Economic Impact Analysis of Georgia s Aerospace Industry

Transcription

1 Ecnmic Impact Analysis f Gergia s Aerspace Industry January 2013 Prepared fr: Center f Innvatin fr Aerspace Gergia Department f Ecnmic Develpment 75 Fifth Street NW, Suite 1200 Atlanta, GA Prepared by: Enterprise Innvatin Institute Gergia Institute f Technlgy 75 Fifth Street NW, Suite 300 Atlanta, Gergia 30308

2 Table f Cntents 1. Executive Summary 2 2. Intrductin 7 3. Ecnmic Impact f Aerspace in Gergia Fiscal Impact f Aerspace in Gergia Cntributin f Aerspace t Gergia s GDP Lcatin f Aerspace Firms in Gergia 16 Appendix 1: Methdlgy, Definitins, and References 17 Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 2

3 Executive Summary Gergia s aerspace industry has many cmpnents, which interact with all ther sectrs f the ecnmy in cmplex ways. This ecnmic impact study was cmmissined by Gergia s Center f Innvatin fr Aerspace (COIA) t assess the industry s cntributin t the state s ecnmy. Mre specifically, this analysis quantifies the level f ecnmic activity cnducted by the cmpnents f the aerspace industry in 2011, estimates its fiscal impact, and quantifies the industry s cntributin t the state s Grss Dmestic Prduct (GDP) and ttal incme. Definitin f Aerspace Industry in Gergia Fr the purpses f this analysis, the aerspace industry includes the fllwing sixdigit Nrth American Industrial Classificatin System (NAICS) industries: Sil preparatin, planting, and cultivating (aerial dusting r spraying) Search, detectin, and navigatin instruments Mtr vehicle seating and interir trim manufacturing (aircraft seat manufacturing) Aircraft manufacturing Aircraft engine and engine parts manufacturing Other aircraft parts and equipment Guided missile and space vehicle manufacturing Space vehicle prpulsin units and parts manufacturing Other transprt. gds merchant whlesalers (aernautical equipment whlesalers) Other petrleum merchant whlesalers Mtrcycle and ther mtr vehicle dealers (aircraft dealers) Scheduled passenger air transprtatin Scheduled freight air transprtatin Nnscheduled air passenger chartering Nnscheduled air freight chartering Other nnscheduled air transprtatin Air traffic cntrl Other airprt peratins Other supprt activities fr air transprt Transprtatin equipment rental and leasing (aircraft rental/leasing) Other physical and bilgical research Flight training Other technical and trade schls (air traffic cntrl schls) Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 3

4 Ecnmic Impact Gergia s aerspace industry creates significant direct ecnmic and fiscal benefits fr the state. The aerspace industry as defined by the NAICS cdes shwn n page 3, emplyed 88,873 wrkers in calendar year 2011, including civilian emplyment at Rbins AFB, Mdy AFB and Dbbins ARB which accunts fr nearly 17 percent f Gergia s direct emplyment in aerspace industry. These wrkers were paid nearly $8.4 billin in wages and salaries and generated an ecnmic utput f $30.7 billin in Each jb in the aerspace industry supprts 1.72 additinal jbs in Gergia utput t $50.9 billin (see Table E- 1). The wages f aerspace emplyees are higher than Gergia s verall average wages f all industries. In 2011, the annual average wage rate f aerspace industry wrkers, excluding benefits, was $74,959 r 66 percent higher than the state s verall average wage rate f $45,090. The average wage rate, including benefits, f aerspace wrkers in Gergia was $94,435. While a very large share f the impacts is attributed t direct emplyment, the ttal impact (direct, indirect, and induced) is imprtant t the state s ecnmy. The nging peratins f aerspace generated ripple impacts thrughut the state, supprting an additinal 153,171 indirect and induced jbs with earnings f $7.4 billin and ecnmic utput f $20.3 billin. This brings the ttal ecnmic In 2011, the emplyment multiplier f the aerspace industry in Gergia was 2.72 and the incme multiplier was These multipliers are higher than average due t the industry s high level f utput and high wages. Table E-1 shws a summary f the ecnmic impact f the aerspace industry in Gergia. Table E-1: Gergia s Aerspace Industry Ecnmic Activity: 2011 Direct Indirect Induced TOTAL Emplyment 88,873 47, , ,044 Wages & Salaries $8,392,759,400 $2,568,850,075 $4,852,155,461 $15,813,764,936 Output $30,714,383,890 $6,719,509,056 $13,551,156,674 $50,985,049,620 Fiscal Impact Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 4

5 The fiscal impact analysis was calculated by estimating the revenues assciated with the aerspace industry s ttal ecnmic activity and subtracting the csts assciated with prviding state services t Gergia s husehlds and cmpanies assciated with that activity. Revenues included individual and crprate incme taxes, sales and use taxes, highway taxes, fees, and miscellaneus revenues. Csts included educatin; public health, safety, and welfare; highways; administratin; and miscellaneus. Table E-2 prvides the fiscal impact estimates based n ttal impacts. The aerspace industry generated an estimated $1.6 billin in revenues fr the state budget in calendar year 2011, which is 10 percent f the state s ttal tax revenues in FY2012 (July 1, 2011 June 30, 2012). When the csts f prviding services t all emplyees were deducted frm these revenues, the net cntributin f aerspace industry t the state revenues in 2011 was $874 millin. Table E-2: Aerspace Fiscal Impact Analysis: 2011 Annual State Gvernment Revenues $1,611,138,477 Annual State Gvernment Csts $737,177,371 Net Annual Revenues $873,961,106 Aerspace Industry and the State s GDP Aerspace cntributes significantly t the state s ecnmic activity, and mre imprtant, it creates and supprts high-paying jbs fr Gergia s citizens. In calendar year 2011, aerspace supprted 242,044 jbs r nearly 5 percent f the state s emplyment, and it cntributed $23 billin t the state s GDP r nearly 6 percent. Cntributin f the Aerspace Industry t Gergia's GDP (2011) Aerspace Industry 5.5% Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 5

6 Lcatin f Aerspace Firms in Gergia Gergia s diverse aerspace industry includes a range f firms that manufacture, perate, service, and repair aircraft, prvide air transprtatin, and perate flight schls. The adjacent maps shw the lcatin f aerspace firms in Gergia. Firms were gecded and mapped based n physical address. Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 6

7 SECTION 1 Intrductin The ecnmic impact study f Gergia s aerspace industry measured the industry s cntributin t the state s ecnmy in 2011 by quantifying its activity in terms f ecnmic utput, emplyment, and emplyee cmpensatin. An additinal factr included hw the industry affects state gvernment csts and revenues. Ecnmic utput is typically defined as business revenues, and emplyee cmpensatin is defined as wages and salaries including benefits, paid by emplyers. Ttal activity is generally referred t as the multiplier effect. This effect ccurs whenever dllars are brught int a state s ecnmy and recirculated befre exciting r leaking ut. Sectin 2 explains the methdlgy used t estimate ttal ecnmic activity, and prvides perspective n hw imprtant these activities are in the verall Gergia ecnmy. Sectin 3 quantifies the industry s impact n state gvernment csts and revenues. Sectins 4 and 5 cmpare the ecnmic activity f aerspace industry t the state s GDP and shw the lcatin f aerspace firms in Gergia, respectively. Definitin f the Aerspace Industry in Gergia The aerspace industry in Gergia has many diverse cmpnents including manufacturing, maintenance/repair and verhaul, peratins, and aerspace educatin and training. Each subsectr f these cmpnents is classified under the Nrth American Industry Classificatin System (NAICS). The definitin f aerspace industry varies by state due t its numerus and different cmpnents, which explains the lack f a standard industry definitin. The sectrs included in this study were carefully examined by Gergia s Center f Innvatin fr Aerspace and encmpass NAICS cdes described in Table 1-1. Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 7

8 Table 1-1: Aerspace Industry Definitin Cmpnents by NAICS Cde NAICS CODE Industry Descriptin Sil preparatin, planting, and cultivating (aerial dusting r spraying) Search, detectin, and navigatin instruments Mtr vehicle seating and interir trim manufacturing (aircraft seat manufacturing) Aircraft manufacturing Aircraft engine and engine parts manufacturing Other aircraft parts and equipment Guided missile and space vehicle manufacturing Space vehicle prpulsin units and parts manufacturing Other transprtatin gds merchant whlesalers (aernautical equipment whlesalers) Other petrleum merchant whlesalers Mtrcycle and ther mtr vehicle dealers (aircraft dealers) Scheduled passenger air transprtatin Scheduled freight air transprtatin Nnscheduled air passenger chartering Nnscheduled air freight chartering Other nnscheduled air transprtatin Air traffic cntrl Other airprt peratins Other supprt activities fr air transprt Transprtatin equipment rental and leasing (aircraft rental/leasing) Other physical and bilgical research Flight training Other technical and trade schls (air traffic cntrl schls) Surce: Nrth American Industrial Classificatin System (2012); Gergia Center f Innvatin fr Aerspace, Gergia Tech s Enterprise Innvatin Institute Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 8

9 Tp Aerspace Cmpanies in Gergia In 2011, Gergia ranked fifth in the cuntry in aerspace emplyment (Surce: Gergia Department f Ecnmic Develpment), and is hme t the ne f the wrld s largest air carriers, Delta Air Lines. Gergia is als hme t numerus manufacturing, R&D, and aircraft maintenance, repair, and verhaul (MRO) cmpanies. Table 1-2 displays a list f the tp 20 aerspace emplyers in Gergia. Table 1-2. Tp 20 Aerspace Emplyers in Gergia Cmpany Name Emplyees 1 Delta Air Lines 29,492 2 Warner Rbins Air Lgistics Center (civilian emplyees nly) 13,971 3 Lckheed Martin Aernautics 8,174 4 Gulfstream Aerspace Crp. 6,160 5 Suthwest Airlines (Air Tran) 6,000 6 Express Jet 3,067 7 FAA 2,592 8 Meggitt 1,200 9 EMS Technlgies (Hneywell) 1, Mdy AFB (civilians nly) The Being C Triumph Aerstructures Dbbins AFB (civilians nly) PCC Airfils LLC Nrthrp Grumman Crp Pratt & Whitney Aircraft Service Internatinal Grup Inc Precisin Cmpnents Internatinal Inc Rckwell Cllins Inc Glbal Aviatin Hldings 350 SOURCE: Gergia Center f Innvatin fr Aerspace Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 9

10 Aerspace Industry Emplyment in Gergia As shwn in Figure 1-1, civilian aerspace emplyment fluctuated greatly during the perid. This trend reflects f the ecnmic challenges f the past few years. Hwever, emplyment in 2011 recvered t prerecessin rates, shwing slid annual grwth f mre than 6 percent. Aerspace wage rates als are in an upward trend, albeit grwing at a slwer pace than emplyment (Figure 1-2). It shuld be nted that the histrical emplyment and wage rate numbers are nt an exact match f direct emplyment shwn in this study due t the industry classificatin changes intrduced by the 2012 NAICS cde system, as well as the nndisclsure limitatins f the data frm the Bureau f Labr Statistics. Furthermre, data presented in Figures 1-1 and 1-2 were derived frm the BLS Quarterly Census f Emplyment and Wages. BLS figures usually include cmpanies that may be classified under aerspacerelated NAICS cdes but prvide services t ther sectrs. Figure 1-1. Aerspace Industry Civilian Emplyment 82, ,000 78,000 76,000 74,000 72,000 70,000 68,000 66,000 64,000 62, Surce: Bureau f Labr Statistics, Quarterly Census f Emplyment and Wages $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 Figure 1-2. Wage Rates f Aerspace Industry Civilians Surce: Bureau f Labr Statistics, Quarterly Census f Emplyment and Wages Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 10

11 SECTION 2 Ecnmic Impact Analysis The cnceptual basis fr estimating ecnmic benefits f an industry is that resurces brught int a state s ecnmy by that industry raise the level f ecnmic activity. The aerspace industry prvides a wide range f direct ecnmic benefits in Gergia. These benefits are measured by analyzing jbs, wages, and utput. Frm these direct impacts, multiplier effects are als evaluated, as wages and ther spending are respent in the lcal ecnmy thereby supprting increased emplyment, incme, and business revenues. These increases are estimated frm an input-utput (I/O) ecnmic mdel. In this study, the analytical prcess f estimating ecnmic impacts (direct, indirect, and induced) f aerspace invlved the fllwing steps: Direct emplyment fr each sectr (by NAICS cde) was quantified. This study cunted the number f emplyees wrking fr cmpanies whse primary business supprts the aerspace industry In Gergia. The best surce fr emplyment and wages is the emplyment security data cllected and maintained by the Gergia Department f Labr. Cmmnly called ES202 data, it has the advantage f being current, allwing an estimate f the ecnmic benefits ccurring in It has the drawback, hwever, f nt including single prprietrships (because they have n emplyees). Review f emplyment data was a critical part f this analysis due t the brad definitin f NAICS cdes fr aerspace sectrs. Emplyment was verified by calling individual firms (calls were cnducted by Gergia s Center f Innvatin fr Aerspace), and changes were made where necessary. During the vetting prcess, it became apparent that many cmpanies were classified under the wrng cde. Every attempt was made t capture all aerspace related emplyment as defined by the NAICS cdes listed n page 8. We recgnize that there are many supprting cmpanies that are nt included in this study. The third step was t use the I/O mdel t estimate ttal impacts, which were divided int three cmpnents. The first was the direct impacts (the value f resurces brught int the state); the secnd was indirect impacts (impacts frm recirculatin f resurces resulting frm aerspace Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 11

12 industry purchases frm ther industries, and the third was induced impacts, resulting frm activities in the husehld sectr. The ttal impact was the sum f direct, indirect, and induced impacts. Table 2-1 prvides estimates f the impacts f aerspace industry sectrs cntained in the industry s definitin. Gergia s aerspace industry emplyed 88,873 wrkers in 2011, wh earned nearly $8.4 billin in wages and salaries and generated an ecnmic utput f $30.1 billin. The direct emplyment included civilian emplyment at Rbins AFB, Mdy AFB and Dbbins ARB, which in 2011 accunted fr nearly 17 percent f Gergia s direct emplyment in aerspace industry. While a very large share f the impacts is attributed t direct emplyment, the ttal impact (direct, indirect and induced) is imprtant t the state s ecnmy. The nging peratins f aerspace generated ripple impacts thrughut the state supprting an additinal 153,171 indirect and induced jbs with earnings f $7.4 billin and ecnmic utput f $20.3 billin. Table 2-1: Gergia s Aerspace Industry Ecnmic Activity: 2011 Direct Indirect Induced TOTAL Emplyment 88,873 47, , ,044 Wages & Salaries $8,392,759,400 $2,568,850,075 $4,852,155,461 $15,813,764,936 Output $30,714,383,890 $6,719,509,056 $13,551,156,674 $50,985,049,620 Surce: GA Tech s Enterprise Innvatin Institute, IMPLAN Pr 2012 Overall, wage rates f aerspace emplyees were higher than Gergia s average wage rates f all industries. In 2011, the annual average wage f aerspace industry wrkers, excluding benefits, was $74,959 r 66 percent higher than the state s verall average wage rate f $45,090. The average wage rate, including benefits, f aerspace wrkers in Gergia was $94,435. The emplyment multiplier f the aerspace industry is Gergia was 2.67 and the incme multiplier was These multipliers were higher than average due t the industry s high level f utput and high wages. Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 12

13 SECTION 3 Fiscal Impact Analysis This analysis als includes a fiscal assessment f hw aerspace affects state tax revenues. The fiscal impact analysis was calculated by estimating the revenues assciated with the aerspace industry s ttal ecnmic activity and subtracting the csts assciated with prviding state services t Gergia s husehlds and cmpanies assciated with that activity. Revenues included individual and crprate incme taxes, sales and use taxes, highway taxes, fees, and miscellaneus revenues. Csts included educatin; public health, safety, and welfare; highways; administratin; and miscellaneus. Table 3-1 prvides the fiscal impact estimates based n ttal impacts. The analysis suggests that ttal annual tax revenues generated by aerspace industry in calendar year 2011 amunted t $1.6 billin, 10 percent f the state s ttal tax revenues 1 in FY2012. When the csts f prviding services t all emplyees were deducted frm these revenues, net annual state revenues generated by the aerspace industry were were $874 millin. Table 3-1: Aerspace Fiscal Impact Analysis (2011) Annual State Gvernment Revenues $1,611,138,477 Annual State Gvernment Csts $737,177,371 Net Annual Revenues $873,961,106 1 Surce: Office f the Gvernr, press release July 2012 Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 13

14 SECTION 4 Aerspace Industry s Cntributin t Gergia s GDP Gergia s aerspace industry supprts a significant prprtin f the state s ecnmic activity. Mre imprtant, it creates and supprts highpaying jbs fr Gergia s citizens. In 2011, aerspace supprted 242,044 jbs r nearly 5 percent f the state s emplyment, and it cntributed $23 billin t the state s GDP r nearly 6 percent. Figure 4-1: Cntributin f the Aerspace Industry t Gergia's GDP (2011) Aerspace Industry 5.5% Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 14

15 SECTION 5 Lcatin f Aerspace Firms Gergia s diverse aerspace industry includes a range f firms that service and repair aircraft, prvide air transprtatin, and perate flight schls. Figure 5-1: Gergia Aerspace Firms: 2011 The fllwing maps shw the lcatin f aerspace firms in Gergia. Firms were gecded and mapped based n physical address. Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 15

16 Incmplete addresses were either nt displayed n the map r mapped based n the address infrmatin available e.g., P.O. Bx r zip cde maps t the center f the 5-digit zip; city name nly maps t the center f the city. Only 85 percent f the recrds had enugh address infrmatin t display n the map. Figure 5-2: Gergia Aerspace Firms by Cunty: 2011 Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 16

17 APPENDIX Methdlgy, Definitins, and References METHODOLOGY AND DEFINITIONS The ecnmic impact f the aerspace industry was measured using IMPLAN, an ecnmic impact assessment mdel custmized t reflect Gergia s ecnmy. The mdel estimates the multiplier (indirect and induced) effects f direct ecnmic activity fr each sectr f the aerspace industry. Direct Impacts Direct impacts measure emplyment, wages and salaries, and expenditures f gds and services within the aerspace industry. Indirect Impacts Indirect impacts result frm the purchase f gds and services by suppliers t the aerspace industry. Induced Impacts Induced impacts result frm the expenditures f aerspace emplyee wages and salaries. REFERENCES Bureau f Ecnmic Analysis Input-Output Sectrs as cntained in IMPLAN Pr: Data Guide, Minnesta IMPLAN Grup Inc., Stillwater, MN, Gergia Department f Labr, ES202 Wage and Emplyment Data: Nrth American Industrial Classificatin System (NAICS), U.S. Department f Labr, Bureau f Labr Statistics, Emplyer Csts fr Emplyee Cmpensatin, Ecnmic Impact Analysis f Gergia s Aerspace Industry: 2011 Page 17