Sometimes a new firm is coming to your study area that is in an industry that doesn’t currently exist. Maybe this is the first solar energy company (Industry 42 - Electric power generation - Solar) or the first brewery (Industry 106 - Breweries). This is great news! But how can I model that in IMPLAN if that industry doesn’t exist yet? Well, here’s how.
Let’s say we want to model the economic impact of a new barbecue sauce company coming to Mecklenburg County, NC. First, we determine this would be Industry 101 - Mayonnaise, dressing, and sauce manufacturing. We can see on the Regions Overview screen that this industry does not currently exist in the county. We notice that the greater Charlotte area is lacking in tortilla manufacturing; as well as mayonnaise, dressing, and sauce manufacturing as all of the Employment, Labor Income, and Output fields are zero for these indicating there was no firm engaged in these businesses in the county in the Data Year (this example uses Data Year 2018).
By clicking on the Menu within the Regions Overview screen, Customize Region pops up. Clicking here will take you to the Customize Region Menu. This is where we can create our new industry.
Select the Industry to customize by scrolling to the IMPLAN Industry; in this case Industry 101 - Mayonnaise, dressing, and sauce manufacturing. Now we see the details, which in this case are zero, for the Industry.
An Employment value must be provided in the Employment field. For each value in the table below the Employment field (Output, Employee Compensation (EC), Proprietor Income (PI), Other Property Income (OPI), and Taxes on Production & Imports (TOPI)) either the total values can be entered where the zeroes are located on the left-hand side of the table or the per worker values (per worker being denoted as /w) can be entered in the fields on the right-hand side of the table (to the left of the labels). If the values on the left are provided, IMPLAN will then calculate the ratios on the right. Alternatively, if you enter the ratios on the right IMPLAN will then calculate the values on the left.
However, we might know very few details about the barbecue sauce company. Given this, we can borrow the information about the Industry from another Region. If we know that the new barbecue sauce company will be very similar to one located in another county nearby or might follow national averages, we can pick that region from which to borrow. A good check for determining if a Regions makes for a good “proxy Region” is to compare the similarity of an Industry that exists in your Region and the Region you are considering borrowing information from, ideally an Industry similar to the one being introduced to your Region.
Using a Proxy Region
In this example, let’s borrow the national model for our estimates. Open up IMPLAN on a second tab and navigate to Customize Region as done earlier for Mecklenburg County, NC. Select Industry 101 - Mayonnaise, dressing, and sauce manufacturing and we see the information from the national level.
Using an Employment value of one and the United States per workers values for Industry 101, the values of zero in Industry 101 in Mecklenburg County in the other tab can be updated.
Be sure to enter Employment first, then, work your way from top to bottom to update each per worker value on the right-hand side of the table.
When you are finished entering the information about the new Industry, click Complete Customization in the bottom right of your screen. IMPLAN will now rebuild the multipliers and RPCs for your Region to include this new industry. You will be prompted to give your new Customized Region a name. Remember to make it something you will remember.
Running an Impact using Customized Region
Your new Region will appear under Selected Regions on the Region screen and display the build progress of the Region. When the spinning wheel turns into the Region Details icon, the build is complete. The teal icon is an indication that the Region is a Customized Region.
Next, click on Add to Impacts and give your Project a name. Enter the information we know about the new barbecue sauce company. In this example we know they will employ 100 people in 2020, so we create an Industry Employment Event for 100. Add your Event to the group on the right. Ensure that your new Customized Region name, in this case, Mecklenburg BBQ, shows up as the selected region under the Dollar Year and Data Year fields. Now you can run your analysis.
If we had not created Industry 103 in Mecklenburg County, NC, our results would show zero impacts across the table because the Industry didn’t exist before and therefore had no effect on the local economy. When you view your results after adding the Industry, you will see that, in our example, we have a Direct Impact of 100 jobs in Industry 103 - Mayonnaise, dressing, and sauce manufacturing, just as we entered. We also see the associated Indirect and Induced effects of our input as well as the effects on Labor Income, Value Added, and Output.
How is it that a southern metropolitan city doesn’t have one company making barbecue sauce? Now we can fix this problem and see what the ripple effects of adding a much needed business to the economy would look like.
Written June 27, 2019
Updated November 2, 2021