This article examines a manufacturing firm potentially leaving a region. While we would like to think that all economic impacts are positive, unfortunately sometimes we have to look at the potential negative side. We want to tell the story to the local economic development team not only how many jobs are at risk, but also what types of jobs these are using IMPLAN Occupation Data.
RUNNING THE IMPACT
What we know is there is a manufacturing firm that specializes in making plastic bottles located in the Cleveland-Elyria, Ohio Metropolitan Statistical Area and they might be going out of business. Company X has an annual sales of $175M.
From the Region screen, we can search for the Cleveland MSA and head Behind the i to examine this Industry. The Regions Overview shows us that in 2018, Industry 192 - Plastics bottle manufacturing employed a total of 594.82 people with Labor Income of $41M and Output of $259M.
Given that the business in danger is such a large percentage of the total Employment in the MSA, we will use an Industry Contribution Analysis to analyze the economic effect of $175M of output in plastic bottle manufacturing, quantifying what the region stands to lose if the business closes.
Our Results show us the Direct Output (sales) for Company X of $175M. This has an associated Indirect Effect of $55M and an Induced Effect of $34M for a total potential loss in Output of $264M. Coupled with the loss in Output facing the Region, 385 Direct jobs at Company X and 459 Indirect and Induced jobs means that the MSA could see a total of 844 jobs lost.
The city/township taxes (Sub County General) could see a loss of $991,201, local special districts (Sub County Special District) could see a loss of $2M, and the five counties in the MSA could see a loss of $696,387.
EXAMINING WORKFORCE IMPLICATIONS
We know from the summary table that if Company X closes, there will be a loss of 385 Direct jobs and a total of 844 lost jobs. Heading to the Occupation Impact tab, we can see a table for all Wage & Salary Employment and income (note: proprietors are not included in this data). Clicking on the column “Wage and Salary Employment” sorts the column by the number of employees in that occupation that will be affected.
Keep in mind that when you first come to the Results screen, IMPLAN will by default show you all Regions, Impacts, Groups, and Events. In this case, we might want to dig into the Direct jobs from Industry 192 - Plastics bottle manufacturing. To do this, choose “Direct” from the Impact Filter and click Run.
Now our Occupational Impacts Table is showing only the occupations that will be lost from the Direct Effect of Company X leaving Cleveland. The largest loss is almost 50 employees in Molding, Coremaking, and Casting Machine Setters, Operators, and Tenders, Metal and Plastic with an associated Wage & Salary Income of $2.1M and an Employee Compensation of $2.6M.
The default is to show the occupations by detailed SOC. If we wanted to look more broadly at what type of jobs these are, we can change the filter for Occupation Aggregation Level from 5 - detail to 2 - major.
This table now shows us that the biggest Direct losses will be in Production Occupations with 227 employees. Out of a total Wage & Salary employment of 385, that represents 59% of the Direct Employment!
The Occupation Impact Averages tab shows us the averages for Wage & Salary Income, Supplements, and EC. If we change the Occupation Aggregation Filter back to 5 - detail, we can see the Average Wage & Salary Income for the biggest Direct Job loss occupation. The almost 50 employees in Molding, Coremaking, and Casting Machine Setters, Operators, and Tenders, Metal and Plastic have an average Wage & Salary Income of $43,154; about $20.60 per hour which is quite a bit higher than the $8.70 minimum wage in Ohio.
Popping over to the Core Competency tab, we can examine the required knowledge, skills, and abilities required for these positions. The next set of tables list the appropriate education, work experience, and on-the-job training. Still with the filter for Direct jobs only, we can see that 52.33% of the jobs only require a high school diploma and another 12.05% don’t even need that.
Also, 24.23% require no work experience.
On-the-job training necessary for Direct Employment at Company X doesn’t require a lot of time; 26.26% of jobs only require 1-3 months.
The annual sales of $175M that Company X has in Cleveland may not seem like a lot. But this supports 385 Direct jobs and 459 Indirect and Induced jobs in the MSA; a total of 844 jobs. This business matters to the economy of Greater Cleveland. It supports a total of $55M in Labor Income, $95M in Value Added (contribution to GDP), and Output of $264M. Company X supports a total of almost $1M in Sub County General (city)tax, almost $2M in Sub County Special District tax, and $696,387 in county taxes.
In the Cleveland-Elyria MSA, 46.82% of the workforce has a high school diploma or less (find this data Behind the i in Occupation Data). The Direct jobs at Company X represent a way for people with or without a high school diploma to find good employment. Over 64%, a total of 247 of Company X’s employees, do not require higher education. Almost a quarter of the jobs at Company X require no work experience at all and these jobs require very short times for on-the-job training.
Company X supports good jobs in an economy that has 8.9% unemployment. While minimum wage in Ohio sits at $8.70 an hour, occupations at this company are paid a wage and salary income of $55,435 a year or $26.83 per hour on average (50 required Molding, Coremaking, and Casting Machine Setters, Operators, and Tenders, Metal and Plastic employees with an average Wage & Salary income of $43,154 ($25.04/hour); 32 Assemblers and Fabricators, All Other, Including Team Assemblers making $39,712 yearly ($19.79/hour)).
Investing state and local incentives in Company X could save these jobs.
Written September 25, 2020