Sacramento Area Council of Governments. AWTP Business Plan. Profile Research & Marketing 1/2010

Transcription

1 Sacramento Area Council of Governments 2010 AWTP Business Plan Profile Research & Marketing 1/2010

2 AWTP BUSINESS PLAN January 2010 ACKNOWLEDGEMENTS We would like to acknowledge and thank the following individuals and organizations for their assistance in the preparation of this Business Plan: Sacramento Area Council of Governments Robert McCrary Lacey Symons James Brown Gary Taylor Yolo County Transit District Terry Bassett Yuba Sutter Transit Keith Martin Sacramento County Farm Bureau Charlotte Mitchell Yolo County Farm Bureau Denise Segura Sierra Gold Trees Brian Berg California Rural Legal Assistance Foundation Martha Guzman La Coorperativa Campesina de California Raul Meyreles, former CEO Marco Lizzaraga, Senior Director of Programs California Human Development Corporation (CHD) Antonio Silva, Senior Housing Program Director Blanca Barna, Director Woodland Field Office Chris Paige, Deputy CEO, Program Yolo County Housing Authority Lisa Baker Connie Gomez Dolores Huerta Foundation Delores Huerta Yolo Family Resource Center Josie Enriquez California Coalition for Rural Housing Felicity Lyons Office of State Senator Lois Wolk Marivel Gomez Profile Research & Marketing Page i

3 AWTP BUSINESS PLAN January 2010 ABSTRACT The Sacramento Area Council of Governments (SACOG) funded the Agricultural Worker Transportation Program (AWTP) Business Plan to determine the existence and extent of the unmet transportation needs among the agricultural worker population in SACOG s service area. Additionally, SACOG contracted for an assessment (as part of the scope of work) of the viability of a public vanpool program and business plan to service this market. In order to achieve the stated goals, the consultant team engaged in several data collection activities which included focus groups and community surveys with farm workers and their families throughout SACOG s top growing regions. Results of the study indicate that there are several transportation and related improvements needed to create sufficient opportunities for farm workers to avail themselves of safe, affordable, and dependable transportation. Furthermore, the farm worker community s positive response (given nearly 1,600 neighborhood surveys) to a public vanpool program was overwhelming. The SACOG business plan includes specific recommendations for the vanpool program implementation. The business plan also recommends the implementation of an aggressive marketing and business development plan to jump start the program. The ongoing recruitment of drivers and passengers increases the profitability of the program. This report is available through the Department of Transportation, Division of Mass Transportation (CALTRANS) and the Sacramento Area Council of Governments (SACOG). Profile Research & Marketing Page ii

4 AWTP BUSINESS PLAN January 2010 EXECUTIVE SUMMARY Agricultural Worker Transportation Program (AWTP) Business Plan This report is the Market Demand Study and Business Plan for the SACOG Agricultural Worker Transportation Program (AWTP). The AWTP will create a vanpool program for the agricultural workers in the four county RTPA area with grant funds from the State of California. The report documents internal research of the market demographics and agricultural characteristics, profiles the target communities with survey data, and lays out a business strategy. The key finding of this report is that the development of a self sustaining vanpool program over months is feasible. All data, analysis, and business plan recommendations are courtesy of PRM Consulting. The SACOG region supports a large and productive agricultural sector, and its workforce is typically economically challenged with few transportation choices. Data from state agricultural reports reveal that at least 5,900 farm labor jobs exist in the greater Sacramento region; other demographic sources report several times this number living in the region. The average farm worker earns less than $12,000 per year. Transit operators in rural areas work hard to provide critical fixed route service, but this service is costly with fare box recovery only a small fraction of what is experienced on more urban routes. While farm workers and their families do avail themselves of existing transit service for nonwork trips, the seasonal and remote nature of the work destinations makes fixed route transit service impractical because average one way commute distances exceed 20 miles. Analysis of extensive community survey data reveal that a ready and willing market exists for vanpool services. About 1,600 farm workers were surveyed in three different market areas: South Sacramento/Delta, Yolo County, and Yuba/Sutter Counties. The Agricultural Worker Community Survey data show that agricultural workers are primarily members of working families whom are long term residents. The typical farm worker has limited access to a private automobile and cannot use existing transit to get to work. With some minor variation among the market areas, an overwhelming majority of surveyed workers are receptive to a public vanpool program. The survey data also provide valuable origin destination information for vanpool service planning. The business plan indicates that self sustaining operations for the vanpool program are feasible for a range of fleet sizes in all targeted market areas. Analyses use seasonal crop data, neighborhood survey results, and other demographic data to estimate market demand and project program costs and revenues. Seasonal demand for vanpools are estimated based upon crop cycles. Based upon a 50 van regional fleet, the plan projects 325 monthly riders. Revenue and cost estimates assume at least 8 riders per van and 20 miles average one way commutes, generating $450,000 in annual trip revenue against $425,000 in operating expenses. The business plan performs sensitivity analyses across various regional fleet sizes and fuel price assumptions. The business plan recommends an aggressive marketing effort. Favorable business plan assumptions are predicated upon successful recruitment of drivers and riders. Recommended activities include regional branding and marketing, direct outreach in the targeted communities, and database driven direct marketing. Successful word of mouth public outreach is a necessary, but probably not completely sufficient approach to ensure vanpool program success. SACOG should develop a robust database of potential clients, and combine traditional public outreach with community based marketing strategies. Profile Research & Marketing Page iii

5 AWTP BUSINESS PLAN January 2010 TABLE OF CONTENTS Acknowledgements.. i Abstract ii Executive Summary iii CHAPTER 1 Vanpool Operation Recommendations Marketing Recommendations for SACOG Vanpool Program..1 CHAPTER 2 AWTP Transportation Models Review...3 CHAPTER 3 Operational Review AWTP Business Plan Findings Methodology Vehicle Operation Cost Assumptions Ridership Demand / Revenue Projections Proposed Vanpool Fare Structure...10 CHAPTER 4 Revenue / Cost Projections Sutter and Yuba County Yolo County Sacramento County...23 CHAPTER 5 Three Year Operational Projections Sub region Projections.. 28 CHAPTER 6 SACOG Marketing Plan Development PRM Market Research Methodology Focus Groups / Neighborhood Surveys Consumer Profile Transportation Needs Assessment Vanpool Message Vanpool Customer Vanpool Customer Concerns Marketable Attributes and Customer Responses South Sacramento Sutter and Yuba (Hispanic) Sutter and Yuba (Punjab) Yolo SACOG Vanpool Proposition Recommended Marketing Channels Marketing Plan Summary.38 Profile Research & Marketing Page iv

6 AWTP BUSINESS PLAN January 2010 Appendix A 1 Regional Survey Overview Report Appendix A 2 Survey Analysis Methodology Appendix A 3 SACOG Survey Yuba County Appendix A 3.1 SACOG Survey Sutter and Yuba Appendix A 3.2 SACOG Survey Punjabi Appendix A 4 SACOG Survey Yolo Appendix A 5 SACOG Survey Sacramento Appendix A 6 SACOG Survey Delta Region Appendix A 7 Hispanic Consumer Profile Appendix A 8 SACOG Survey Questions (English) Appendix A 8.1 SACOG Survey Questions (Spanish) Appendix B 1 SACOG Latino Yuba City Focus Group Summary Appendix B 2 SACOG Punjabi Focus Group Summary Appendix B 3 SACOG Winters Focus Group Summary Appendix B 4 SACOG Woodland Focus Group Summary Appendix C 1 Agricultural Labor Demand Analysis Appendix C 2 Gross Cost Revenue Projections Appendix C 3 Van Leasing Rates Appendix C 4.1 Sutter and Yuba Revenue and Cost Projections Appendix C 4.2 Yolo Revenue and Cost Projections Appendix C 4.3 Sacramento Revenue and Cost Projections Appendix D Status of AWTP Grant Recipient Vanpool Programs Profile Research & Marketing Page v

7 AWTP BUSINESS PLAN January 2010 LIST OF FIGURES Figure 3.1 Total Labor Demand SACOG Service Area....8 Figure 3.2 Labor Demand Yuba / Sutter.. 8 Figure 3.3 Labor Demand Sacramento..9 Figure 3.4 Labor Demand Yolo Figure 4.1 Total Projected Revenue and Cost for 2010 at $3.00/Gallon Figure 4.2 Total Projected Revenue and Cost for 2010 at $3.50/Gallon Figure 4.3 Total Projected Revenue and Cost for 2010 at $4.00/Gallon Figure 4.4 Yuba / Sutter Projected Revenue and Cost for 2010 at $3.00/Gallon Figure 4.5 Yuba / Sutter Projected Revenue and Cost for 2010 at $3.50/Gallon Figure 4.6 Yuba / Sutter Projected Revenue and Cost for 2010 at $4.00/Gallon Figure 4.7 Yuba / Sutter Projected Monthly Revenue and Cost 50 Van $3.00/Gallon Figure 4.8 Yuba / Sutter Projected Monthly Revenue and Cost 40 Van $3.00/Gallon 15 Figure 4.9 Yuba / Sutter Projected Monthly Revenue and Cost 30 Van $3.00/Gallon Figure 4.10 Yuba / Sutter Projected Monthly Revenue and Cost 50 Van $3.50/Gallon. 15 Figure 4.11 Yuba / Sutter Projected Monthly Revenue and Cost 40 Van $3.50/Gallon Figure 4.12 Yuba / Sutter Projected Monthly Revenue and Cost 30 Van $3.50/Gallon. 16 Figure 4.13 Yuba / Sutter Projected Monthly Revenue and Cost 50 Van $4.00/Gallon Figure 4.14 Yuba / Sutter Projected Monthly Revenue and Cost 40 Van $4.00/Gallon Figure 4.15 Yuba / Sutter Projected Monthly Revenue and Cost 30 Van $4.00/Gallon Figure 4.16 Yolo Projected Revenue and Cost for 2010 at $3.00/Gallon..18 Figure 4.17 Yolo Projected Revenue and Cost for 2010 at $3.50/Gallon..18 Figure 4.18 Yolo Projected Revenue and Cost for 2010 at $4.00/Gallon..19 Figure 4.19 Yolo Projected Monthly Revenue and Cost 50 Van $3.00/Gallon Figure 4.20 Yolo Projected Monthly Revenue and Cost 40 Van $3.00/Gallon Figure 4.21 Yolo Projected Monthly Revenue and Cost 30 Van $3.00/Gallon Figure 4.22 Yolo Projected Monthly Revenue and Cost 50 Van $3.50/Gallon Figure 4.23 Yolo Projected Monthly Revenue and Cost 40 Van $3.50/Gallon Figure 4.24 Yolo Projected Monthly Revenue and Cost 30 Van $3.50/Gallon Figure 4.25 Yolo Projected Monthly Revenue and Cost 50 Van $4.00/Gallon Figure 4.26 Yolo Projected Monthly Revenue and Cost 40 Van $4.00/Gallon Figure 4.27 Yolo Projected Monthly Revenue and Cost 30 Van $4.00/Gallon Figure 4.28 Sacramento Projected Revenue and Cost for 2010 at $3.00/Gallon Figure 4.29 Sacramento Projected Revenue and Cost for 2010 at $3.50/Gallon Figure 4.30 Sacramento Projected Revenue and Cost for 2010 at $4.00/Gallon Figure 4.31 Sacramento Projected Monthly Revenue and Cost 50 Van $3.00/Gallon Figure 4.32 Sacramento Projected Monthly Revenue and Cost 40 Van $3.00/Gallon Figure 4.33 Sacramento Projected Monthly Revenue and Cost 30 Van $3.00/Gallon Figure 4.34 Sacramento Projected Monthly Revenue and Cost 50 Van $3.50/Gallon Figure 4.35 Sacramento Projected Monthly Revenue and Cost 40 Van $3.50/Gallon. 26 Figure 4.36 Sacramento Projected Monthly Revenue and Cost 30 Van $3.50/Gallon. 26 Figure 4.37 Sacramento Projected Monthly Revenue and Cost 50 Van $4.00/Gallon. 26 Figure 4.38 Sacramento Projected Monthly Revenue and Cost 40 Van $4.00/Gallon. 27 Figure 4.39 Sacramento Projected Monthly Revenue and Cost 30 Van $4.00/Gallon Figure Year AWTP Operating Revenue and Cost Projection..28 Figure 5.2 Yuba / Sutter 3 Year AWTP Operating Revenue and Cost Projection...29 Figure 5.3 Yolo 3 Year AWTP Operating Revenue and Cost Projection..29 Figure 5.4 Sacramento 3 Year AWTP Operating Revenue and Cost Projection...29 Profile Research & Marketing Page vi

8 AWTP BUSINESS PLAN January 2010 CHAPTER 1 VANPOOL OPERATION RECOMMENDATIONS PRM recommends that SACOG implement an initial 30 van fleet vanpool system for local agricultural workers. The areas to be targeted are South Sacramento, Sutter, Yolo and Yuba Counties. In order to successfully implement a vanpool program, PRM recommends the following: Initiate the activation of the AWTP grant for the purchase of equipment Identify location of operation yard and business office Hire staff and begin marketing efforts to identify and recruit drivers / riders (see marketing recommendations) Establish service and purchase contracts with vehicle maintenance contractors and fuel suppliers Identify vehicle insurers to establish vehicle policies Research and acquire GPS tracking system and service software to operate program. 1.1 Marketing Recommendations for a Sacramento Area Vanpool Program PRM recommends a strategic Marketing and Business Development Campaign, specifically targeting Latinos in Sacramento County (Galt and the South Delta), Yuba and Sutter Counties and Yolo County (Woodland and Winters). The workers should be contacted where they work (fields and packing houses) and where they live. PRM recommends a separate outreach and communication approach for both. Recommended core elements of the workplace and neighborhood marketing & business development program to include: Field Outreach Program Coordinator: A Field Program Coordinator should be placed in key market locations to make direct contact with employers, employees, farm labor contractors and other stakeholders in the workplace environment for the purposes of consumer education (individual and group program presentations), vanpool registration and person to person decision maker follow up as needed. Key responsibilities of the Field Outreach Program Coordinator include: Identifying suitable workplace locations for placement of vanpool information (marketing collateral); receiving employer authorization for placement and performing all maintenance of vanpool marketing collateral and other promotional information. This should be performed on a regular schedule as approved by SACOG. Profile Research & Marketing Page 1

9 AWTP BUSINESS PLAN January 2010 Placing and maintaining of all Point of Sale and marketing collateral in retail businesses, money exchange houses, community service agencies, health clinics and other organizations that the target community traffics and congregates. Developing valuable business and community partnerships in target communities to elevate program brand awareness and set in motion word of mouth within the target community. Implementing a targeted, market specific, high profile agricultural worker vanpool brand awareness program and a direct response, database mail program to build brand awareness and recruit drivers and riders for and in these communities. The direct response mail program campaign will cross pollinate (integrate) with targeted point of sale posters, flyers, registration response cards and vanpool fact sheets to augment brand awareness and registrations in the targeted communities. Profile Research & Marketing Page 2

10 AWTP BUSINESS PLAN January 2010 CHAPTER 2 AWTP TRANSPORTATION MODELS REVIEW PRM conducted approximately 1,500 field surveys and the data indicates a considerable number of working residents use a raitero to get to and from work because they have no other transportation option. 1 A raitero is a private driver that illegally collects fares for transportation to and from work. Additional data supports this assertion. In 2002, the State Department of Transportation (CALTRANS) commissioned a statewide study assessing the transportation needs of workers employed in the agricultural industry. The study s findings clearly indicate the paramount need for available and safe transportation for a majority of the industry s workers. Also, feedback in employer surveys and farm worker focus groups (conducted for that analysis) indicated that few employers provide transportation to their employees. Some farm labor contractors that provide transportation tied their transportation service to other demands on workers such as, using a certain raitero. A majority of the farm workers interviewed reported using a raitero to get to and from work. The vast majority responded that the vehicles and their drivers (raiteros) are unsafe and not reliable. 2 Since most agricultural workers begin their day well before sunrise and travel to remote locations to work in fields and packing sheds, traditional public transportation does not satisfy their transportation needs. Extensive research further supports this grievance; Latino agricultural workers surveyed for a 2009 Kings County Area Public Transit Agency (KCAPTA) study found that over 90% felt that public transit does not adequately meet their needs for travel to and from work. 3 That same research also indicates that these workers are established residents with children enrolled in local schools, most households are multi generational, and the average household size is over five residents. Unfortunately for these working residents, average commutes are longer than the county average and the financial impact to the family s budget is significant, especially given their limited income. The majority of the working families surveyed are at or below the federally established poverty line. For most of these working families there are fewer than 2 vehicles per household, creating a transportation availability gap for those not able to drive their own vehicle to and from places of agricultural or other employment. 1 Profile Research & Marketing, SACOG Agricultural Workers Vanpool Business Plan, Questions: #Q2 & Q2b1 of the field survey. 2 Profile Research & Marketing, CALTRANS Statewide Agricultural Industries Transportation Needs Assessment, Research Findings and Conclusions, August Profile Research & Marketing, KCAPTA Strategic Hispanic Marketing Plan, Executive Summary, September 2009 Profile Research & Marketing Page 3

11 AWTP BUSINESS PLAN January 2010 For many workers, this harsh reality is compounded in that they are forced to ride with raiteros. Research indicates that in many cases, raiteros do not have a valid drivers license or insurance, and their passengers do not feel safe riding with them. However, these workers remain silent because they have no other transportation options. Farm worker transportation needs, poor conditions, and consequences for farm workers are not new. In 1999, a horrific vehicle accident near the town of Five Points, California 13 farm workers who were killed on their way to the fields. The workers were traveling with a raitero operating an unsafe, illegal vehicle. Following the 1999 tragedy, the Governor s office approached KCAPTA to request assistance in finding an effective solution for farm worker transportation. In March 2000, Caltrans set out to prepare and submit a grant application for funds to establish a vanpool pilot project (Appendix D). In May 2001, KCAPTA received a letter confirming Caltrans intent to provide funds from the Federal Transit Administration Job Access and Reverse Commute (JARC) program as well as matched funds from California s Public Transportation Account. Following receipt of funds in November 2001, KCAPTA began hiring necessary staff and purchasing vehicles. Everything for the pilot project Agricultural Industries Transportation Services (AITS) pilot project, was in place for the official launch in April AITS currently provides over 350 vans in five California Central Valley counties serving agricultural workers, students, teachers, federal employees, and California State Correctional Officers. This unique brand of public transportation is available in rural locations, affordable for farm workers, and safe for riders and drivers. In contrast to raitero operated vans, AITS vans are properly equipped, insured, and operated by volunteer drivers who work in the agricultural industry; they possess a class C driver s license and have passed a class B physical. AITS drivers must have a clean driving record, which allows both the drivers and the vans to be insured at an affordable rate. Vanpools begin operating before sunrise, giving passengers flexibility and convenience in their morning commute. Passengers pay a mileage based, inexpensive monthly fee, which covers van maintenance, fuel, insurance, and administrative costs. The AITS vanpool project has successfully reduced the negative effects that transportation barriers and service gaps have caused rural Californian agricultural workers in the past. AITS vanpools also give these workers the means by which to seek additional or better employment in alternate locations. AITS vans provide participants with affordable transportation to work via an accessible public transportation service. But more importantly, AITS frees workers from the exploitation and unsafe travel conditions previously supplied by raiteros. 4 KCAPTA, Bryant Digital Media, The Farmworkers Road to Employment, pp 7 &8, April 2009 Profile Research & Marketing Page 4

12 AWTP BUSINESS PLAN January 2010 CHAPTER 3 OPERATIONAL REVIEW The analysis of the demand for and the feasibility of implementing an AWTP Vanpool Program details significant rationale and justification for establishing such a system. Rider demand and service revenue potential clearly demonstrate the feasibility of operating such a system, though service requirements vary from region to region and are subject to the seasonal ebbs and flows of the local agricultural labor market. In order to establish a consistent baseline for need and revenue, a number of factors were considered in the development of projections used in this plan. 3.1 AWTP Business Plan Findings To determine ridership demand for the AWTP vanpool system, 34 individual crops (representing major employment generators) were analyzed in the three regional focus areas (Sacramento, Yolo and Yuba / Sutter counties Appendix C 1). The results indicate that up to approximately 10,000 agriculture workers are employed in the focus region at various times of the year. Typically, seasonal labor demand spikes in the summer and fall months and drops precipitously during the winter and early spring. Fluctuations in part time demand vary so greatly that the number of seasonal workers typically plummets to nearly zero in March and reaches its zenith in August and September. The fluctuating need for field labor coupled with the nontraditional work schedule makes it impossible for typical public transit to efficiently meet the needs of seasonal workers. Normally, field laborers begin their day before sunrise and do not end their day until dusk. The unpredictable nature of the harvesting season often requires workers to pass from field to field or farm to farm during the same day. The typical seasonal worker may work for several different employers throughout the harvest season (Appendix A). Agricultural worker surveys conducted for this report found that nearly 50% of local agricultural workers have a minimum of two different employers per year and nearly 30% have at least three. In California, attempts to provide safe and reliable transportation have been spotty in the past. However, since 2002 AITS has successfully provided vanpools to thousands of seasonal workers in the Central Valley, Ventura County, and the Monterey Bay area. As part of the analysis for the SACOG AWTP Business Plan, the AITS program was reviewed. Its success hinges on two very simple principles: flexibility and low overhead (a discussion of the service is provided later in this section). The AITS program serves as the model for SACOG s proposed program. The vehicle evaluated for this study is consistent with the van type used in the AITS program the 2010 GMC Savanna cargo vehicle outfitted to carry 15 adult passengers. Vehicle performance specifications, passenger capacity, fuel consumption, and maintenance Profile Research & Marketing Page 5

13 AWTP BUSINESS PLAN January 2010 schedules and costs used for the business plan projections were obtained from independent sources Methodology The analysis included a review of the local agricultural industry (Appendix A 2). Data used in the analysis were derived from annual agriculture reports for Sacramento, Sutter, Yolo, and Yuba counties. Crop and labor demand information was obtained from current cost and return studies developed by the Agriculture and Resource Economics Department at the University of California, Davis. Additional demand data were provided by regional agricultural worker surveys conducted as part of the AWTP Business Plan. The analysis provides information on acres harvested, major crops, a month by month labor demand for each area, and an estimate for rider demand for each county. Demand was utilized to apportion vehicles to each region and to estimate the operational costs and potential revenues of the system. Base data used to determine demand estimates relied on three primary data sets : U.S. Census, California Labor Market Data, and the neighborhood survey conducted by PRM. Workforce information was also provided through the Employment Development Department s Labor Market Information Database. Localized unemployment rates were factored to generate estimates for working adults per household. Cross tabulation of survey data was used to determine commute demand per roadway. Commute distances were cross tabulated to estimate commuter populations with similar trip profiles. Figures for individuals possessing California driver s licenses were blended into the analysis providing estimates for licensed drivers in each survey area. 3.3 Vehicle Operation Cost Assumptions Vehicle mile costs were calculated by analyzing a number of costs associated with operating a typical vanpool service (Appendix C 2). Vehicle costs ranged from $0.48 per mile (when looking at direct costs) to $1.29 per mile (when looking at gross per mile costs, including equipment lease costs). Costs used in the analysis are as follows: Fuel: The EPA estimates mileage 14 / 18 MPG; Fuel Costs evaluated at $3.00, $3.50 and $4.00 per gallon Vehicle Insurance: Estimated vehicle insurance coverage costs are based on similar policies used by the AITS program policies (Meets Migrant and Seasonal Agricultural Worker Protection Act (MSPA) required per passenger liability and medical coverage standards) Profile Research & Marketing Page 6

14 AWTP BUSINESS PLAN January 2010 Vehicle Maintenance Costs: Includes manufacturer s scheduled maintenance and needed repair. Costs expensed are consistent with estimates provided by independent sources such as Yahoo Autos. Administrative Costs: Estimated administrative costs include two FTE benefitted program staff, but does not include costs for office space or equipment lot. Volunteer vehicle drivers are responsible for collecting fares, fueling vehicles and monitoring vehicle performance at no cost to the system. Vehicle Lease Payment: Not included in cost estimates. State grant funds will be used to purchase vehicles. Sample lease arrangement costs are included for information purposes (Appendix C 3). Misc. Costs: Include costs for installation and monthly charges for Global Positioning System units and emergency roadside coverage. Passenger Revenue Assumptions: Passenger fare rates are derived from AITS vanpool program operating costs compared to estimated direct and indirect vanpool operation costs for the proposed SACOG service area. Commute distances were stratified to estimate numbers of riders and daily fare proceeds. Ridership: Projections for vanpool ridership are based on data compiled through the agricultural worker survey and labor demand estimates are generated through analysis of major crops, seasonal labor demands and comparable commute profiles (Appendix C 4). Workers traveling similar roadways, i.e. I 5 north, and comparable commute distances were matched to determine likely vanpool passenger customers. Conservative passenger estimates for start up service were developed and compared to concomitant costs for similar operations in other service areas. Regional Agricultural Data: The region s major crops generate approximately 4,600 full and part time agricultural jobs annually. The demand for seasonal labor peaks from May through September when 66% of all seasonal workers are employed. The region s grape, rock fruit (peaches and plums) and tomato crops create the highest demand for short term employment. These crops represent prime target crops for the AWTP service. Profile Research & Marketing Page 7

15 AWTP BUSINESS PLAN January 2010 Figure 3.1 Figure 3.1 illustrates average, month by month, labor demand for the SACOG focus areas. Crop by crop employment demand data is included in Appendix C 1. Passenger estimates were developed from data derived from the Agricultural Workers Community Survey and figures provided by the annual seasonal agricultural labor demand calculations. Commuters with similar trip profiles (roadways used, direction travelled and trip distance) were combined to develop ridership projections. Nearly 1,000 commuters were identified as having trip profiles that could be combined for vanpool purposes. County by county rider estimates include: 329 in Sacramento County, 392 in Sutter and Yuba counties and 187 in Yolo County. Sutter and Yuba Counties 2007 Agricultural Reports for the counties of Yuba and Sutter indicate that nearly 250,000 acres were actively farmed, creating approximately 3,000 full and part time jobs (not seasonally adjusted). Eleven of the region s most significant crops were reviewed to establish monthly labor demand. Peaches, plums, and rice accounted for the area s highest demand for workers. Figure 3.2 Profile Research & Marketing Page 8

16 AWTP BUSINESS PLAN January 2010 Sacramento County Nearly 110,000 acres were harvested in 2007 with grapes, alfalfa and corn constituting Sacramento County s most significant crops. These crops created early 1,500 full and part time jobs. Local grapes produced for the wine industry drove the regional agricultural labor market by generating nearly 1,000 jobs (not seasonally adjusted). Other high labor demand crops consisted of apples, corn and pears. Yolo County Figure 3.3 Figure 3.4 Tomatoes, rice, grapes and alfalfa top Yolo County s crop types on nearly 246,000 acres of active farmland. Agricultural activity in Yolo County amounted to 1,400 jobs (not seasonally adjusted). The area s grape and tomato harvest generated the county s highest demand for local labor. 3.4 Ridership Demand / Revenue Projections An essential element of this business plan is the establishment of attainable goals by which to measure effectiveness. It includes a baseline from which to plan, evaluate and revise operating structure. In establishing reasonable demand estimates, PRM developed a scientific approach utilizing existing demographic data and information derived from the project market research. County demand figures are provided and reflect conservative estimates. Factors such as unemployment rates, roadway utilization, commute distances, relative access to available modes of local transportation, licensed driver statistics and the standard deviation of the survey outcomes were considered. Base estimates for licensed drivers and non licensed workers were compared with survey responses that indicated they would use a vanpool service. Those that responded they have limited or no other transportation options were weighted accordingly. This group would be most inclined to use the vanpool program during the initial phases of the vanpool marketing program. Profile Research & Marketing Page 9

17 AWTP BUSINESS PLAN January 2010 Commute requirements were integrated to focus on workers that had significant daily commute requirements. 3.5 Proposed Vanpool Fare Structure Projected overall revenue is based on the number of riders multiplied by distance traveled. Unlike traditional public transit rate structures, the AWTP vanpool program utilizes a modified zone system similar to a taxi system. This approach enables revenue to reflect distance traveled and better cover the actual system operation cost. The rate structure below illustrates the fares charged by the AITS program; this structure was used to develop the estimates for this business plan. Table 3.1 Proposed Vanpool Fare Structure Weekly Mileage Weekly Fare < 300 miles $ miles $ miles $ Miles $ miles $ miles $ ,000 miles $ ,001-1,100 miles $60.00 Rising operational costs, such as fuel could require a fare adjustment. Similar to AITS, volunteer vanpool drivers will be responsible for the collection of the fares and submittal to the operating entity. Profile Research & Marketing Page 10

18 AWTP BUSINESS PLAN January 2010 CHAPTER 4 REVENUE / COST PROJECTIONS This analysis considers operation costs including fuel, insurance, maintenance and repair requirements and administrative costs as included in Appendix C 2. It does not factor equipment costs, as the recommendation is to fund vehicle acquisition through the initial Caltrans grant. Adding purchase / lease costs significantly drives up monthly expenses and would necessitate upward adjustments to the fare structure, negatively affecting access and affordability. A detailed breakdown of cost and revenue assumptions can be found in Appendix C 2, as is a comparison of purchase and leasing costs. Estimates are provided for each region for initial fleet sizes of 50, 40 and 30 vehicles with fuel costs ranging from $3.00 to $4.00 per gallon. The most optimal scenario (revenue over cost) would be an initial fleet size of 30 vans. Currently, fuel prices are averaging $3.00 per gallon, which generates an overall system operating surplus of $38,810. This considers moderate ridership and costs for vehicles not operating during the months of low agricultural labor demand. The system operating at a 30 van fleet can also absorb significant fluctuations in fuel costs. Even at $4.00 per gallon, the system continues to operate at a surplus of $16,081. Because idle equipment does generate costs (approximately $606 per month), larger fleets will operate at a deficit should operating costs rise. Below are the graphed projections of all analyzed fleet sizes and various fuel prices. Figure 4.1 Profile Research & Marketing Page 11

19 AWTP BUSINESS PLAN January 2010 Figure 4.2 Figure 4.3 Conservative initial year estimates indicate that 50 vans could serve 325 workers and generates a total $446,755 in annual trip revenue. That fleet size would require $424,569 in direct and indirect expenses leaving an operating surplus of $22,168. Van systems with 40 and 30 vans would operate at a $25,187 and a $38,810 surplus, respectively. The results are estimates for likely vanpool riders and eligible drivers for each of the three focus areas. As stated, these estimates represent minimum demand estimates for each county. County demand estimates are: Profile Research & Marketing Page 12

20 AWTP BUSINESS PLAN January Sutter and Yuba County First year regional demand estimates are 158 monthly riders in Sutter and Yuba counties. Projected van revenue and operation costs are below. Annualized projections are provided and indicate operating surpluses in all scenarios. Figure 4.4 Figure 4.5 Profile Research & Marketing Page 13

21 AWTP BUSINESS PLAN January 2010 Figure 4.6 Due to the sporadic nature of seasonal labor demand in the industry, a month to month analysis is provided. These figures are important because the demand for labor will directly impact van utilization. Agricultural labor demand rarely dips to zero and good system management, coupled with effective marketing will ensure that the maximum number of vans are in service throughout the year. Figure 4.7 Profile Research & Marketing Page 14

22 AWTP BUSINESS PLAN January 2010 Figure 4.8 Figure 4.9 Profile Research & Marketing Page 15

23 AWTP BUSINESS PLAN January 2010 Figure 4.10 Figure 4.11 Figure 4.12 Profile Research & Marketing Page 16

24 AWTP BUSINESS PLAN January 2010 Figure 4.13 Figure 4.14 Figure 4.15 Profile Research & Marketing Page 17

25 AWTP BUSINESS PLAN January Yolo County First year regional demand estimates are an average of 66 monthly riders in Yolo County. Projected van revenue and operation costs are displayed below. Annual deficits are experienced at the 50 van level, with fuel costs at $3.50 per gallon and above. This is caused by two factors in Yolo County: commute distances tend to be shorter and labor demand fluctuations are more severe, requiring more vans to sit idle. A smaller van fleet in Yolo is necessary until ridership is increased through marketing and system awareness. Figure 4.16 Figure 4.17 Profile Research & Marketing Page 18

26 AWTP BUSINESS PLAN January 2010 Figure 4.18 Due to the sporadic nature of seasonal labor demand in the industry, a month to month analysis is provided. These figures are important because the demand for labor will directly impact van utilization. Agricultural labor demand rarely dips to zero and good system management and effective marketing will ensure the maximum number of vans are in service throughout the year. Figure 4.19 Profile Research & Marketing Page 19

27 AWTP BUSINESS PLAN January 2010 Figure 4.20 Figure 4.21 Figure 4.22 Profile Research & Marketing Page 20

28 AWTP BUSINESS PLAN January 2010 Figure 4.23 Figure 4.24 Figure 4.25 Profile Research & Marketing Page 21

29 AWTP BUSINESS PLAN January 2010 Figure 4.26 Figure 4.27 Profile Research & Marketing Page 22

30 AWTP BUSINESS PLAN January Sacramento County First year regional demand estimates are an average of 101 monthly riders in Sacramento County. Projected van revenue and operation costs are below. Figure 4.28 Figure 4.29 Profile Research & Marketing Page 23

31 AWTP BUSINESS PLAN January 2010 Figure 4.30 Due to the sporadic nature of seasonal labor demand in the industry, a month to month analysis is provided. These figures are important because the demand for labor will directly impact van utilization. Agricultural labor demand rarely dips to zero and good system management and effective marketing will ensure the maximum number of vans are in service throughout the year. Figure 4.31 Profile Research & Marketing Page 24

32 AWTP BUSINESS PLAN January 2010 Figure 4.32 Figure 4.33 Figure 4.34 Profile Research & Marketing Page 25

33 AWTP BUSINESS PLAN January 2010 Figure 4.35 Figure 4.36 Figure 4.37 Profile Research & Marketing Page 26

34 AWTP BUSINESS PLAN January 2010 Figure 4.38 Figure 4.39 Profile Research & Marketing Page 27

35 AWTP BUSINESS PLAN January 2010 CHAPTER 5 THREE YEAR OPERATIONAL PROJECTIONS Figure 5.1 The AWTP Business Plan process developed and reviewed a number of scenarios to determine the feasibility of an agricultural workers vanpool system in the Sacramento region. Start up year projections have been formulated for each sub region and provided in a month tomonth and annual format. A region wide projection has been developed for multi size fleet systems and a wide range of operation costs. Long term sustainability is a major factor in the decision to implement a vanpool system. The Figures identify system performance over a three year period. The projections are based on a 30 van system, with targeted marketing focused on maximizing ridership and expanding van usage. First year revenues over costs realize a $38,809 surplus. Years two and three generate surpluses based on additional ridership once awareness of the program expands and marketing activities fill vans to capacity. Fuel prices are expected to rise in later years and are factored into the projections. In 2011 and 2012, idle vans are put into service for additional months as pent up demand is accommodated through the AWTP vanpool service. 5.1 Sub region Projections Mid range projections on a sub regional basis are provided. Each projection considers moderate growth and the utilization of additional vans during more months as the system serves more workers. Revenues in years beyond two and three will flatten out. As the program becomes more popular, vans will fill to capacity and will be unable to increase revenue through additional ridership. It is recommended that additional vans be added to the system during year three based on actual ridership growth rates. Sutter and Yuba and Sacramento counties have sufficient worker populations to sustain feasible growth in the fleet system. Profile Research & Marketing Page 28

36 AWTP BUSINESS PLAN January 2010 Figure 5.2 Figure 5.4 Figure 5.3 Profile Research & Marketing Page 29

37 AWTP BUSINESS PLAN January 2010 CHAPTER 6 SACOG MARKETING PLAN DEVELOPMENT In order to successfully implement an agricultural vanpool program, the users (agricultural workers) need to be made aware of the program. However, agricultural communities are typically hard to reach markets. Conventional marketing and communication practices, such as translating advertisements into Spanish and airing them on bilingual television and radio, have had limited success penetrating these tight knit communities; these predominantly Spanishspeaking community members typically only associate with familiar businesses and services, and will not typically respond to conventional advertisements. Successful marketing strategies must be based on the culture within the rural, immigrant (campesino) communities. Therefore, creating brand familiarity and gaining the trust of the community is important to acceptance and implementation. In order to do this, marketing and communications must be targeted with agricultural worker specific approaches. PRM, in coordination with California Rural Legal Assistance Foundation, conducted targeted research in south Sacramento County, Sutter and Yuba Counties, and Yolo County (Winters and Woodland). The primary objectives for the market research were to identify the community s market profile, assess the transportation needs, identify favorable vanpool market areas, and determine the best marketing strategies for the agricultural worker community. PRM s overall goal was to identify a marketing plan that will effectively inform the agricultural worker community and recruit vanpool drivers and passengers. 6.1 PRM Market Research Methodology Focus Groups / Neighborhood Surveys PRM personnel contacted and evaluated prospective focus group participants in South Sacramento County (Galt and Delta area), Yolo County (Winters and Woodland), and in Sutter and Yuba Counties. Over 180 prospective participants were interviewed by PRM, using a screening tool developed for this project. The tool was designed to ensure that participants represented a cross section of the target area s resident population. The qualifying residents then participated in four focus groups in their local communities (Galt, Woodland, and two in Yuba City). PRM ensured that the main segments of the community (i.e. gender and age groups) were distributed evenly in each research session. More information is available in Appendix B. The focus groups helped to inform the content and approach of the neighborhood surveys. Over the course of three months, more than 1,000 individuals were surveyed in the focus areas. Profile Research & Marketing Page 30

38 AWTP BUSINESS PLAN January Consumer Profile The extensive qualitative and quantitative research conducted in the target areas has informed the consumer profile, a separate component of the marketing plan. The consumer profile data will function as the primary baseline for the SACOG Strategic Marketing Plan s message (Appendix A & B). One key finding is that the research contradicts a commonly held belief that the agricultural worker market primarily consists of transitory individuals. Instead, the data indicate that workers are stable residents and involved in the local community. Of those surveyed, three out of four are married and, on average, have families larger than four people. The great majority of community members have children or grandchildren in local schools. The agricultural vanpool market appears to be made up of families and traditional community stakeholders which means marketing to households may be an effective strategy Transportation Needs Assessment According to the U.S. Census (2000) the average household size in California is 2.93 persons and the average vehicles per household total more than two. The number of individuals in a household is important when considering the number of vehicles per household; households with one or no vehicle have limited access to transportation for work, school, medical care, etc. Therefore, the fact that working members in a household would have transportation to and from work (via a vanpool), and that the driver may use the vehicle on weekends, is an effective marketing message. Household Size: Households were asked how many people live in their household In the South Sacramento survey area, 79% of respondents have families of four or more individuals. In Sutter and Yuba Counties: the Punjab Community surveyed has household sizes that reflect the state average, but Hispanic household averages are greater. The households surveyed reported 29% with four individuals, 35% with five individuals, and 15% with more than five individuals per household. Combined, 58% responded that they have families equal to or in excess of four individuals. In the Yolo County survey areas, 73% responded that they have families of at least four individuals. Profile Research & Marketing Page 31

39 AWTP BUSINESS PLAN January 2010 Vehicles per Household: Households were asked how many vehicles are available per household In South Sacramento County, 46% of the households responded that they have one or no vehicle in their household. In Sutter and Yuba Counties, within the Punjab Community, 88% responded that they have one or no vehicle per household; in the Hispanic Community, 17% responded that they have no vehicle per household and 42% responded that have one car per household. Combined, 65% of households surveyed have one vehicle. In Yolo County, 53% of the households surveyed responded that they have one or no vehicle per household. Work Commute Distances: Households were asked how many miles workers travel to and from their place(s) of employment. In South Sacramento County, 45% of the households responded that they have a commute 25 to 50 miles plus one way. In Sutter and Yuba Counties: only 1% of the Punjab households surveyed reported that they commute 25 to 50 miles or more one way; 29% of Hispanic households reported they commuted 25 to 50 miles one way and 37% of working residents commuted more than 50 miles one way to get to work. Combined, 53% of households report working residents commuted plus miles one way. In Yolo County, 32% of the households surveyed responded that their commute was 25 to 50 miles plus one way. Employment Opportunities: Households with limited transportation were asked whether they would use the vanpool to get different (better) employment. In South Sacramento County, 95% of the households responded that they would be Very Likely to use the vanpool program if access to additional and/or better employment was possible. In Sutter & Yuba Counties: 61% of the Punjab households surveyed responded that having access to a vanpool program would make No Difference in whether they would use the program or not. Other data also indicated that receptivity to the vanpool program within that community would be limited. Profile Research & Marketing Page 32

40 AWTP BUSINESS PLAN January 2010 Conversely, 91% of the Hispanic households in Sutter and Yuba Counties responded they were Very Likely, to use the vanpool program given access to better and more stable employment. In Yolo County, 91% of the households surveyed indicated that they would be Very Likely to use the vanpool program if access to additional and/or better employment was possible. Transportation needs exists in both the Hispanic and Punjab communities. However, the Punjab group responded that they are mostly content with their mode of transportation and the desire to alter that transportation pattern may be limited. Most Punjab agricultural workers (82%) travel less than 15 miles to work and the data reflect relationships determine their transportation choices; however, reliability remained an issue with half of all Punjab individuals surveyed. On the contrary, the Hispanic communities surveyed across all the SACOG focus areas responded favorably toward a new transportation system. Many Latinos in these areas have limited transportation options and are forced to use a raitero (paid driver) to get to and from work. These Hispanic communities have responded that traditional public transit does not meet their needs; they feel unsafe and are not satisfied with this mode of travel and would use a safe and reliable public vanpool service if available. 6.2 AWTP Vanpool Message (Value Proposition Marketing Message) Data indicates that the most effective marketing strategy is direct response, consumer value mail. Direct Response mail gives the potential customer a phone number to call or a tear off section to mail, which makes it easy for the person to learn more about the product. The consumer value aspect ensures that the mail immediately highlights the value of the product, specific to the consumer (e.g. affordable, safe, reliable transportation to and from work for agricultural workers). The success of this marketing strategy will directly correspond to how clearly the information reflects what the consumer needs, how they may feel about the offered product or service, and the ease of signing up. PRM s research confirmed that word of mouth is the most effective method of communication and marketing, and identified marketing challenges related to building a brand that people would become familiar with and trust. The task of creating a known brand appears to be the most challenging, as data indicate that target markets in the Central Valley, which are served by AITS vanpool program, are often unfamiliar with the vanpool services. Profile Research & Marketing Page 33