Industrial - Port of Delcambre
Transcription
Industrial - Port of Delcambre
1 Table of Contents Executive Summary Explanation of Industrial/ Manufacturing Sector Planning for Industrial Zones SWOT Analysis: Shrimping Industry SWOT Analysis: Non-Oilfield Manufacturing SWOT Analysis: Specialty Pet Food Shrimping Industry Segmentation Country of Origin Labeling/ Anti-Dumping Laws Coastal Wetland Preservation The Shrimp Boot Image Market Segmentation Customer Value Determination Customer Analysis 3 Year Marketing Strategy/ Value Proposition Non-Oilfield Fabrication Segmentation Alternative Energy Market Segmentation Customer Value Customer Analysis 3 Year Marketing Strategy/ Value Proposition Specialty Pet Food Segmentation Market Segmentation Customer Value Determination Customer Analysis 3 Year Marketing Strategy/ Value Proposition Appendices Other Industrial Opportunities Seafood Buyers LED Study on Pet Food Manufacturing 2 3 6 7 8 10 11 13 14 16 18 19 21 22 23 25 27 30 32 34 36 38 39 40 40 41 A B C Executive Summary Delcambre, a town of less than 5,000 on the southern Louisiana Coast, faces mounting challenges to economic growth and sustainment. A small shrimping town rich in Cajun culture and family pride has found itself facing a decline of its major industries and a diminishing of its population. In 2005, Delcambre was hit by Hurricane Rita which placed nearly the entire town underwater, destroyed houses, and caused many members of the population to permanently abandon the town. Despite the trials faced by the town, those who did stay had a dream of someday being a part of a bigger, better Delcambre but needed to find the right opportunities to make that dream a reality. “The district is the launching point for 30% of the United States’ oil production, 25% of its natural gas production, 3000 channels, five of the top fifteen busiest ports, 20% of all boat traffic, 60% of all grain cargo, 36% of all shrimp, 50% of all oysters, 26% of all blue crabs, 3.5 million waterfowl, and fisheries valued at $2.8 billion” (Rick 3). Besides its rich culture, dedicated citizens, and industrial markets, Delcambre’s greatest asset is its location. The Delcambre Canal, which runs through the middle of the town, connects with the Gulf Intracoastal Waterway. This waterway connects Texas to the Florida Coast and eastern Florida to the Jersey Shoreline. It is one of the most traveled waterways in country. America’s 26,000 miles of inland waters move 600 million tons per year, transport $100 billion in interstate trade, and account for 800,000 jobs. Most of these waters drain to the Intracoastal and eventually the Gulf of Mexico. CGMG has outlined a plan for the revitalization of the town’s economy and livelihood based on expansion of the town’s industrial sectors. What follows is a summary of those plans: Delcambre currently derives its industrial revenue from three main segments: boat repairs, 3 shrimping, and fabrication shops. CGMG has selected the following three segments as targets for growth and expansion within the Port of Delcambre: Increased Shipping- Because of Delcambre’s access to air, water, freight, and interstate commerce, it is ideally situated to benefit from increased cargo transportation. The institution of increased shipping channels and opportunities will also prove to be beneficial to its success in the other industries presented. Retooling the Shrimping Industry- By focusing on higher end clientele who are willing to pay a premium for Louisiana shrimp, Delcambre can combat the price wars created by excessive dumping from foreign countries. The town should focus on marketing “Wild Louisiana Shrimp” and try to expand its customer base by centering its activities on small wholesalers and retailers throughout the state of Louisiana. Expansion of Fabrication Shops- With President Obama’s recent anti oil stances, offshore construction budgets are in limbo and the demand for offshore related products is unclear. Diversifying into government and alternative energy fabrication should counter these various demand inconsistencies. The town’s current assets such as the existing infrastructure and open land provide much room for growth opportunities within this field for current and future developments. Establishment of a High-End Pet Food Processing Center- The state of Louisiana recently conducted a study on the economic impact of high-end pet food for Louisiana. They found this area attractive because of the easy access to the raw food materials, multi-modal transportation channels across the state, and extra land open for development. This could provide a huge market opportunity for the town as a whole due to the fact that there are no other companies within this industry anywhere in the surrounding regions. This would give them a chance to tap 4 into uncharted territory and strive to increase the already high profit margins. Though this proposal could change the face of the town, it may be too large to accomplish without the help of government subsidies. 5 Industrial/ Manufacturing Sector The Industrial/ Manufacturing sector is the primary focus of this study. Delcambre’s existing industries include shrimping, boat repair, and oilfield fabrication. Though Delcambre has access to both a rail spur and highways, the largest industrial asset of Delcambre is the Delcambre Canal. This canal has operated near a 12 foot depth for most of the city’s history, but the depth was lowered when Hurricane Rita washed sediment into it. Dredging the Canal to a depth closer to 12 feet would greatly increase Delcambre’s functionality as a port. The Canal reaches south to the Intracoastal Waterway. The Intracoastal is a 3,000 mile waterway that stretches from the Manasquan River in New Jersey down the eastern seaboard to Florida and along the Gulf Coast until it terminates in Brownsville, Texas. Federal mandates require the Intracoastal to maintain a depth of 12 feet throughout the canal. However, inadequate funding has caused some of the areas to drop as low as 7 feet. ! Shipping is a major industry for towns with access to the Intracoastal. Raymond Butler, Executive Director of the Gulf Intracoastal Canal Association, states that inland transportation accounts for $3 billion per year in direct revenue. America’s 26,000 miles of inland waters move 600 million tons per year, transport $100 billion in interstate trade, and accounts for 800,000 jobs. The top products transported in descending order are petroleum, sea animal shells, nonmetals, and metals. A key advantage of shipping via waterways versus land-based transportation is the cost savings. Shipment by water results in cost savings through the production of less vehicles and rail cars and requires less infrastructure than the constant maintenance of highways and rail 6 systems. Barge transportation is also safer than other modes and has greater capacity potential, being able to hold the equivalent of 15 railcars or 60 trucks. Another key facet of transportation by barge is that a barge is more efficient than other transportation uses and also results in fewer emissions than a train or truck. Planning for Industrial Zones When planning for industrial zones, one must remember that making the entire town into an industrialized area will greatly affect the quality of life for that town. While the fabrication shops do not cause significant pollution problems if maintained properly, noise is a major issue at these facilities. Sand blasting (which occurs in most oil field fabrication yards) creates significant noise for the surrounding area. Every fabrication yard that is built takes up valuable waterfront property. These planning decisions must be closely analyzed not only for the potential short-term revenue inflows, but also for the long-term opportunity costs. Beautification of the city through parks and natural sites must also be considered. Setting an industrial zone south of a certain point on the canal could help to reduce the interference between the industrial zone and the retail, tourist, and real estate sectors. 7 SWOT Analysis Shrimping: Delcambre has proven to have many valuable characteristics that make it appropriately suited for the shrimping industry. The fact that they have the ability to provide fresh, local seafood to surrounding areas will serve to be their main point-of-difference within their region. Easy access to the Gulf of Mexico and multi-modal transportation can also play a major role in supplying them with a competitive advantage. This accessibility will help provide easier, less costly, and more efficient transportation channels in which to reach their consumers. The current people and existing infrastructure will also prove to be useful for this industry. Delcambre has played a role in the shrimping industry for a very long time now and the skilled workforce and materials such as shrimping boats and supplies that are already in place in the town serve to be very positive attributes. Also, the fact that the seafood industry provides such a high traffic market makes the shrimping industry a very attractive market. The fact that shrimp are more of a luxury good than a necessity could prove to be somewhat of a downfall for the town. This could lead to the idea of differing demands based on outside forces that cannot be controlled by the town. Also, since shrimp are on more of a seasonal basis this may lead to certain variations in available supply over time. Delcambre’s opportunity within the shrimping industry seems to mesh well with the idea of looking for customers that value quality over price. We don’t believe it would be appropriate for Delcambre to market their catch to large chain restaurants or others that are simply looking for a cheap way in which to get shrimp into their product mix. A marketing approach of 8 stressing the idea of the fresh, local seafood to prospective customers who are not price sensitive would be the most effective way of approaching the market. We would like to extend Delcambre’s customer base to the smaller, quality-driven purchasers throughout Louisiana. Although the town possesses many features that will encourage its shrimping industry it also faces some challenges. The threat of natural disasters, hurricanes in particular, has always proven to be a source of trouble for the town and its industries. Also, one thing that could be a hardship at this point in time may be the slowing economy. The fact that consumers have constantly changing preferences may also lead to an inconsistent level of demand. Finally, foreign competition would provide a basis for problems due to cost differences. 9 Non-oilfield manufacturing: The manufacturing industry could benefit from many of Delcambre’s assets. Their access to multi-modal transportation channels and open space provide lots of room for growth opportunities within the town. They do also have some current infrastructure in place that could prove to be useful for some of these manufacturing ventures. The town possesses a workforce that is somewhat skilled in this line of work and will definitely give them an advantage over competing areas. Delcambre could find many opportunities within this industry. They could build off of their past undertakings to provide the necessities in which to look towards their future. One main benefit of moving into this industry would be the fact that the demand remains fairly consistent over time. It would not operate like the oil industry with giant peaks and valleys in demand. There are also some weaknesses within the town that could prove to hinder the market opportunity. The number of workers needed for many of the government contracts may prove to be unattainable for the town. The workers’ lack of technological expertise and the processes that would be beyond their current training level would need to be addressed and resolved. This type of industry would also be bringing a completely new customer base within the town so they would have to figure out ways in which to adapt their current abilities to these new customers. The threat of natural disasters could provide a problematic area in which to attract these new customers. They may be unsure about moving into Delcambre due to their long history with the devastating effects of natural disasters. This sort of industry may also induce an increase in the population of the town which may cause some problems with the current residents. 10 Specialty pet food: The specialty pet food industry would serve as a new opportunity for the town of Delcambre. The fact that the town has access not only to raw materials that serve as principal ingredients in a majority of dog food but also to the less commonly used ingredients that are popular in premium food types is what provides the greatest link between the two. The town would also be very well equipped to provide the acreage needed (15-20) to support this type of manufacturing and the transportation accessibility (particularly rail and interstate travel) that would make importation of supplies and exportation of the finished product easier. The manufacturer would also be able to take advantage of other opportunities that could assist in cutting back on normal operating expenses such as the lower hourly wage rates in the South and the lack of a water tracking system within the town to regulate utility charges. On the other hand, some weaknesses that would exist within the town would be the fact that there is currently no existing infrastructure that would be appropriate for this type of manufacturing. The project would require large investments, most likely through govenment grants and loans. The town also would not have much to provide in regards to skilled workers. This would require a lot of partnering with others not only for the manufacturing side but also in regards to training and bringing workers in. The pet food industry would provide the town with an opportunity to tap into uncharted territory. There are currently no companies within this industry around here which would provide the opportunity for a monopoly within the surrounding regions. This sort of venture would also provide good profit opportunity due to the traditionally very high gross margins and continuing sales growth in the past. 11 The establishment of a specialty pet food manufacturer would, however, lead to a large increase in population for the town. This increase could prove to be more than the town would be willing or able to accommodate for some time. This importation of new people could also lead to new ideas and new cultural backgrounds being situated in one place and eventually lead to a changing of the culture Delcambre has grown to know and love. FOR ADDITIONAL INDUSTRIAL DEVELOPMENT OPTIONS, SEE APPENDIX A. 12 Segment 1: Shrimping Industry No industry has been more vital to the success and identity of Delcambre than the shrimping industry. Like many southern towns that rely heavily on one segment for economic success, Delcambre’s economy has been tied closely to the shrimping industry (Laska et al., 94). Shrimping in Delcambre is not only a vital part of the local economy, but of the state and nation’s economy as well. According to the Louisiana Economic Development, Louisiana accounts for 26 percent of all seafood caught in the United States. Americans consume 1.3 billion pounds of shrimp per year, which is more than any other nation (Rick 1). The shrimp industry in Louisiana, though still very viable, has been struggling. Overfishing of the Gulf of Mexico was one factor for the decline (Mendoza, personal interview). The impact of the 2005 hurricanes also had a tremendous effect on the national fishing industry. Based on the 2007 Summary of Agriculture and Natural Resources by the LSU Agriculture Center, “the seafood industries experienced nearly $250 million in revenue loss as a result of the two storms.” In addition, the shrimping industry has been affected by the importation of cheap shrimp from overseas. Rick also states that the average price for a pound of state-caught shrimp has dropped from $1.45 to $0.94 in the last 20 years. Shrimpers are finding that their costs are rising while revenues are falling, a formula that is putting this precious industry on life support. Because of recent legislation, more companies have sought to buy “Louisiana Wild” shrimp because of its quality advantage. However, some products, such as processed food, do not require the higher quality shrimp found in Delcambre, and it is unlikely that local shrimpers will be able to compete with the cheap imports on this front. Delcambre does have a major competitive advantage on the high-end sector, which is composed of markets, restaurants, and 13 individual buyers. These buyers have typically been willing to pay a premium for fresh Gulf Shrimp. One potential solution is for Delcambre to temporarily adjust its shrimping methods. Since these exclusive markets target mostly the larger shrimp, attempting to deliver more of these may help Delcambre in the long run. The problem is that short-term sacrifices must be made and would require significant government subsidy to ensure that the shrimpers do not leave for another area. One such strategy entails setting size requirements for a period of time to help the shrimp population grow to the desired size. By producing a slightly lower volume of shrimp over the next two years, the shrimpers would be working to build a more sustainable premium catch base for future years. Requiring nets with larger holes or implementing stricter catch standards would build the select shrimp market. This could tremendously affect the revenues of local shrimpers and would absolutely require government assistance to ensure that these shrimpers were able to sustain a living. Country of Origin Labeling & Anti-Dumping Laws One major hurtle that the Southern Shrimp association faces is the competition from cheap, imported Asian shrimp. Locals, especially those in Delcambre, have been driven out of a generations-long industry because of their inability to compete with farm-raised shrimp that are being dumped onto seafood markets. The United States Government also sought protection for its domestic shrimp and fisheries industry by enacting anti-dumping tariffs. Estimates show that the importation of shrimp into the US is a $3 billion industry (Economist). According to Economist magazine, “in 2004, urged on by domestic producers, America slapped anti-dumping duties on shrimp from China, Thailand, India, Brazil, Ecuador and Vietnam.” Even though these anti-dumping tariffs were enacted, they 14 were not high enough to halt the progress of these foreign importers. Only for a brief time, before being rejected by the World Trade Organization, did the tariffs collected go directly to individual shrimpers and processors in the United States. Another measure taken to protect domestic shrimpers is the Country of Origin Labeling Act (COOL). COOL states that all imported seafood must include the country of origin and whether it is wild or farm-raised. Additionally, the labeling must be clearly visible by the end consumer. This legislation is targeted to all fresh or frozen seafood, but does not include food which has been processed. Examples of exempt commodities include smoked salmon, canned tuna, and pickled herring (Session 13). In order for a product to classify as US raised, it must come from the United States and not have any processing on it that occurs outside the States. Country of Origin Labeling has raised awareness about the quality of wild American (especially Louisianacaught) seafood. The backlash against importation of shrimp has caused many companies to advertise the COOL as a selling point, with the label “Wild Louisiana Shrimp” signifying quality similar to “USDA Approved.” As more seafood retailers follow this plan by exploiting the “Wild Louisiana Shrimp” label, Louisiana should see positive market demand as more people become aware of the quality of Louisiana shrimp and the uncertainty associated with the safety and quality of imported shrimp. Along with anti-dumping and Country of Origin Labeling laws, there is also a movement for greater regulation within the United States Food & Drug Administration concerning imported seafood. John A. Williams, Executive Director of the Southern Shrimp Alliance, says “Because the FDA inspects only approximately 1 percent of all seafood imports, imports contaminated with harmful drug residues, pesticides, salmonella, and common filth enter the United States 15 virtually undetected.” The European Union, Canada, and Japan all have found massive improvements in safety and health through more intense regulation of seafood imports. On several occasions, countries that have had products banned from the European Union or other more heavily regulated areas have been able to ship these refused goods into America. Cambodia and Vietnam have both been condemned for insufficient health and hygiene issues, but the two have imported over 200 million pounds of shrimp into the US. Many of these importing nations have been known to overdose these shrimp with antibiotics, causing them to evolve into carriers of more resistant bacteria that humans cannot fight off as easily. Coastal Wetland Preservation One of the greatest environmental challenges facing the state of Louisiana is coastal erosion. According to a 2006 article in Satellite News, “An analysis of land-change data from the US Geological Survey (USGS) found that 217 square miles of Louisiana’s coastal lands were transformed to water after hurricanes Katrina and Rita swept across the coastline in August and September 2005.” Additionally, “Every thirty minutes, an area of coastal land the size of a football field vanishes. Since the 1930s, more than 1.2 million acres (1,900 square miles), an area the size of Delaware, has disappeared from the Mississippi River Delta” (Environmental Defense Fund). There are currently several proposals within the state to use alternative solutons to coastal preservation and levy building. The Times Picayune reported that Goveror Jindal had expressed his support for using 10 miles of I-10 destroyed by the 2005 hurricanes to create fishing reefs by sinking portions in certain marine areas. According to the article, “A team from the Louisiana Department of Transportation and Development, with help from other agencies, is still reviewing the separate proposls for using the concrete, which Jindal said will save the sate upward of $15 16 million.” Though Delcambre does not have as much excess concrete, Delcambre does have a major asset: the fleet of abandoned shrimp boats. Those boats which are considered nonseaworthy and cannot be salvaged for parts could be sunk in strategic areas to create artificial reefs to help support the fishing industry. The boats could also be used to either protect or create levies in the area. These boats could also be sent to other locations around the state for the same purposes. Another alternative restoration plan is to use sediment from dredging to rebuild the coastline. Some projects are already underway in Louisiana. The Coastal Protection and Restoration Authority of Louisiana (CPRA) announced that Governor Jindal also expressed support for this process. According the CPRA, “The state is dedicating nearly $20 million from the Coastal Protection and Restoration Fund to projects that will build an estimated 670 acres of marsh in Southwest Louisiana using sediment dredged from the Calcasieu Ship Channel.” This project puts the state’s budget at over $200 million for state funding. The citizens of Delcambre could possibly seek two sources of state funding for the dredging of the Delcambre Canal to the desired depth of 12 feet: coastal restoration funds and port development funds. The dredging should have a positive effect on both segments by making the channel more accessible and helping to prevent further land loss. 17 Transforming the Shrimp Boot Image into Opportunity One image that has consistently been associated with the Delcambre community is the white shrimp boot. Many in the past have incorrectly utilized this image to stereotype Delcambre as a small town with little opportunity for growth. These white boots present tremendous opportunity for the town. The white shrimp boot should be worn as a badge of honor, a glowing symbol of the shrimping industry that has dramatically shaped Delcambre’s culture. No other town in the state has earned the right to be so closely associated with one of its industries than Delcambre. Through Delcambre’s expertise and quality production in the shrimping industry, it has earned the right to be considered an authority within the shrimping industry. These white boots must be marketed as Delcambre’s trophy, reminding our state that shrimping is synonymous with Delcambre. 18 Market Segmentation In order to properly segment our desired targets markets, individual segmentation bases were used for each service. They are: I. Seafood Industry A. Type of Seafood (primarily shrimp) B. Location of distribution center (in-state) C. Type of distribution center D. Price willing to pay (High) 19 For the seafood industry, we felt it important to stay with shrimp because of supply and its link to Delcambre’s history. In-state markets were targeted to reduce transportation costs and to capitalize on the growing movement to encourage the purchase of Louisiana Wild Seafood (. The type of distribution center initially had no impact, but once we further segmented the market to the price that user was willing to pay for quality, we found that the processing plants seemed to strive for low-cost over high quality. Additionally, the local shrimpers did not have adequate protection under COOL to push for heavy distribution to the processing centers. The final target market eventually came down to those who sought quality over price. This group was typically the local markets, individuals, and wholesalers. We have applied five criteria to the segment of Louisiana-based seafood wholesalers and retailers. Measurable- This target market can be clearly identified and measured. Substantial- These buyers represent a major chunk of the Louisiana buyers of seafood. Accessible- Delcambre has access to these channels in order to better promote its brand. Differentiable- This segment distinguishes itself because of its focus on quality Louisiana Shrimp. Actionable- Delcambre can act upon this segment and immediately impact this market. PLEASE SEE APPENDIX B FOR A DETAILED LIST OF ALL RETAILERS, WHOLESALERS, AND BUYERS. 20 Customer Analysis We feel that if Delcambre focuses on wholesalers and retailers within a close geographic range, it should be able to adequately reach those customers. Delcambre’s reputation within the shrimp industry, coupled with a highly skilled workforce, should help it to grow in that sector. Competitor Analysis Delcambre must establish a delicate relationship with its local competitors. Delcambre’s shrimp industry cannot succeed without the success of the larger sectors that it belongs to. It must acknowledge that without the success of the Louisiana Shrimp Association and the Southern Shrimp Alliance, Delcambre’s shrimping will fail. Instead of competing directly with members 21 of this group, it must position itself as a leader of this sector. This situation is akin to Delcambre positioning itself as a star basketball player. While that basketball player may shine and make money, he will ultimately fail if his team and his league fail. Instead of focusing on intense local competition, Delcambre should position itself to combat the heavy importation of shrimp. Through the LSA and SSA, Delcambre may be able to help raise awareness for the importance of wild, domestic shrimp. By working through these organizations, Delcambre may be able to reposition itself as a shrimping powerhouse. Supply Chain Analysis Because of Delcambre’s familiarity with the shrimping business, it should have no troubles with the supply chains. Its multi-modal transportation should allow prompt shipping and receiving of goods. 22 3 Year Marketing Strategy Value Proposition: PROVIDING FRESH, WILD SEAFOOD FOR THOSE SERVING SOPHISTICATED TASTES By positioning itself as a port that provides seafood, Delcambre removes the limitation of being a pure shrimping town. This provider of seafood could encompass local seafood markets, commercial fishing, and oyster harvesting. In order to deliver value to its customers, Delcambre must position itself as providers of high-end seafood. Because of the many negative effects of frozen shrimp importation, Delcambre should attempt to exploit the movement to purchase from in-state suppliers. It must let buyers know the benefits of buying locally. Because of the abnormally low prices obtained on imports, Delcambre will not be able to compete as a low-cost leader. Reaching out to those who serve “sophisticated tastes” states that Delcambre is not going to attempt a price war with the shrimp importers, but will position itself as a deliverer of quality products to those who serve consumer markets that appreciate and demand higher quality seafood. Examples of these customers would include wholesalers/ retailers who serve mid- to high-end restaurants and who sell directly to consumers. In order for this concept to be successful, Delcambre must restore its shrimping workforce. These workers who have left the business or the town will not return on their own. The first job of the town of Delcambre is to present its strong brand. They should tap into the assets of the LSA and SSA to push the Louisiana Wild movement. This campaign must both alert people to the dangers of buying overseas seafood, and the potential benefits derived from buying locally. The current recession may provide an opportunity for people seeking to keep American dollars in America. This protectionist sentiment could cause a moderate movement to push for the 23 purchase of American goods over imported goods. Indirect marketing in this instance could help increase the awareness of the Delcambre shrimp brand. In order to increase the demand for Louisiana Shrimp, Delcambre must not only target the wholesalers and retailers, but must also reach the end- user of the shrimp. By directly targeting these users, Delcambre, working with the Louisiana Shrimp Association, can explain to this group the benefits of buying Louisiana Wild Shrimp. Though phone calls, emails, and traditional mailing may be more cost-effective, face-to-face contact will be needed in some instances. As this campaign continues and Delcambre continues to build its brand name, gradual improvements to the town’s shrimping infrastructure should be considered. The processing plants are in need of update and the Canal needs to be dredged. Eliminating the abandoned boats should not be an absolute priority because creative disposal or resurfacing of these boats may prove more profitable. The town should also consider the opportunity in using the shrimping industry to reach out the younger generation. Field trips, ride-alongs, and family excursions with the shrimpers could draw interest from the potential shrimpers of the future. 24 Segment 2: Non-Oilfield Fabrication Delcambre currently has valuable infrastructure in place for the fabrication industry. Because much of the region has been trained in the craft of welding and fabrication, a valuable pool of employees is available within a 30 mile radius. The Trinity Fabricators yard is currently available and it should be a high priority to get this valuable shop filled. According to the Acadiana Economic Development website, the property has between 11,000 and 15,000 square feet of useable space, features two 10-ton bridge cranes, two 3-ton jib cranes, sliding door access, and 35’ eave height. It has 343 feet of frontage on the Delcambre Canale and 650 feet on the slip. The current lease price is $8,500 per month. Because of its size, it will likely attract different clientele than the larger Shaw facility. The height and crane capacity make it unlikely to draw the interest of larger fabrication companies who assemble entire rigs, but could be a perfect fit for local fabrication companies who are seeking water access. New Iberia has many small to mid-sized fabrication companies that are landlocked and limited by only being able to accept truckable work. Access to the waterway allows for these fabrication companies to accept much larger projects. The relatively light crane capacity should not be a major hindrance as the property has room to bring in large, heavier tonnage crawler cranes that are used in other ports around the state. Another potential target would be the larger companies at the Port of Iberia who are seeking a satellite shop to handle some of their smaller projects. In addition to oil field fabrication, other types of fabrication could take place in these shops. The previously mentioned boat fabrication companies could be housed within Delcambre’s existing shops. This would not be ideal because a boat manufacturer would not be 25 able to fully utilize the facilities’ lifting capabilities. With the large influx of government spending as a result of President Obama’s stimulus bill, there will be an increase in demand for government fabrication. The government uses many of the same or similar steel manufactured items as the oil field such as tanks, skid packages, vessels, storage containers, sump tanks, and some piping. A typical fabrication company with aluminum and stainless welding capability should be able meet the standards on many smaller government projects. A company known as Federal Suppliers has helped local oil and gas fabricators make contact with the buyers of state and federal governments. The third area for potential service by these fabrication companies comes from the push for alternative energy resources. Though the processing of substances into biofuels is likely outside the scope of Delambre’s expertise, the fabrication for these processes is very much within Delcambre’s capabilities. Many do not realize that centrifuges used to separate corn into ethanol are skid mounted in the exact same fashion as the processing equipment used in the oil field. Delcambre should probably not attempt to venture into the complex and technologically advanced manufacturing of the centrifuges themselves, but many of these biofuel companies outsource their skid fabrication. Converting the United States away from foreign oil will require massive investments in infrastructure and equipment in order for these projects to be successful. In addition to the skid mounted activities, there will be greater need for windmill manufacturing and other related support services. Though the oilfield fabrication industry faces a decrease in overall demand due to president Obama’s stance against the oil companies, this revenue may be offset by well diversified companies capable of serving the oil field, the government, and alternative energy 26 services. Attracting this type of company would help to bring a balanced company into Delcambre with the potential to produce a consistent revenue stream. President Obama’s Push for Alternative Energy President Obama has pledged to reshape America’s energy industry more than any other president in the last 100 years. According to his website, Obama has pledged to implement the following energy initiatives during his term: 1) Immediately Provide Emergency Energy Rebate- Even though many oil companies showed a considerable loss in the fourth quarter of 2008 due to write-downs of their oil reserves, President Obama has pledged windfall taxes on the oil companies to pay for a $500-$1,000 tax rebate for all Americans. A 1990 Congressional Research Service Report explained the effects of the last windfall profit tax (WPT) on oil companies that was implemented between 1980 and 1987. The oil companies, with obligations to their board, share holders, and all related stakeholders, will be forced to offset the billions in additional taxes by cutting costs. According to James K. Glassman of Capitalism Magazine, the typical way that oil companies cut their budgets is by reducing their construction, exploration, and production budgets. A 1990 Congressional Research Service Report explained the effects of the last windfall profit tax (WPT) on oil companies that was implemented between 1980 and 1987. “The WPT reduced domestic oil production between 3 and 6 percent, and increased oil imports from between 8 and 16 percent," says the report." This made the U.S. more dependent upon imported oil.” If oil companies reduce their construction, exploration and production budgets, then this will have a clear negative impact on the demand for oil field related services. These budgets are the 27 economic drivers for the fabrication, supply, shipping, and maintenance of offshore equipment. If Delcambre seeks growth within these industries, it must either compete with existing business in local ports or look to manufacturing and support systems for overseas ventures. 1) Implement Cap & Trade Program to Reduce Greenhouse emissions President Obama seeks a cap and trade system that would essentially auction off “pollution permits.” According to Robert Sussman’s testimony before the House Select Committee on Energy Independence and Global Warming, a cap and trade system would have major effects on the fossil fuels industry. Coal companies have fallen out of favor with Congress because of Congress’s desire to provide more environmentally friendly energy alternatives. This cap and trade system could negatively impact Delcambre if it harms the growth of US traditional energy companies. A cap and trade system, however, could have a positive impact on the portions of Delcambre’s economy not tied directly to traditional energy markets. According to Obama’s website, “A portion of the receipts generated by the cap and trade system would be used to provide new funding for state and federal land and wildlife managers to restore habitat, create wildlife migration corridors, and assist fish and wildlife to adapt to the effects of a warming climate.” These funds could potentially be tapped by Delcambre to restore lost coast land and make sure that the environment remains hospitable for the shrimping industry even as the global climate changes. 3) Invest in secure energy future and create 5 million “green energy” jobs President Obama plans to strategically invest “$150 billion over 10 years to accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable 28 energy, encourage energy efficiency, and advance the next generation of biofels and fuel infrastructure. 29 Market Segmentation Manufacturing A. Raw Material (metallic preferred) B. Type of Manufacturing (custom) C. Location (Regional) D. Service Segment E. Manufacturing Sector 30 The manufacturing industry required a more detailed segmentation process. Because of the expertise of the labor pool, we chose metallic over nonmetallic manufacturing. This labor pool has traditionally focused on individual craftsmen who work on a single project at a time so assembly line work would not fit within their on-the-job training. Delcambre would seek to compete regionally with other Gulf Coast Fabrication zones. Due to size constraints of the existing facilities, pursuing fabrication companies who focus on large mutli-year projects is probably outside of the scope of Delcambre’s current infrastructure. Within the non-oilfield segment, pursuing boat fabrication, alternative energy projects, and government contracts should provide the most stable areas of growth. We have applied five criteria to the segment of non-oilfield fabrication. Measurable- This target market can be clearly identified and measured, but because of the tremendous growth potential in this industry, it may be difficult to ascertain the true potential of this segment. Substantial- Under the current administration, the Federal Government continues to be the largest buyer in the United States. A push for expanded alternative energy sources should also provide growth for that segment. Accessible- Delcambre has access to vast amounts of skilled metal-working labor. Differentiable- This segment is differentiable because it focuses on clientele that is not pursued heavily in this geographic area. Actionable- Delcambre can act on this plan immediately because the Trinity Fabricators yard is currently vacant, and another fabrication company can take over this shop. 31 Customer Value Working on non-oilfield fabrication presents a different set of value attributes for the consumer. While the focus of many companies is primarily profit-driven, environmentally conscious companies hold preservation of Earth’s resources in high regard. By providing the attributes of transportation ease, skilled labor, shipping capability and access to raw materials, Delcambre can help lower lead times and provide high quality work. This should cause a decrease in cost and help the company reach their profit growth goals. By utilizing existing facilities and local natural resources to produce alternative energy, Delcambre can also aid them in their environmental goals. Should Delcambre pursue the Government fabrication route, projects will be based on lowest-bid criteria and Delcambre will look to sell itself purely on the basis of its cost-cutting capabilities. 32 Channel Customer Analysis By targeting local fabrication yards looking to expand or branch out, Delcambre should be able to deliver value. The relatively affordable prices and convenient location would make Delcambre an attractive target site. Competitor Analysis There are few companies competing locally in the alternative energy sector. Most fabrication companies along the Gulf Coast focus on the oilfield. This presents a sector that may have relatively low resistance levels from local competitors. Many of the fabricators do perform some amount of government work to fill in when the oil field slows down. Supply Chain Analysis The Delcambre community has easy access to all of the inflow and outflow channels needed to perform this type of fabrication. Because traditional steel, aluminum, and stainless materials are used on for the centrifuge skid fabrication, the same vendors used for oil field fabrication could be utilized. Many of these are located between Lafayette and Delcambre. While government work require additional standards and certifications, many of these raw materials can also be found locally. 33 THREE YEAR MARKETING STRATEGY SERVING AS THE GATEWAY TO LOUISIANA’S ALTERNATIVE ENERGY INNOVATION This proposition positions Delcambre as a means to push the country forward in its pursuit of alternative energy. As the “Gateway” to the future, we focus on its central location in Louisiana and close proximity to multimodal transportation. Even though Delcambre is not traditionally a high-tech town, its transportation infrastructure facilitates the movement of much of the country’s technology. Without ports such as Delcambre, the progress of the highertechnology projects could not occur. ! The Gateway to the Future serves not only as the actual gateway in terms of transportation, but also in how it supports its fabrication industry. Whether serving on government projects or alternative energy, Delcambre is looking to serve the country in ways that it never thought possible. The fabrication industry’s evolution from pure oil & gas construction to a more diversified pursuit of alternative energy, traditonal energy, and government work should present opportunities for Delcambre that have been relatively untapped. Delcambre should also position itself as an innovator, drawing on its past experience in fabrication to deliver quality products to these new industries. Because of Delcambre’s limited financial resources, its first priority is filling the Trinity Fabricators Yard. It should attempt to directly target fabrication firms in the twin parish area. Since the Trinity yard is limited in size, the town should not expect for a brand- new large fabricator to come into this. Instead, it should look to the large local firms either looking to 34 downsize or add a satellite office. There are also many fabrication yards that are land-locked and limited to smaller projects that are truckable. Delcambre should stress its waterfront property with immediate access to the Intracoastal Canal. As soon as the Trinity yard is filled, the city can look to improve the Canal for future industrial development. It should consider working with the state and federal government to tap into funds that may be allocated for dredging, bulkheading, port improvement, or rebuilding the coastline. The need for dredging has hindered the multimodal transportation development of the area. Funding assistance for this is required if the town is to see future industrial growth. If Delcambre can work with the state to use the dredge material to help rebuild the coastline, then additional funding channels may be opened. ! 35 Segment 3: High-End Pet Food Manufacturing Market Segmentation SEGMENTATION BASES I. Pet Food A.Quality of food (exclusive) B.Type of food (dry) C.Animal type (dogs & cats) D.Ingredient origin (local) 36 For Pet Food Manufacturing, we eliminated standardized pet food because the standardized market, though much larger, is saturated with large, established competitors. The niche strategy of exclusive, high end dry pet food has a much stronger growth market. Because of the number of dogs and cats relative to other pets, we eliminated all other pet foods that fell outside of this group. For economic reasons, utilizing in-state materials would be preferable to out-of-state materials. The biggest problem with the pet food market group is the financial and land resource commitment required. The project may be too big to fit within Delcambre’s three year feasibility plan. Additionally, Delcambre would have to be open to significant population growth. This segmentation would require Delcambre to position itself with the state as a viable site for this business. Delcambre would likely not directly target the manufacturing company, but would serve as the geographic center that the state could sell as a prime location for this facility. We have applied five criteria to the segment of high-end pet food manufacturing. Measurable- This target market can be clearly identified and measured. Substantial- The Pet Food Market has tremendous growth potential and potential for several profitable niche areas that exist with little or no competition. Accessible- Accessibility is a major obstacle for Delcambre. It currently lacks the expertise and adequately trained work force to complete this project alone. It must leverage it geographic position and transportation capabilities to prove it is most worthy site in the state for the project. 37 Customer Value Determination Value in the pet food market is created similarly to the shrimp industry. For someone to be spending significant portions of their income on upscale cat and dog food, quality is a premium, and price is an almost nonexistant factor. Because Delcambre does not have significant experience in this field, a nonlocal company would have to move in and bring an inflow of new labor. This is one of the few industrial opportunities where Delcambre’s labor force is not an asset. The town and property of Delcambre are the selling point. Waterfront property with access to the Gulf of Mexico, Mississippi River, and Atlantic Ocean is available in Delcambre for a price that is significantly lower than other parts of the country. This prime location, with a direct route in all directions, could create the value needed to have Delcambre chosen as the site for the plant. 38 Delcambre can position itself to achieve the manufacturer’s ultimate goal: earn higher profits. Because many of the quality raw materials are produced in the area, Delcambre can appeal to high-end customers while lowering the overall cost for the manufacturer. Their ability to reach this relatively untapped segment of high-income pet food purchasers should allow for reduced competition and increased leverage with suppliers. The availability of land and access to the needed multimodal transportation should provide for quick delivery and increased production capacity which would increase customer satisfaction. This would in turn increase the potential revenue base and profits and result in increased revenue and employment within Delcambre. Although there is no funding currently available, Delcambre should work with the Louisiana Economic Development to determine the project’s feasibility. As soon as the project is greenlit, Delcambre must position itself as a viable candidate for the site. While Delcambre should have no problem receiving the material in a cost effective manner, it must ensure that it can deliver the product to end users in a timely manner. If Delcambre is one of the potential sites, it will compete with other port towns with proximity to all four methods of transportation and accessibility to raw materials. Shipping efficiency will be a key to maintaining this business successfully. Delcambre must present itself as a blue collar town capable of delivering white collar quality. While Louisiana appears to be the prime target of this potential project, other states along the Gulf will also likely be in competition for the spot. Ultimately, Delcambre must meet the basic goal of customer profitability by showing that it can help the manufacturing company and the state make more money by selecting Delcambre as the site for the plant. 39 Channel Customer Analysis Because Delcambre is a HUB-zone community that is positioned with access to air transportation, the Intracoastal Waterway, and potential rail connections, they must prove to the state that their transportation capabilities and ability to easily access the needed raw materials make Delcambre the most profitable site in the region. Competitor Analysis Delcambre’s main competitors would be other Gulf Coast port sites with similar assets. As soon as the state decides to move forward with the project, Delcambre must earn the site selection from the state. Supply Chain Analysis The supply chain serves as one of Delcambre’s most compelling arguments for site selection. It has the capacity to efficiently receive the raw materials and access to transportation to ship the final product. Value Proposition: Delivering the Freshest Ingredients for your Processing Needs The main focus of Delcambre’s Value Proposition is its ability to limit transportation costs of materials by delivering materials straight from where they are grown to where they are processed. If Delcambre can prove that using Louisiana materials will save the end user money, it can position itself as a viable candidate for the Pet Food Manufacturing Site. The delivery aspect focuses on its multimodal transportation capabilities and ability to ship and receive the 40 necessary goods for this process. Because the raw materials are grown or harvested in the state of Louisiana, Delcambre would be positioned to deliver fresh ingredients that most other distributors could not provide. Delcambre must first determine whether the Louisiana Economic Development wants to continue this project and in what capacity. If the project is greenlit, Delcambre must decide where the land for this project would be located. It would need waterfront access, highway access, and moderate proximity to the rail. As with any large manufacturing facility, Delcambre should carefully select the site so that the facility does not conflict with real estate, tourism, or retail locations. As soon as the potential site is designated, Delcambre must begin the process of lobbying to be the site chosen. Starting with its local representatives, Delcambre would need to begin marketing itself for this site. It must focus on its transportation capabilities, room for growth, and immediate access to most of the necessary raw materials. Should Delcambre be selected, the first priority (other than construction of the site itself) would be to secure funding and location for the extension of the rail system to allow easy transportation of raw materials and finished goods. It would then need to look toward training the workers that would be at the site to ensure a qualified work force. Though the Pet Food Manufacturing Facility would likely not be completed or possibly even started during the three year marketing timeline, the town would have have to dedicate themselves to this project as soon as a potential site is located. 41 Appendix A: Other Industrial Opportunities Boat Building & Repair One particular area of potential growth and maintenance is boat repair. Currently, Delcambre has a yacht refurbishment business. The access along the Canal and central location near the Intracoastal provide Delcambre with the resources to grow this business. A large portion of the local work force has welding or manufacturing experience. Expanding this sector into small leisure boat repair, shrimp boat repair, and boat fabrication are a logical step forward in the evolution and growth of the boat repairs. A large portion of the local work force has welding or manufacturing experience. Certain types of welding, such as aluminum and related metals, could serve as useful skills in the boat repair sector. Additionally, there are many ship yards in the area and quality ship building hands are nearby. Through these added services, Delcambre should be able to be reach out to more of the Acadiana area. Expansion of this area could also cause related growth in the retail business. A shop that sells customfabricated aluminum boats could also sell motors, fishing equipment, and customfabricated trailers. If marketed correctly, this increase in boat sales could lead to greater traffic on the Canal by allowing them to “test drive” the boats on the Canal. The end goal would be for people to purchase the boat in Delcambre, dock at the boat launch, use Delcambre"s gas stations, and eventually have the boat repaired within the town. 42 Flood Opportunities One area that Delcambre must improve upon is its ability to exploit its greatest weakness: the area’s high susceptibility to flooding and hurricanes. New Orleans has continually marketed the affects of Katrina and has profited from these terrible events that occured. By exploiting the hurricane damage scenario, we are not suggesting that Delcambre forget the tragic experiences that have shaped the city. We hope, in fact, for the opposite, where Delcambre utilizes its experience with flooding and hurricanes to help protect itself and surrounding areas from future disasters. Because of this increase in flooding and potential damage from hurricanes, a demand for wind and water-related insurance claims has been created. A small hub of an insurance carrier, such as Farm Bureau or State Farm, would place the insurance sector right in the center of most of its customers and may cause improved reaction time when people have claims during inclement weather. Insurance that services the oil and gas industry could also be located in Delcambre due to its close proximity to several ports. Worker’s compensation is a big business for the industry and could be a prime target business to move to Delcambre. In addition to exploiting floods for revenue gains through insurance, the flood-proofing of houses could become a major source of income for Delcambre. Because of the flood problems, houses in Delcambre are being built to strict codes to safeguard from future incidents. Delcambre should become an example of how to overcome major flooding problems. Low-lying areas of Lafayette and Orleans parish could benefit from the experience of Delcambre, and allow Delcambre to become the “flood-proof construction capital of Southern Louisiana.” 43 Supporting the Fabrication Companies through Supply Chain Targeting In addition to attracting the fabrication companies in the area, Delcambre should also look at targeting the suppliers to these companies. Companies such as valve distributors, steel supply companies, machine shops, welding supply companies, electrical and instrumentation vendors, paint suppliers, and inspection companies could benefit from Delcambre’s central location. Companies like Ace, Acme, and Venture Transportation provide the transportation of many of the oilfield’s manufactured goods. Many of these companies work out of Lafayette or Broussard. Relocating to Delcambre could provide valuable waterfront real estate and place them in the center of most of their customers. While the fabrication companies should be located in the southern portion of the town, the suppliers would likely be in the northern portion to mitigate the risk of flood damages to their inventories. 44 Works Cited Carter, Colin, Barry Krissoff, and Alix Peterson Zwane. "Can Country-of-Origin Labeling Succeed as a Marketing Tool for Produce? Lessons from Three Case Studies." Canadian Journal of Agricultural Economics 54.4 (Dec. 2006): 513-530. Academic Search Complete. EBSCO. [Library name], [City], [State abbreviation]. 31 Mar. 2009 <http://library.louisiana.edu/cgi-bin/ proxy?http://biere.louisiana.edu:2075/login.aspx? direct=true&db=a9h&AN=22911214&site=ehost-live>. Field, Alan. "Shrimpers criticize FDA inspections." Pacific Shipper 83.3 (10 Mar. 2008): 20-20. Business Source Complete. EBSCO. 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