T P U $4.5 M E O 13 $4.0 12 $3.5 11 $3.0 10 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Manufacturing Output Pre-Recession 01 Policy implications of divergence between output Manufacturing Output Post-Recession and employment in manufacturing Manufacturing Employment Pre-Recession Manufacturing Employment Post-Recession DRAFT $6.5 18 (2010-2016) &OUTPUTCAGR EMPLOYMENT MANUFACTURING NATIONAL MINERALS MFG. 02 01 Transportation MFG has grown strongly, butchange isintheair strongly, hasgrown MFG Transportation ismodest inoutput perworker butgrowth sector, growing hasbeenthemostconsistently MFG andBeverage Food -0.3% MISCELLANEOUS MFG. 0.3% ELECTRICAL MFG. ELECTRICAL 1.2% 2010 0.2% COMPUTER MFG. ,496 1.6% 0.3% 2011 1.8% WOOD MFG. WOOD -1.1% ,497 2.9% -0.7% MFG. FOOD 2012 2.9% MACHINERY MFG. MACHINERY 1.3% ,945 1.2% 1.6% 3.8% MFG. METALS 2013 0.7% 1.8% ,922 4.1% 2.9%1.0% TEXTILES MFG. 2.9% 2014 4.4% MFG. CHEMICALS -2.0% 3.8% ,537 4.1% Output Employment4.4% PLASTICS MFG. 0.2% MFG. TRANSPORTATION 2015 4.5% ,293 4.4%1.6% 2016 8.9%8.9% 2.0% 9 DRAFT ,670 10 ST. LOUIS MANUFACTURING EMPLOYMENT CAGR (2010-2016) Manufacturing Employment CAGR (2010-2016) St. Louis MSA 1.5% 1.9% US 1.1% 1.1% Source: BLS QCEW 01 For St. Louis, manufacturing growth post recession has been impressive, faster than US average 02 Aerospace and automotive have led the way DRAFT 11 US NAVY/ USAF AIRCRAFT PROCUREMENT F/A-18, EA-18, C-17, AS OF MAY 2017; EXCLUDES FOREIGN MINISTRY SALES $4,000,000,000 $3,000,000,000 $4,000,000,000 $2,000,000,000 $3,000,000,000 $1,000,000,000 $2,000,000,000 $0 $1,000,000,000 12 13 14 15 16 17 18 19 20 $0 Aircraft Purchases 12 13 14 15 16 17 18 19 20 Modifications of In-Service Aircraft RDT & E 105%01 Department of Defense Funding for F/A-18 has improved since 5% we last talked billion more new builds budgeted FY 15-18 + $650 ٠$4.8 100% million less in airframe mods 0% 02 Buys the region some time; F-15 and F/A-18 will eventually go 95% DRAFT 5% away 12 CHANGE IN DEFENSE OUTLAY FROM PEAK YEAR 1989 AND 2012 105% 100% 95% 90% 85% 80% 00 01 02 03 04 05 06 07 08 09 10 11 Decrease from 1989 Peak Decrease from 2012 Peak 01 While DoD funding is beginning to improve toward 2012 threshold, the pace of recovering remains behind the 1989 trajectory 02 Defense contractors remain under pressure DRAFT 13 31% OF TOTAL REGIONAL OUTPUT IS $640,000 MANUFACTURING & LIFE SCIENCES $306 BILLION TOTAL OUTPUT FOR ST. LOUIS $178,000 MANUFACTURING ALL WORKERS OUTPUT PER WORKER SOURCE: IMPLAN OUTPUT PER WORKER IS 3XALL JOBS DRAFT 14 METALS MFG 36% LIFE SCIENCES SERVICES 28% LIFE SCIENCES MFG (4%) FOOD MFG 18% $96 OTHER 18% BILLION 01 Metal Fabrication, including aerospace, automotive, and associated tooling is highly concentrated in St. Louis 02 Metal Fabrication is the single largest regional cluster in terms of output, larger than the plant and life sciences.... DRAFT 15 STL PLANT AND LIFE SCIENCES ECOSYSTEM The region has spent 20 years investing in plant and life sciences and tech, and is now reaping the rewards for a focused strategy.... In comparison, manufacturing is highly fragmented... DRAFT 16 REGIONALSt Louis MANUFACTURING ECOSYSTEM MAP TODAY Economic Development Missouri Partnership Bi-State Technology Developoment Corporation DRS Sustainment Regional Agency Business Gilster-Mary Nestle Purina General Council Lee Corp. World Trade PetCare Co. Motors HBM Holdings Center Emerson St Clair CIVIC County BioSTl WestRock Anheuser-Busch InBev Economic St Louis Freightway PARTNER Monsanto Co. Development Graybar Electric COMPANIES Wash U-Aero- Company Inc. US Steel space Research & Education Olin Brass Center St. Louis Development Mallinckrodt Missouri Corporation Enterprise Sigma-Aldrich Regional US Small Business Wash U-Institute of Zoltek (MilliporeSigma) Adminstration Materials Science Yield Business Council Companies Inc. & Engineering Lab Boeing GKN Aerospace True Manufacturing SLU SLATE North America St. Louis Regional Company Inc. Chamber TALENT & TRAINING Ranken Technical Institute Ameren Vatterott Southwest Missouri Educational Illinois FUNDERS Centers College Brick City SIUE Makes Lewis & Clark Manufacturing Inc. St. Louis Community @ Ranken Community College College Cortex Tech Metropolitan St. Louis Shop Manufacturers' St. Louis STL Association Makes Venture Works COM- MUNITY Missouri Association of FACILITIES Midwest Manufacturers Manufacturing Leaders Group Missouri S&T - DRAFT SLU Boeing Center for Supply Chain Aerspace Center Manufacturing 17 REGIONALSt Louis MANUFACTURING ECOSYSTEM MAP Economic Development Missouri Partnership Bi-State Technology Developoment Corporation DRS Sustainment Regional Agency Business Gilster-Mary Nestle Purina General Council Lee Corp. World Trade PetCare Co. Motors HBM Holdings Center Emerson St Clair CIVIC County BioSTl WestRock Anheuser-Busch InBev Economic St Louis Freightway PARTNER Monsanto Co. Development Graybar Electric COMPANIES Wash U-Aero- Company Inc. US Steel space Research & Education Olin Brass Center St. Louis Development Mallinckrodt Missouri Corporation Enterprise Sigma-Aldrich Regional US Small Business Wash U-Institute of Zoltek (MilliporeSigma) Adminstration Materials Science Yield Business Council Companies Inc. & Engineering Lab Boeing GKN Aerospace True Manufacturing SLU SLATE North America St. Louis Regional Company Inc. Chamber AMIC TALENT & TRAINING Ranken Technical Institute Ameren Vatterott Southwest Missouri Educational Illinois FUNDERS Centers College Brick City SIUE Makes Lewis & Clark Manufacturing Inc. St. Louis Community @ Ranken Community College College Cortex Tech Metropolitan St. Louis Shop Manufacturers' St. Louis STL Association Makes Venture Works COM- MUNITY Missouri Association of FACILITIES Midwest Manufacturers Manufacturing Leaders Group Missouri S&T - DRAFT SLU Boeing Center for Supply Chain Aerspace Center Manufacturing 18 MANUFACTURING GROWTH RATE GROWTH RATE COMPARISON: 2010-2015 MISSOURI Metric 2010 2015 CAGR Population 5,988,927 6,076,204 0.3% Employment 2,658,400 2,796,900 1.0% GDP $255,865,000,0000 $292,718,000,000 2.7% R & D Funding $4,464,770,500 $5,545,616,100 4.4% 01 R&D funding in Missouri has increased faster than most economic metrics 02 Positive R&D trends in the State bode well for innovation in Missouri DRAFT 19 NATIONAL R&D FUNDING BY INNOVATION PROCESS PHASE PRE-COMMERCIALIZATION: 2015 $400 $350 $300 $250 VALLEY OF DEATH N O $200 I L L I B $150 $100 $50 $0 BASIC APPLIED PRE- RESEARCH RESEARCH DEVELOPMENT DEVELOPMENT $66 Billion $84 Billion $14 Billion $360 Billion 01 Transitioning innovations from a theoretical state to a practical application is challenging 02 A resource gap between research and development complicates this process further DRAFT 20 PER CAPITA R&D RATES $1,600 $1,400 $1,200 $1,100 $800 $600 $400 $200 $0 TOTAL PRIVATE FEDERAL VENTURE CAPITAL ACADEMIC MO 2010 MO 2015 US 2010 US 2015 01 Despite positive trends in R&D funding post-Recession, Missouri still receives less R&D funding per capita than the US 02 Universities in Missouri find R&D at a per capita rate comparable to the US average 03 All other major sources of R&D funding lag behind US per capita DRAFT funding rates 21 MISSOURI TOTAL R&D FUNDING AND MISSED OPPORTUNITIES 2015 $6.0 $5.0 $4.0 N $3.0 O I L L I B $2.0 $1.0 $0.0 PRIVATE FEDERAL VENTURE