Impact analysis of a firm
Dear IMPLAN Team,
I am currently conducting an economic impact analysis for an existing truck manufacturing company to estimate its impact on the local economy. I have information on employment and the operating budget. The employees reside in several counties so my study area includes all of these counties. I have several questions regarding the steps I am following.
1. I am running an economic impact analysis using a trade flow method.Is economic contribution analysis a more appropriate analysis?
2. I have build a model that includes all the counties where employees reside. In the type of activity I have selected industry change (sector 278). I have created an event by changing both the employment figure and the industry sales (replacing with the operating budget). Is this analysis correct or should I run a multi-regional analysis instead?
3. The company purchases part of the inputs outside of the study area and its output is sold outside of the study area although the manufacturing of trucks occurs in the study area. Should I set the LPP to 100%? How can I account for the fact that output is not consumed in the area?
Thank you very much for your insight.
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IMPLAN SupportHi Eftila, 1. If the goal is to show the contribution of the manufacturer's current operations as opposed to a proposed change in the level of operations, a contribution analysis would be more appropriate, as it will avoid overstating the current contribution of the firm. See more here: https://implan.com/index.php?option=com_content&view=article&id=660:660&catid=253:KB33 2. This choice is up to you. You have built a study area based on the 'commuter shed' guidelines and there is nothing wrong with that approach, especially since you have enough information to edit the Event to more closely match to your firm than to the area average firm in that industry. If you have no need to see separate impacts for each county separately, then MRIO is not necessary. However, I would further edit the Event to zero-out Proprietor Income since you are modeling a firm as opposed to the industry as a whole, which is made up of firms and proprietors. Also, please note that operating budget is not the same as Output unless that budget includes production taxes and profits. If your budget figure does not include these items, you can get an estimate of Output by multiplying the non-payroll portion of your budget figure by the ratio of Output to Intermediate Expenditures for that industry from Explore > Study Area Data. 3. IMPLAN is a backward-looking model - i.e., it is only showing what it takes for the firm to manufacture those trucks - it does not include any impacts related to the users of those trucks. The fact that the sales originate from outside the region is actually a good thing because it brings new spending into the region. Since 100% of the truck production occurs in the area you definitely want to leave LPP at 100%. This does not assume that the firm purchases all of its inputs locally - that is taken care of by the RPCs (Regional Purchase Coefficients), which are already built into the multipliers. If you go to Explore > Social Accounts > Balance Sheets tab > Commodity Demand tab and select sector 278 from the drop-down menu, you will be able to see which inputs the sector purchases and the percentage of that input demand that is sourced locally (RPC). Thanks0 -
Hello! I would like to see the link you included in the response below, but I wasn't able to open the link. Is the information still available?0
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IMPLAN SupportHello, Please try the link now. Let us know if you have any further questions.0
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