SUMMER 2011 ECONOMIC IMPACT OF THE OKLAHOMA MANUFACTURING SECTOR. Southwestern Oklahoma State University Center for Economic & Business Development

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1 SUMMER 2011 ECONOMIC IMPACT OF THE OKLAHOMA MANUFACTURING SECTOR Southwestern Okahoma State University Center for Economic & Business Deveopment Prepared by: Fui Ting Fui Phang Ting Phang

2 Prepared for: The State Chamber of Okahoma Okahoma Professiona Economic Deveopment Counci Okahoma 21st Century Specia Thanks to Peco Products, Inc., The Goodyear Tire & Rubber Company, and Kimray Inc. for images

3 Executive Summary The State Chamber of Okahoma has approached the Center for Economic and Business Deveopment at Southwestern Okahoma State University to conduct an updated study of the manufacturing sector s economic impact upon the State of Okahoma. The fu report is commissioned by the State Chamber of Okahoma, Okahoma Professiona Economic Deveopment Counci and Okahoma 21st Century (A Research Foundation Affiiate of the State Chamber). The primary focus of this report is to forecast the tota economic impact and impications arising from the manufacturing sector on Okahoma s economy. To anayze the economic impact, the study used the REMI mode, a dynamic input-output, muti-equation mode that was specificay deveoped for Okahoma and its six primary regions. Empoyment data obtained from the Okahoma Empoyment Security Commission (OESC) has served as the primary input to measure this broady-defined sector. The economic impact of manufacturing is measured in terms of Gross Regiona Product, Consumption, Rea Disposabe Persona Income, Output, Popuation, Labor Force, Empoyment, Capita Stock, Proprietors Income and Income Tax. The study found that the economic impact of the manufacturing sector is substantia and woud compound exponentiay into the future as it rippes through the regions and the state s economy. Beow is a snapshot of manufacturing s average economic impact on the statewide economy, : State Output Impact woud account for $ biion Gross State Product Impact woud account for $ biion Rea Disposabe Persona Income Impact woud account for $ biion Empoyment Impact woud account for 308,417 net new jobs 3 Center for Economic & Business Deveopment at Southwestern Okahoma State University

4 Tabe of Contents Executive Summary... 3 Manufacturing at a Gance... 5 Project Information: Economic Impact Anaysis Methodoogy... 7 Project information & Assumptions Statewide Economic Impact (Bock 1 - Output Variabes): Gross State Product Rea Disposabe Income State Output Statewide Economic Impact (Bock 2 - Labor & Capita Demand Variabes): Empoyment Capita Stock Statewide Economic Impact (Bock 3 - Popuation & Labor Suppy Variabes): Labor Force Popuation Statewide Economic Impact (Bock 4 - Wages, Prices & Cost Variabes): Proprietors Income Income Taxes Concusion Regiona economic impact: Northwest Okahoma Northeast Okahoma Southwest Okahoma Southeast Okahoma OKC MSA Tusa MSA References... 37

5 Manufacturing at a Gance Manufacturing at a Gance Manufacturing today has evoved dramaticay since its eariest days, from a traditiona paradigm to a much more compex taxonomy. It is characterized by strong exports, high productivity, skied-abor and advanced technoogy, innovation and growth, which has served as the underpinning for the state s economy in every facet. Recent economic turmoi has chaenged the nation in the past years and spreads across a wide range of industries. Since the nation emerged from recession in ate 2009, the manufacturing sector has been a key driver of the economy s recovery. According to the Bureau of Economic Anaysis, durabe-goods manufacturing and retai trade were among the eading contributors to the upturn in U.S. economic growth in Manufacturing vaue added a measure of an industry s contribution to GDP rose 5.8 percent in 2010, a sharp return to growth after decining two consecutive years. Durabe-goods manufacturing turned up, increasing 9.9 percent after decining 12.7 percent in Nondurabe-goods manufacturing rose 0.8 percent, after decining 3.4 percent in Growing competition and advanced technoogy have aso yieded higher productivity. The news reeased by the Bureau of Labor Statistics stated that, in 2009, the United States had the argest productivity increase of 7.7 percent among the 19 countries (incuding Austraia, Begium, Canada, U.K., Japan, Germany and Spain to name a few). 2 The observed sharp increase in productivity portrays a higher Gross Domestic Product (GDP) growth rates. According to the Bureau of Economic Anaysis, every $1 of fina demand spent for a manufactured good generates $0.55 of GDP in the manufacturing sector and $0.45 of GSP in non-manufacturing sectors. 4 Looking at Gross State Product (GSP) in 2010, manufacturing stayed strong, contributing the argest share of14.4 percent ($17,269 miion) to Okahoma s tota GSP, which represented an 11.1 percent increase from This increase was made possibe by tremendous advances in manufacturing productivity. By comparison, the Rea Estate, Renta and Leasing sector cosey foowed the manufacturing sector, which accounted for $14,284 miion in GSP, whie the Mining sector setted for third pace, which contributed $14,109 miion in terms of GSP (see graph). Okahoma Gross State Product by Industry 2010 (miions of current doars) Arts, Entertainment & Recreation Education Services Management of Companies & Enterprises Other Services, except government Accommodation & Food Services Utiities Information Administrative & Waste Services Transportation & Warehousing Construction Professiona & Technica Services Whoesae Finance & Insurance Retai Heathcare & Socia Assistance Mining Rea Estate, Renta & Leasing Manufacturing Source: Bureau of Economic Anaysis Center for Economic & Business Deveopment at Southwestern Okahoma State University 5

6 Manufacturing at a Gance Okahoma Top Five Export Markets 2010 (miions of $) China, $243 (7.9%) Russia, $194 (6.3%) Okahoma manufacturing jobs had faen by 13.9 percent in 2009 from 2007, and the state s tota estabishments had sipped 1.7 percent during the same period of time. 5 Between May 2010 and May 2011, however, empoyment growth in manufacturing has outpaced other sectors with 8,700 jobs added to the state and growing by 7.1 percent. 6 Japan, $ 348 (11.3%) Mexico, $424 (13.%) Canada, $1,867 (60.7%) Manufacturing jobs are among the highest paying in the state. According to the Nationa Association of Manufacturers, manufacturing compensation is neary 50 percent higher than other nonfarm empoyers in the state. 7 Source: U.S. Census Bureau Situated in the heartand of the nation, Okahoma is among the top states for ogistic centers. In the atest statistic, Okahoma ranked 25th in the nation of the Top States for Business The ranking is based on a number of factors that incude the cost of business, quaity of ife, economy, technoogy and innovation, education, access to capita, and cost of iving. In addition, it was ranked 3rd in the nation in 2010, as one of the best states in terms of the Cost of Doing Business. 8 The state is aso regarded as one of the most business-friendy states, ranking 7th owest in the nation on tax burden in An export boom and strong inventories have paced manufacturing at the forefront of the economic recovery. From 2009 to 2010, Okahoma s exports grew 21 percent, accounting for $5.4 biion, with products shipped to over 170 countries. 10 With this figure, the top five commodities exported made up 39 percent of tota exports, which is comprised of Civiian Aircraft, Engines and Parts, Medica and Surgica reated Instruments and Appiances, Tires, Crude Oi, and Parts for Boring or Sinking Machinery. 11 According to the Okahoma Department of Commerce, exporters provide 27,000 jobs in Okahoma. U.S. manufacturing exports to the recent Free Trade Agreement (FTA) partners were 10.5 percent higher in 2010 when compared to our overa export growth since each agreement was signed. 12 Okahoma s primary export markets are Canada, Mexico, Japan, China and Russia (see chart). Canada is the state s argest export market, with export saes totaing $1,867 miion in 2010; foowed by Mexico ($424 miion); Japan ($348 miion); China ($243 miion); and Russia ($194 miion). Okahoma was ranked 6th in the nation by voume of exports to Russia. 10 Between 2009 and 2010, Okahoma goods exported to Russia more than doubed. According to the State Chamber of Okahoma, internationa trade now supports neary one in every five American jobs, and workers in gobay engaged companies earn more than the average wage. 13 Understanding the vaue and the potentia economic impact of this diverse sector is essentia as we move towards the economic recovery. Positive spiover of manufacturing wi benefit the state s economy in many ways. 6 Center for Economic & Business Deveopment at Southwestern Okahoma State University

7 Economic Impact Anaysis Methodoogy Economic Impact Anaysis Methodoogy Regiona Economic Modes, Inc. (REMI), based in Amherst, MA, produces economic modeing software that enabes users to answer what if questions about their respective economies. Each REMI mode is taiored for specific geographic regions by using data, incuding empoyment, demographic, and industry data, unique to the modeed region. The Center for Economic & Business Deveopment uses the Okahoma REMI mode, which is a six region, 70 sector REMI mode, to forecast how a given economic activity or poicy change occurring in one region woud affect that region, a group of regions, and/or the state. The REMI simuation mode uses hundreds of equations and thousands of variabes to forecast the impact that an economic/ poicy change woud have upon an economy. Basicay, the REMI mode measures this economic impact by first forecasting the region s performance as if there were not any changes (the contro forecast), and then forecasting the region s/state s performance if the economic activity occurred (the aternative forecast). The difference between the two forecasts represents the economic impact of the economic activity upon the region, group of regions, and/ or the state. It is this economic impact that wi be reported in the Economic Impact Anaysis section of this report. A basic graphic representation of some of the inkages in the economic modeing software is presented beow. As can be seen, the REMI mode contains five bocks. Each bock has its own variabes and interactions so that changing any one variabe in the mode not ony affects other variabes in its REMI Linkages (Excuding Economic Geography Linkages) [1] Output State & Loca Government Spending Output Consumption Spending Investment Spending Net Exports Rea Disposabe Income [3] Demographic [2] Labor & Capita Demand Migration Popuation Optima Empoyment Capita Stock Participation Rate Labor Force Labor / Output Ratio [5] Market Share Domestic Market Share Internationa Market Share [4] Wages, Prices, and Production Costs Empoyment Opportunity Wage Rate Composite Wage Rate Production Costs Housing Price Rea Wage Rate Composite Prices Center for Economic & Business Deveopment at Southwestern Okahoma State University 7

8 Economic Impact Anaysis Methodoogy own bock, but aso variabes in other bocks. For exampe, if XYZ Corporation expanded its operations in Okahoma City by hiring an additiona 100 new empoyees, then that initia empoyment increase woud utimatey affect output, popuation, migration, wage rates, etc. It is through the mode s inkages and interactions that empoyment s (in Bock 2) direct effects upon optima capita stock (Bock 2), empoyment opportunity (Bock 4), and rea disposabe income (Bock 1), that the empoyment gain works its way through the mode to affect each of the other variabes. Commenting first on empoyment s positive effect upon optima capita stock, this variabe wi increase from an empoyment gain because (1) some new empoyees wi demand newy constructed houses, and (2) physica capita wi be required to assist the abor to produce output. Optima capita stock interacts with actua capita stock (not shown) to affect the eve of investment (Bock 1) in the mode which utimatey increases Okahoma City s output (Bock 1). Higher optima capita stock when compared to actua capita stock spurs investment in the region since the difference represents unfufied demand for physica capita. And output (Y) increases since it is equa to the sum of persona consumption (C), state & oca government spending (G), investment (I), net exports from the region (X-M) as we as demand for intermediate inputs. Commenting next upon empoyment s effect upon empoyment opportunity, this variabe increases because 100 new jobs have been created in the economy. An increased empoyment opportunity wi positivey affect wage rates (Bock 4) if the region s empoyment is growing faster than the region s abor force (Bock 3). Wage rates interact with the consumer price defator, which is an adjustment factor accounting for differing infation rates in various regions, to affect rea wage rates (Bock 4). Higher rea wage rates in one region compared to another region serve as an incentive for peope to move between geographic regions; thus rea wage rates affect migration (Bock 3). Commenting ast upon empoyment s effect upon rea disposabe income (Bock 1), as jobs are created, income paid to the new empoyees aso increases. The newy empoyed wi save a portion of their income and spend a portion of their income on consumer goods, the atter of which increases consumption (Bock 1). As a component of output, increased persona consumption produces a subsequent rise in output. Obviousy, the previous exampe is ony a simpe iustration of a more compex mode. For more information about the REMI mode and its equations, pease read Regiona Economic Modeing by George Treyz (Kuwer Academic Pubishers, 1993.) 14 8 Center for Economic & Business Deveopment at Southwestern Okahoma State University

9 Economic Impact Anaysis Methodoogy Given the previous basic iustration of the REMI mode, the process that the REMI mode uses to forecast the economic impact of a poicy change can be iustrated. The process begins with a poicy question and concudes with a comparison between a contro forecast and an aternative forecast. The accompanying diagram assists with the iustration. A contro forecast, which uses current data regarding the economy, is generated by the REMI mode. The contro forecast represents the projection of the economy into the future ceteris paribus. This means that future economic growth wi foow simiar patterns in the future as had been experienced in the past. The aternative forecast aows the user to input variabe changes to occur in future time periods. Ony those variabes that woud be affected by the poicy change being measured woud be changed in the aternative forecast. The REMI mode then forecasts economic performance based upon the poicy variabe changes. The difference between the aternative and the contro forecasts, measured by the distance between the two forecast ines, represents the economic impact of the poicy change upon the economy. If the aternative forecast is greater than the contro forecast, then a positive economic impact resuts for the economy. A negative economic impact resuts shoud the aternative forecast be ess than the contro forecast. Forecasting Economic Impacts with the REMI Software Poicy Question What woud be be the t he economic e conomic im- impact upon upon Okahoma O kahoma from from the tex- he expansion of of ABC ABC Corporation in in the Tire Tire Manufacturing industry? Externa Input Increased e empoyment / output variabes i in n the Tire Manufacturing M industry and baseine vaues for a a other externa poicy variabes. REMI Mode Externa Input Baseine Baseine vaue vaue for for externa externa p poicy oicy variabes. variabes. Aternative Forecast Contro Forecast 1,975 1,975 1,769 1,975 1,769 Year 1 Year 2 Year 3 Year 4 Year 1 Year 2 Year 3 Year 4 1,769 Year 1 Year 2 Year 3 Year 4 Center for Economic & Business Deveopment at Southwestern Okahoma State University 9

10 Economic Impact Anaysis Methodoogy As is observabe from the accompanying map, the state of Okahoma is divided into six regions in the REMI mode used by the CEBD. They are: Northwest Okahoma, Northeast Okahoma, Southwest Okahoma, Southeast Okahoma, the Okahoma City metro area, and the Tusa metro area. The Okahoma City metro area and the Tusa metro area correspond to the Metropoitan Statistica Areas (MSAs) defined by the Office of Management & Budget. The Office of Management & Budget (OMB) defines metropoitan areas in the United States based upon the size of the economies and commuting patterns. The two argest MSAs by popuation in Okahoma are Okahoma City MSA and Tusa MSA. As defined by the OMB, the Okahoma City MSA is comprised of seven counties (Canadian, Ceveand, Grady, Lincon, Logan, McCain, and Okahoma counties), and the Tusa MSA is comprised of seven counties (Creek, Okmugee, Osage, Pawnee, Rogers, Tusa, and Wagoner counties). 15 Additionay, any of the regions may be combined with any combination of the other regions to produce a user-defined region for the purposes of measuring economic impact. For exampe, if an economic impact were to be quantified for Eastern Okahoma, then the three regions of Northeast Okahoma, Southeast Okahoma and the Tusa metro area woud be combined to be reported as Eastern Okahoma. This report deineates the economic impact of the Okahoma Manufacturing sector on the state of Okahoma and the six sub-state regions (see map beow) of Okahoma. Okahoma REMI Regions Northwest Okahoma Northeast Okahoma Southwest Okahoma Southeast Okahoma OKC MSA Tusa MSA 10 Center for Economic & Business Deveopment at Southwestern Okahoma State University

11 Economic Impact Anaysis Methodoogy It is important to note that whie economic impact anaysis is a vauabe too for economic deveopment, economic impact anaysis does have imitations. Resource Systems Group, Inc. identified some of the imitations of their economic impact anaysis too. Those imiting factors that pertain to REMI-modeed economic impact anaysis are: Economic impact anaysis cannot determine whether a new economic activity/project is economicay feasibe or profitabe. It is possibe that projects with very arge favorabe economic impact may be unprofitabe. 16 Economic impact anaysis cannot identify the specific individuas or the ocation of individuas or businesses impacted. For exampe, the anaysis may show that a specific number of jobs wi be generated in the trucking industry, but it cannot determine if those jobs wi be fied from a specific town. 16 Economic impact anaysis cannot determine whether the outcomes of an economic activity are sociay or environmentay beneficia. Regarding the first point, the purpose of economic impact anaysis is not to determine whether a new economic impact activity is profitabe. Rather, the purpose of economic impact anaysis is to quantify the impact of the new economic activity upon an economy. Other assessment toos, ike market feasibiity studies or cost/benefit anayses, can hep decisionmakers determine whether an economic activity/project is profitabe. Regarding the second point, athough the economic impact cannot identify a specific company or city, the REMI mode can forecast the region in which the economic impact wi occur. With the state divided into six regions, the eve of detai is greater in the REMI mode than with other economic impact anaysis modes. Regarding the fina point, Resource Systems Group, Inc. reported that economic impact anaysis can ony dea with impact that is easiy quantifiabe in doars or empoyment. Environmenta, heath, or socia impacts are not normay assessed, even though they may have economic impications. 16 Whie this may be a imitation of IMPLAN-modeed economic impact anaysis, this is not a imitation with REMI-modeed economic impact anaysis. Admittedy these externaities are not easiy quantifiabe, but they may sti be quantified through the use of we-formed surveys. With a quantifiabe amount associated with the externaity, its impact may then be modeed through an additiona simuation. There is at east one other imitation when measuring the economic impact upon a region not mentioned in the Resource Systems Group, Inc. report. That imitation reates to using aggregated industry data to measure economic impact. Most economic impact toos use historica data to mode future events. Some of the historica data is aggregated in order to make the modeing too more affordabe and user-friendy. Using aggregate industry data to mode the economic impact of a specific company requires the assumption that the specific company is a good sampe of the aggregate of the whoe industry. Lasty, it shoud be noted that economic impact anaysis is not the same too as a cost-benefit anaysis. A cost-benefit anaysis quantifies a of the costs, incuding socia and environmenta costs, and a of the benefits associated with a project, and if the ratio of benefits to costs is greater than 1.0, then this becomes the basis for approving a project. Economic impact anaysis does not have any threshod associated with the too. Rather, the REMI-modeed economic impact anaysis wi forecast quantifiabe amounts of empoyment, popuation, income, etc. over a range of years for any region. These quantifiabe forecasts can then be used with other toos, incuding cost-benefit anayses and feasibiity reports to assist in the decision-making process. Center for Economic & Business Deveopment at Southwestern Okahoma State University 11

12 Economic Impact Anaysis Methodoogy Separate from the imitations of economic impact anaysis, there are unique imitations to the REMI mode. Every economic impact mode attempts to simuate rea word conditions, and every economic impact mode has its own unique weaknesses. The primary weakness of our REMI mode is that the geographic regions in the mode cannot be disaggregated further. This means that our version of the REMI mode cannot forecast the economic impact upon smaer regions. Specificay, the six regions cannot be broken into the counties comprising their respective region. The reader shoud bear in mind that every mode has its weaknesses, and whie it is not the purpose of this report to ist the reative strengths and weaknesses of each of the economic impact modes, we want to be as transparent as possibe regarding the REMI modeing software used by the CEBD. One of the key features differentiating the REMI simuation mode from other economic impact measurement toos is the fact that REMI uses severa economic impact methodoogies to predict impact upon an economy. Whereas other toos rey upon one methodoogy to predict economic impact, REMI combines severa economic impact methodoogies, which has the effect of minimizing the weaknesses of any one methodoogy. Methodoogies incuded in the REMI mode are inputoutput, econometric equations, economicbase, and it aso incudes aspects of computabe genera equiibrium. An additiona strength of the REMI mode invoves its dynamic nature. Whereas economic impact modes reying soey on input-output are ony abe to make static one year forecasts, the REMI mode is abe to forecast the economic impact over a number of years. Aso differentiating the REMI mode from other economic impact modes is its abiity to report the economic impact with a myriad of economic and/or demographic variabes. This means that not ony wi traditiona economic impact variabes (for exampe, empoyment, income, gross regiona product, etc.) be reported by the REMI mode, but the mode is aso abe to report other economic and socioeconomic variabes (for exampe, capita stock, economic migrants, popuation by age/gender, etc.) as we. By forecasting nontraditiona economic and socioeconomic variabes, the REMI mode provides a more compete picture of the impact a given scenario woud have upon an economy. 12 Center for Economic & Business Deveopment at Southwestern Okahoma State University

13 Project Information and Assumptions Project Information and Assumptions This section documents key scenarios and assumptions that serve as primary inputs into the REMI mode for the purposes of estimating incrementa impact of Manufacturing on Gross Regiona Product (GRP), Output, Empoyment, Income, Taxes and more. The REMI mode is a dynamic inputoutput modeing software that generates forecasts based on historica data. The primary nationa, state, and county data came from the Bureau of Economic Anaysis (BEA). Other major sources of historica data were obtained from the U.S. Census Bureau, Bureau of Labor Statistics (BLS), State Empoyment Security Agencies (ESAs), Energy Information Administration and other reated sources that serve as the foundation upon which to forecast future economic and socioeconomic variabes. the REMI mode, empoyment input of the Transportation Equipment Manufacturing industry was further disaggregated into 2 sub-categories of 4-digit NAICS codes, which are Motor Vehice, Vehice Body and Parts Manufacturing and Other Transportation Equipment. (See Tabe 1.1) The empoyment numbers of manufacturing incuded workers covered by the State Unempoyment Insurance (UI) aws and federa civiian workers covered by the Unempoyment Compensation for Tabe 1.1 NAICS Category Food Manufacturing Beverage and Tobacco Product Manufacturing Textie Mis Manufacturing the Federa Empoyees (UCFE) program. The tota manufacturing empoyment of 130,001 represents the tota job count of federa, oca and private non-farm empoyment. This number was grouped by six sub-state regions: with 5,811 jobs in the Northwest region; 18,831 jobs in the Northeast region; 7,351 jobs in the Southwest region; 18,473 jobs in the Southeast region; 32,750 jobs in Okahoma City MSA; and 46,785 jobs in Tusa MSA. Tota manufacturing empoyment in 2009 decined by 13.9 percent compared to tota manufacturing Empoyment 16,143 2, In order to mode the economic impact of a business that presenty exists in the economy, it is necessary to remove data associated with that business from the modeing software in the current year and the projected future years. As a resut, the subsequent forecast produces negative impact when compared to the contro forecast. This approach is known as a Counterfactua Modeing. In order to expain the positive impact that the business woud have upon the economy, the resuts obtained were mutipied by negative one, which ater refers to as a counterfactua positive simuation. This type of simuation assumes any doars/ jobs removed from the mode wi not be re-spent or re-empoyed esewhere in the economy Textie Product Mis Manufacturing Appare Manufacturing Leather and Aied Product Manufacturing Wood Manufacturing Paper Manufacturing Printing and Reated Support Activities Manufacturing Petroeum and Coa Product Manufacturing Chemica Manufacturing Pastics and Rubber Product Manufacturing Nonmetaic Minera Product Manufacturing Primary Meta Manufacturing Fabricated Meta Product Manufacturing Machinery Manufacturing Computer and Eectronic Product Manufacturing ,294 2,717 3,262 2,540 2,742 9,782 7,765 3,936 20,845 26,254 6,079 Empoyment data used as inputs into the REMI mode were suppied by the Okahoma Empoyment Security Commission (OESC). The empoyment data we obtained and used to run the simuation are reported in 3-digit NAICS codes. Due to the recent changes made to Eectrica Equip t, Appiance & Component Product Manufacturing Motor Vechice, Vehice Body and Parts Manufacturing Other Transportation Equipment Manufacturing Furniture and Reated Product Manufacturing Misceaneous Tota 3,118 6,021 6,021 1,660 3, ,001 Center for Economic & Business Deveopment at Southwestern Okahoma State University 13

14 Project Information and Assumptions empoyment in 2007 in the previous study. The data obtained from OESC was grouped by FIPS codes. FIPS codes refer to the Federa Information Processing Standards Codes. It is created for states and counties to name popuated paces. For specia cases, unique FIPS codes such as FIPS 995 and FIPS 998 are assigned to specific businesses. FIPS 995 is defined as statewide, ocations in more than one county, or no primary county. To expain this, it refers to estabishments that have ocations in more than one county, or for which a primary ocation has not been determined or cannot be assigned by the State. FIPS 998, on the other hand, is defined as out-of-state ocations. Generay, empoyers reported under FIPS 998 must have UI accounts in a states in which they have permanent worksites or in which they have ongoing business operations, such as construction, which usuay ack a fixed worksite. Whie most out-of-state worksites wi be of a temporary nature, there are a few rare cases where an empoyer may maintain a worksite outside the state in which UI coverage is based that coud be cassified with county code 998. The study incuded FIPS 995 empoyment as data inputs into the REMI mode, but not the empoyment data reported in FIPS 998, since the economic activities in FIPS 998 occurred in out-of-state regions. The study further assumed that empoyment numbers of FIPS 995 were proportionatey distributed to the six distinct regions of Okahoma. (See map on pg 7) To forecast the possibe economic impact, the study empoyed a more conservative approach, assuming the number of tota empoyment inputs remains unchanged over the entire forecasted time period. Two variabes, Saes Empoyment and State and Loca Government Empoyment, were used to project the economic impact driven by the manufacturing sector. Using the empoyment data, seven compementary scenarios (OKC MSA, Tusa MSA, Northwest Okahoma, Northeast Okahoma, Southwest Okahoma, Southeast Okahoma and FIPS 995) were buit and modeed as counterfactua positive simuations, based on a forecast time frame from 2011 to As previousy mentioned, the REMI mode reies on historica data to forecast the economic impact. This data was obtained from different sources and each of these sources use different measurements to report the monetary figures. BEA has reported Gross Domestic Product (GDP) and its aggregate fina demand components in chained rea doars, whie BLS uses fixed rea doars for data that are at the most detaied eve. In order to reconcie these two sets of variabes, a rea doar concepts used in the mode are based on fixed weights. This aows the industry vaue added and fina demand totas to remain baanced. To avoid any confusion, a monetary figures of the economic impact reported are present in current doars. Current doar is the vaue of a doar at the time at which it is measured. Looking at the body in this report, the former haf of the report discusses the possibe economic impact of manufacturing on the state s economy, and the atter haf addresses the same issues, but focuses on a regiona eve on the six sub-state regions. The graphs shown from page 14 to page 22 represent the aggregated economic impact (direct, indirect, and induced impact) of the manufacturing sector on Okahoma s economy. The contro forecast predicts the economic and demographic variabes into the future, if nothing changes (ceteris paribus) in the economy. The aternative forecast predicts the same variabes for the economy with a given economic stimuus, which in this case are the manufacturing empoyment data inputs. The difference between the two (contro forecast and aternative forecast) concudes the economic impact that the stimuus has upon the state and the regiona economies. The aggregated economic impact is an estimate of what woud have occurred in the study region over the study time period, if manufacturing had been the ony stimuus that occurred in the economy and ceteris paribus. The economic impact of the manufacturing sector, hereafter is referred to as Manufacturing. 14 Center for Economic & Business Deveopment at Southwestern Okahoma State University

15 Statewide Economic Impact (Bock 1: Output Variabe) Gross State Product Gross State Product (GSP) As a vaue added concept is anaogous to the nationa concept of Gross Domestic Product. It is equa to output excuding the intermediate inputs. It represents compensation and profits. Affected By: Consumption, Net Exports, Investment, State & Loca Government Spending Affecting: Commodity Access Index, Change in Loca Suppy, Empoyment, Output Gross State Product (GSP) is anaogous to the nation s Gross Domestic Product (GDP), and to the region s Gross Regiona Product (GRP). It is the tota vaue of a goods and services produced within a region during a given time period. In genera, it can be used as a barometer to gauge a region s economic we being. GSP is predicted to account for $ biion if nothing changes in the state s economy in With the addition of Manufacturing, this amount woud grow to as much as $ biion, representing a 17 percent increase or $ biion of GSP impact. By 2031, the GSP impact is predicted to equate $ biion, which woud resut in an upsurge of tota GSP to reach to an estimate of $ biion. Over the years, average Manufacturing GSP impact is projected to match $ biion annuay, mirroring a 17.9 percent increment from the baseine. Average Manufacturing Consumption Impact Category Miions of Current $ Vehices & Parts $ Computers & Furniture $1, Other Durabes $ Food & Beverages $2, Cothing & Shoes $ Gasoine & Oi $ Fue Oi & Coa $7.225 Other Non-Durabes $1, Housing $2, Househod Operation $1, Transportation $ Medica Care $3, Other Services $3, Tota $21, Manufacturing activities woud stimuate GSP impact to grow by roughy 5 percent yeary, on average, throughout the study time period. Looking at Manufacturing impact across a industries, the Other Services category woud make up 17.8 percent ($3, miion) of the average tota consumption impact, whie the Fue Oi and Coa category woud account for 0.03 percent or $7.225 miion of the average tota consumption impact. Graph 1.1: Economic Impact of Gross State Product $500 Economic Impact Without Manufacturing $400 With Manufacturing (Biions of Current $) $300 $200 $100 $ Average $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Center for Economic & Business Deveopment at Southwestern Okahoma State University 15

16 Statewide Economic Impact (Bock 1: Output Variabe) Rea Disposabe Persona Income Rea Disposabe Persona Income: Disposabe persona income defated by the PCE-Price Index (the persona consumption expenditure price index). Affected By: Empoyment (Bock 2), Commuter Income or Outfow, Property Income Transfers, Taxes, Socia Security Payments, Compensation (Bock 4), Consumer Prices (Bock 4) Affecting: Consumption, Optima Residentia Capita Stock (Bock 2) Rea Disposabe Persona Income represents the after tax, infation adjusted income that can be spent or saved by income earners. Rea Disposabe Persona Income is directy affected by Disposabe Persona Income, so a change in Rea Disposabe Persona Income wi ead to a change in Persona Consumption. In REMI s term, Rea Disposabe Persona Income equas Disposabe Persona Income defated by the PCE-Price Index. Briefy, an increase in rea disposabe persona income can be caused by an increase in disposabe persona income or a decrease in the PCE-Price index. Manufacturing s Rea Disposabe Persona Income impact is projected to surge consideraby and woud eap percent from $ biion in 2011 to $ biion in By 2031, tota Rea Disposabe Persona Income above the baseine woud buid up to an estimated $ biion. Compared to the previous study from 2008, the predicted average impact that Manufacturing woud have on Rea Disposabe Persona Income woud have contracted 17.5 percent, down from the initia estimates of $ biion to $ biion. Despite this, Manufacturing continues to generate substantia impact on the statewide Rea Disposabe Persona Income. Mirroring the Manufacturing in the economy, the economic impact on Rea Disposabe Persona Income is projected to grow by an average rate of 5.3 percent annuay. Average impact on Rea Disposabe Persona Income is predicted to rise to $ biion per year throughout the entire forecasted time period. Graph 1.2: Economic Impact of Rea Disposabe Persona Income $400 $350 $300 Economic Impact Without Manufacturing With Manufacturing (Biions of Current $) $250 $200 $150 $100 $50 $ Average $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Center for Economic & Business Deveopment at Southwestern Okahoma State University

17 Statewide Economic Impact (Bock 1: Output Variabe) State Output State Output The amount of production in doars, incuding a intermediate goods purchased as we as vaue-added (compensation and profit). Can aso be thought of as saes (Output= Sef-Suppy + Export + Intraregiona Trade + Exogenous Production. Affected By: Consumption, Internationa Exports, Investment, State and Loca Government Spending, Intermediate Inputs, Share of Domestic Markets Affecting: Commodity Access Index, Change in Loca Suppy, Empoyment, Intermediate Inputs State output, refecting broader economic activities that incude the amount of production, is comprised of a the intermediate goods purchased as we as vaue-added (compensation and profit). Briefy, it is the sum of Gross State Product pus intermediate goods and services. Output is affected by changes in industry demand in a regions in the nation, the home region s share of each market, and internationa exports from the region. Variabes affecting and affected by the state output are the same variabes affecting and affected by GSP, except that state output incudes the measurement of intermediate inputs. In 2011, state output is anticipated to be $ biion, if nothing changes in the economy. This amount woud surge to $ biion if Manufacturing is brought into the state, which woud render an estimated of $ biion in state output impact that is driven by Manufacturing s activities. State output impact wi continue to grow in the subsequent years at an average speed of 5 percent annuay, and the average output impact is projected to be $ biion per year. Over the years of the forecasted time frame, the aggregated impact on state output woud account for approximatey $2, biion. REMI predicts the state output (without Manufacturing) to be $ biion and $ biion, in 2021 and 2031 respectivey. However, if Manufacturing were to be added to the economy, this impact woud appreciate to neary $ biion and $ biion respectivey, portraying a 22.9 percent increment in 2021 and 24.7 percent increase in output impact by Graph 1.3: Economic Impact of State Output $800 $700 $600 Economic Impact Without Manufacturing With Manufacturing (Biions of Current $) $500 $400 $300 $200 $100 $ Average $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Center for Economic & Business Deveopment at Southwestern Okahoma State University 17

18 Statewide Economic Impact (Bock 2: Labor and Capita Demand Variabes) Empoyment Empoyment: Bureau of Economic Anaysis (BEA) concept based on pace of work; incudes fu-time and part-time empoyees. Affected By: Labor / Output Ratio, Output (Bock 1), Labor Productivity Affecting: Capita Stock, Rea Disposabe Income (Bock 1), Empoyment Opportunity (Bock 4), Wage Rate (Bock 4) Empoyment incudes the number of futime and part-time jobs by pace of work, with fu-time and part-time jobs carrying equa weight in the REMI mode. Whie empoyees, soe proprietors, and active partners are incuded in the estimate, unpaid famiy workers and vounteers are not incuded. Manufacturing has an empoyment mutipier of 2.4 on the statewide economy. Generay speaking, with every 100 jobs created by Manufacturing, statewide empoyment woud increase by an additiona 240 jobs. The cacuation of the empoyment mutipier is done by taking the number of projected average empoyment impact (308,417 jobs) divided by the number of manufacturing empoyment input (130,001 jobs). As noted in the graph, the existence of Manufacturing in the economy woud drive the statewide empoyment to increase to 2, thousand jobs from the initia 2, thousand jobs in Average Empoyment Impact Category Net New Job Natura Resources, Mining, Utiities, Construction Manufacturing Trade Transportation, Information, Finance, & Accounting Services State & Loca Government 22, ,347 31,034 3,489 76,196 46, By 2031, the empoyment impact is projected to tota 2, thousand jobs, which indicates a 13.7 percent increase, or an additiona 328,540 net new jobs added to the state. On average, the statewide empoyment impact is estimated to increase 308,417 net new jobs per year. Of this figure, the estimated private non-farm empoyment impact woud stand at 85 percent. Manufacturing woud account for the argest impact, supporting neary 129,347 of statewide empoyment. Graph 2.1: Economic Impact of Empoyment Economic Impact 3,000,000 Without Manufacturing With Manufacturing 2,500,000 (Peope) 2,000,000 1,500,000 1,000, , Average 299, , ,417 2,166,238 2,422,245 2,313,741 2,465,527 2,750,785 2,622, Center for Economic & Business Deveopment at Southwestern Okahoma State University

19 Statewide Economic Impact (Bock 2: Labor and Capita Demand Variabes) Capita Stock Capita Stock The amount of capita stock existing in the economy. It is further divided into Residentia Actua Capita Stock and Non-Residentia Actua Capita Stock Affected By: Cummuative effects of Investment Affecting: Gap betwen Actua & Optima Capita Stock, Investment As noted before, Capita Stock is divided into three major categories. These incude Residentia Capita Stock, Non-Residentia Capita Stock and Utiity Capita Stock. Each of these categories is further disaggregated into actua or optima capita stock. However, recent changes have omitted the reporting of Utiity Capita Stock, therefore, this report wi focus on the findings of Residentia Actua Capita Stock and Non-Residentia Actua Capita Stock. As a reminder, a reported Actua Capita Stock is the cumuative impact that woud occur in the state, which is triggered by the jobs supported in Manufacturing. In 2011, the state s tota Actua Capita Stock is forecasted to grow by an additiona $5.823 biion. This amount woud ramp up to as much as $ biion by The average impact brought about by Manufacturing woud equate to $ biion per year. Okahoma Residentia Actua Capita Stock is the amount of residentia capita (housing structures) in the region accumuated over time net of depreciation. Okahoma Residentia Actua Capita Stock is affected by changes in residentia investment. The economic impact upon the statewide Residentia Actua Capita Stock is predicted to grow from $3.941 biion in 2011 to $ biion in 2031, resuting in an average impact of $ biion annuay. Okahoma Non-Residentia Actua Capita Stock is the amount of non-residentia capita (non-housing structures) in the region accumuated over time net of depreciation. In 2011, the statewide Non- Residentia Actua Capita Stock impact is forecasted to be $1.882 biion and woud eventuay increase to $ biion by The average impact spiover on the statewide economy woud equa $ biion per year. Graph 2.2: Economic Impact of Capita Stock Tota Capita Stock Impact $800 Without Manufacturing With Manufacturing Residentia Actua Capita Stock Impact Non-Residentia Actua Capita Stock Impact 80 $ $ (Biions of Current $) $500 $400 $300 $200 $ $ Average $5.823 $ $ $ $ $ $ $ $ Center for Economic & Business Deveopment at Southwestern Okahoma State University 19

20 Statewide Economic Impact (Bock 3: Popuation and Labor Suppy Variabes) Labor Force Labor Force: The number of peope in the abor force, i.e., empoyed or seeking work; cacuated with participation rates by age-gender-racia cohort. Affected By: Popuation and Participation Rate Affecting: Empoyment Opportunity (Bock 4), Wage Rate (Bock 4) Labor force incudes the tota number of peope empoyed and those who seek empoyment in a given region, cacuated with the participation rates and age cohort. Cacuation of the abor force is derived by taking the tota popuation mutipied by the participation rate. An increase in popuation or participation rate wi resut in an increased abor force in the region, and vice versa. As can be seen in the graph, the abor force is predicted to tota 1, thousand peope in 2011, if nothing changes economicay. This figure is projected to escaate to 1, thousand peope if Manufacturing s activities were injected into the region, suggesting an increase of 7.7 percent or 141,953 peope in terms of the abor force impact. By the end of 2031, the economic impact of Manufacturing on abor force is estimated to add an additiona 282,532 peope onto the baseine projection of 1, thousand peope. The average impact on the abor force woud grow by 238,698 peope per year. With this number, the White popuation has the argest share (73.3 percent or 174,978 peope) of the average abor force impact; foowed by the Others popuation (12.5 percent or 29,767 peope); the Hispanic popuation (7.5 percent or 18,110 peope); and asty, the Back popuation (6.6 percent or 15,843 peope). Graph 3.1: Economic Impact of Labor Force Economic Impact 2,500,000 Without Manufacturing With Manufacturing 2,000,000 (Peope) 1,500,000 1,000, , Average 141, , ,698 1,833,830 1,992,313 1,923,377 1,975,783 2,274,845 2,162, Center for Economic & Business Deveopment at Southwestern Okahoma State University

21 Statewide Economic Impact (Bock 3: Popuation and Labor Suppy Variabes) Popuation Popuation Mid-year estimates of popuation, incuding survivors from the previous years, births, specia popuations, and three types of migrants (economic, internationa, and retired). Affected By: Tota Migration, Specia Popuation, Nataity Rates, and Surviva Rates Affecting: Potentia Labor Force, Labor force, Loca / state Government Spending (Bock 1), Consumption Spending (Bock 1), Housing Price (Bock 4) Popuation refects the mid-year estimates of peope, incuding births, specia popuations, survivors from the previous year, economic migrants, internationa migrants, and retired migrants. It is affected by changes in tota migration, specia popuations, nataity and surviva rates. Popuation appears not ony as a determinant of Rea Disposabe Persona Income Per Capita, but aso as a determinant of Consumption, State and Loca Government Spending, and the Reative Housing or Land Prices. A change in Popuation wi resut in a change of these variabes. The major determinant of Popuation itsef is Economic Migration. Economic migrants are migrants under age 65 (who were part of the civiian popuation the preceding year) who respond to economic and amenity factors. Increased amenity factors transate into a higher economic migrant impact with more peope moving into the region. A positive economic migration becomes indicative of the growing popuation impact. It shoud be noted that economic migrants present in the graph are non-cumuative impact. As can be seen, the number of economic migrants woud eventuay taper off over time as the stimuus (Manufacturing) approaches the end of the forecast time period, and more economic migrants are anticipated to eave the state. From 2011 to 2031, Manufacturing s impact on popuation is predicted to escaate from 176,277 peope to 552,629 peope. Okahoma s net economic migrant impact is estimated to increase to 14,687 peope per year on average, accounting for 3.5 percent of the average popuation impact (421,275 peope). Graph 3.2: Economic Impact of Popuation 5,000,000 Popuation Impact Without Manufacturing With Manufacturing Net Economic Migrant Impact 50 4,000, ,000, ,000, ,000, Average 176, , ,275 3,854,513 4,410,259 4,186,586 4,030,790 4,962,888 4,607,861 0 Center for Economic & Business Deveopment at Southwestern Okahoma State University 21

22 Statewide Economic Impact (Bock 4: Wage, Price and Cost Variabes) Proprietors Income (with Inventory & Capita Adjustment) Proprietors Income It is a BEA (Bureau of Economic Anaysis) concept, incuding income in kind of soe-proprietorships, partnership, and tax-exempt cooperatives, excudes dividends, monetary interest received by nonfinancia business, and renta income received by persons not primariy engaged in the rea estate business. Affected By: Wage Rate, Prices, Costs Affect- Proprietors Income with Inventory and Capita Consumption Adjustments is the current production income of soe proprietorships, partnership, and tax-exempt cooperatives. Corporate directors fees are incuded in proprietors income, but the imputed net renta income of owner occupants of a dweings is incuded in the renta income of persons. Proprietors income excudes dividends and monetary interest received by nonfinancia business and renta incomes received by persons not primariy engaged in the rea estate business; these incomes incude dividends, net interest, and renta income of persons, respectivey. As noted in the graph, if nothing changes in the economy, the predicted proprietors income woud be $ biion in With the stimuation of Manufacturing s economic activities on the statewide economy, the proprietors incomes are predicted to spira upward to $ biion, resuting in a proprietors income impact of $4.819 biion. By 2031, 24.3 percent or $8.886 biion worth of proprietors income impact is projected to be added to the state, which brings the tota proprietors income to equate $ biion. Over the years, the average annua impact on proprietors income is expected to increase approximatey $6.387 biion annuay, growing at an average annua rate of 3.1 percent. Graph 4.1: Economic Impact of Proprietors Income $50 $40 Economic Impact Without Manufacturing With Manufacturing (Biions of Current $) $30 $20 $10 $ Average $4.819 $5.292 $6.147 $7.278 $8.886 $6.387 $ $ $ $ $ $ $ $ $ $ $ $ Center for Economic & Business Deveopment at Southwestern Okahoma State University

23 Statewide Economic Impact (Bock 4: Wage, Price and Cost Variabes) Income Taxes Income Taxes It is a BEA (Bureau of Economic Anaysis) concept of persona income taxes, which when subtracted from persona income (income received by persons from a sources), resuted in disposabe persona income (tota after tax income received by persons; it is the income avaiabe to persons for spending or saving) Affected By: Persona Income Affecting: Disposabe Persona Income Income Tax is derived from Persona Income. When this amount is subtracted from Persona Income, it wi resut in Disposabe Persona Income. It is important to note that the income tax impact present in this study represent the revenues (through the spiover effects from Manufacturing s empoyment) received by the state. 17 The composition of income tax revenue has to be traced back to Persona Income. Persona Income is cacuated as the sum of wage and saary disbursements, suppements to wages and saaries, proprietors income with inventory vauation and capita consumption adjustments, renta income of persons with capita consumption adjustments, persona dividend income, persona interest income, and persona current transfer receipts, ess contributions for government socia insurance. The persona income of an area is the income that is received by, or on behaf of, a the individuas who ive in the area; therefore, the estimates of persona income are presented by the pace of residence of the income recipients. The economic impact of Manufacturing on income tax revenue is significant over time. If nothing changes economicay, income tax revenues woud equa $8.946 biion at the baseine eve in This amount woud boost to $ biion if Manufacturing s activities were incuded in the statewide economy, which transates into 14.4 percent of income tax revenue impact or $1.286 biion. The study forecasted that the income tax impact woud eap by percent within the twenty year time period. The average income tax impact is estimated to rise by $0.814 biion per year and is projected to grow at an average speed of 5.4 percent annuay. Graph 4.2: Economic Impact of Income Taxes Economic Impact Without Manufacturing With Manufacturing (Biions of Current $) Average $0.452 $0.608 $0.786 $0.997 $1.286 $0.814 $3.487 $4.516 $5.765 $7.096 $8.946 $5.890 $3.939 $5.124 $6.551 $8.093 $ $6.704 Center for Economic & Business Deveopment at Southwestern Okahoma State University 23

24 Concusion Concusion: Based on these findings, the economic impact of Manufacturing remains significant and positivey affects the statewide economic activities. The foowing provides a snapshot of the economic impact of Manufacturing upon the state s economy in 2031: State Output Impact woud account for $ biion Gross State Product Impact woud account for $ biion Rea Disposabe Persona Income Impact woud account for $ biion Empoyment Impact woud account for 328,540 net new jobs 24 Center for Economic & Business Deveopment at Southwestern Okahoma State University

25 Regiona Economic Impact Northwest Okahoma To anayze the economic impact of Manufacturing at the regiona eve, the state of Okahoma is divided into 6 sub-state regions. The magnitude of economic impact for each region differs depending on the voume of economic activity stimuated by Manufacturing, and stems from the nature of the economic structure, activities, and abor market condition of the region. In 2009, the northwest region was comprised of 240 manufacturers, which supported more than 5,811 jobs, both fu and part time. Together, these 5,811 jobs in the region accounted for 7.5 percent of tota empoyment in the region, and manufacturing comprised of 3.7 percent of the tota industry estabishment. Manufacturing pays some of the highest wages compared to a industries in the With an empoyment mutipier of 1.8, Manufacturing s direct, indirect and induced impact upon Northwest Okahoma are estimated to add 10,638 net new jobs by region. As noted in the map, Manufacturing jobs in this region pay more than 26.4 percent above a industries on average annua wage. The region has an empoyment mutipier of 1.8. This means, with every 100 new jobs created in Manufacturing, an additiona 180 jobs wi be created. The top three distinct manufacturing industries in the northwest region incude Food manufacturing, Machinery manufacturing, and Fabricated Meta Product manufacturing. Among a, Food manufacturing remained the argest empoyer in the region, empoying more than 2,709 peope (47percent) in By comparison, Machinery manufacturing made up the second argest share of 15.2 percent (885 jobs), whie the Fabricated Meta Product manufacturing sustained 626 jobs (10.8 percent) in the region. Tabe 5.1 summarizes the economic impact resuts for the northwest region. (On next page) Map 5.1: Manufacturing Overview - Northwest Okahoma Northwest Counties Afafa Beaver Baine Cimarron Custer Dewey Eis Grant Harper Major Roger Mis Texas Woods Woodward Manufacturing - Tota Estabishment Manufacturing - Tota Empoyment Manufacturing - Average Annua Wage A Industries - Tota Estabishment A Industries - Tota Empoyment A Industries - Average Annua Wage Manufacturing as a Percent of A Estabishment Manufacturing as a Percent of A Empoyment 240 5,811 $38,699 6,487 77,435 $30, % 7.5% Source: Okahoma Empoyment Security Commission (2009) Center for Economic & Business Deveopment at Southwestern Okahoma State University 25

26 Regiona Economic Impact Tabe 5.1: Northwest Okahoma Economic Impact (in biions of current $) Variabe Average Gross Regiona Product $0.719 $0.880 $1.108 $1.374 $1.727 $1.145 Consumption $0.298 $0.419 $0.561 $0.718 $0.906 $0.575 Rea Disposabe Persona Income $0.394 $0.521 $0.673 $0.857 $1.110 $0.699 Regiona Output $2.090 $2.566 $3.218 $3.979 $4.966 $3.319 Proprietors Income $0.058 $0.055 $0.058 $0.067 $0.080 $0.062 Income Taxes $0.011 $0.016 $0.020 $0.025 $0.032 $0.021 Variabe Average Capita Stock $0.150 $2.140 $1.052 Residentia Actua Capita Stock $0.105 $1.638 $0.791 Nonresidentia Actua Capita Stock $0.045 $0.502 $0.261 Empoyment (Peope) 10,243 10,689 10,328 Labor Force (Peope) 5,830 9,978 8,856 Popuation (Peope) 6,710 17,167 13,985 Net Economic Migrants (Peope) 1, In 2011, empoyment gains in Manufacturing are projected to outpace popuation growth by 52.7 percent, suggesting the sector is continuing to expand its roe in stimuating regiona economic activities. Manufacturing s impact on empoyment is estimated to create an additiona 10,243 net new jobs. Popuation impact is predicted to grow from 6,710 peope in 2011 to 17,167 peope in The projected popuation growth is argey affected by the infux of economic migrants entering the region. Economic migrants entering the region are predicted to tota 1,722 peope in 2011, representing a 25.7 percent gain in tota popuation. Labor force impact, on the other hand, woud surge to 9,978 peope by Rea disposabe persona income impact is forecasted to reaize an average of $0.699 biion per year, hindering an average growth rate of 5.3 percent yeary. On the fip side, manufacturing s impact upon regiona proprietors income woud average $0.062 biion annuay. Manufacturing s impact on tota actua capita stock woud ramp up to $2.140 biion by The impact on GRP is estimated to an increase to an average $1.145 biion yeary. Regiona consumption, as a component of GRP, woud grow by $0.575 biion annuay, which woud account for 50.2 percent of GRP. By 2031, regiona output is predicted to equa $4.966 biion and average annua growth rate of regiona output is projected to rise by 4.4 percent annuay. 26 Center for Economic & Business Deveopment at Southwestern Okahoma State University

27 Regiona Economic Impact Northeast Okahoma To anayze the economic impact of Manufacturing at the regiona eve, the state of Okahoma is divided into 6 sub-state regions. The magnitude of economic impact for each region differs depending on the voume of economic activity stimuated by Manufacturing, and stems from the nature of the economic structure, activities, and abor market condition of the region. In 2009, the northeast region was comprised of 562 manufacturers, which supported more than 18,831 jobs, both fu and part time. Together, these 18,831 jobs accounted for 10.4 percent of tota empoyment of a industries, and manufacturing comprised of 5 percent of the tota industry estabishment. Manufacturing pays some of the highest wages compared to a industries in the With an empoyment mutipier of 2.1, Manufacturing s direct, indirect and induced impact upon Northeast Okahoma are estimated to add 42,937 net new jobs by region. As noted in the map, Manufacturing jobs in this region pay more than 17.7 percent above a industries on average annua wage. The region has an empoyment mutipier of 2.1. This means, with every 100 new jobs created in Manufacturing, an additiona 210 jobs wi be created. The top three distinct manufacturing industries in the northeast region incude Machinery manufacturing, Food manufacturing, and Fabricated Meta Product manufacturing. Among a, Machinery manufacturing remained the argest empoyer in the region, empoying more than 3,909 peope (20.8 percent) in By comparison, Food manufacturing made up the second argest share of 12.5 percent (2,350 jobs), whie the Fabricated Meta Product manufacturing sustained 1,885 jobs (10 percent) in the region. Tabe 5.2 summarizes the economic impact resuts for the northeast region. (on next page) Map 5.2: Manufacturing Overview - Northeast Okahoma Manufacturing - Tota Estabishment Manufacturing - Tota Empoyment Manufacturing - Average Annua Wage A Industries - Tota Estabishment A Industries - Tota Empoyment A Industries - Average Annua Wage Manufacturing as a Percent of A Estabishment Manufacturing as a Percent of A Empoyment ,831 $35,123 11, ,065 $29,846 5% 10.4% Northeast Counties Adair Cherokee Craig Deaware Kay McIntosh Mayes Muskogee Nobe Notawa Okfuskee Ottawa Payne Sequoyah Washington Source: Okahoma Empoyment Security Commission (2009) Center for Economic & Business Deveopment at Southwestern Okahoma State University 27

28 Regiona Economic Impact Tabe 5.2: Northeast Okahoma Economic Impact (in biions of current $) Variabe Average Gross Regiona Product $2.725 $3.452 $4.444 $5.588 $7.119 $4.596 Consumption $1.148 $1.640 $2.237 $2.901 $3.735 $2.301 Rea Disposabe Persona Income $1.526 $2.069 $2.736 $3.533 $4.605 $2.846 Regiona Output $6.409 $8.073 $ $ $ $ Proprietors Income $0.145 $0.133 $0.136 $0.156 $0.187 $0.148 Income Taxes $0.045 $0.062 $0.082 $0.105 $0.137 $0.085 Variabe Average Capita Stock $0.606 $9.036 $4.383 Residentia Actua Capita Stock $0.409 $6.779 $3.206 Nonresidentia Actua Capita Stock $0.197 $2.257 $1.177 Empoyment (Peope) 38,767 42,937 40,416 Labor Force (Peope) 21,057 40,980 34,922 Popuation (Peope) 25,666 77,558 59,958 Net Economic Migrants (Peope) 7, ,117 In 2011, empoyment gains in Manufacturing are projected to outpace popuation growth by 51 percent, suggesting the sector is continuing to expand its roe in stimuating regiona economic activities. Manufacturing s impact on empoyment is estimated to create an additiona 38,767 net new jobs. Popuation impact is predicted to grow from 25,666 peope in 2011 to 77,558 peope in The projected popuation growth is argey affected by the infux of economic migrants entering the region. Economic migrants entering the region are predicted to tota 7,130 peope in 2011, representing a 27.8 percent gain in tota popuation. Labor force impact, on the other hand, woud surge to 40,980 peope by Rea disposabe persona income impact is forecasted to reaize an average of $2.846 biion per year, hindering an average growth rate of 5.7 percent yeary. On the fip side, manufacturing s impact upon regiona proprietors income woud average $0.148 biion annuay. Manufacturing s impact on tota actua capita stock woud ramp up to $9.036 biion by The impact on GRP is estimated to increase to average $4.596 biion yeary. Regiona consumption, as a component of GRP, woud grow by $2.301 biion annuay, which woud account for 50 percent of GRP. By 2031, regiona output is predicted to equa $ biion and average annua growth rate of regiona output is projected to rise by 4.8 percent annuay. 28 Center for Economic & Business Deveopment at Southwestern Okahoma State University

29 Regiona Economic Impact Southwest Okahoma To anayze the economic impact of Manufacturing at the regiona eve, the state of Okahoma is divided into 6 sub-state regions. The magnitude of economic impact for each region differs depending on the voume of economic activity stimuated by Manufacturing, and stems from the nature of the economic structure, activities, and abor market condition of the region. In 2009, the southwest region was comprised of 202 manufacturers, which supported more than 7,351 jobs, both fu and part time. Together, these 7,351 jobs accounted for 7.7 percent of tota empoyment of a industries, and manufacturing comprised of 3 percent of the tota industry estabishment. Manufacturing pays some of the highest wages compared to a industries in the With an empoyment mutipier of 2.0, Manufacturing s direct, indirect and induced impact upon Southwest Okahoma are estimated to add 15,699 net new jobs by region. As noted in the map, Manufacturing jobs in this region pay more than 24 percent above a industries on average annua wage. The region has an empoyment mutipier of 2. This means, with every 100 new jobs created in Manufacturing, an additiona 200 jobs wi be created. The top three distinct manufacturing industries in the southwest region incude Pastic and Rubber Product manufacturing, Machinery manufacturing, and Food manufacturing. Among a, Pastic and Rubber manufacturing remained the argest empoyer in the region, empoying more than 2,725 peope (37.1 percent) in By comparison, Machinery manufacturing made up the second argest share of 19.3 percent (1,416 jobs), whie the Food manufacturing sustained 1,053 jobs (14.3 percent) in the region. Tabe 5.3 summarizes the economic impact resuts for the southwest region. (on next page) Map 5.3: Manufacturing Overview - Southwest Okahoma Manufacturing - Tota Estabishment Manufacturing - Tota Empoyment Manufacturing - Average Annua Wage A Industries - Tota Estabishment A Industries - Tota Empoyment A Industries - Average Annua Wage Manufacturing as a Percent of A Estabishment Manufacturing as a Percent of A Empoyment 202 7,351 $37,690 6,629 95,093 $30, % 7.7% Southwest Counties Beckham Caddo Comanche Cotton Greer Harmon Jackson Kiowa Stephens Timan Washita Source: Okahoma Empoyment Security Commission (2009) Center for Economic & Business Deveopment at Southwestern Okahoma State University 29

30 Regiona Economic Impact Tabe 5.3: Southwest Okahoma Economic Impact (in biions of current $) Variabe Average Gross Regiona Product $1.148 $1.518 $1.989 $2.491 $3.153 $2.036 Consumption $0.461 $0.668 $0.924 $1.207 $1.549 $0.950 Rea Disposabe Persona Income $0.619 $0.847 $1.120 $1.443 $1.872 $1.162 Regiona Output $2.769 $3.697 $4.841 $6.054 $7.623 $4.946 Proprietors Income $0.041 $0.027 $0.016 $0.012 $0.010 $0.020 Income Taxes $0.018 $0.025 $0.033 $0.042 $0.054 $0.034 Variabe Average Capita Stock $0.186 $2.825 $1.360 Residentia Actua Capita Stock $0.128 $2.142 $1.014 Nonresidentia Actua Capita Stock $0.058 $0.683 $0.346 Empoyment (Peope) 13,464 15,699 14,583 Labor Force (Peope) 9,779 18,736 16,040 Popuation (Peope) 12,351 37,882 29,130 Net Economic Migrants (Peope) 3, In 2011, empoyment gains in Manufacturing are projected to outpace popuation growth by 9 percent, suggesting the sector is continuing to expand its roe in stimuating regiona economic activities. Manufacturing s impact on empoyment is estimated to create an additiona 13,464 net new jobs. Popuation impact is predicted to grow from 12,351 peope in 2011 to 37,882 peope in The projected popuation growth is argey affected by the infux of economic migrants entering the region. Economic migrants entering the region are predicted to tota 3,369 peope in 2011, representing a 27.3 percent gain in tota popuation. Labor force impact, on the other hand, woud surge to 18,736 peope by Rea disposabe persona income impact is forecasted to reaize an average of $1.162 biion per year, hindering an average growth rate of 5.7 percent yeary. On the fip side, manufacturing s impact upon regiona proprietors income woud average $0.020 biion annuay. Manufacturing s impact on tota actua capita stock woud ramp up to $2.825 biion by The impact on GRP is estimated to increase to an average $2.036 biion yeary. Regiona consumption, as a component of GRP, woud grow by $0.950 biion annuay, which woud account for 46.6 percent of GRP. By 2031, regiona output is predicted to equa $7.623 biion and average annua growth rate of regiona output is projected to rise by 5.2 percent annuay. 30 Center for Economic & Business Deveopment at Southwestern Okahoma State University

31 Regiona Economic Impact Southeast Okahoma To anayze the economic impact of Manufacturing at the regiona eve, the state of Okahoma is divided into 6 sub-state regions. The magnitude of economic impact for each region differs depending on the voume of economic activities stimuated by Manufacturing, and stems from the nature of the economic structure, activities, and abor market condition of the region. In 2009, the southeast region was comprised of 496 manufacturers, which supported more than 18,473 jobs, both fu and part time. Together, these 18,473 jobs accounted for 11 percent of tota empoyment of a industries, and manufacturing comprised of 4.4 percent of the tota industry estabishment. Manufacturing pays some of the highest wages compared to a industries in the With an empoyment mutipier of 2.1, Manufacturing s direct, indirect and induced impact upon Southeast Okahoma are estimated to add 41,775 net new jobs by region. As noted in the map, Manufacturing jobs in this region pay more than 15.7 percent above a industries on average annua wage. The region has an empoyment mutipier of 2.1. This means, with every 100 new jobs created in Manufacturing, an additiona 210 jobs wi be created. The top three distinct manufacturing industries in southeast region incude Food manufacturing, Pastic and Rubber manufacturing, and Machinery manufacturing. Among a, Food manufacturing took over Pastic and Rubber manufacturing and became the argest empoyer in the region, empoying more than 4,002 peope (21.6 percent) in By comparison, Pastic and Rubber manufacturing made up the second argest share of 20.2 percent (3,729 jobs), whie the fabricated meta product manufacturing sustained 2,098 jobs (11.4 percent) in the region. Tabe 5.4 summarizes the economic impact resuts for the southeast region. Map 2.4: Manufacturing Overview - Southeast Okahoma Southeast Counties Atoka Bryan Carter Choctaw Coa Garvin Haske Hughes Johnston Latimer Le Fore Love McCurtain Marsha Murray Pittsburg Pontotoc Pottawatomie Pushmataha Seminoe Manufacturing - Tota Estabishment Manufacturing - Tota Empoyment Manufacturing - Average Annua Wage A Industries - Tota Estabishment A Industries - Tota Empoyment A Industries - Average Annua Wage Manufacturing as a Percent of A Estabishment Manufacturing as a Percent of A Empoyment ,473 $33,885 11, ,549 $29, % 11.0% Source: Okahoma Empoyment Security Commission (2009) Center for Economic & Business Deveopment at Southwestern Okahoma State University 31

32 Regiona Economic Impact Tabe 5.4: Southeast Okahoma Economic Impact (in biions of current $) Variabe Average Gross Regiona Product $2.651 $3.337 $4.266 $5.320 $6.717 $4.397 Consumption $1.127 $1.604 $2.193 $2.848 $3.654 $2.256 Rea Disposabe Persona Income $1.499 $2.036 $2.699 $3.491 $4.544 $2.807 Regiona Output $7.591 $9.710 $ $ $ $ Proprietors Income $0.168 $0.150 $0.151 $0.169 $0.197 $0.163 Income Taxes $0.044 $0.060 $0.080 $0.102 $0.133 $0.083 Variabe Average Capita Stock $0.626 $9.273 $4.492 Residentia Actua Capita Stock $0.407 $6.774 $3.201 Nonresidentia Actua Capita Stock $0.219 $2.499 $1.290 Empoyment (Peope) 37,585 41,775 39,261 Labor Force (Peope) 22,361 43,098 36,749 Popuation (Peope) 28,265 84,447 65,530 Net Economic Migrants (Peope) 7, ,192 In 2011, empoyment gains in Manufacturing are projected to outpace popuation growth by 133 percent, suggesting the sector is continuing to expand its roe in stimuating regiona economic activities. Manufacturing s impact on empoyment is estimated to create an additiona 37,585 net new jobs. Popuation impact is predicted to grow from 28,265 peope in 2011 to 84,447 peope in The projected popuation growth is argey affected by the infux of economic migrants entering the region. Economic migrants entering the region are predicted to tota 7,733 peope in 2011, representing a 27.4 percent gain in tota popuation. Labor force impact, on the other hand, woud surge to 43,098 peope by Rea disposabe persona income impact is forecasted to reaize an average of $2.807 biion per year, hindering an average growth rate of 5.7 percent yeary. On the fip side, manufacturing s impact upon regiona proprietors income woud average $0.163 biion annuay. Manufacturing s impact on tota actua capita stock woud ramp up to $9.273 biion by The impact on GRP is estimated to increase to an average $4.397 biion yeary. Regiona consumption, as a component of GRP woud grow by $2.256 biion annuay, which woud account for 51.3 percent of GRP. By 2031, regiona output is predicted to equa $ biion and average annua growth rate of regiona output is projected to rise by 4.8 percent annuay. 32 Center for Economic & Business Deveopment at Southwestern Okahoma State University

33 Regiona Economic Impact OKC MSA To anayze the economic impact of Manufacturing at the regiona eve, the state of Okahoma is divided into 6 sub-state regions. The magnitude of economic impact for each region differs depending on the voume of economic activities stimuated by Manufacturing, and stems from the nature of the economic structure, activities, and abor market condition of the region. In 2009, the OKC MSA was comprised of 1,333 manufacturers, which supported more than 32,750 jobs, both fu and part time. Together, these 32,750 jobs accounted for 6.0 percent of tota empoyment of a industries, and manufacturing comprised of 3.9 percent of the tota industry estabishment. Manufacturing pays some of the highest wages compared to a industries in the With an empoyment mutipier of 2.7, Manufacturing s direct, indirect and induced impact upon OKC MSA are estimated to add 93,513 net new jobs by region. As noted in the map, Manufacturing jobs in this region pay more than 55.7 percent above a industries on average annua wage. The region has an empoyment mutipier of 2.7. This means, with every 100 new jobs created in Manufacturing, an additiona 270 jobs wi be created. The top three distinct manufacturing industries in OKC MSA incude Machinery manufacturing, Fabricated Meta Product manufacturing, and Transportation Equipment manufacturing. Among a, Machinery manufacturing remained as the argest empoyer in the region, empoying more than 7,071 peope (21.7 percent) in By comparison, Fabricated Meta Product manufacturing made up the second argest share of 17.1 percent (5,588 jobs), whie the fabricated meta product manufacturing sustained 3,430 jobs (10.5 percent) in the region. Tabe 5.5 summarizes the economic impact resuts for the OKC MSA region. (on next page) Map 2.5: Manufacturing Overview - OKC MSA OKC MSA Counties Canadian Ceveand Grady Lincon Logan McCain Okahoma Manufacturing - Tota Estabishment Manufacturing - Tota Empoyment Manufacturing - Average Annua Wage A Industries - Tota Estabishment A Industries - Tota Empoyment A Industries - Average Annua Wage Manufacturing as a Percent of A Estabishment Manufacturing as a Percent of A Empoyment 1,333 32,750 $50,237 33, ,653 $32, % 6.0% Source: Okahoma Empoyment Security Commission (2009) Center for Economic & Business Deveopment at Southwestern Okahoma State University 33

34 Regiona Economic Impact Tabe 5.5: OKC MSA Economic Impact (in biions of current $) Variabe Average Gross Regiona Product $7.087 $8.929 $ $ $ $ Consumption $3.343 $4.475 $5.917 $7.576 $9.722 $6.117 Rea Disposabe Persona Income $4.660 $5.982 $7.706 $9.832 $ $8.042 Regiona Output $ $ $ $ $ $ Proprietors Income $1.795 $2.009 $2.369 $2.831 $3.458 $2.456 Income Taxes $0.137 $0.183 $0.235 $0.298 $0.384 $0.244 Variabe Average Capita Stock $1.682 $ $ Residentia Actua Capita Stock $1.184 $ $8.522 Nonresidentia Actua Capita Stock $0.499 $5.782 $2.995 Empoyment (Peope) 84,461 93,513 87,119 Labor Force (Peope) 33,580 71,225 59,044 Popuation (Peope) 41, , ,820 Net Economic Migrants (Peope) 11, ,909 In 2011, empoyment gains in Manufacturing are projected to outpace popuation growth by 103 percent, suggesting the sector is continuing to expand its roe in stimuating regiona economic activities. Manufacturing s impact on empoyment is estimated to create an additiona 84,461 net new jobs. Popuation impact is predicted to grow from 41,615 peope in 2011 to 140,710 peope in The projected popuation growth is argey affected by the infux of economic migrants entering the region. Economic migrants entering the region are predicted to tota 11,960 peope in 2011, representing a 28.7 percent gain in tota popuation. Labor force impact, on the other hand, woud surge to 71,225 peope by Rea disposabe persona income impact is forecasted to reaize an average of $8.042 biion per year, hindering an average growth rate of 5.2 percent yeary. On the fip side, manufacturing s impact upon regiona proprietors income woud average $2.456 biion annuay. Manufacturing s impact on tota actua capita stock woud ramp up to $ biion by The impact on GRP is estimated to increase to an average $ biion yeary. Regiona consumption, as a component of GRP, woud grow by $6.117 biion annuay, which woud account for 50.7 percent of regiona GRP. By 2031, regiona output is predicted to equa $ biion and average annua growth rate of regiona output is projected to rise by 5 percent annuay. 34 Center for Economic & Business Deveopment at Southwestern Okahoma State University

35 Regiona Economic Impact Tusa MSA To anayze the economic impact of Manufacturing at the regiona eve, the state of Okahoma is divided into 6 sub-state regions. The magnitude of economic impact for each region differs depending on the voume of economic activity stimuated by Manufacturing, and stems from the nature of the economic structure, activities, and abor market condition of the region. In 2009, the Tusa MSA was comprised of 1,587 manufacturers, which supported more than 46,785 jobs, both fu and part time. Together, these 46,785 jobs accounted for 11.7 percent of tota empoyment of a industries, and manufacturing comprised of 6.3 percent of the tota industry estabishment. Manufacturing pays some of the highest wages compared to a industries in the With an empoyment mutipier of 2.5, Manufacturing s direct, indirect and induced impact upon Tusa MSA are estimated to add 123,927 net new jobs by region. As noted in the map, Manufacturing jobs in this region pay more than 44.3 percent above a industries on average annua wage. The region has an empoyment mutipier of 2.5. This means, with every 100 new jobs created in Manufacturing, an additiona 250 jobs wi be created. The top three distinct manufacturing industries in Tusa MSA incude Fabricated Meta Product manufacturing, Machinery manufacturing, and Transportation Equipment manufacturing. Among a, Fabricated Meta Product manufacturing remained as the argest empoyer in the region, empoying more than 11,006 peope (23.5 percent) in By comparison, Machinery manufacturing made up the second argest share of 23.1 percent (10,808 jobs), whie the Transportation Equipment manufacturing sustained 5,278 jobs (11.3 percent) in the region. Tabe 5.6 summarizes the economic impact resuts for the Tusa MSA. (on next page) Map 2.6: Manufacturing Overview - Tusa MSA Manufacturing - Tota Estabishment Manufacturing - Tota Empoyment Manufacturing - Average Annua Wage A Industries - Tota Estabishment A Industries - Tota Empoyment A Industries - Average Annua Wage Manufacturing as a Percent of A Estabishment Manufacturing as a Percent of A Empoyment 1,587 46,785 $48,875 25, ,529 $33, % 11.7% Tusa MSA Counties Creek Okmugee Osage Pownee Rogers Tusa Wagoner Source: Okahoma Empoyment Security Commission (2009) Center for Economic & Business Deveopment at Southwestern Okahoma State University 35