ERCGP Water Intensive Industries Market Assessment Economic Development Committee Briefing

1. McManis & Monsalve Associates May 14, 2008 ERCGP Water Intensive IndustriesMarket AssessmentEconomic Development Committee Briefing

2. Agenda • Review of objectives, staffing and methodology • Erie value proposition • Some early findings • Top line assessment: water-intensive industries • Two case studies • Next steps and time line • Questions 2 2

3. Objectives • Can we successfully use our abundance of high quality water to attract companies in water intensive industries? • If so, how? Answer the following questions: 3 3

4. Staffing: Lead Resources Phil Nathanson, Planner 30 years planning experience as manager and consultant specializing in strategy, market research, and new product and service design and introduction Recently led market assessment and marketing strategy development for Erie-based high tech startup Bill Welch, Research Team Manager 30 years experience as reporter and city editor in Erie Graduate degree in research and analysis Deputy Director of MCIIS non-profit research arm Daily management of team of four dedicated researchers Todd DeBruin, Project Manager Seven years experience managing projects that integrate research and analysis with business planning Mercyhurst trained researcher with MBA 4

5. Subject Matter Experts Ronald R. Pollina, PhD President and founder of Chicago-based Pollina Corporate Real Estate, Inc. Has assisted many Fortune 500 companies to find new locations, including Xerox, E.I. du Pont, 3Com, Time Magazine, Bosch, Caterpillar, and Prudential Insurance Is currently assisting two clients in water-intensive industries in evaluating potential sites Has been invited to speak several times to Erie audiences, most recently as keynote speaker at “Erie Economic Summit 2007” 5

6. Subject Matter Experts Paul Kenny Subject matter expertise in water-intensive beverage and bottling industries including strategy and planning support 20+ years operations and planning experience with Coca-Cola and Seagram's Marco Monsalve Overall guidance and quality control MMA CEO Erie based, knows business leaders, environment and culture 20+ years of consulting and business planning experience 6

7. Objective: To ensure that we are on the same page with you regarding process, deliverables, and quality and capability of current supply and infrastructure Approach: Conduct a Kickoff Meeting to review methodology, establish project management and reporting protocols Assess and define thecurrent value proposition ERCGP reviews and confirms, and we make whatever revisions might be required Methodology – Step One 7 7

8. Objective: To answer the research questions posed in the RFP and assess Erie’s relative competitive advantage. Approach: “Rapid immersion”: Research analysts quickly develop working knowledge, leveraging expertise of SMEs Ongoing collaboration between research team and business and industry SME team members Research plan drawing on: Open source intelligence Selected in-depth interviews with decision makers at water-intensive industries that have recently relocated The Pollina proprietary mutivariate model and data base, and the experience of Pollina staff in working with relocating companies Step 2: Conduct Strategic Assessment Research 8 8

9. Step 2: Research Plan (cont’d) To determine the degree of Erie’s competitive edge over the next three years: Identify water-intensive industries by type of industry, amount and quality of water demanded Determine the importance of water availability for water-intensive companies in comparison to other factors in deciding where to locate a facility, including quality of life, labor relations climate Develop a priority list of infrastructure improvements important to water-intensive industries (e.g., waste water treatment capabilities) Develop a priority list of other incentives or improvements important to water intensive industries (e.g., proximity to Interstates, rail) Identify other localities seeking to attract water intensive industries, and determine the value propositions they are offering Benchmark the value propositions of Erie and other localities against the identified needs of companies in water-intensive industries 9

10. Objective: To translate research findings into actionable intelligence within the context of Erie’s current value proposition and goal of attracting businesses Approach: Research results are codified into findings based on review and input from Project Manager, SMEs and Planner Findings include answers to basic and detailed questions in RFP Findings are embodied in draft report and presented to ERCGP ERCGP reviews and comments on report Finalize report Step 3: Present and Finalize Report 10 10

11. What We’ve Done So Far • Researched and validated the value proposition • Received and digested preliminary input from Pollina • MCIIS research team digging in this week And we have some preliminary findings ….

12. The North Western Pennsylvania Value Proposition Water supply and quality: Abundant, uninterrupted Water Infrastructure: Sophisticated and compliant Wastewater treatment: ample, underutilized capacity Logistics: Could be big advantage – very central location Other Incentives: 40% off already-competitive water rates for 5 years (Erie rates) Land costs – 50% of competition or lower Site preparation (extensions, etc.) at reduced costs Workforce: low labor rates Construction, leasing/purchase packages customized = guaranteed best deal over 10-year period Intangibles: You really want to make the deal! 12 12

13. The Most Promising Water-Intensive Industries

14. The Next Ten … • Pharmaceuticals • Data Centers • Aquaculture • Pulp and paper • Automotive parts • Ethanol • Electric Utilities • Metals • Chemicals • Petrochemicals

15. Case Studies • To date we have studied several recent siting decisions in which the companies involved cited water as important • In each case, other infrastructure requirements were as important as water • In each case, a special package put together by the State, localities and, in some cases, private organizations and educational institutions were determinative factors in the final selection • In many cases, the Governor’s office and the Governor personally were involved in the negotiations

16. Case Study: Procter and Gamble • The plant: Paper tissue and towel products • Location: Box Elder County, Utah • Size of the deal: $315 million, 300 jobs • Contending sites: In Washington, Oregon, Idaho and Nevada • The stated requirement: “The intersection of rail, ample supply of water, wastewater treatment capacity, electrical supply and natural gas supply in the volumes that are required and at rates that make sense.” • The sweeteners: $85 million from the Governor’s office, more from the county; personal involvement of the Governor in negotiations

17. Case Study: Amlyn Pharmaceuticals • The plant: Produces Byetta, a new Type 2 diabetes medication • Location: West Chester, Ohio • Size of the deal: $400 million, 500 jobs • Contending sites: Many • The stated requirement: • Skilled workforce (average salary will be $50,000) • Research-and-development support • The sweeteners: • State of Ohio: $87 million in statutory benefits and financial assistance • County and local: $30 million • 15-year, 100% tax abatement • Formal partnership among adult technical schools, community colleges and universities

18. Timeline • Weekly updates with Jake and steering group • Draft report: early June • Final report: mid-June