Economic & Fiscal Impacts of Marana Aerospace Solutions on Pinal County Presented by: Danny Court Principal, Senior Economist Elliott D. Pollack & Company Elliott D. Pollack & Company
Think of an economy in two parts: Export Domestic (Base Industries) (Local Industries) Elliott D. Pollack & Company
The Effect of Base Industries on the Local Economy • Goods or services are sold outside the local economy; • Money is imported into the region; • These monies circulate; • Leakage eventually occurs; Elliott D. Pollack & Company
Flow of a Region’s Economy Base Industries Export-Related Business Services, Manufacturing, Tourism, Retirement, etc. Spending by Base Industries Local Market Industries Retail, Construction, Local Business Services, Banks, Local Government Elliott D. Pollack & Company
“Base” Industry Facts 1. Demand for their product is primarily from outside the local market area. They are NOT just chasing $$$ already here. 2.They can produce almost anywhere. 3.They create demand for local goods & services. Elliott D. Pollack & Company
Pinal County Targeted Industries: • Transportation/Logistics • Manufacturing • Health Services • Aerospace & Defense • Natural & Renewable Resources • Tourism Elliott D. Pollack & Company
Economic Impact on the Region Company adds jobs and pays a salary to its employees. The company buys goods & services within the region. Employees spend their salaries on goods and services within the region. Elliott D. Pollack & Company
Economic Impact on the Region - Direct Creating jobs and paying a salary to its employees. Elliott D. Pollack & Company
Economic Impact on the Region - Indirect Buying local goods & services Elliott D. Pollack & Company
Economic Impact on the Region - Induced Employees & supplier employees spend their salaries on items such as: • Housing • Automobiles (car dealerships) • Clothing (retail stores) • Food (grocery, restaurants) • Services (plumber, health care, legal, etc.) • Entertainment Elliott D. Pollack & Company
Economic Impact on the Region – Cycle Continues In turn, those retail and service employees receive salaries. They spend money on local goods & services. Elliott D. Pollack & Company
In general, the higher the wage, the larger the multiplier. Elliott D. Pollack & Company
Average Annual Wages v. Multiplier Effects Average Annual Job Industry Wage Multiplier Base Industries Inorganic chemical manufacturing $99,817 4.4 Semiconductor machinery manufacturing $151,536 4.7 Electronic computer manufacturing $130,443 4.5 Computer storage device manufacturing $128,723 5.4 Aircraft manufacturing $135,700 3.9 Custom computer programming services $91,981 2.8 Scientific research and development services $93,250 3.3 Local Industries Retail stores $36,152 1.4 Real estate $23,279 1.8 Landscape services $32,156 1.3 Elementary and secondary schools $42,345 1.5 Full-service restaurants $25,786 1.3 Other personal services $36,095 1.3 Source: Implan 2016 Elliott D. Pollack & Company
Marana Aerospace Solutions at Pinal Airpark Elliott D. Pollack & Company
Marana Aerospace Solutions is a “Base Sector” Industry Brings money into the community from outside. Elliott D. Pollack & Company
ECONOMIC & FISCAL IMPACT (a) Construction impacts (b) Operations impacts (c) Employee spending impacts Elliott D. Pollack & Company
Marana Aerospace Solutions Operations Impacts Average Annual Impact Direct Jobs 378 (Including Contractors) Total Jobs 590 Wages $30.3 million Economic Output $134.4 million Local Purchases (supplies, $1.8 million vehicles, utilities, rentals, etc.) Annual Fiscal Impact** $87,800 *2016 dollars **County revenues only Elliott D. Pollack & Company
Marana Aerospace Solutions Employment Impact • 260 Direct Staff • 118 Contractors (stay an average of 4 months) • 600 Aircraft Overseers (stay an average of 2 weeks) • 38 auditors (stay an average of 2 days) Report figures assume less than 5% of direct employees live within Pinal County and that no overnight stays or spending by temporary guests is yet captured by Pinal County. Elliott D. Pollack & Company
Visitor Spending Impacts Average Annual Impact Spending $3.5 million Jobs 52 Wages $189,000 Economic Output $644,000 Much of this spending is likely captured by Pima County, but represents an opportunity for Pinal County as additional assets are developed near the airpark. Elliott D. Pollack & Company
Aerospace Industry Outlook Boeing forecasts air traffic growth averaging 4.0% while Airbus forecasts passenger traffic growth of 4.5% annually over the 20 years from 2016 through 2035. This equates to demand of 33,100 to 39,600 aircraft over the next 20 years. Already, both companies are experiencing record backlogs (Boeing – 5,795 aircraft & Airbus – 6,831 aircraft), equal to approximately 8 to 11 years of production for the aircraft makers. Elliott D. Pollack & Company
Aerospace Industry Outlook The Maintenance, Repair & Operations (MRO) industry also has a healthy outlook. The forecast for large commercial and regional jet MRO business is for growth at a compound annual rate of 4.1% over the next 10 years. Demand for MRO should mirror the growth in airline fleets, with the highest rates of growth originating from developing economies. Elliott D. Pollack & Company
Opportunities for Expansion Could soon need additional capacity which would likely generate a $30 million capital investment. This would essentially double the size of the company (756 direct jobs, 1,180 total jobs). Total economic impact of expanded footprint would be $268.8 million annually. Elliott D. Pollack & Company
Marana Aerospace Solutions is a great Anchor Tenant for Pinal Airpark It is recommended that the County explore opportunities to leverage Marana Aerospace’s presence to attract complimentary users and suppliers. Elliott D. Pollack & Company
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