IMPLAN Pro: Estimate the Contribution of a Single Industry

Introduction:

Detailed Information:

You can certainly use the single Industry Contribution Analysis method to look at an individual firm but this will provide a conservative estimate of the what the firm does in the region. The other straight-forward alternative is to run an impact analysis using the standard methodology with your firm level numbers and describing the results as what your company supports in the local economy. This will likely be a slight overestimation.

The reason behind this is that the contribution method constrains the Model so that other purchases of that Sector cannot exceed the initial, unadjusted, Industry Sales value. This is necessary when you look at an entire Industry's production because the amount of sales cannot exceed regional Output (i.e. if you region produces $3MM of a commodity, your analysis is invalid if estimates $3.5MM of the commodity). But when a single firm is considered, unless it represents the entire Industry then purchases from other like firms in that Sector are a real possibility. So for example, a grain farmer will buy grain for next year's crop (Indirect) and we buy grains and product made from grains thus grain farming will be impacted through labor spending (Induced).

Therefore, if the grain farmer is one of many farmers in the area, these feedback linkages are largely legitimate. But depending on the size of the farmer's operations in comparison to the total regional production some constraint over a standard impact analysis may be appropriate.

Where the line lies is really up to the interpretation of the analyst. Often in these cases we recommend running both methodologies with the understanding that the real contribution lies somewhere in-between the two result sets. Information about the total production of the Industry can be found at Explore> Study Area Data if you are wanting to compare it to your individual firms production.

Usage:

Open the Study Area Data sheet and determine the Output for the Industry.

 In the Explore menu select Study Area Data. 

Scroll through the sheet to find the IMPLAN sector you are modeling.  Record the total Output value. (e.g. For 2007 Washington County, MN, Sector 99 Wood Windows and Doors has a total Output of $870,637,634).

Find the current Detailed Multiplier for the Industry sector you are modeling (not the summary multiplier).

Select Multipliers under the Explore menu

Multipliers 

Select the Detail Multipliers tab and then change the drop-down menu to the sector you are modeling. The screen should update to reflect the Multipliers contributing to the selected sector. Record the Type SAM Multiplier for your Industry Sector. (For 2007 Washington County, MN, When Sector 99 Wood Windows and Doors is selected in the drop-down menu, the corresponding SAM Multiplier for Sector 99 is 1.130588).  This DetailedType SAM Multiplier tells us how a specific industry responds to an impact on itself.  In a contribution analysis, we want to calculate a Final Demand value such that, using this detailed multiplier, the total output impact on that industry equals its historical output for that year.

Calculate the reciprocal of the Multiplier.

• Divide 1.0 by your Multiplier from step 2. (For 2007 Washington County, MN, When Sector 99 Wood Windows and Doors this would be 1.0/1.130588 = .884495)

• Multiply the reciprocal value by the region's Total Output for your study sector. (For 2007 Washington County, MN, Sector 99 Wood Windows and Doors this would be 0 .884495*870,637,634= $770,075,070.67)

Set the  Industry Sales number to (For 2007 Washington County, MN, Sector 99 Wood Windows and Doors this would be $770,075,070.67). 

Create a Scenario by selecting Analyze Scenarios under the Analyze menu

Select New Scenario

Select the Activity to be analized in the Available Activity box and click Select. This will transfer the Activity from the Available Activity box to the Selected Activity box.

Select Analyze Single Region

• Go to the Detail Results tab, and sort by Output. Scroll down to the sector you are examining. Total Output for your sector should be close to or identical to (For 2007 Washington County, MN, Sector 99 Wood Windows and Doors this would be $870,637,248.00).

RELATED TOPICS:

Contribution vs. Base Analysis