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IMPLAN Blog

Which Southeast States Win When GE Expands?

October 24, 2018 by Tim French

Demand for jet engines is taking off. Domestic airlines have relied on up-fitting or remodeling equipment originally constructed in the 1970s or later. This generation of equipment is slowly approaching its expiry. And internationally, travel tastes have changed. Airlines are one-upping each other to offer the most top-of-the-line luxury flights which are incorporating features including personal compartments with beds, full-service bars, and incredible food options.

On a fundamental level, this means that the aircraft industry needs more jet engines. And GE Aviation is getting ready. The company announced earlier this year that they would be expanding their operations and output in two North Carolina facilities which manufacture materials or components for jet engines.

Getting Specific

GE Aviation listed a handful of specific investments it would make in order to meet market demand:

  • Invest an additional $105M in its Asheville, NC production facility
  • Create 131 new jobs at the Asheville facility
  • Add 15 new positions at its West Jefferson, NC manufacturing plant

Fortunately, these investments are tailor-made for conducting an economic impact analysis: We’ve got jobs, dollars, a specific industry, and a specific geography (North Carolina). But that got us to thinking here at IMPLAN—in an industry like aircraft manufacturing with operations all across the country, how does an economic activity like this in North Carolina affect economies elsewhere?

Tweaking the Usual Methodology

Most commonly, impact analyses you’ll find online follow a rather straightforward input-output methodology wherein economic impacts are calculated and totaled for the entire region—whether country, state, county, congressional district, zip code, or some combination of any of the above. This approach gives you a big-picture look at economic activity in a region but it doesn’t show you which areas of that region might be more affected than others. To get a look at how sub-regions might be disproportionately impacted, we’ll have to use a technique known as multi-regional input-output or MRIO, for short.

In this methodology, subregions are defined and related to the subregion in which the initial (direct) impact takes place. Then the calculation process examines the effects of the direct impact as regional trade between subregions and the primary region while accounting for indirect and induced impacts. In short, the MRIO reveals the winners and (relative) losers in a given region.

Here’s What we Found

For our very simple MRIO analysis, we defined “the southeast” as including North Carolina, Virginia, South Carolina, Tennessee, Mississippi, Alabama, Georgia, and Florida. Click on a state in the heat map below to reveal the resulting total economic impact for each state in the study region.

WhitePaperCover_HowToReportThe analysis is only one part of the whole story. To learn more about other presentation and storytelling techniques and the must-have sections to include in a report, check out our white paper “Creating a Compelling Economic Impact Report.”

Surprisingly, Florida is the most impacted region outside of North Carolina, while South Carolina sees almost no impact at all (impacted industries in South Carolina include a few restaurant sectors so it seems likely that once or twice a year someone employed by a company in GE’s supply chain stops off somewhere in the palmetto state for a quick lunch). 

Top 10 Industries Impacted by State

When it comes to impacted industries by total impact (including direct, indirect, and induced economic impacts), what follows describes how that breaks down for each state. Taking a look at the most impacted industries helps paint a portrait of how neighboring economies are structured around providing the goods and services to the supply chain that supports the direct impact as well as how workforces are distributed regionally. The direct impact will be zero for all states except for North Carolina because the initial shock to the economy will be fully spent in that state.

North Carolina

Sector

Description

Direct

Indirect

Induced

Total

357

Aircraft manufacturing

$105,000,000

$23,402

$32

$105,023,431

395

Wholesale trade

$0

$1,582,314

$526,940

$2,109,253

461

Management of companies and enterprises

$0

$1,948,941

$147,382

$2,096,323

441

Owner-occupied dwellings

$0

$0

$1,421,969

$1,421,969

358

Aircraft engine and engine parts manufacturing

$0

$1,334,891

$51

$1,334,941

440

Real estate

$0

$249,117

$832,596

$1,081,713

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$975,795

$204

$975,999

309

Semiconductor and related device manufacturing

$0

$609,567

$9,773

$619,340

433

Monetary authorities and depository credit intermediation

$0

$187,944

$423,858

$611,802

482

Hospitals

$0

$0

$539,239

$539,239

 

Florida

Sector

Description

Direct

Indirect

Induced

Total

358

Aircraft engine and engine parts manufacturing

$0

$574,659

$25

$574,683

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$307,270

$54

$307,324

395

Wholesale trade

$0

$184,069

$42,966

$227,035

309

Semiconductor and related device manufacturing

$0

$121,492

$2,718

$124,210

315

Search, detection, and navigation instruments manufacturing

$0

$92,741

$40

$92,781

461

Management of companies and enterprises

$0

$75,077

$10,881

$85,958

440

Real estate

$0

$24,920

$52,871

$77,791

446

Lessors of non-financial intangible assets

$0

$63,883

$10,253

$74,136

441

Owner-occupied dwellings

$0

$0

$64,285

$64,285

357

Aircraft manufacturing

$0

$62,627

$19

$62,646

 

Virginia

Sector

Description

Direct

Indirect

Induced

Total

461

Management of companies and enterprises

$0

$520,306

$47,816

$568,122

440

Real estate

$0

$47,200

$80,494

$127,694

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$106,917

$16

$106,933

441

Owner-occupied dwellings

$0

$0

$84,260

$84,260

452

Computer systems design services

$0

$65,623

$6,439

$72,061

395

Wholesale trade

$0

$28,370

$27,074

$55,444

448

Accounting, tax preparation, bookkeeping, and payroll services

$0

$35,120

$16,767

$51,888

434

Nondepository credit intermediation and related activities

$0

$21,670

$24,672

$46,342

309

Semiconductor and related device manufacturing

$0

$45,347

$925

$46,272

305

Broadcast and wireless communications equipment manufacturing

$0

$45,610

$440

$46,050

 

Georgia

Sector

Description

Direct

Indirect

Induced

Total

357

Aircraft manufacturing

$0

$278,026

$76

$278,102

358

Aircraft engine and engine parts manufacturing

$0

$275,191

$12

$275,203

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$154,282

$25

$154,307

395

Wholesale trade

$0

$114,789

$31,228

$146,017

119

Carpet and rug mills

$0

$104,456

$332

$104,787

461

Management of companies and enterprises

$0

$58,194

$8,789

$66,982

49

Electric power transmission and distribution

$0

$34,984

$17,778

$52,762

441

Owner-occupied dwellings

$0

$0

$50,875

$50,875

305

Broadcast and wireless communications equipment manufacturing

$0

$49,784

$513

$50,296

440

Real estate

$0

$14,008

$31,243

$45,251

 

Alabama

Sector

Description

Direct

Indirect

Induced

Total

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$158,184

$26

$158,210

357

Aircraft manufacturing

$0

$82,445

$21

$82,466

217

Iron and steel mills and ferroalloy manufacturing

$0

$80,449

$873

$81,322

358

Aircraft engine and engine parts manufacturing

$0

$79,330

$4

$79,334

395

Wholesale trade

$0

$26,242

$6,684

$32,926

356

Other motor vehicle parts manufacturing

$0

$29,226

$495

$29,721

219

Rolled steel shape manufacturing

$0

$26,521

$290

$26,812

254

Valve and fittings, other than plumbing, manufacturing

$0

$19,455

$161

$19,616

441

Owner-occupied dwellings

$0

$0

$19,045

$19,045

49

Electric power transmission and distribution

$0

$12,736

$5,266

$18,002

 

Tennessee

Sector

Description

Direct

Indirect

Induced

Total

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$117,016

$18

$117,034

356

Other motor vehicle parts manufacturing

$0

$65,492

$1,071

$66,563

411

Truck transportation

$0

$33,233

$6,186

$39,420

395

Wholesale trade

$0

$27,355

$10,336

$37,691

248

Spring and wire product manufacturing

$0

$25,250

$122

$25,372

217

Iron and steel mills and ferroalloy manufacturing

$0

$22,968

$234

$23,202

168

Artificial and synthetic fibers and filaments manufacturing

$0

$20,974

$1,380

$22,354

461

Management of companies and enterprises

$0

$18,827

$3,328

$22,155

519

Federal electric utilities

$0

$15,160

$6,751

$21,910

441

Owner-occupied dwellings

$0

$0

$21,891

$21,891

 

Mississippi

Sector

Description

Direct

Indirect

Induced

Total

217

Iron and steel mills and ferroalloy manufacturing

$0

$17,566

$184

$17,750

156

Petroleum refineries

$0

$11,207

$4,972

$16,179

299

Fluid power pump and motor manufacturing

$0

$10,970

$18

$10,988

356

Other motor vehicle parts manufacturing

$0

$5,986

$104

$6,089

395

Wholesale trade

$0

$4,806

$1,201

$6,007

315

Search, detection, and navigation instruments manufacturing

$0

$5,449

$3

$5,451

438

Insurance agencies, brokerages, and related activities

$0

$1,437

$3,108

$4,545

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$4,492

$1

$4,492

354

Motor vehicle seating and interior trim manufacturing

$0

$3,866

$13

$3,879

226

Copper rolling, drawing, extruding and alloying

$0

$3,744

$116

$3,860

 

South Carolina

Don’t let the zeroes deceive you—even though the economic impacts are scant for this state, employment impacts tell a slightly different story. GE’s Economic impact supported 10.5 job-years (6.6 indirect and 3.9 induced) in South Carolina which distribute among several industries. The employment impacts highlight a network which reacts to and is vitally linked with activities in South Carolina’s northern neighboring state.

Sector

Description

Direct

Indirect

Induced

Total

358

Aircraft engine and engine parts manufacturing

$0

$1

$0

$1

395

Wholesale trade

$0

$0

$0

$0

464

Employment services

$0

$0

$0

$0

359

Other aircraft parts and auxiliary equipment manufacturing

$0

$0

$0

$0

440

Real estate

$0

$0

$0

$0

501

Full-service restaurants

$0

$0

$0

$0

465

Business support services

$0

$0

$0

$0

502

Limited-service restaurants

$0

$0

$0

$0

416

Warehousing and storage

$0

$0

$0

$0

468

Services to buildings

$0

$0

$0

$0

 

Wrapping it Up

This is only a small and incomplete look at GE Aviation’s economic impact on the southeast. There are tax impacts to account for, industry linkages to explore, and social accounts which would reveal a whole lot more about how the southeastern states are connected economically to each other. But even this limited snapshot of the aviation industry demonstrates that taking a big-picture approach to economic analysis, although methodologically sound and valid, misses out on describing the distribution of an impact across subregions. But relying on MRIO when it’s most applicable will highlight more detailed—and often, more interesting—results.

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Topics: Data, Economics, Methodology

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