Transportation costs
Outbound transportation costs are a function of distance to markets, transportation
modes used and rate schedules. Because of the complexity of calculating differential
modal transportation costs by state and because trucking is the dominant transportation
mode for the industry cluster, only motor freight costs were assumed to vary. Outbound
motor freight costs for the respective states were estimated by indexing national
average motor freight costs to the average weighted distance of each state to the
national market.
 West
Virginia is within 24-hour trucking distance of 50 percent of all major identified
markets. Transportation costs for a typical facility in West Virginia are estimated
to be below the competing states’ average, representing average annual savings
of $37,795.
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Transportation Costs
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U.S.
|
Region
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W.Va.
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W.Va. advantage
vs. region
|
|
Wood Products
|
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NAICS 3212: Engineered
wood products
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$1,933,836
|
$2,152,983
|
$2,101,845
|
($51,138)
|
|
NAICS 32191: Millwork
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$1,938,473
|
$2,169,347
|
$2,115,472
|
($53,875)
|
|
NAICS 337110: Wood kitchen
cabinets
|
$932,901
|
$1,041,684
|
$1,016,299
|
($25,385)
|
|
NAICS 321991: Mobile
homes and prefab housing
|
$1,498,682
|
$1,677,176
|
$1,635,524
|
($41,652)
|
|
NAICS 33712: Wood household
and institutional furniture
|
$968,376
|
$1,081,296
|
$1,054,946
|
($26,350)
|
|
NAICS 337211: Wood office
and store fixtures
|
$1,068,307
|
$1,189,897
|
$1,161,524
|
($28,373)
|
|
Average
|
$1,390,096
|
$1,552,064
|
$1,514,268
|
($37,796)
|
Source: West Virginia Development Office Cost Model
Approach
To confirm the viability of the value-added wood products cluster as
a target industry for West Virginia, a comparative analysis of operating costs and
profitability was prepared for a national aver-age operating establishment in West
Virginia versus the 10 surrounding states considered to be the state's principal
competitors: Ohio, Pennsylvania, Maryland, Virginia, Kentucky , Indiana, Michigan,
Tennessee, North Carolina and South Carolina.
The national average operating establishment was based on industry average
operating and financial characteristics derived from the most current Annual Survey
of Manufactures, published by the U.S. Census Bureau; Annual Statement Studies,
published by Robert Morris Associates, and national input/output coefficients for
various factor costs. This information was used to develop a detailed annual operating
expense statement, which served as a baseline for estimating costs for West Virginia
and the comparison states. These national baseline costs were adjusted by state-specific
cost differentials for various factors (wage rates, utility rates, etc.) to derive
operating costs for West Virginia and the comparison states.
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