As can be seen above, a compelling case can be made for the value of investment in our transportation system. If Michigan wants to be a player in the global economy, it must assure that our road network allows for reliable low-cost transportation that helps companies be more competitive. The bottom line is that transportation investment increases productivity and helps generate economic growth. A continuation of policies that underfund transportation investment will hurt Michigan companies and the state’s residents.
Michigan business executives participating in a state transportation summit in 2003 noted the economic importance of transportation and developed a list of many of the state’s transportation shortcomings. Key issues included poor road conditions, unexpected delays from congestion and access to key transportation and industrial facilities. Many of the issues were captured and summarized in the state’s long-range transportation plan for freight. The report quotes a particularly relevant part of a FHWA report on the impact of freight bottlenecks that says:
The effects of growing demand and limited capacity are felt as congestion, upward pressure on freight transportation prices, and less reliable trip times as freight carriers struggle to meet delivery windows. Higher transportation prices and lower reliability can mean increased supply costs for manufacturers, higher import prices, and a need for businesses to hold more expensive inventory to prevent stock outs. The effect on individual shipments and transactions is usually modest, but over time the costs can add up to a higher cost of doing business for firms, a higher cost of living for consumers, and a less productive and competitive economy.
No other statement could do a better job of summing up the critical importance of transportation infrastructure to the nation’s manufacturers and, more important, to the auto manufacturers headquartered right here in Michigan. The Michigan auto industry is highly dependent on good transportation services in order to keep production running with low inventory levels and the right mix of product. Given the importance of congestion-free on-time deliveries in the auto industry, Michigan should be at the forefront of investing in transportation infrastructure. Yet we are not – and the absolute and comparative advantage we built up in transportation beginning in the 1940s, with our leading role in development of the interstate system, has been frittered away. Today, despite years of stagnant population growth and an economy stuck with low employment and personal income growth, we are faced with Detroit having the 17th worst congestion levels amongst the top 85 urban areas in the country. Transportation investment can help make Michigan the preferred location for the auto industry of the future, and it is a critical factor in assuring the state’s economic development.
However, poor interstate access and congestion was an issue Ford considered in evaluating its Wixom Assembly Plant’s future status in 2006. The site had been plagued by poor interchange access to I-96 and a low capacity two-lane road for years. The poor access made just in time (JIT) component resupply more difficult and led to production disruptions over the years. Eventually Ford decided to close the plant and a spokesman confirmed that inadequate infrastructure was a significant factor that was considered in determining the plant’s future. While the state eventually came up with the money to improve the Wixom Road interchange, it was not in time to impact views about the plant’s efficiency.
It is also important to note that it is not just the auto industry that is reliant on congestion-free highways. In fact, some of the other industries that Michigan is trying to attract may be even more dependent on a superior highway system than the auto companies. Take recent proposals to turn Willow Run and Detroit Metro Airports into a mega air freight hub connecting the Canadian and U.S. mid-continent to Asia and other freight markets. Given our geographic location, we have an absolute advantage in providing such services, but we need to build additional comparative advantages by providing a superior highway network that will quickly and reliably connect the hundreds of supply chain partners that make the air freight system work. If Michigan can provide the necessary transportation infrastructure, including airport and highway facilities that will allow for just in time transportation on the ground, this concept could prove to be one of the strongest economic development projects to ever be proposed in Michigan.
In a similar vein, Michigan sits at the geographic center of the world’s greatest trade partnership between Canada and the United States. As NAFTA matures, there will be increasing opportunities for Michigan to host a variety of manufacturing plants, distribution centers and carrier terminals that capitalize on our geographic location. However, for Michigan to fully capitalize on that economic development potential, we will need to offer world-class transportation facilities, with an emphasis on a reliable highway system, but also including rail, rail-truck and other intermodal facilities. The highway and rail system will also need to include delay-free U.S.-Canada border crossings and that means assuring we have sufficient customs processing and roadbed capacity. This is another example of how transportation infrastructure investment can help Michigan’s economy grow.
Michigan is also trying to attract a number of other industries and specific companies that will want access to world class transportation – both for business reasons and for the sake of their employees commuting times and overall quality of life. Think about Google investing in Ann Arbor and what Google wants, and what its workers want in personal transportation mobility. While Google has announced it will locate in Ann Arbor, the ultimate number of employees that are actually located in Ann Arbor may well be dependent on how they perceive the Ann Arbor environment. And inadequate highway capacity on US23, where there already are major unplanned delays and congestion problems, will not contribute to positive perceptions.
Many other companies, from Neogen in the microbiology field, to Energy Conversion Devices in the alternative energy filed, to Stryker Medical and other high-tech firms, need to be able to draw talent to their Michigan locations. They will want reasonable commuting times for their employees and a transportation system that contributes to their overall quality of life in Michigan. In addition, all of these companies are highly dependent on the ability of multitudes of specialist technicians, lab workers, consultants, salespeople and other personnel to travel back and forth to partner suppliers and customers. They will demand fast and reliable transportation.