2015 ECONOMIC IMPACT OF GEORGIA S AEROSPACE INDUSTRY

Transcription

1 2015 ECONOMIC IMPACT OF GEORGIA S AEROSPACE INDUSTRY June 2017 Prepared by:

2 Table of Contents Executive Summary 2 Section 1: Introduction 9 Section 2: Economic Impact of Aerospace in Georgia 12 Section 3. Fiscal Impact of Aerospace in Georgia 16 Section 4. Contribution of Aerospace to Georgia s GDP 16 Section 5. Location of Aerospace Firms in Georgia 17 Section 6. Special Interest Aerospace Regions 17 Section 7. Unmanned Aircraft Systems Companies 22 Section 8. Space Companies 23 Appendix 1. Economic Impact by Regional Commission 24 Appendix 2: Methodology, Definitions, and References 28 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 1

3 Executive Summary This 2015 economic impact study of aerospace related activity in the state of Georgia is an update of similar economic studies commissioned by Georgia s Center of Innovation for Aerospace (COIA) to assess the industry s contribution to the state s economy in 2011 and This analysis quantifies the level of economic activity conducted by the components of the aerospace industry in 2015, estimates its fiscal impact, and quantifies the industry s contribution to the state s Gross Domestic Product using an input-output economic model and available industry data. The study also estimates the economic impact of aerospace activities in four selected regions of the state and analyzes two small but emerging niches unmanned aircraft systems (UAS) and space related companies located in the state of Georgia. The aerospace industry continues to expand across the state, and saw significant growth between 2013 and Aerospace direct employment increased by 10,632 or 12 percent in 2015 compared to The total economic impact of the industry is estimated to be almost $64 billion in FY2015, an increase of 22% over 2013 results. Direct output of aerospace industry increased by nearly $6.5 billion, an increase of 20 percent, from 2013 to Total output also increased by 25 percent between 2013 and The key findings of this study are shown below in Table E-1. In 2015, the aerospace industry supported 268,232 jobs in Georgia, representing 6.5% of the state s total employment, contributing $29.3 billion to the state s GDP (6 percent of the total GDP). Wages and salaries of direct employment increased nearly $10 billion in 2015, an increase of $826 million (9 percent) from The wages and salaries of total aerospace related jobs also grew by $2.8 billion (18 percent) in the same period. Each job in the aerospace industry supported 1.71 additional jobs in Georgia in Table E-1 provides a summary of the key metrics. Table E-1: Georgia s Aerospace Industry Economic Activity: 2015 Direct Indirect Induced Total Employment 98,991 71,277 97, ,232 Wages & Salaries $9,986,897,729 $4,184,769,135 $4,212,834,918 $18,384,501,782 Output $38,909,655,978 $11,406,271,664 $13,470,173,137 $63,786,100,779 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 2

4 Definition of Aerospace Industry in Georgia The Georgia Center of Innovation for Aerospace uses Aerospace as an inclusive term covering the full range of life cycle activities for vehicles that fly in the air or in space. To measure the economic impact of the broad span of these activities in this analysis, this study s aerospace industry includes the six-digit North American Industrial Classification System (NAICS) industries shown in Table E-2 to describe their operations. The data used in this analysis were carefully examined and tailored to exclude any non-aerospace related companies and organizations. Table E-2: Aerospace Industry Definition Components by NAICS Code Sector Category Sector Category Soil preparation, planting, and cultivating Support Fueling aircraft (except on contract basis) Support Forestry Services (Crops spraying) Support Durable goods agents and brokers, wholesale trade Support Tire manufacturing, except retreading Support Scheduled passenger air transportation Core Insulated wire or cable made in aluminum wire Support Scheduled freight air transportation Core Aircraft and automotive wire or cable made from purchased copper in wire Support Nonscheduled air passenger chartering Core Hardware manufacturing Core Nonscheduled air freight chartering Core Machine Shops Core Other nonscheduled air transportation Core Metal Coating Support Air traffic control Core Electroplating, Plating, polishing Support Other airport operations Core Fluid power valve and hose fitting mfg. Support Other support activities for air transport Core Bearing Manufacturing Support Applications software programming services, custom computer Support Overhead cranes, hoists, and monorail Computer hardware consulting services or Support systems consultants Support Industrial truck, trailer, and stacker mfg. Support Business management consulting services Support Search, detection, and navigation instruments Core Other physical and biological research Support Motor vehicle seating and interior trim mfg. Core Aircraft janitorial services Support Aircraft manufacturing Core Flight training Support Aircraft engine and engine parts mfg. Core Other technical and trade schools Support Other aircraft parts and equipment Core Reupholstery and furniture repair Support Gasket, packing, and sealing devices manufacturing Support Transportation program administration Core Other transport. goods merchant wholesalers Support Economic Impact The aerospace industry, as defined by the NAICS codes shown on page 2 and tailored to exclude non-aerospace firms, employed 98,991 workers in This estimate includes civil service employment at Robins AFB, Dobbins AFRB and Moody AFB, which together comprise nearly 15 percent of the total direct employment in aerospace industry. Employees in the aerospace industry were paid nearly $10 billion in wages and salaries and generated an economic output of $38.9 billion in While a large share of the impacts is attributed to direct employment, the total economic impact (direct, indirect and induced) of aerospace industry is significant. The ongoing Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 3

5 operations of aerospace generated ripple impacts throughout the state supporting an additional 169,241 indirect and induced jobs with earnings of $8.4 billion and economic output of $24.9 billion. This brings the total economic output to nearly $63.8 billion (see Table E-1). Study findings show that wages of aerospace employees are higher than Georgia s overall average wages of all industries. The 2015 average wage rate, including benefits, of aerospace workers in Georgia was $100,887. The annual average wage rate without benefits was $72,639 or 47 percent higher than the state s overall average wage rate of $49, The employment multiplier of aerospace industry in Georgia was 2.71 and the income multiplier was The industry s high level of output and high wages, which translates in higher spending and demand for goods and services, has resulted in higher multipliers than the average multipliers of all sectors. Each job in the aerospace industry supported 1.71 additional jobs in Georgia in 2015 Fiscal Impact The fiscal impact of aerospace industry was calculated by estimating the revenues associated with the industry s total economic activity and subtracting the costs associated with providing state services to Georgia s households and companies associated with that activity. Revenues included individual and corporate income taxes, sales and use taxes, highway taxes, fees, and miscellaneous revenues. Costs included education; public health, safety, and welfare; highways; administration; and miscellaneous. Table E-3 provides the fiscal impact estimates based on the estimated industry total impacts. The aerospace industry generated nearly $2 billion in revenues for the state budget in calendar year When the costs of providing services to all employees were deducted from these revenues, the net contribution of aerospace industry to the state revenues in 2015 was nearly $1.2 billion. Table E-3: Aerospace Fiscal Impact Analysis: 2015 Annual State Government Revenues $1,951,040,627 Annual State Government Costs $796,665,601 Net Annual Revenues $1,154,375,026 1 Source: Quarterly Census of Employment and Wages - Bureau of Labor Statistics: 2015 Annual Averages, All establishment sizes. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 4

6 Aerospace Industry and the State s GDP Aerospace industry is an important driver of the state s economic activity. It creates and supports highpaying jobs for Georgia s citizens. In calendar year 2015, aerospace supported 268,232 jobs or 6.5 percent of the state total employment 2, and it contributed $29.3 billion to the state s GDP or 6 percent. Figure E-1: Contribution of Aerospace Industry to the State of Georgia's GDP (2015) Aerospace Industry 6% Location of Aerospace Firms in Georgia Georgia s diverse aerospace industry includes a range of firms that manufacture, operate, service, and repair aircraft, provide air transportation, and operate flight schools. The map below shows the location of aerospace firms in Georgia. Firms were geocoded and mapped based on their physical address. Figure E-2: Georgia Aerospace Firms by County: Source: Quarterly Census of Employment and Wages - Bureau of Labor Statistics: 2015 Annual Averages, All establishment sizes. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 5

7 Special Interest Aerospace Regions As the map clearly shows, there are specific clusters of aerospace activity, which closely correlate to administratively assigned economic development regions in Georgia 3. As a result, this study s process of economic modeling and analysis was used to create a regional view of economic impact in four selected regions: Region 3 Atlanta Regional Commission Region 6 Middle Georgia Region 8 River Valley Region 12 Coastal Table E-4 shows a list of these regions and their respective counties. Table E-4: Regional Commissions Regions ATL Regional Commission (Region 3) Middle Georgia (Region 6) River Valley (Region 8) Coastal (Region 12) Counties Cherokee, Clayton, Cobb, DeKalb, Douglas, Fayette, Fulton, Gwinnett, Henry, Rockdale Baldwin, Bibb, Crawford, Houston, Jones, Monroe, Peach, Pulaski, Putnam, Twiggs, Wilkinson Chattahoochee, Clay, Crisp, Dooly, Harris, Macon, Marion, Muscogee, Quitman, Randolph, Schley, Stewart, Sumter, Talbot, Taylor, Webster Bryan, Bulloch, Camden, Chatham, Effingham, Glynn, Liberty, Long, McIntosh, Screven Source: Georgia Department of Community Affairs The Atlanta Regional Commission (Region 3) is a 10-county area with the largest aerospace activity compared to the other eleven regions. The economic impact that stemmed from aerospace activities in 2015 accounts for more than 50 percent of the industry s overall economic impact in the state of Georgia. There were 56,757 jobs associated directly with aerospace industry in These jobs generated $5.8 billion in direct wages and salaries and $19 billion in output. Using a regional economic model, it is estimated that aerospace activities created and supported 145,883 total jobs with earnings of nearly $10.7 billion, and output of nearly $32.5 billion. The Middle Georgia Region (Region 6) is comprised of eleven counties. Aerospace companies employed 23,665 people in the region, who earned $2.3 billion in wages and salaries. The 3 The state s regional commissions (RCs) function as multicounty planning and development agencies. A map of RCs can be found here: Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 6

8 regions direct employment includes 13,600 jobs held by civilians employed at Robins Air Force Base. Companies in this region generated nearly $8.5 billion in direct output during that year. The total economic impact of aerospace activities in the region totaled to 48,928 jobs with wages and salaries of $3.2 billion and output of nearly $11.6 billion. The River Valley Region (Region 8) encompasses 16 counties. In 2015, there were 899 direct jobs with wages and salaries of $63.5 million related to aerospace activity in the region. Direct output was $426.9 million. The overall industry economic impact in the region totals to 1,724 jobs, $98.3 million in earnings and $537.7 million in output. The Coastal Region (Region 12) includes 10 counties. This region is the state s third largest in terms of aerospace activity. There were 12,166 direct jobs connected to aerospace activity in the region in 2015 that injected $1.4 billion of direct wage and salaries into the region s economy. Direct output was $9 billion. Individual and business spending supported additional regional economic activity bringing the total economic impact to 28,367 jobs, $2.1 billion in wages and salaries and $11.2 billion in output. Unmanned Aircraft Systems (UAS) Companies Unmanned aircraft systems (UAS) have been used by the military for decades and the technology has now been authorized by Congress and FAA regulations to be applicable commercially. Commercial use of UAS has rapidly expanded since its initial authorization in Given the growing commercial use of UAS in a wide variety of industries such as agriculture, media and construction, this study quantified the economic impact of UAS companies operating in the state of Georgia in 2015 to be used as a baseline in future studies. Using data provided by the Georgia Department of Labor, it was determined that UAS companies employed 603 people in year 2015, who earned nearly $44 million in wages and salaries and generated $130 million in economic activity. Spending by these companies and their employees generated additional activity in other sectors of the state s economy. Overall, UAS companies in 2015 created and supported 1,330 jobs with wages & salaries of $78 million and generated nearly $233 million of economic activity. Table E-4: Economic Impact of Unmanned Space Systems Companies in Georgia: 2015 Direct Indirect Induced TOTAL Employment ,330 Wages & Salaries $44,057,919 $16,135,058 $17,858,485 $78,051,462 Output $129,810,685 $45,616,544 $57,098,990 $232,526,219 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 7

9 Space Companies An increasing number of companies in Georgia are actively pursuing activities in the space industry. The Center of Innovation for Aerospace has determined that there were 12 companies with some activities in the space sector in These companies employed 915 employees that earned $122 million in wages and salaries and $333 million in economic activity. Further spending by space companies and their employees resulted in supporting an additional 1,548 indirect and induced jobs with wages of $74.3 million that resulted in output of $220.7 million. Table E-5 shows the total impact of space companies in the state of Georgia. Table E-5: Economic Impact of Space Companies in Georgia: 2015 Direct Indirect Induced Total Employment ,045 2,463 Wages & Salaries $121,859,842 $29,362,220 $44,944,721 $196,166,783 Output $333,076,945 $79,006,681 $143,706,628 $555,790,254 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 8

10 SECTION 1 Introduction The economic impact study of Georgia s aerospace industry measures the industry s contribution to the state s economy in 2015 by quantifying its activity in terms of economic output, employment, and employee compensation. The study also assesses the industry s impact in state government costs and revenues. This report is an update of the economic study conducted in Economic output is typically defined as business revenues, and employee compensation is defined as wages and salaries including benefits, paid by employers. Total activity is generally referred to as the multiplier effect. This effect occurs whenever dollars are brought into a state s economy and recirculated before exciting or leaking out. Section 2 explains the methodology used to estimate total economic activity, and provides perspective on how important these activities are in the overall Georgia economy. Section 3 quantifies the industry s impact on state government costs and revenues. Sections 4 and 5 compare the economic activity of aerospace industry to the state s GDP and show the location of aerospace firms in Georgia, respectively. Section 6 is an addition to the 2013 study and it quantifies the economic impact of unmanned space systems companies located and operating in the state of Georgia. The latest study quantifies the economic impact of space companies shown in Section 7. Definition of the Aerospace Industry in Georgia The aerospace industry in Georgia has many diverse functions including research, development, manufacturing, maintenance/repair and overhaul, operations, education and training. To collect data for this study, the North American Industry Classification System (NAICS) was used to group and identify aerospace companies. In its classification scheme, NAICS does not always explicitly identify aviation or aerospace activity, making a consistent definition difficult. For example, soil preparation, NAICS includes a wide range of activities related to irrigation, tilling and fertilization. Aerial application of chemicals by aircraft is embedded in this classification. This tendency to embed aviation and aerospace related products and services in broad NAICS classification causes the definition of aerospace industry to vary by state. The NAICS classification data included in this study were carefully examined by the Georgia Center of Innovation for Aerospace and tailored to exclude any non-aerospace related companies and organizations. NAICS codes used in this study are described in Table 1-1. The industry definition was updated in the 2013 study to include a more extensive list of sectors and make adjustments due to revisions of the NAICS code classification. The list of sector was further expanded in the 2015 study. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 9

11 Table 1-1: Aerospace Industry Definition Components by NAICS Code Industry Industry Sector (NAICS) Category Code Soil preparation, planting, and cultivating Support Forestry Services (Crops spraying) Support Tire manufacturing, except retreading Support Insulated wire or cable made in aluminum wire Support Aircraft and automotive wire or cable made from purchased copper in wire Support Hardware manufacturing Core Machine Shops Core Metal Coating Support Electroplating, Plating, polishing Support Fluid power valve and hose fitting mfg Support Bearing Manufacturing Support Overhead cranes, hoists, and monorail systems Support Industrial truck, trailer, and stacker mfg Support Search, detection, and navigation instruments Core Motor vehicle seating and interior trim mfg Core Aircraft manufacturing Core Aircraft engine and engine parts mfg Core Other aircraft parts and equipment Core Gasket, packing, and sealing devices manufacturing Support Other transport goods merchant wholesalers Support Fueling aircraft (except on contract basis) Support Durable goods agents and brokers, wholesale trade Support Scheduled passenger air transportation Core Scheduled freight air transportation Core Nonscheduled air passenger chartering Core Nonscheduled air freight chartering Core Other nonscheduled air transportation Core Air traffic control Core Other airport operations Core Other support activities for air transport Core Applications software programming services, custom computer Support Computer hardware consulting services or consultants Support Business management consulting services Support Other physical and biological research Support Aircraft janitorial services Support Flight training Support Other technical and trade schools Support Reupholstery and furniture repair Support Transportation program administration Core Source: North American Industrial Classification System (2012); Georgia Center of Innovation for Aerospace, Georgia Tech s Enterprise Innovation Institute Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 10

12 Top Aerospace Companies in Georgia Georgia is home to companies in three major aerospace market sectors: manufacturing, air transportation and maintenance, repair and overhaul (MRO). With the world s busiest commercial airport, Georgia is home to Delta Air Lines and several of the largest air carriers. Georgia is also the home base for two large aircraft manufacturers and a multitude of their lower tier suppliers. With the large number of aircraft and airports, Georgia is the natural home for several large Maintenance, Repair and Overhaul (MRO) enterprises. Georgia is also home for companies and academic centers that do significant amount of research and development for aerospace. Table 1-2 displays a list of the top 20 aerospace employers in Georgia. Table 1-2. Top 20 Aerospace Employers in Georgia: FY 2015 No. Company Name 1. Delta Air Lines 2. Warner Robins Air Logistics Center (civilian employees only) 3. Lockheed Martin Aeronautics 4. Gulfstream Aerospace Corp. 5. ExpressJet 6. FAA 7. Southwest Airlines (Air Tran) 8. AirServ Security 9. MEGGITT 10. Moody Air Force Base (civilian only) 11. Dobbins Air Reserve Base (civilian only) 12. The Boeing Company 13. SITA 14. City of Atlanta-Hartsfield Jackson International Airport (HJIA) 15. Northrop Grumman Corp 16. ViaSat 17. PCC Airfoils LLC 18. Precision Components International Inc. 19. Triumph Aerostructures 20. Honeywell (formerly EMS Technologies) Sources: Georgia Center of Innovation for Aerospace, GDEcD Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 11

13 SECTION 2 Economic Impact Analysis The conceptual basis for estimating economic benefits of an industry is that resources brought into a state s economy by that industry raise the level of economic activity. The aerospace industry provides a wide range of direct economic benefits in Georgia. These benefits are measured by analyzing employment, income (wages & salaries), and output (business revenues). From these direct impacts, multiplier effects are also evaluated, as income and other spending are re-spent in the local economy thereby supporting increased employment, income, and business revenues. These increases are estimated from an inputoutput (I/O) economic model. The analytical process of estimating the economic impacts (direct, indirect, and induced) of aerospace in this study involved the following steps: Direct employment for each sector (by NAICS code) was quantified. This study counted the number of employees working for companies whose primary business supports the aerospace industry in Georgia. The best source for employment and wages is the employment security data collected and maintained by the Georgia Department of Labor. Commonly called ES202 data, it has the advantage of being current, allowing an estimate of the economic benefits occurring in It has the drawback, however, of not including single proprietorships (because they have no employees). Review of employment data was a critical part of this analysis due to the broad definition of NAICS codes for aerospace sectors. Employment was verified by calling individual firms (calls were conducted by Georgia s Center of Innovation for Aerospace), and changes were made where necessary. During the vetting process, it became apparent that many companies were classified under the wrong code. Every attempt was made to capture all aerospace related employment as defined by the NAICS codes listed on page 10. We recognize that there may be many supporting companies that are not included in this study. The third step was to use the I/O model to estimate total impacts, which were divided into three components. The first was the direct impacts (the value of resources brought into the state); the second was indirect impacts (impacts from recirculation of resources resulting from aerospace industry purchases from other industries); and the third was induced impacts, resulting from activities in the household sector. The total impact was the sum of direct, indirect, and induced impacts. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 12

14 Table 2-1 provides estimates of the impacts of aerospace industry sectors contained in the industry s definition. Georgia s aerospace industry employed 98,991 workers in 2015, who earned nearly $10 billion in wages and salaries and generated an economic output of $38.9 billion. The direct employment included civilian employment at Robins AFB, Moody AFB and Dobbins ARB, which in 2015 accounted for 15 percent of Georgia s direct employment in aerospace industry. While a large share of the impacts is attributed to direct employment, the total economic impact (direct, indirect and induced) of aerospace industry is significant. The ongoing operations of aerospace generated ripple impacts throughout the state supporting an additional 169,241 indirect and induced jobs with earnings of $8.4 billion and economic output of $24.9 billion. Table 2-1: Georgia s Aerospace Industry Economic Activity: 2015 Direct Indirect Induced Total Employment 98,991 71,277 97, ,232 Wages & Salaries $9,986,897,729 $4,184,769,135 $4,212,834,918 $18,384,501,782 Output $38,909,655,978 $11,406,271,664 $13,470,173,137 $63,786,100,779 Overall, wage rates of aerospace employees were higher than Georgia s average wage rates of all industries. In 2015, the annual average wage of aerospace industry workers, excluding benefits, was $72,639 or 47 percent higher than the state s overall average wage rate of $49,551. The average wage rate, including benefits, of aerospace workers in Georgia was $100,887. The employment multiplier of the aerospace industry was Georgia was 2.71 and the income multiplier was These multipliers were higher than state s average multiplier of all sectors due to the industry s high level of output and high wage rates. Other Impacts not captured in this study Aerospace industry generates additional impacts that are not captured in this study. Single Proprietor businesses are not required to report employee totals, and therefore have not been included in this analysis. There are a number of these types of employers in the aerospace industry in Georgia, particularly in the emerging sector of UAS. Additionally, the small airports have a significant impact on the success of local economies and businesses, and that impact has not been assessed as part of this report. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 13

15 Findings of 2011, 2013 and 2015 Studies The Georgia Center of Innovation Aerospace engaged Georgia Tech to conduct the economic impact of Aerospace industry in Georgia in The economic impact study was updated using 2013 data. The latest update is based on 2015 industry data. Figures 2-1 through 2-3 show a summary of the studies findings. It is important to note that aerospace industry definitions (sectors included) vary in each study. Furthermore, revisions of NAICS code definitions have an impact on the direct effect numbers. Therefore, caution should be exercised in comparing the results of the three studies. Aerospace direct employment increased by 10,632 or 12 percent in 2015 compared to employment in The increase in direct employment resulted in total impact increasing by 22 percent. 280, , , ,000 80,000 30,000-20,000 Figure 2-1. Aerospace Industry Employment in Georgia 2011; 2013; ,991 88,873 88,359 71,277 47,874 52, ,416 97,964 78, , ,178 Direct Effect Indirect Effect Induced Effect Total Effect 2011 Employment 2013 Employment 2015 Employment 268,232 Direct Effect Indirect Effect Induced Effect Total Effect Figure 2-2. Aerospace Industry Wages & Salaries in Georgia 2011; 2013; 2015 $2.61 $2.97 $4.18 $4.82 $3.44 $4.21 $8.28 $9.16 $9.99 $15.71 $15.57 $18.38 As shown in Figure 2-2, wages and salaries 4 of direct employment increased to nearly $10 billion in This is an $0 $5 $10 $15 $20 increase of 2011 Wages & Salaries 2013 Wages & Salaries 2015 Wages & Salaries Billions $826 million, or 9 percent from 2013 rates. The wages and salaries of total jobs also grew by $2.8 billion or 18 percent. This is contrary to the slight decline of total wages and salaries from 2011 to Wages and salaries presented in Figure 2-2 are not adjusted for inflation Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 14

16 Direct output 5 of aerospace industry increased by nearly $6.5 billion, an increase of 20 percent, from 2013 to Total output also increased at a robust rate of 25 percent. Direct Effect Indirect Effect Induced Effect Total Effect Table 2-3. Aerospace Industry Output in Georgia 2011; 2013; 2015 $6.82 $8.16 $11.41 $13.47 $10.26 $13.47 $30.42 $32.45 $38.91 $50.71 $50.86 $63.79 $0.00 $15.00 $30.00 $45.00 $60.00 $ Output 2013 Output 2015 Output Billions 5 Output figures shown in Figure 2-3 are not adjusted for inflation. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 15

17 SECTION 3 Fiscal Impact Analysis This analysis also includes a fiscal assessment of how aerospace affects state tax revenues. The fiscal impact analysis was calculated by estimating the revenues associated with the aerospace industry s total economic activity and subtracting the costs associated with providing state services to Georgia s households and companies associated with that activity. Revenues included individual and corporate income taxes, sales and use taxes, highway taxes, fees, and miscellaneous revenues. Costs included education; public health, safety, and welfare; highways; administration; and miscellaneous. Table 3-1 provides the fiscal impact estimates based on total impacts. The aerospace industry generated nearly $2 billion in revenues for the state budget in calendar year 2015, which represents nearly 10% of the total state budget for its 2015 Fiscal Year 6. When the costs of providing services to all employees were deducted from these revenues, the net contribution of aerospace industry to the state revenues in 2015 was nearly $1.2 billion. Table 3-1: Aerospace Fiscal Impact Analysis: 2015 Annual State Government Revenues $1,951,040,627 Annual State Government Costs $796,665,601 Net Annual Revenues $1,154,375,026 Section 4 Aerospace Industry s Contribution to Georgia s GDP Aerospace industry is an important driver of the state s economic activity. It creates and supports high-paying jobs for Georgia s citizens. In 2015, aerospace supported 268,232 jobs or 6.5 percent of the state total employment 7, and it contributed $29.3 billion to the state s GDP or 6 percent. Figure 4-1: Contribution of Aerospace Industry to the State of Georgia's GDP (2015) Aerospace Industry 6% 6 Source: GA 2015 Department of Revenue Annual Reporthttps://dor.georgia.gov/sites/dor.georgia.gov/files/related_files/document/ADM/Report/2015_Statistical_Report.pdf 7 Source: Quarterly Census of Employment and Wages - Bureau of Labor Statistics: 2015 Annual Averages, All establishment sizes. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 16

18 SECTION 5 Location of Aerospace Firms Georgia s diverse aerospace industry includes a range of firms that service and repair aircraft, provide air transportation, and operate flight schools. The following map shows the location of aerospace firms in Georgia. Firms were geocoded and mapped based on their physical address. Incomplete addresses were either not displayed on the map or mapped based on the address information available e.g., P.O. Box or zip code maps to the center of the 5-digit zip; city name only maps to the center of the city. Note that there is widespread activity throughout the state, with high-activity clusters surrounding the Atlanta Regional Commission, Middle Georgia, River Valley and Coastal Regions. Figure 5-1: Georgia Aerospace Firms by County: 2015 SECTION 6 Special Interest Aerospace Regions As shown in Figure 5-1, the majority of aerospace activity is centered in four economic development regions as defined by the state. This section shows the economic impact of this activity in each of the four selected regions: Region 3 Atlanta Regional Commission Region 6 Middle Georgia Region 8 River Valley Region 12 Coastal Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 17

19 i. Atlanta Regional Commission- Region 3 The Atlanta Regional Commission (ARC) is the 10-county area of Cherokee, Clayton, Cobb, DeKalb, Douglas, Fayette, Fulton, Gwinnett, Henry and Rockdale counties, including the city of Atlanta. The region is home to Lockheed Martin Aeronautics, the Hartsfield- Jackson Atlanta International Airport, the Dobbins Air Reserve Base and a number of other companies therefore, it is no surprise the majority of aerospace activity occurs within the ARC. The impact that stemmed from these activities in the region accounts for more than 50 percent of the industry s overall economic impact in the state of Georgia. There were 56,757 jobs associated directly with aerospace industry in These jobs generated $5.8 billion in direct wages and salaries and $19 billion in output. Using a regional economic model, it is estimated that aerospace activities created and supported 145,883 total jobs with earnings of nearly $10.7 billion, and output of nearly $32.5 billion. Table 6-1: Economic Impact of Aerospace Related Activities in the Atlanta Regional Commission (Region 3) in 2015 Direct Indirect Induced Total Employment 56,757 39,306 49, ,883 Wages & Salaries $5,831,753,528 $2,409,546,511 $2,429,909,750 $10,671,209,789 Output $19,008,759,938 $6,198,540,858 $7,252,158,196 $32,459,458,992 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 18

20 ii. Middle Georgia- Region 6 The Middle Georgia Region is comprised of Putnam, Monroe, Jones, Baldwin, Crawford, Bibb, Twiggs, Wilkinson, Peach, Houston and Pulaski Counties. It also home to the Robins Air Force Base 8, the region s largest employer. Aerospace companies in the region employed 10,065 people in addition to 13,600 civilians employed at the base, totaling 23,665 aerospace jobs in year These employees earned $2.3 billion in wages and salaries and the companies activities generated nearly $8.5 billion in direct output during the year. The total economic impact of aerospace activities in the region 48,928 jobs, wages and salaries of $3.2 billion and output of nearly $11.6 billion. See Table 6.2 for a breakdown of the region s economic impact. Table 6-2: Economic Impact of Aerospace Related Activities in Middle Georgia Regional Commission (Region 6) in 2015 Direct Indirect Induced Total Employment 23,665 8,578 16,686 48,928 Wages & Salaries $2,304,309,079 $375,756,838 $553,006,096 $3,233,072,013 Output $8,464,205,125 $1,161,633,872 $1,949,553,363 $11,575,392,360 8 Military jobs are not included in this study. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 19

21 iii. River Valley Region- Region 8 The River Valley Region includes Chattahoochee, Clay, Crisp, Dooly, Harris, Macon, Marion, Muscogee, Quitman, Randolph, Schley, Stewart, Sumter, Talbot, Taylor, and Webster Counties. In 2015, there were 899 direct jobs with wages and salaries of $63.5 million related to aerospace activity in the region. Direct output was $426.9 million. The overall industry economic impact in the region totals to 1,724 jobs, $98.3 million in earnings and $537.7 million in output. Table 6-3: Economic Impact of Aerospace Related Activities in River Valley Regional Commission (Region 8) in 2015 Direct Indirect Induced Total Employment ,724 Wages & Salaries $63,455,515 $22,880,339 $11,932,720 $98,268,574 Output $426,849,826 $69,108,510 $41,725,310 $537,683,646 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 20

22 iv. Coastal Region- Region 12 The Coastal regions encompasses 10 counties: Bryan, Bulloch, Camden, Chatham, Effingham, Glynn, Liberty, Long, McIntosh and Screven. This region is the state s third largest in terms of aerospace activity. There were 12,166 direct jobs connected to aerospace activity in the region in 2015 that injected $1.4 billion of direct wage and salaries into the region s economy. Direct output was $9 billion. Individual and business spending supported additional regional economic activity bringing the total economic impact to 28,367 jobs, $2.1 billion in wages and salaries and $11.2 billion in output. Table 6-4: Economic Impact of Aerospace Related Activities in the Coastal Regional Commission (Region 12) in 2015 Direct Indirect Induced Total Employment 12,166 6,655 9,545 28,367 Wages & Salaries Output $1,408,550,648 $321,339,591 $339,192,868 $2,069,083,107 $9,042,738,736 $1,017,393,995 $1,143,849,094 $11,203,981,825 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 21

23 SECTION 7 Unmanned Aircraft Systems (UAS) Companies Unmanned aircraft systems (UAS) 9 have been used for decades evolving from being used for basic operations to currently being used in a number of applications across many industries. Given the growing use of UAS in the commercial and civil market, this study quantifies the economic impact of this sector in the state of Georgia. The Georgia Center of Innovation for Aerospace researched and identified 55 UAS companies currently operating in the state of Georgia. However, we were able to get employment data for only 12 companies; therefore, the impact incudes only these 12 companies. Using data provided by the Georgia Department of Labor, 10 it was determined that these companies employed 630 people in year 2015 who earned $44 million in wages and salaries and generated nearly $130 million in economic activity. The spending by these companies and their employees generated additional activity in other sectors of the state s economy. Overall, UAS companies in 2015 created and supported 1,330 jobs with wages and salaries of $78 million and generated nearly $233 million of economic activity. Table 7-1: Economic Impact 11 of Unmanned Space Systems Companies in Georgia: 2015 Direct Indirect Induced Total Employment ,330 Wages & Salaries $44,057,919 $16,135,058 $17,858,485 $78,051,462 Output $129,810,685 $45,616,544 $57,098,990 $232,526,219 9 Definition of UAS: An unmanned aircraft system (UAS), sometimes called a drone, is an aircraft without a human pilot onboard instead, the UAS is controlled from an operator on the ground 10 Source: Georgia Department of Labor, ES202 data (Firm level data) 11 The economic impact was calculated using companies self-reporting employment and NAICS code data. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 22

24 SECTION 8 Space Companies An increasing number of companies in Georgia are actively pursuing activities in the space industry. This study shows the economic impact of the growing space sector. The Center of Innovation for Aerospace has determined that there were 12 companies with some activities in the space sector in These companies employed 915 employees that earned $122 million in wages and salaries and $333 million in economic activity. Further spending by space companies and their employees resulted in supporting an additional 1,548 indirect and induced jobs with wages of $74.3 million that resulted in output of $220.7 million. Space companies are an important part of the overall aerospace industry. An increase in commercial space opportunities has resulted in growth of the space companies whose operations have generated an economic impact in the state of Georgia. As Table 8-1 shows, space companies supported 2,463 total jobs that generated $196.2 million in wages and salaries and $555.8 million in output Table 8-1: Economic Impact of Space Companies in Georgia: 2015 Direct Indirect Induced Total Employment ,045 2,463 Wages & $121,859,842 $29,362,220 $44,944,721 $196,166,783 Salaries Output $333,076,945 $79,006,681 $143,706,628 $555,790,254 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 23

25 APPENDIX 1 Economic Impact by Region While the majority of aerospace related activities are concentrated in a five regions, the industry has presence in all twelve regions in the state of Georgia. Table A.1 shows a breakdown of the economic impact of aerospace industry by region. Note that Wages and Salaries and Output are slightly lower (less than one percent) than figures shown in Table 2-1 due to rounding. Table A.1-1. Economic Impact of Aerospace Industry by Regions Atlanta Regional Commission Employment Wages and Salaries Output 56,757 $5,831,753,528 $19,008,759,938 Middle GA 23,665 $2,304,309,079 $8,464,205,125 Coastal 12,166 $1,408,550,648 $9,042,738,736 Northwest GA 1,214 $74,423,464 $346,513,190 South GA 1,160 $79,127,471 $351,409,404 River Valley 899 $63,455,515 $426,849,826 Southwest GA 828 $38,998,953 $259,382,893 Three Rivers 670 $42,181,287 $201,731,703 Northeast GA 507 $30,347,411 $127,521,273 GA Mountains 403 $23,713,550 $80,792,765 Heart of Georgia Altamaha 401 $31,541,898 $118,401,036 Central Savannah 321 $22,807,540 $116,222,995 TOTAL 98,991 $9,951,210,344 $38,544,528,884 Figures A-1.1 through A-1.3 show each region s output, employment, and wages and salaries. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 24

26 Figure A-1.1: Aerospace Employment by Region: 2015 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 25

27 Figure A-1.2: Aerospace Industry Wages and Salaries by Region: 2015 Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 26

28 Figure A-1.3: Aerospace Industry Output by Region: 2015 See Appendix 2 for a definition of Output. Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 27

29 APPENDIX 2 Methodology, Definitions and References METHODOLOGY AND DEFINITIONS The economic impact of the aerospace industry was measured using IMPLAN, an economic impact assessment model customized to reflect Georgia s economy. The model estimates the multiplier (indirect and induced) effects of direct economic activity for each sector of the aerospace industry. Output: Economic output is defined as the value of a company s or industry s production. Simply, output is total sales revenue minus its cost of goods sold. Wages and Salaries: Wages and salaries are defined as income paid by employers. Direct Impacts: Direct impact measures employment, wages and salaries, and expenditures of goods and services attributable to aerospace industry. Indirect Impacts: Indirect impact results from the purchase of goods and services by suppliers to the aerospace industry. Induced Impact: Induced impact results from the expenditures of aerospace employee wages and salaries. Total impact: Total Impact is generally referred to as the multiplier effect. This effect occurs whenever dollars are brought into a region s economy and recirculated before exiting or leaking out. REFERENCES Bureau of Economic Analysis Input-Output Sectors as contained in IMPLAN Pro: Data Guide, Minnesota IMPLAN Group Inc., Stillwater, MN, Georgia Department of Labor, ES202 Wage and Employment Data: North American Industrial Classification System (NAICS), Economic Impact Analysis of Georgia s Aerospace Industry: 2015 Page 28