2022 Utah-MEP Economic Impact Report

ACKNOWLEDGMENTS

Prepared by: Ruby Ward, professor, and Tatiana Drugova, postdoctoral fellow, Department of Applied Economics, Utah State University

Contact author: Ruby Ward 4815 Old Main Hill Logan, Utah 84322-4815 ruby.ward@usu.edu

Utah State University Economic Research Institute Report

Utah State University Economic Research Institute (USUERI) is part of the Department of Applied Economics at Utah State University (USU), wherein faculty research applied economic issues. Ruby Ward, Ph.D. is a full professor in the Department of Applied Economics at USU. Ward has completed many projects that measure economic impacts and given presentations at various conferences. Tatiana Drugova is a postdoctoral fellow in the Department of Applied Economics at USU.

In its programs and activities, Utah State University does not discriminate based on race, color, religion, sex, national origin, age, genetic information, sexual orientation or gender identity/expression, disability, status as a protected veteran, or any other status protected by University policy or local, state, or federal law. The following individuals have been designated to handle inquiries regarding non-discrimination policies: Executive Director of the Office of Equity, Alison Adams-Perlac, alison.adams-perlac@usu.edu, Title IX Coordinator, Hilary Renshaw, hilary.renshaw@usu.edu, Old Main Rm. 161, 435-797-1266. For further information on notice of non-discrimination: U.S. Department of Education, Office for Civil Rights, 303-844-5695, OCR. Denver@ed.gov. Issued in furtherance of Cooperative Extension work, acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture, Kenneth L. White, Vice President for Extension and Agriculture, Utah State University.

This report was researched and produced by the Utah State University Economic Research Institute (USUERI) at the request of the Utah Manufacturing Extension Partnership (UTAH-MEP). The UTAH-MEP was founded as a collaboration effort between the following entities who comprise the founding members:

• Utah State Uni versity’s Utah Manufacturing Extension Service (UMES),

• Impact Utah

• The Uni versity of Utah Manufacturing Extension Partnership (UUMEP)

The services of the UTAH-MEP are identical to and replace those previously offered through the Utah Industry Resource Alliance (UIRA). As such, the UTAH-MEP enhances the partnership that previously existed between UTAH-MEP partnering resources.

The UTAH-MEP is dedicated to the success of Utah businesses in the manufacturing sector and all other businesses in rural Utah. Statewide economic growth is the primary focus of the collaboration.

The UTAH-MEP provides outreach, value-added training, education, workforce development, certifications, and needs-driven services to Utah manufacturers and rural Utah businesses. UTAH-MEP is aligned with Utah’s Economic Development Strategy.

Through 2022, the UTAH-MEP membership is comprised of the following manufacturing ecosystem resources:

• Utah State Uni versity’s Utah Manufacturing Extension Service including the Manufacturing/Outdoor Products Support Hub

• Impact Utah

• The Uni versity of Utah Manufacturing Extension Partnership (UUMEP)

• Utah Advanced Manufacturing & Materials Initiative (UAMMI)

• Utah Manufacturer s Association (UMA)

• World Trade Center of Utah (WTC Utah)

Section 1. EXECUTIVE SUMMARY

The manufacturing sector has been an important part of the economies of both the United States and Utah. Economic development and job creation were two of Utah Governor Spencer Cox’s main initiatives. Within these initiatives are the objectives to strengthen and grow both rural and urban businesses within Utah.

The Utah Manufacturing Extension Partnerships (UTAHMEP) is the premier provider of manufacturing improvement services in Utah. UTAH-MEP implements proven solutions that produce measurable results. Formed in the beginning of 2020, the UTAH-MEP alliance brings together the strongest manufacturing improvement groups in Utah combined with university resources, government relationships, and economic development partnerships to provide excellence in training, consulting, and customer service. The UTAH-MEP alliance includes the University of Utah’s MEP Center (UUMEP), Utah State University’s Utah Manufacturing Extension Service (UMES) including the Manufacturing/Outdoor Products Support Hub, Impact Utah, Utah Manufacturers Association (UMA), World Trade Center of Utah (WTC Utah), and Utah Advanced Materials and Manufacturing Initiative (UAMMI).

The global pandemic continues to affect all businesses throughout the state in dramatic ways, either through unprecedented growth or similarly unprecedented declines in revenue, as well as dramatic disruptions to their supply chains. In response to this global crisis, both state and federal agencies provided funds to be deployed directly to those impacted, or through agencies tasked with delivering specific assistance as a condition for receipt of funds. UTAHMEP received both state and federal funds that have been or continue to be used to support both Utah manufacturing companies and other businesses.

The UTAH-MEP assists small- and medium-sized clients throughout the state by helping to modernize their operations so they become more competitive, productive, and efficient.

Client manufacturing establishments (CMEs) and other rural businesses (ORBs) served by the UTAH-MEP during 2022

reported changes they were able to make due to the assistance (direct effects). The Impact Analysis for Planning (IMPLAN®) was used to analyze the multiplying effects (indirect and induced). Below is a summary of the findings. Additional impacts and details can be found in Section 6, IMPLAN Results.

• As a result of the UTAH-MEP, 125 CMEs/ORBs (100 urban and 25 rural counties) reported the following effects:

o 1,733 jobs created or retained with 372 of these in rural counties and 1,361 in urban counties.

o $390.6 million in additional or retained sales with $61.1 million of that from CMEs/ORBs in rural counties.

• The reported effects of jobs and sales do not represent all the impacts of UTAH-MEP, but they are the most easily measured quantitatively, lending themselves to the economic impact modeling of UTAH-MEP on the economy of the state of Utah.

• The direct effect, which measures changes within the client itself, is the equivalent of 2,036 jobs and just under $648 million sales or output for 2022. For details on how the direct effects were calculated, see Section 6, IMPLAN Results.

• The total impacts are the direct effect plus the indirect and induced effects. Total impacts include 4,721 jobs; $295 million in employee wages; $1,163 million in output or sales; and $30.8 million in state and local taxes. A breakout for urban and rural areas is seen in Tables 1 and 2. Figures 1 and 2 summarize the total impacts.

• The above impacts are based solely on what the clients themselves attest to as changes they made directly from the assistance received from UTAH-MEP. These reported client improvements may be maintained beyond the scope of the one-year study period for this model. If such is the case, the eventual impacts of UTAH-MEP’s work may be even higher than estimated here.

2022: UTAH-MEP Total

Figure 1. 2022 UTAH-MEP Overall Impacts

Table 1. 2022 Total Economic Impacts From the UTAH-MEP

Table 2. 2022 Tax Impacts of UTAH-MEP

Figure 2. 2022 UTAH-MEP Employment and Output Impacts (in millions)

Section 2. INTRODUCTION

Manufacturing is a critical part of Utah’s economy. It represents the single largest private sector component of Utah’s GDP, is responsible for 8.9% of the state’s workforce and tends to pay wages above the state average. It is also considered a “prime” industry, an industry around which other segments of the economy (medical, retail, financial, technical, etc.) grow. Utah has a high concentration of manufacturing specializations in composites and advanced manufacturing, nonmetallic mineral products, computer and electronic products, and furniture and related products.

The UTAH-MEP is a partnership between Impact Utah, Utah State University’s Utah Manufacturing Extension Service (UMES) and the Manufacturing/Outdoor Products Support Hub, the University of Utah Manufacturing Extensions Partnership (UUMEP), the World Trade Center Utah (WTC Utah), the Utah Manufacturers Association (UMA), and the Utah Advanced Materials & Manufacturing Initiative (UAMMI).

The UTAH-MEP provides assistance to small- and mid-sized clients throughout the state with services to improve produc-

tivity, expand capacity, enhance growth, and increase profitability. It assesses the individual needs of a manufacturer, identifies the roadblocks to success, determines opportunities for improvement and growth, and helps the company leverage private/public resources and access a consistent set of services to maximize its potential and grow its business.

The following report examines the positive economic impacts that UTAH-MEP has had on the state’s economy during 2022. This is done using impact analysis; Section 5 provides details about economic impact analysis and how IMPLAN was used to perform the analysis. Section 6 includes the results of modeling the specific impacts of UTAH-MEP’s activities in 2022, including the traditional work with manufacturers.

Section 4 provides specific information about the data and survey methodology. Conclusions, cautions, and limitations can be found in Section 7. Find results broken out by counties for 2022 in Appendix A.

Section 3.

UTAH-MEP

Formed in 2020, the UTAH-MEP brings together the strongest manufacturing improvement groups in Utah combined with university resources, government relationships, and economic development partnerships to provide excellence in training, consulting, and customer service.

The UTAH-MEP includes the University of Utah’s MEP Center (UUMEP), Utah State University’s Utah Manufacturing Extension Service (UMES), Impact Utah, Utah Manufacturers Association (UMA), World Trade Center of Utah (WTC Utah), and Utah Advanced Materials and Manufacturing Initiative (UAMMI).

other organizations and federal research labs that share a passion for enhancing the manufacturing community.

Funded in part through Hollings Manufacturing Extension Partnership (MEP) based at the National Institute of Standards and Technology (NIST), UTAH-MEP is the official representative of the MEP National Network in Utah. The MEP program is a network of over 1,400 trusted advisors and experts at more than 450 MEP service locations, providing any U.S. manufacturer with access to the resources they need to succeed. This partnership provides a range of resources to help small- and medium-sized manufacturers identify and accelerate growth and competitiveness. As a public-private partnership, the MEP program delivers a high return on investment to taxpayers.

Through its collaborations at the federal, state, and local level, the UTAH-MEP works with manufacturers to develop new products and customers, expand, and diversify markets, adopt new technology, and enhance value within supply chains. The UTAH-MEP is the state-sponsor organization for Utah’s supply chain solution, CONNEX™ Utah, which is being adopted by MEP centers across the nation. The national MEP program serves as a bridge to

At its core, the UTAH-MEP shares knowledge to improve lives by providing access to manufacturing experts, application engineers, and research professionals. This approach helps us reduce business’ costs, improve productivity, and increase capacity. This service is available to every manufacturer in Utah, each will receive a customized approach focusing on their specific obstacles to growth and profitability. Whatever the need, UTAH-MEP offers the tools, expertise, and flexibility to engage with manufacturers and rural businesses at all levels.

Supports Utah’s Economic Development Strategy Through Specific Manufacturer Improvements

The UTAH-MEP provides outreach, value-added training, education, workforce development, certifications, and needs-driven services to Utah manufacturers and rural Utah businesses. The collaboration is aligned with Utah’s economic development strategy to produce results, based on our joint records of proven performance and successful outcomes (Figures 3 and 4). Figure 5 provides the top reasons manufacturers chose to work with UTAH-MEP.

Every manufacturing client requires a customized approach focusing on their specific obstacles to growth and profitability. Entry points range from creating improved flow on the production line to speeding sales order processing, training the workforce on problem-solving approaches, and developing a strategy to enter new markets. Whatever the need, UTAHMEP offers the tools, expertise, and flexibility to engage with manufacturers and rural businesses at all levels. Figure 6 provides the strategic challenges that manufacturers indicate they will face over the next three years.

Generate Demand: Do you have fewer customers and sales than you hoped for? Learn how to accurately predict your business’s growth with demand training through the UTAH-MEP. Our beginnerto expert-level courses help refine your marketing and sales strategies to get your message in front of the right audience and increase your top line.

Grow Leadership: Does your organization promote its employees into leadership positions? Would you like your leaders to prioritize efficiency and performance for all your teams? If so, you need UTAH-MEP’s leadership training. These courses are designed to help novice and experienced leaders alike improve the performance of their teams. Completion of our training will teach your leaders

how to instill lasting change within your organization, inspire their teams toward better performance, and become more financially literate.

Quality & Compliance: Does your organization meet the compliance requirements needed to compete with high-paying jobs? Since many projects require certain certifications before your company will even be considered, compliance needs to be a priority. Fortunately, the UTAH-MEP can connect you with every compliance training provider you will ever need.

Expand Capacity: Do you want a more efficient output with your current number of employees? The UTAH-MEP offers training to motivate your organization toward the implementation of industry best practices and procedures. This training encourages growth-inspiring tactics while also eliminating wasteful behaviors, helping you get the most out of your teams and employees. In addition, the UTAH-MEP is the state’s sponsor of Utah’s supply chain solution, CONNEX™ Utah, to help you better connect, be discovered, and grow your business.

Maximize Technology: Is your organization looking to develop a new product or implement new technology into your manufacturing process? The UTAH-MEP technology offerings will get you the help you need. We’ll walk you through the technological advancements of the manufacturing industry so you’ll know exactly which automated services can help your company improve its effectiveness or bring new products to the market.

Figure 3. UTAH-MEP

Statewide Market Penetration: Deliver statewide services to balance market penetration with impact and revenue generation.

Growth of Manufacturing Jobs: Address manufacturer needs focused on outdoor products and small manufacturing enterprises to support state economic development initiatives.

Strengthen Manufacturing Ecosystem Partnerships: Expand relationships with Utah’s state, regional, and local ecosystem partners.

Strengthen Workforce Development: Support state and stakeholder missions and help outdoor products and SMEs increase innovation, growth, productivity, and technology adoption.

Support Rural Small Manufacturers: Ensure Utah rural small and medium enterprises (SMEs) and outdoor products have the training, resources, and tech support.

Figure 4. UTAH-MEP Supports Utah’s Economic Development Strategy

Figure 5. Top Two Selected Reasons for Choosing to Work With the UTAH-MEP Program

Figure 6. Top Three Selected Strategic Challenges Over the Next 3 Years Technology needs

UTAH-MEP Members

Below is a list and brief description of the various members of the UTAH-MEP. Members of the UTAH-MEP collaborate to deliver a full spectrum of services to the manufacturers and rural businesses of the state as seen in Figure 4.

The program was initially authorized in 1988 and has been active in Utah since 1995. Focused on helping smalland mid-sized manufacturers generate business results, the Hollings Manufacturing Extension Partnership (MEP) National Network comprises 51 MEP Centers located in all 50 states and Puerto Rico, and its over 1,400 trusted advisors and experts. For every one dollar of federal investment in FY 2020, the MEP National Network generated $19.60 in new sales growth and $33.70 in new client investment. This translates into $2.9 billion in new sales. During this same time, for every $1,381 of federal investment, the Network created or retained one manufacturing job. (nist.gov/mep/mep-national-network)

The University of Utah Manufacturing Extension Partnership (UUMEP) Center is the official representative of the MEP National Network in Utah since 2016. In 2020 they, along with Utah State University and Impact Utah, founded the Utah Manufacturing Extension Partnership Alliance (UTAH-MEP) as the public face of the MEP in Utah. The UTAH-MEP allows partners across the state to use federal funds to deliver comprehensive, proven solutions to Utah manufacturers, fueling growth and advancing manufacturing. The UUMEP Center is a gateway for our manufactures to access the amazing resources of the University of Utah and NIST to solve technical issues.

With a history of over 26 years of providing high quality learning acceleration to Utah’s manufacturers, Impact Utah has a new leadership team that combines to bring over 100 years of continuous improvement, business leadership, business development, workforce and talent development, and entrepreneurship experience to assist Utah business enterprises. Impact Utah works with businesses throughout Utah to help access the resources and training they need to grow, and to do so profitably. Impact Utah is funded by state, local, and private resources, and is flexible in what it offers businesses in order to fully serve its clients’ needs. Impact Utah works with owners, executives, managers, and operators to assess company needs in all areas and then make sure those companies have the resources they need to bridge the performance gaps discovered.

The Utah State University’s Utah Manufacturing Extension Service (UMES) was founded in 1996. The UMES is part of the University’s Extension program that supports Utah’s manufacturing sector. The focus of the UMES is to help manufacturers in Utah grow

their businesses and compete on a regional, national, and global scale. UMES provides a broad range of hands-on business, technical, and manufacturing optimization services that are delivered by experienced, boots-on-the-ground professionals. The program has developed a comprehensive network of public and private partners to help Utah manufacturers build cultures to support and sustain continuous improvement.

As a part of this collaborative effort, Utah State University created a new Manufacturing/Outdoor Products Support Hub, which is a cooperation between the UMES and USU’s new Outdoor Product Design and Development (OPDD) program. The OPDD program was created in 2015 to support Utah’s diverse and growing outdoor products manufacturing and design and development industry sector. OPDD is a valuable resource to help the outdoor industry with design and development knowledge, using tools to help bring new products to the market and grow the Utah economy.

World Trade Center Utah (WTC Utah) is a 501(c)(6) nonprofit organization that was founded in 2006 and became an official member of the World Trade Centers Association (WTCA) in 2007. As the state’s authority for international business development, WTC Utah facilitates economic growth by helping Utah companies increase exports, attracting foreign investment and building international awareness of the state. World Trade Center Utah is a licensed and certified member of the WTCA. Headquartered in New York City, WTCA is comprised of a network of more than 300 World Trade Centers in 100 countries around the world focused on facilitating prosperity through trade and investment.

The Utah Advanced Materials and Manufacturing Initiative (UAMMI) brings together public, private, community, industry, and education partners to assure the growth and sustainability of Utah’s advanced material and manufacturing industry. The mission of UAMMI is to ensure that Utah is the global leader in advanced value-added materials, manufacturing, technology development, and design by integrating industry, academic, and government contributors in ways that enhance collaboration, promote business opportunities, share knowledge resulting from relevant research, and engage a skilled and trained workforce.

The Utah Manufacturers Association (UMA) is the leading trade association for the manufacturing community in the state of Utah. UMA is the one-stop shop for the workforce regarding safety, employee development, local and national public policy, business development, and continuous improvement. Industry leaders come together with UMA to solve the relevant issues facing manufacturers. The UMA Center for Business helps its members grow using continuous improvement tools like Lean and Six Sigma. UMA’s mission is to connect and strengthen Utah manufacturers.

Section 4. DATA DESCRIPTION AND SURVEY METHODOLOGY

The raw data for this model was collected from a survey of the clients of UTAH-MEP. The survey was administered by a third party. The data was self-reported by this sample of client manufacturing establishments (CMEs) and other rural businesses (ORBs), based on projects between UTAH-MEP and the CMEs/ORBs during 2022. The CMEs/ORBs reported a total of 1,733 jobs created or retained and $390.6 million in additional or retained sales. It is important to note that, though these two types of reported effects do not represent all the impacts of UTAH-MEP (such as changes in labor and material costs, product development, facility layout improvements, employee training, inventory reduction, etc.), they are among the most significant impacts. They are a good starting point for the quantitative modeling in IMPLAN.

Table 3 provides detail regarding the size of the surveyed CMEs/ORBs. Considering all CMEs/ORBs in the sample, the majority of them are small-sized companies, while large-sized companies have the smallest share. The same applies when rural or urban classification is considered.

Table 3. Size of the Surveyed Client Manufacturing Establishments (CMEs) and Other Rural Businesses (ORBs)

Most economic modeling programs (including IMPLAN) use the Bureau of Economic Analysis’s Benchmark Input-Output Accounts to classify each industry. All federal government statistical data series are issued on a different classification system called the North American Industrial Classification System (NAICS). UTAH-MEP has classified their clients based on the NAICS codes. For the most part, the NAICS codes and the IMPLAN sector codes are very similar classifications. There are, however, circumstances in which a classification may be broken down into several classes in one system, but only into one class in another system. A bridge between the NAICS codes and IMPLAN sectors, provided by the Minnesota IMPLAN Group, helps alleviate the translation issues.

Before modeling, it is important to recognize that in IMPLAN, employment and output are linked. That is, for each set of data put into the program, IMPLAN assumes that there is a certain level of additional output associated with each number of additional jobs reported and assumes an additional level of employment based on the output indicated. Thus, adding jobs will also add a corresponding amount of output. From the raw data collected from the CMEs/ORBs, some clients reported only additional jobs, some reported only additional sales, and some reported both. There are several reasons that clients may have reported only one. The client may have only had good information on one. There may have been an increase in their efficiency, allowing for more sales using the same number of employees. They also may have experienced a lag in hiring new employees and/or increased production and will hire additional employees over time. Because the specific reason for reporting only jobs or output is not known, several assumptions must be made.

First, the numbers on employment were used where possible. The numbers of all additional or retained jobs were put into IMPLAN and the impacts were run. For CMEs/ORBs that reported only additional sales, and did not report additional jobs, the data for additional sales was also put directly into IMPLAN to run the model.

Last, the data from CMEs/ORBs that reported both additional jobs and additional sales need to be addressed. Because each of these companies was included in the first model, on the basis of jobs, the output related to the additional jobs these companies reported has already been accounted for. To simply run a second model with the full amount of additional reported output would be double counting it to some degree. To correct this situation, the output that could be attributed to the number of jobs added or retained was subtracted from the additional output reported by each CME/ORB. This determines what amount of the increase they reported for additional output was above that of the output already accounted for in the first model (output related to an increase in jobs). Thus, the last model was run using only the amount of output not already explained by the change in jobs. This adjustment is made to avoid overstatement of the results based on double-counting the additional output reported by the CMEs/ORBs.

Because of the relationship in IMPLAN between employment and output previously discussed, running this additional output will cause IMPLAN to assume that there are additional jobs related to this output and additional employee compensation related to those jobs. These jobs will be above the number of additional or retained jobs reported by the CMEs/ORBs, which may cause an overstatement in the numbers of jobs reported by the CMEs/ORBs. The reasons that companies may have reported an increase only in output or employment were previously addressed. Each cause would have led to different results, and therefore, the decision was made to avoid assumptions about the actual basis for this. Instead, additional sales were used, with the knowledge that it may cause an overstatement of employment. The effect of this overstatement will be noted in footnotes next to the results.

Also note, in running the IMPLAN models, the model defaults were used. The study area was defined as the state of Utah.

The economic input-output software used to calculate the total economic impacts of UTAH-MEP’s work (IMPLAN) uses new economic activity as inputs. The estimated impacts (reported in a later section) that are produced by IMPLAN assume that the activity being modeled is new activity above an expected baseline. In most cases, the participating firms would continue to operate without UTAH-MEP’s assistance. The goal of the study is to isolate the company’s activity that would not exist without this assistance.

Survey respondents take the survey online and are told that it should take approximately 15 minutes to complete. The questions are a mix of multiple choice and short fill-in-the-blank. Respondents are asked to report general information on their firm and activity, including overall sales and employment. Respondents are then asked questions about the outcomes of services they received, and if the outcomes led to increases in sales or employment. If respondents indicate an increase in sales or employment, they are asked to quantify the amounts.

IMPLAN is not built to forecast future activity due to investment (or avoided investment). We report the sums of the reported investment but are not estimating their long-term impacts. When estimating the total economic impacts of UTAH-MEP’s work, we consider increased sales, retained sales, and job creation and retention. These economic impacts are simpler to quantify and their connection to specific UTAH-MEP interventions is easier to establish.

Respondents report on:

• Increased sales

• Retained sales

• Cost savings

• Plant equipment investments

• Information systems investments

• Workforce practices investment

• New products and processes (and associated sales)

• Savings from avoided investments

• Job creation

• Job retention

DESCRIPTION OF ECONOMIC IMPACT ANALYSIS AND IMPLAN®

In looking at the economic impacts of UTAH-MEP, it is necessary to recognize that the full economic impact includes not only the actual event but also the additional impacts caused by that one event. Often, there is a “multiplying effect,” which makes the impacts even larger than just the initial event. There are several computer-based programs available to aid in economic impact analysis. For this study, IMPLAN was used. IMPLAN is short for “IMpact analysis for PLANning.” It is a highly respected economic impact modeling and analysis program in the United States. The maintenance, updating, and improvement of IMPLAN is done by the Minnesota Implan Group (MIG) of Stillwater, Minnesota, a spin-off company from the University of Minnesota. IMPLAN has been in use since 1984.

IMPLAN models are constructed using social accounting matrices (SAM) based on spending and purchasing data from the Bureau of Economic Analysis (BEA), supplemented by data from other publicly available sources. SAM are constructed to reflect the actual industry interactions in a region and include government activities that are not traditionally reflected in this type of economic analysis. SAM are used to describe and predict the changes in economic activity (the changes in total output) that result from changes in one or more industries within the economy (the changes in total input).

For this model, we are using the IMPLAN data set from 2019. Because the data set is used to describe the relationships

among different sectors in the economy, it is not expected that these basic relationships will change much from year to year. This is especially true for large study areas, such as those we are using in this model.

IMPLAN makes simplifying and useful assumptions to make predictions. The first of these is linearity with constant returns to scale. IMPLAN assumes that all changes will hold to a given proportion, regardless of the size of initial change in the economy. This assumption may not be appropriate for extremely large changes in the region’s economy because it does not allow for changes in the price due to changes in demand, thus disallowing for changes in technology and/or the relative prices of inputs.

The second assumption is that of a demand-driven model. IMPLAN assumes that there are no supply constraints--that firms have unlimited access to whatever materials they need to raise production to meet demand. This assumption is reasonable for small- to medium-sized changes in the economy. Extremely large changes, however, may lead to estimates that far exceed the available resources of the region.

There are also “fixed commodity” assumptions (price changes do not cause firms to change the mix of inputs used) and “homogenous sector output” assumptions (the proportion of different commodities produced by an industry is fixed).

Section 5.

Though there are some limitations with the assumptions made in IMPLAN, the assumptions are reasonable and useful to a certain point of change. Thus, IMPLAN is more accurate in predicting small economic changes over large economic changes.

When conducting economic impact studies, it is important to differentiate between new economic activity, and economic activity that may just be replacing already existing activity. If expansion for one firm occurs at the expense of another, then no actual growth has been created. The survey questions ask respondents to break out this new activity, allowing us to consider only outcomes above the level of activity expected with no UTAH-MEP intervention.

SAM create a map showing how money and resources flow through the economy. In a simulation, new economic activity

IMPLAN Impacts

The impacts represented by the model can be separated into different categories: direct, indirect, and induced effects.

• Direct effects are the initial changes in demand in the economy. They are defined by the modeler and placed in the appropriate industry. They are not subject to multipliers. In this case, survey information on jobs and output or sales was collected from CMEs/ORBs and put into the appropriate industry.

• Indirect effects are the changes in industries due to changes in business-to-business purchases. They are estimated based on national purchasing and sales data that model the interactions between industries. This category reflects the economic activity necessary to support the new economic activity in the direct impacts by other firms in the supply chain.

• Induced effects account for the effects of consumption due to additional employee compensation and proprietor income from both the direct and induced effects.

The total economic impact is a sum of the direct, indirect, and induced effects. The total effect divided by the direct effect is the multiplying effect. This is the total degree of change from an initial change of $1. For example, a multiplier of 1.5 means that for every dollar of direct effect, an extra $0.50 in additional output is created from the indirect and induced

is assumed to occur in an industry or group of industries. Based on past spending and purchasing activity, IMPLAN simulates the purchasing and spending necessary for this new economic activity to occur. IMPLAN tracks this new economic activity as it works its way through the economy. Also included in SAM are household and government behavior. In addition to following purchasing and spending through the private sector, IMPLAN also estimates the impact of changes in disposable income and tax revenue.

A production function is constructed for each industry, reflecting its connections to other industries. Economic changes or events are propagated through this process as new economic activity motivates additional economic activity in other parts of the supply chain and through changes in spending habits.

effects. It is referred to as a multiplier because it is the degree that the initial or direct effect results in a larger total effect on the economy.

The direct effects are used by IMPLAN to model the indirect and induced effects to find the total effect. As described in the previous section, the direct effects for this study were the additional and retained jobs and the additional and retained sales reported by the CMEs/ORBs.

The impact summary results are given in terms of employment, labor income, total value added, and output.

• Employment represents the number of annual jobs.

• Labor income is made up of total employee compensation (wages and benefits) as well as proprietor income. Proprietor income is profits earned by self-employed individuals.

• Total value added is made up of labor income, property type income, and indirect business taxes collected on behalf of local government. This measure is comparable to familiar net measurements of output like gross domestic product.

• Output is a gross measure of production.

• Indirect business taxes consist primarily of excise and sales taxes paid by individuals to businesses.

Section 6.

IMPLAN ® RESULTS

The aggregated results of the impacts of UTAH-MEP involvement with CMEs/ORBs are presented in this section. This is followed by the tax impacts and a breakdown of urban and rural impacts. A breakdown of the effects for UTAH-MEP involvement in each county is provided in Appendix A.

Table 4. 2022 Reported Effects of UTAH-MEP Involvement on Client Manufacturing Establishments(CMEs) and Other Rural Businesses (ORBs)

*This is the output equivalent to the jobs reported.

**These are the jobs equivalent to the additional output above jobs and output only reported.

Table 4 shows the reported effects of UTAH-MEP involvement with CMEs/ORBs during 2022. These have been aggregated by companies that reported only jobs, companies that reported both jobs and output, companies that reported only output, and companies that reported no effects on both jobs and output.

CMEs/ORBs reported 1,733 additional or retained jobs in 2022. In addition, 303.2 jobs were created; 0.6 jobs from CMEs/ORBs that reported output only and an additional 302.6 jobs from CMEs/ORBs that reported both output and jobs. The direct employment effect reported in Table 5 was 2,036 jobs.

Utah-MEP Economic Impact Report

The 1,733 jobs reported were equivalent to $585.5 million in output. This added to the $0.2 million of output reported by companies only reporting output and an additional $62.2 million in output reported by companies that could not be explained by their reported jobs, resulting in a total $647.8 million in direct effects for output shown in Table 5.

Table 5 shows the total economic impact of UTAH-MEP work with CMEs/ORBs in 2022. UTAH-MEP activity directly supported 2,036 jobs that would not have otherwise existed, and indirectly supported an additional 2,685 jobs. These jobs generated $295 million in total labor income. The total increase in output with the multiplying effect associated with this activity was $1,163 million.

* CMEs/ORBs reported 1,733 additional or retained jobs. The additional 303 jobs are associated with additional or retained sales (output) that could not be explained by the jobs reported.

Table 5. 2022 Direct, Indirect, and Induced Impacts of UTAH-MEP

Figures 7 and 8 illustrate the direct and total effects of UTAH-MEP involvement with CMEs/ORBs on both employment and output.

Figure 7. 2022 UTAH-MEP Employment Impacts

Figure 8. 2022 UTAH-MEP Output Impacts

Tax Impacts

IMPLAN® models the results of various tax impacts. The indirect business taxes, reported earlier, consist primarily of excise and sales taxes paid by individuals to businesses. However, the additional local, state, and federal tax generated by the UTAH-MEP’s activities is also interesting to note.

The additional federal tax collected in 2022 is over $59.9 million, and the additional state and local tax collected is $30.8 million (Figure 9). The total tax revenue, found in the same way as the output and employment numbers, totals $90.8 million. It is important to note that these numbers include the indirect business taxes previously reported. For a more detailed breakdown of the tax revenue for 2022, see Table 6.

$30,847,580 $59,918,135

Figure 9. 2022 Tax Impacts from UTAH-MEP by Entity Tax Impacts

Table 6. 2022 Total Tax Impacts of UTAH-MEP

Top Industries Affected Breakdown

In order to provide a more detailed look at the impact of UTAH-MEP’s work, we have broken out the total impacts by top industries affected (Table 7). The top industries were sorted by the total effect on employment. It should be noted that the information in Table 7 is the total effect, which would include the indirect effects of business-to-business purchases as well as the induced effect of additional demand from both increased employee compensation and proprietor income. In 2022, the top industries affected were measuring and controlling device manufacturing and ice cream and frozen dessert manufacturing.

7. 2022 Top Industries Affected by UTAH-MEP

Rural/Urban Breakdown

We have also broken out results into rural and urban impact. Summaries of the 2022 impacts of UTAH-MEP in rural and urban areas are in Tables 8 and 9. Total employment effect was 846 jobs in rural areas and 3,875 jobs in urban areas. Total output effect was $194.4 million in rural areas and $968.4 million in urban areas. Overall, both the direct and total employment impacts of UTAH-MEP programs on urban areas are larger than for rural areas of Utah, and the same applies to output impacts. Considering that the 2010 Census showed Utah is the eighth most urban state, the level of activity in rural areas is impressive.

Table

Table 8. 2022 Rural Areas Impacts of UTAH-MEP

Figure 10 shows the relative additional and retained jobs reported by CMEs/ORBs in rural and urban areas. For a more detailed look at impacts by county, see Appendix A.

Table 9. 2022 Urban Areas Impacts of UTAH-MEP

Figure 10. 2022 Additional or Retained Jobs Reported by CMEs/ORBs and Indirect and Induced Employment Effects From UTAH-MEP Involvement in Rural and Urban Areas

Manufacturing Investment Benefits

As stated in Section 4, Data Description and Survey Methodology, UTAH-MEP also helps firms implement long-term investments or change practices to avoid unnecessary investments. These activities do not lend themselves to short-term economic impact analysis but can have a significant long-term effect on firm activity. Table 10 shows the investments made as a result of working with UTAH-MEP, according to survey results from 2022.

The investment benefits were smaller for rural areas compared to urban, considering each investment category alone and the sum of all investments. Plant equipment was the largest area for both rural and urban areas.

To calculate any long-term economic impacts of these additional benefits, we would need to conduct further survey work over a period of time.

Table 10. 2022 UTAH-MEP Investment Benefits

Section 7. CONCLUSION

Including the multiplying effects, over 4,721 jobs were created that would not have been realized without the assistance of UTAH-MEP. CMEs/ORBs also reported $390.6 million in additional or retained sales, with $61.1 million of that from CMEs/ORBs in rural counties.

When examining the main impact results of UTAH-MEP for 2022, here are some important points to keep in mind.

(1) These are model results, not survey results. In order to track “actual” impacts rather than modeled impacts, it would be necessary to track the actual expenditures made by each of these individual clients, their suppliers, and so on. This would, obviously, be very time and cost intensive, with no guarantee that the firms would supply their entire information. Therefore, these results are modeled using the average observed relationship at the state and industry levels.

The estimated impact numbers are large in comparison to the modest investment by the state into the UTAH-MEP. This can generate skepticism about the methodology used to obtain these numbers. However, “large” numbers were expected before modeling even began and the overall impacts result in a multiplier of 1.79 for output. This multiplier is fairly consistent with Utah’s economy for several reasons:

• The employee compensation for manufacturing employees is much higher than that of the employees of other sectors. For example, national manufacturing employee compensation is, on average, higher than that of the service industries’ employees. This causes a larger induced effect.

• This impact is in comparison to the funding provided to UTAH-MEP. In general, UTAH-MEP’s assistance provides education and helps facilitate changes in small- to medium-sized businesses. Often, a small investment in knowledge can have a large effect on output.

(2) The span of IMPLAN is one year, and it deals with a one-time injection into the economy. Therefore, it will underestimate the total impacts over time due to continual retention of the reported additional jobs and sales.

(3) The model does not consider the “opportunity costs” of the inputs, that is, the value of the other uses for the money that Utah invested in UTAH-MEP. There may have been several alternatives for the deployment of these resources, like building roads.

(4) This model evaluates only the constructive effects of the investment. It does not take into consideration any of the “destructive” effects—any decline in other in-state firms due to the increase in the clients of UTAH-MEP. This “creative destruction,” however, is generally viewed as a natural, and even instrumental, effect in an evolving and healthy economy.

UTAH-MEP’s mission of supporting Utah manufacturing and identifying new opportunities fits closely with Governor Cox’s initiative on creating jobs and growing both rural and urban businesses. UTAH-MEP’s capacity is a function of the size of their consulting staff, and an expansion of this staff should increase UTAH-MEP’s overall impact.

In order to fully isolate the complete effects of UTAH-MEP on participating organizations, we would need access to years of sales and operational data from each firm, along with appropriate controls.

Large, technology manufacturers tend to dominate the Utah manufacturing discussion, but as the preceding results show, smaller manufacturers like composites can produce large numbers of new jobs, particularly when given technical assistance. The aggregate effect of employment increases from small- and medium-sized firms is large and contributes to sectors identified as priorities by Utah’s economic development agencies.

Section 8. APPENDIX A: 2022 COUNTY RESULTS

Figure 11 shows the location of the various clients served by UTAH-MEP. The following tables show the summary impacts for each county included in the analysis for 2022. It should be noted that the multiplier effects here are much smaller. That is because only the multiplying effect on that particular county was included and not the effect on the whole state of Utah as was examined in the Section 6, IMPLAN Results.

Figure 11. 2022 Location of Clients Served by UTAH-MEP

Table 11. 2022 Impacts of UTAH-MEP in Box Elder County

Table 12. 2022 Impacts of UTAH-MEP in Cache County

Table 13. 2022 Impacts of UTAH-MEP in Carbon County

Table 14. 2022 Impacts of UTAH-MEP in Davis County

Table 15. 2022 Impacts of UTAH-MEP in Emery County

Table 16. 2022 Impacts of UTAH-MEP in Iron County

Table 17. 2022 Impacts of UTAH-MEP in Juab County

Table 18. 2022 Impacts of UTAH-MEP in Salt Lake County

Table 19. 2022 Impacts of UTAH-MEP in Sanpete County

Table 20. 2022 Impacts of UTAH-MEP in Summit County

Table 21. 2022 Impacts of UTAH-MEP in Tooele County

Table 22. 2022 Impacts of UTAH-MEP in Uintah County

Table 23. 2022 Impacts of UTAH-MEP in Utah County

Table 24. 2022 Impacts of UTAH-MEP in Wasatch County

Table 25. 2022 Impacts of UTAH-MEP in Washington County

Table 26. 2022 Impacts of UTAH-MEP in Weber County

“Utah-MEP and CONNEX™ Utah has help us reach non-Utah companies in ways we that would not have been possible, I don’t know of another forum that is connecting companies. We have been able to secure large and small contracts for work being done in the State of Utah. Today’s transient market requires that we reach out of state companies for our industry specific projects in our region.

We are excited about the future partnership with both Utah-MEP and CONNEX, it’s a valuable resource for companies like Thriller Metal Fabrication & Manufacturing to reach government entities & nationwide companies.

My hope is that this platform continues to grow and affects companies like Thriller Metal Fabrication & Manufacturing in building a company that is stainable for many years to come.”

John Gomez President

INNOSYS INC.

“We deeply appreciate all of the introductions you are making on the behalf of InnoSys and all that UAMMI has to offer and look forward to working with the Utah-MEP.”

Larry Sadwick Ph.D., CTO

“Overall, I think the first session was a major success… just having the crew in the same room thinking about failure modes and risk is a very good thing. I think the following sessions need to be really technical and in the weeds of how to perfume the analysis. Over-arching quality engineering theory and history is interesting, but what we really need is engineers who can quantify risk and tweak their designs to eliminate it. It sounds like that’s the plan, so full speed ahead!”

Pet Gompert Director of Innovation

“We have really appreciated working with iMpact Utah and everything they have done for us. They have helped us see our shortcomings and implement systems that have improved our processes drastically. With their help, we have been able to improve our systems within six months what would have taken us years to see and implement.”

Andy Martin Partner, CNC Pros

“After living and working for 20 years in the northeast, I am continually impressed by the resources and cooperation among various Utah agencies that exist to support small manufacturing business such as DPS Skis. We are on the long road to standing up a premium brand with U.S. manufacturing right here in Salt Lake City. Along this journey so far, we have received support in the form of STEP grant funding, consulting services, international trade mission and

matching making support and more from the World Trade Center Utah. We have received extensive Lean Manufacturing training and resources through iMpact Utah. The newly created automation grant through Utah State University is just getting underway with exciting prospects. Both UMA and UAMMI have provided critical matchmaking, technical composites resources and lobbying efforts that benefit the ongoing needs of the business as well.

The most impressive aspect of all this support is the willingness and ability of these agencies to collaborate, refer and imagine ways to pull resources from each different group at opportune times. It seems to me that the Utah-MEP Alliance is a unique team approach at a state level that is not the environment of many other states.”

Alex Adema President & CEO

“We are so very grateful for iMpact Utah and particularly Jared and Eric. They have helped us navigate some, could have been, treacherous territory and I am so very grateful for their skills and abilities. They are very different in approach, and yet the combination works. I particularly appreciate their genuine desire to help, and their engagement level is second to none. We have

accepted them as one of us, and in our current culture (that we’re working on changing), that speaks volumes! I can’t say enough good things about them, and more than that, we have learned, adjusted our trajectory, and gained momentum as a direct result of their tutelage.”

“The MEP is one of the best resources available to companies in Utah—period. Quality support, personalized to our business, relevant to our real-world goals and our actual bottom-line results.”

Nathan Hansen President

Align Precision Organizational Development