Port's regional study recommends $35 million investment

The Northwest Tennessee Regional Port Authority meeting at the Lannom Center provided a chance for those in attendance to hear the results of a socioeconomic study of the area. The study was a required part of a federal application for $35 million in stimulus money for the proposed Port of Cates Landing in Lake County. From left: Northwest Tennessee Workforce Board Director Henry Lewis; Commissioner Mack Forrester of the port authority, Dr. Murat Arik, associate director of the Jennings A. Jones College of Business at MTSU; Northwest Tennessee Regional Port Authority Chairman Jimmy Williamson and Dyersburg Mayor John Holden.

During this month's Northwest Tennessee Regional Port authority meeting, Dr. Murat Arik, associate director of the Jennings A. Jones College of Business at Middle Tennessee State University, gave a presentation on the recently completed socioeconomic study of the area.

The presentation was given at the Lannom Center to a crowd of businessmen and political figures.

The primary purpose of the study was to analyze the broader socioeconomic contributions of the proposed investment in the Port of Cates Landing. It was sponsored by the port authority as a required part of an application for the Transportation Investment Generating Economic Recovery or TIGER grant program, which is designed for intermodal projects in economically distressed areas. The proposed investment amount for the port is about $35 million. There were 1,400 proposals submitted from around the country for the $1.5 billion available, of which 96 were port-related.

"The study looks at how the $35 million affects the regional economy," said Arik.

The study focused primarily on Dyer, Lake and Obion counties, but it also included Crockett, Gibson, Weakley and Lauderdale.

Arik pointed out the seven-county region has a total population of nearly 200,000 with a labor force of nearly 92,000. Publicly available socioeconomic indicators suggest the entire region and individual counties are in economic distress.

"The entire region has been shedding manufacturing jobs since the early 1990s," said Arik.

He pointed out some positive features about the port by saying it was in the perfect spot on the Mississippi river and was located above the 100-year floodplain. He also noted there has been $15 million already invested in the project.

"The proposed investment of $35 million will make the port and industrial park a reality," said Arik. "It will increase economic competitiveness of the region and its businesses by directly connecting the area to New Orleans. Especially once the port receives foreign-trade designation actually this will be a reality too."

The study addressed three major questions.

* What are the benefits of the proposed port investment to society?

* What are the short- and long-term economic contributions of the proposed investment to the regional economy?

* What are the implications of the proposed investment for the indicators of socioeconomic distress in Northwest Tennessee?

"According to our estimates the port will handle nearly 1.6 million tons of cargo (annually)," said Arik.

Currently, Arik estimates the cargo volume to the region is 80 percent by truck and 20 percent by rail. He said after the port is constructed there will be a modal shift where 53 percent of the cargo volume will be transported by barge, 33 percent by truck and 14 percent by rail.

There will also be an increase in the incoming and outgoing cargo volume. With barges transporting close to 1.6 million tons, trucks transporting 973,999 tons and rail transporting 413,212 tons of cargo annually.

"This shift will reduce the number of long trucks on highways by 22 percent and vehicle miles traveled by 70 percent," said Arik.

He said that once the port becomes operational, it would have both economical and societal benefits.

"You're going to start attracting new businesses to the area and/or retain existing businesses in the region," said Arik. "There will be significant reductions in truck-related fatalities and injuries. Reduction in hazardous material spills. These are the environmental issues. Reduction in greenhouse emissions, especially carbon dioxide."

Next, Arik noted the short-term economic impact of building a port had two scenarios. The first was the construction of the port and an industrial park. The second was the "what if scenario" that was posed regarding several letters of interest in the past. These letters were to area leaders from businesses with an interest in relocating to the area.

"We decided that the best option would be a steel mill construction in the region," said Arik.

The study also showed the long-term economic impact would establish 783 marine-related direct jobs. These are jobs that are necessary to handle 1.6 million tons of cargo. Also, 203 direct jobs would be created by industrial park tenants.

The steel mill scenario was also included in the long-term factors with an estimated $550 million investment spread over three years. The steel mill would create 300 direct jobs.

Arik said he believed that once the port is built it would make the region highly competitive to surrounding regions.

"And (it) looks like that's the only option in the region," said Arik.

Also, according to the study, area businesses would save $2.2 million on transportation costs annually. The creation of the port would also prevent about 37 fatalities and 832 injuries during the life cycle of the port, which is 50 years.

The environmental impact includes estimated reduction of greenhouse emissions by 8,760 tons annually and 563 gallons of hazardous spills annually.

The cost-benefit analysis for the region would be that for every dollar invested, society would gain $2.89 at minimum in return.

"This is a significant ratio," said Arik.

In the area of short-term jobs and economic impact, building the port and the industrial park would bring in 406 construction-related jobs.

A small-scale steel mill would create 2,184 jobs in the region over a three-year period.

In the long-term, the port, industrial park and steel mill would create 2,355 jobs in the area both directly and indirectly.

"In the last nine years we've had three steel mills come look at this project," said Northwest Tennessee Regional Port Authority Chairman Jimmy Williamson.

There were also more than 10 letters of interest from major businesses indicating that had seriously considered Cates Landing as their next home, but chose a different location because the port was not operational.

From 2008-2009, nearly 1,500 manufacturing jobs were lost in Lake, Dyer and Obion counties. In the neighboring counties, nearly 2,700 manufacturing jobs were lost during the same time period.

"The proposed port investment will help the region maintain certain manufacturing jobs," said Arik. "These are not new jobs, just keeping what you have in the area."

The study showed that almost all of the short-term port jobs would pay higher wages than the average wages in Dyer, Obion or Lake County. The average wages for direct permanent jobs would also be higher than the average wage in the region.

As far as population growth trend, the study shows a port would likely reverse the population trend in the region, which has generally been decreasing. Over the last eight years, Dyer County's population has increased its population by only .86 percent. Lake County lost nearly 8 percent of its population and Obion County lost 3.31 percent of its population.

"Once you create some job opportunities in the region you're going to also stabilize the population dynamics in the region," said Arik.

During this same period the population of the United States grew by more than 8 percent.

"If we don't do something to stem the flow, our best and brightest are going to keep migrating," said Williamson. "We're going to educate them here and they are going to go somewhere else to work."

Williamson also said the loss of population would affect federal and state representatives' level of influence.

Arik went over unemployment figures for the region, noting Lauderdale County was almost 10 points higher than the national average. His figures as of June of this year showed the national unemployment rate at 9.7 percent.

Arik then pointed out how much the port would affect the unemployment rate.

"The port investment has potential to reduce the unemployment rate in the region by 50 percent," said Arik.

The port is also expected to impact the poverty levels in the seven county region.

In the study, it states the most telling indicator of socioeconomic distress in a community is the poverty rate. It says Lake County has the 15th highest poverty rate among more than 3,000 counties in the United States.

One member of the audience noted the county's prison population was a contributing factor in the high poverty rate.

Arik said if you took out the prison population it would still be significantly high. The study shows in 2007, Dyer County had 16.7 percent of the population living below the poverty level. Obion County had 15.9 percent below the poverty level and Lake County had 39.2 percent of the population below the poverty level, which is 26.2 percentage points higher than the U.S level.

"It's a highly impoverished region actually from what I see here in terms of poverty rates," said Arik.

The total poverty rate for the seven counties was 17.92 percent and 17.1 percent for Dyer, Lake and Obion combined. The national poverty rate average was more than four percentage points lower at 13 percent.

The study suggests the poverty rate in the region will decline 7.6 percentage points to 9.5 percent for Dyer, Lake and Obion counties if the port, industrial park and steel mill are constructed.

"You're going to see a significant reduction in the poverty rate," said Arik.

In conclusion, Arik said the benefit-cost and economic impact analyses suggest the proposed $35 million investment would be well worth the effort.

"The port will not only bring much-needed high-paying jobs, but also diversify the regional economy to a great extent," said Arik. "We strongly recommend this level of investment in the region."

After the presentation, Williamson took time to answer a few questions from the audience. A question was asked about Highway 78 between Tiptonville and Dyersburg and Highway 22 between Tiptonville and Union City.

Williamson said studies have been done to four-lane Highway 78 and improve Highway 22 if the port is built. And they were also going to start the engineering for the industrial park very soon.

Williamson said if the entire project could do away with 50 percent of the poverty in the area it would be a valuable undertaking.

"I think that speaks volumes about what a project like this can do," said Williamson. "Without some huge stimulus like this I don't see how we can stem the outflow of people."