NASCO PRESENTATION/KANSAS CITY

NASCO Strategic Infrastructure Presentation

2011 NASCO Conference

Kansas City, MO • May 17-18, 2011

3 Topics/Building North American Competitiveness

Global Infrastructure Trends - 5 TRENDS

North American Realities

Strategies to Build Competitiveness

$0

$750,000

$1,500,000

$2,250,000

$3,000,000

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Infrastructure Spending in Millions of Dollars

Trend #1 - Increasing Infrastructure Scarcity1980-2030

Source: CG/LA Infrastructure Global 2030 Projections Model

24T

40TMore of a Fact than a Trend

Huge Area for Creative Development

$16T

Perception versus Reality

0

10

20

30

40

35 39

14

54

6042

3424

20

What will be the cumulative size of the global infrastructure market in the 2011-2030 period?

%

74% of Industry Expertsare Massively Off

Trend #2 - Public Leadership

0 100 200 300 400

36

36

240

36

240

360

Finance

Political/Policy

Engineers

Lawyers

Public

Pension Funds

Meaning? Will Every Country Need a Development Bank

Months

Trend #3 - Public Leadership/Public Sector Capacity

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Real Public Sector Capacity Building Requirement - The Real “Gap”

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Trend #4 - Technology Drives Infrastructure

Highway System - Trucks & Cars Smart Grid

Diesel Rail

Large Vehicles

Diesel Trucks

Central Generation (Coal & Diesel)

Analog Grid

Giant Utilities

State-CenteredHigh Carbon

Public ControlLiquids

Private SectorCarbon NeutralPublic + Private

Electrons

Renewables

Smart Meters & Batteries

Massive Technology Innovation

Electric Rail

Electric & Hybrid Cars

High Speed Rail

Venture Infrastructure BankGeneral Fund

Innovation - Business Model, Finance, Technology, Operation

A 50 Year Old Infrastructure Design& Project Delivery Model

Trend #5 - Winners & Losers

Water

Urban Mobility

Wastewater

These are Clear Issues - But Where does the Money Come From?

0

0.75

1.5

2.25

3

2000 2005 2010 2015 2020 2025 2030

0.18 0.18 0.19 0.21 0.23 0.24 0.24

All Infrastructure Water & WW

Small Countries

%/GDP

Trend #5 - Hot SpotsHigh Potential

Actual

China

India

Russia

Brazil

US

Mexico

Chile

Germany

Colombia

IndonesiaVNam

VenezuelaCambodia

70%

White Space: The Basics10 Infrastructure Global Hotspots

United StatesUS$5,471

ChinaUS$13,740

JapanUS$3,528

1

Note: Figures are expressed in billions of USD

3

4

2

5

67

8

910

BrazilUS$1,180

IndiaUS$1,491

South KoreaUS$1,029

GermanyUS$1,650

SpainUS$1,106

ItalyUS$1,322

FranceUS$1,274

In the coming 20 years, 10 countries will account for 75% of the total infrastructure global market. These are the infrastructure global hotspots. Despite the fact that each individual country faces different challenges, these locations have the ability to move projects forward keeping the current momentum of their economies and infrastructure markets. These countries also represent the new economic clusters that will attract global investment in the coming decades and that will have the capability of providing valuable opportunities to its citizens.

White Space:The financial hill ahead to improve infrastructure

Quality of Infrastructure

(scale: 0-7)

GDPCumulative/ Billion

5

50,000

US

China Japan

73

FranceIndia

EnglandBrazil

Italy

Circle size represents investment per capita

CanadaS. KoreaRussia

Spain

Germany

Mexico

Philippines

UAE

This graph shows the investment per capita in each country in relation to the Quality of Infrastructure and economy size. Countries located in the lower left hand are in a tough situation: their economies are relatively small and their infrastructure quality is poor. These countries will need to make significant changes to improve its public sector capacity and increase private sector investments overcoming most of the five issues for infrastructure development: institutional arrangement, corruption and private sector involvement. China is the only country with poor infrastructure and a big economy (perhaps India will join them soon). Their challenge will be the correct allocation of resources combined with sustained growth.

North American Realities

0%

1%

2%

3%

4%

19801985

19901995

20002005

20102015

20202025

2030

United States Infrastructure Investment 1980-2030

High EndLow End

TIGERTIFIAHSR

INFRA FUNDBUILD AMERICA BONDS

STIMULUS

STRATEGIC SPONSOR

GOLD SPONSORS

PLATINUM SPONSORS

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MADISONWILLIAMSAND COMPANY

MADISONWILLIAMSAND COMPANY

National Infrastructure Bank

Vision - The Key

North American Competitiveness

North American Productivity

North American Opportunity

Strategic Projects

So, (1) What are they? and (2) Where DOES the Money Come From?

Basic Description

PrivatizationTraditional Public Sector Procurement PPP’sOutsourcing

PrivatePublic

Least Risk Transfer Most Risk Transfer

Operational & Institutional Weakness

Operational & InstitutionalStrength

Increased Private InvestmentAmerica’s Growth Path in Infrastructure

0

100

200

300

400

150150

150150

150

3 10 30100

160

20112012

20132014

2015US BasU Plus APF

CurrentGlide Path

PPPPotential

$US B

Back to the Vision Thing

Advanced Manufacturing

NearShoring

Strategy - What do we Do?

Strategic Implications

Major Technological Transition - Liquids to Electrons

Situation of Scarcity - What is a $16 Trillion Gap?

New Model Confusion - Roles of Public & Private Sectors

New Set of Winners + Losers - Does this Really Work

Who Leads? Who Decides?

Public v Private

LT v ST

Strategic Opportunity

Make Projects?

Create Finance?

Do Technology?

Specialty or IntegratedCompanies?

Strategic Tools

National Infrastructure Bank

New Infrastructure Matrix

The 60 Year old Design

Something that Works in a Globalized, and Increasingly Globalizing, World

Injection of Creativity & Innovation - and SPEED - into the Infrastructure Business

0

100

200

300

400

150 150 150 150 150

3 10 30

100

160

2011 2012 2013 2014 2015

US BasU Plus APF

Vision - Projects & Competition

THANK YOU

0

375000

750000

1125000

1500000

155,305158,975

163,207194,928 262,125

302,112335,227

248,068269,501

292,055 332,839 392,488 466,027556,578

283,295 330,876453,769

645,927

871,204

1,151,321

1,487,628

20002005

20102015

2020

2025

2030

US EU27 Asia

US, EU, Asia to 2030

“Logic will get you from A to B, Imagination will get you Everywhere”

Albert Einstein