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General Electric's Impact on the State of Georgia’s
Economy
July 2017
An Economic Analysis Prepared by:
1
INTRODUCTION ...................................................................................... 2
GEORGIA .................................................................................................. 4
TOTAL ECONOMIC OUTPUT .................................................................. 4
EMPLOYMENT ............................................................................................... 5
CHARITABLE IMPACT ................................................................................. 6
INVESTMENT .................................................................................................. 7
RESEARCH METHODOLOGY ................................................................. 8
DEFINITIONS .......................................................................................... 11
APPENDIX ............................................................................................... 13
REFERENCES ........................................................................................... 14
2
General Electric's Impact on the State of Georgia’s Economy
2
INTRODUCTION General Electric Company (GE or 'the company') is a diversified industrial
corporation that offers a wide range of products and services including aircraft
engines, power generation equipment, medical imaging, as well as industrial
financing. The company primarily operates in North America, Europe, Asia, South
America, Australia and Africa and employed approximately 100,000 people in the
United States in 2016.
The state of Georgia is home to GE Power, GE Digital, GE Healthcare and GE
Transportation, as well as other GE businesses. GE Power has facilities in Atlanta,
Duluth, Chamblee and Waynesboro. From its Monitoring & Diagnostics Center in
Atlanta, GE Power can track the energy assets of its customers across the globe.
The GE Digital Operations Center is also based in Atlanta, out of the Buckhead
district, supporting the business’s global information technology infrastructure
operations.
In 2017, GE asked the business economic intelligence and research company, Frost
& Sullivan, to conduct an economic impact analysis (EIA) of the presence of GE’s
operations in Georgia. This EIA tool, built by researchers at Frost & Sullivan, can be
used to assess various scenarios and identify the potential impacts of GE’s
operational presence on GE in Georgia’s economy in terms of total economic
output impact, job creation, and charitable contributions.
Independent of which impact variable is explored, GE’s impact on the state of
Georgia’s economy can be measured and categorized into three levels of impact:
o Direct impact—the total number of GE jobs created, its associated total
economic output, paid wages, and charitable contributions generated from
GE’s production operations
o Indirect impact—the number of indirect jobs created, its associated
wages, and total economic output related to GE’s direct expenditures on
goods and services through its supply chain and from each US state’s local
economy. This is the economic activity generated by GE’s supply chain to
serve GE’s operational needs.
o Induced impact—the economic impact created as a result of local
spending by GE employees and families, its associated wages and GDP
produced from those induced wages. This is the economic activity
generated by the household expenditures of GE employees in the local
economy.
GE provides
substantial direct,
indirect, and
induced
socioeconomic
benefits to the
state of Georgia.
3
To calculate these economic impacts, a pragmatic input/output (I/O) production
model was developed. The I/O model is based on the assumption that GE’s presence
in a given economy contributes to the total value of the economy, just like all other
economic actors in the economy and that each economic actor has a direct impact,
an indirect impact, and an induced impact on the total economy through the
economic decisions they make. Each of these types of impacts can be measured and
compared to the performance of the total economy. Consequently, economic
impact statements can be made regarding the relative and absolute benefit GE has
on the economy as a whole.
GE provides significant economic and philanthropic benefit to the state of Georgia.
In 2016, GE contributed a total of $3.648 billion in direct, indirect, and induced total
production output in the state of Georgia. GE’s economic presence in the state of
Georgia supports 11,743 direct, indirect, and induced fulltime equivalent jobs. This
is nearly enough people to fill the Verizon Wireless Amphitheatre at Encore Park
to capacity. GE employs 2,975 fulltime manufacturing and professional jobs in state
of Georgia and GE supports an additional 2,097 fulltime equivalent jobs in its supply
chain. An additional 6,671 fulltime equivalent jobs are supported by local companies
that serve the personal consumption needs of GE employee households.
Consequently, GE’s economic presence in the state of Georgia has contributed to
the generation of $1.561 billion in total direct, indirect, and induced compensation
in 2016 and its employees and its foundation contributed $3.88 million in total
charitable contributions. Overall, GE has demonstrated its commitment to the state
of Georgia’s economy through its continued investment and rock-solid presence
today, and tomorrow.
Note that this economic analysis only includes the impact of GE’s current operations
in Georgia and does not include the additional economic benefits that GE brings to
the state through recent capital investments, such as GE Digital’s new global digital
operations center in Buckhead. Investments like this lead to additional construction
and infrastructure jobs and economic activity which are not covered in this report.
4
General Electric's Impact on the State of Georgia’s Economy
4
GEORGIA TOTAL ECONOMIC OUTPUT
GE provides significant economic and philanthropic benefit to the state of Georgia
due to its presence in the state. In 2016, the company contributed a total of $3.65
billion in direct, indirect, and induced total production output in Georgia. That is
the same as $9.99 million of total economic production output per day, $416,138
per hour, and $116 per second. The source of this total economic output is derived
from three sources; GE’s direct productivity contributed 31.8% of the total
economic impact, the productive output of GE’s supply chain, or the indirect impact
of GE’s presence in the state, contributed 55.0% of the total economic impact, and
the economic output contribution of the local businesses that serves GE employee
household personal consumption needs contributed 13.2% of total economic output
induced by GE’s presence in the state of Georgia. GE’s economic output within
Georgia is shown below in both absolute and relative terms.
Total Economic Output Attributed to GE’s Presence in Georgia (Total Direct, Indirect,
and Induced), USD, 2016
GE's Impact on the U.S. State of Georgia – Total Economic Output, USD Million, 2016
Metrics Total Economic Impact
Direct $1,163.1
Indirect $1,999.0
Total Direct and Indirect Impact $3,162.1
Induced Impact $485.8
Total $3,647.9
Direct
31.9%
Indirect
54.8%
Induced
13.3%
Relative Economic Output attributed to GE’s
Presence in the State of Georgia by Impact
Type (Direct, Indirect, and Induced), 2016
PER DAY
$9.99M
PER HOUR
$416K
PER YEAR
$3.65B
PER SECOND
$116
$3.65 B
Economic Output Attributed to GE’s
Presence in the State of Georgia per $1
Spent on GE Employee Compensation,
USD, 2016
Source: Frost & Sullivan
Source: Frost & Sullivan
STATE OVERVIEW
Georgia is the 8th most
populous state in the
USA, with a population
of 10.3 million people.
Georgia headquarters 26
Fortune 1000
companies, and its
capital, Atlanta, is
considered an important
world city and a key
economic zone. Georgia’s
economy is big in
manufacturing, ‘trade,
transport, and utilities’, business services, and
healthcare.
Population: 10.3 million
GDP: $498 billion
Employment: 4.7
million
Unemployment Rate:
5.3%
$7.52 Total Economic Output
$1 Spent on GE Compensation leads to
5
EMPLOYMENT
GE’s economic presence in Georgia supports 11,743 direct, indirect, and induced
fulltime equivalent jobs. This is the same number of people that can nearly fill the
Verizon Wireless Amphitheatre at Encore Park. In all, one GE job in Georgia
supports an additional 2.95 fulltime equivalent jobs in Georgia, independent of the
industry sector.
GE employs 2,975 fulltime manufacturing and professional jobs in Georgia and GE’s
supply chain supports 2,097 fulltime equivalent jobs in order to address GE’s
business activity needs. Furthermore, 6,671 fulltime equivalent jobs are induced to
serve the personal consumption needs of GE employee households. Specifically, for
every 100 direct fulltime equivalent GE jobs employed in Georgia, 85 retail trade
jobs (2,540 total FTE jobs) and 41 health care and social assistance jobs (1,214 total
FTE jobs) are supported. In addition, for every 100 GE jobs, 29 fulltime equivalent
accommodation and food service jobs (872 total FTE jobs) and 22 education services
including teachers (658 total FTE jobs) are also supported by the presence of GE
and its supply chain partners in Georgia.
GE's Impact on the U.S. State of Georgia – # of Additional Jobs Supported per 100 GE
Jobs Employed, USD Million, 2016
Industry Sector Measure
Retail trade 85
Health care and social assistance 41
Professional and business services 31
Accommodation and food services 29
Educational services 22
Manufacturing 11
All Others 75
Total Jobs Supported per 100 GE Jobs Employed 295
GE's Impact on the U.S. State of Georgia – Total Jobs Supported, Fulltime Equivalent
Jobs, 2016
Every GE job in Georgia
creates 2.95 additional
jobs within the state.
This positive feedback
helps to create jobs in a
wider variety of industry sectors.
Source: Frost & Sullivan
Manufacturing
759
Retail trade
2,540
Professional and
business services3,464
Educational
services658
Health care and
social assistance1,214
Accommodation
and food services872
All Others
2,236
6
General Electric's Impact on the State of Georgia’s Economy
6
LABOR COMPENSATION
GE’s economic presence in Georgia has contributed to the generation of $1.561
billion in total direct, indirect, and induced compensation in 2016. Furthermore, GE
compensates its direct employees significantly more than the average Georgian
business. Specifically, GE compensates its average employee 3.20 times more than
the state’s average compensation rate. This increased compensation rate leads to a
significantly greater economic output potential; $7.52 of total direct, indirect, and
induced economic output was created for every $1 of GE compensation expended
in 2016.
CHARITABLE IMPACT
The benefits of GE’s presence in Georgia go beyond the economy as evident in its
direct contributions to the communities of Georgia. In 2016, GE corporate, GE’s
employees, and the GE Foundation contributed $3.88 million in total charitable
contributions (equivalent to $1,304 per employee) to local charities in Georgia.
Overall, General Electric has clearly demonstrated its commitment to the state of
Georgia’s overall economy and its communities through its continued investment
and charitable contributions.
GE's Charitable Impact – Monetary Donations and Volunteer Hours, Georgia, 2016
Metric Unit of Measure Measure
GE Monetary Donations USD $3,878,253
GE Monetary Donations
per GE Employee USD/person $1,304
Volunteer Hours Pro Bono Hours 4,726
$1.561B
Total GE Attributed Direct, Indirect,
and Induced Employee
Compensation, Georgia, 2016
3.20x
Average GE Compensation
Relative to State Average per
State, Georgia, 2016
Source: Frost & Sullivan
GE contributed $3.88
million in total
charitable contributions
and provided 4,726
hours of pro bono
volunteer hours to local
charities in Georgia.
GE compensates its
average employee 3.20
times more than the
state’s average
compensation rate.
7
INVESTMENT
Note that this economic analysis only includes the impact of GE’s current operations
in Georgia and does not include the additional economic benefits that GE brings to
the state through recent capital investments. These investments lead to additional
construction and infrastructure jobs and economic activity which are not covered
in this report.
In June 2016, GE Digital announced it would be opening its global digital operations
center in Atlanta. The business is leasing and renovating the majority of the two top
floors of the Prominence office tower in the Buckhead district, supporting additional
construction and infrastructure jobs and bolstering the local economy.
8
General Electric's Impact on the State of Georgia’s Economy
8
RESEARCH METHODOLOGY There are a number of approaches in measuring the economic impact of a given
company’s operational presence, but the most common and acceptable economic
model is the input-output (I/O) method, invented by Nobel Prize-winner Wassily
Leontief. The Leontief I/O model is based on using matrices that report the value
of inputs (in producer prices) delivered at the national and regional level by a set of
industry sectors used by the same set of industry sectors producing output at the
national and regional level (and also measured in producer prices). These matrices,
known as national input-output tables, are produced and published in the United
States by the Department of Commerce’s Bureau of Economic Analysis (BEA).
There are 3 types of economic impacts – direct, indirect, and induced – that are
generally recognized by economic practitioners of the I/O model:
• Direct Impact—the total number of jobs created and its associated value-
add to the local economy, paid wages, and associated federal, state, and local
income taxes generated from the primary economic entity of importance.
The primary economic entity of importance can be a given
company/corporation, industry sector, project, or organization.
• Indirect Impact—the number of indirect jobs created, its associated wages,
and generated federal, state, and local income taxes related to primary
economic entity of importance’s direct expenditures on goods and services
within its supply chain and from each region’s local economy. This is the
economic activity generated by primary economic entity of importance’s
supply chain in order to serve primary economic entity of importance’s
operational needs.
• Induced Impact—the economic impact created as a result of local spending
by the households of employees of the primary economic entity of
importance. These expended wages are used to create new wages, new
GDP, and new federal, state, and local income taxes generated in order to
deliver goods and services to the households of employees of the primary
economic entity of importance. This is the economic activity generated by
the household expenditures of the employees of primary economic entity
of importance in the local economy.
9
I/O matrix tables are used to calculate economic impact multipliers used in the EIA
model. Multipliers are parameters that are used for calculating the total impact on
all industry sectors in an economy (including cascading effects derived from the
entire value chain) of changes in the demand for the output of any given industry
sector. These multipliers describe the expected, or average, effects and not marginal
effects. Thus, these multiples do not take into consideration economies of scale,
unused production capacity or technological change but they still provide a good
picture of the inter-relationships between industry sectors that supply valuable
inputs and industry sectors that use these inputs to make more valuable products.
Specifically, these multipliers can be used to calculate the direct and indirect
economic impacts of a new investment in an economy or the size of the economic
importance of a company, product, project, etc. in terms of the value of total
production output (in producer prices), gross value added (which is also a proxy
for gross domestic product), the total employment (in terms of the number of full
time equivalent jobs created), total expenditures on labor compensation, tax
revenue generation, and shareholder profits.
An I/O matrix table models the organization of the United States’ entire industrial
production system in a given year. The row of an I/O table reports the value of
inputs sold to each industry sector for a given industry sector and the sum of a row
report’s the total value of sold inputs across all industry sectors. The column of an
I/O table reports the value of the inputs used and paid for by a given industry sector.
It is similar to a bill of material’s used by a given industry sector and the sum of a
given column equals the total expenditure on inputs used to create the given
industry’s output. Thus, I/O matrix tables show the relationships that exist between
industrial sectors in a given region.
An I/O table also includes expenditures paid out to various stakeholders for each
of the industry sectors, including total compensation paid out to labor for their help
in transforming the acquired inputs into valuable industrial output, expenditure to
federal, State, and local governments in the form of production and import taxes,
and payments to shareholders and creditors. The sum of all payments to the value
chain for inputs and all other stakeholders for their contributions in transforming
the inputs into valuable production output equals the total economic impact of the
given industry sector’s activity in the given region.
10
General Electric's Impact on the State of Georgia’s Economy
10
As stated previously, the BEA provides national I/O tables that must be adjusted for
regional scale and variance since the size and mix of industrial sectors participating
in each region clearly varies from the aggregated national reporting. In order to
control for this variance, location quotient (LQ) weights can be applied to the
national table in order to scale and adjust the table. The LQ weight is calculated by
taking the ratio of a given industry sector’s share of regional earnings and the given
industry sector’s share of national earnings. If the LQ ratio is less than one, then the
ratio is multiplied by the regional share of the industry sector’s earnings relative to
the national earnings. If the LQ ratio is greater than one, then only the regional
share of the industry sector’s earnings relative to the national earnings is used as
the weight. In addition, primary research and expert judgment must be applied to
check to make sure that the weighted I/O table is truly representative of each state’s
economic interactivity between industry sectors supplying inputs and industry
sectors producing output. In other words, each intersection within the I/O table
must be reviewed and adjusted accordingly if newer or better information is
available.
The following inputs were utilized in this economic analysis:
o Total Production Output and Gross Value-Added of GE’s operations and
the U.S. State in general per U.S. state
o GE provided inputs, including the number of production-related and
professional jobs created per U.S. state and expenditures on goods and
services for local operations from the local economy
o Local employment trends per U.S. state
o Average compensation and wages per laborer in each U.S. state
o Number of employees per industry sector per U.S. state
o Production, Import, and other taxes paid per U.S. state
o Average household/personal expenditures on local goods and services
o Expenditure on local charities by GE and each U.S. state in general
11
DEFINITIONS This analysis looks at various measures of economic impact of GE’s presence in each
of the states under investigation in this report. The list below of economic impacts
shows the specific economic impacts measured for the purposes of this analysis.
Total Economic Output – Also called Total Value of Production Output, this
metric reflects the total value of all production activity of a given primary economic
entity of importance. A primary economic entity of importance can be a single
corporation like GE, a set of companies, or an entire industry sector. Specifically,
this measure is basically the value of all production activity, in producer prices,
related to presence of GE in the state and includes the value of production of GE
(direct impact), the suppliers of GE (indirect impact), and the businesses that serves
GE employee household personal expenditure (induced impact). The Total
Economic Output is also equal to the sum of all payments to all of GE’s stakeholders
including the raw material/input suppliers (payments for raw materials), direct
employees (compensation payments), and payments to other stakeholders including
governments (taxation), creditors (interest payments on debt), and profits
(payments to owners). In other words, this metric can be thought of as a proxy for
TOTAL REVENUE generated by GE plus TOTAL REVENUE generated by GE’s
supply chain plus TOTAL REVENUE generated by companies servicing GE and its
employee’s households. Total economic production output per time period can be
easily deduced.
Gross Value Added – This metric is the total value created by GE due to the
transformation of the sourced raw materials/inputs into something more valuable.
This metric is equal to the sum of all payments to employees (compensation
payments) and payments to other stakeholders including governments (taxation),
creditors (interest payments on debt), and profits (payments to owners). This
metric excludes payments to input suppliers.
Labor Compensation – This metric is the total wages and benefits created and
paid out directly by GE (direct impact), the indirect labor payments of GE’s supply
chain, and any wages and benefits created and paid out by the local companies
servicing the needs of GE employee households (induced impact). This is a
component of Gross Value Added. Using the results of the I/O model developed
for this report, the average GE labor compensation relative to the given state’s
average labor compensation (ratio of GE compensation relative to average state
compensation; $GE wage/$ average state wage).
Employment – This metric is the total number of fulltime equivalent jobs created
by GE (direct impact), the total number of fulltime equivalent jobs created by GE’s
supply chain as a consequence of servicing the raw material needs of GE (indirect
impact), and the total number of fulltime equivalent jobs created by local companies
12
General Electric's Impact on the State of Georgia’s Economy
12
servicing the needs of GE employee households (induced impact). All employment
findings reported in this analysis are measured in fulltime equivalent jobs. Using
multiples derived from the I/O model, types of jobs created by industry sector can
be deduced. In addition, the number of indirect and induced jobs created due to
GE’s presence per one GE job created and total direct, indirect, and induced jobs
created relative to total state jobs can be deduced.
Charitable Impact – This metric measures the total direct charitable expenditure
by GE and its employees in the form of payments to local charities (momentary
donations) or through donated time (charitable pro bono hours). Charitable Impact
can be measured per GE employee and in total terms.
13
APPENDIX General Electric's Impact on the U.S. State of Georgia – Economic Impact Summary
Table, USD Million, 2016
Metrics
Total
Economic Impact
Gross
Valued Added
Rest of
Value Added*
Labor Compensation
Employees (People)
Direct $1,163.1 $674.1 $188.7 $485.4 2,975
Indirect $1,999.0 $1,136.8 $325.3 $811.5 2,097
Total Direct and Indirect Impact^ $3,162.1 $1,810.9 $514.0 $1,296.9 5,072
Induced Impact@ $485.8 $440.4 $176.5 $263.8 6,671
Total $3,647.9 $2,251.2 $690.5 $1,560.7 11,743
* Includes estimated government tax types (Federal, State, and Local; Corporate, Income, Property, Sales, and Others), payments to creditors, and payments to owners (profits)
^ Excludes Second-order Induced Wholesale Trade and Construction Jobs. All Jobs are Full-Time Equivalent. @ GE + Upstream Value Chain Partners
General Electric's Impact on the U.S. State of Georgia – Number of Jobs Supported by
Industry Sector, # of Employees, 2016
Industry Sector Direct Jobs Indirect Jobs Induced Jobs Total Jobs
Manufacturing 437 323 -- 759
Retail trade -- 18 2,522 2,540
Professional and business services 2,539 925 -- 3,464
Educational services -- 2 655 658
Health care and social assistance -- 1 1,213 1,214
Accommodation and food services -- 124 748 872
All Others -- 704 1,532 2,236
Total 2,975 2,097 6,671 11,743
Note: Excludes Second-order Induced Wholesale Trade and Construction Jobs. All Jobs are Full-Time Equivalent. Source: Frost & Sullivan Analysis
General Electric's Impact on the U.S. State of Georgia – Charitable Impact, USD Million,
2016
Metrics Grand Total
Georgia $3,878,253
Note: NPISH = Nonprofit Institutions Serving Households
14
General Electric's Impact on the State of Georgia’s Economy
14
REFERENCES Angelos Pagulatos and Kurt R. Anschel. (October 1981). An I-O Study of the Economic
Structure of Appalachian Kentucky. Growth & Change. Wiley-Blackwell
Dan S. Rickman. (April 2001) Using Input-Output Information for Bayesian Forecasting of
Industry Employment in a Regional Econometric Model. International Regional Science
Review 24, 2: 226–244
Information Sources: Bureau of Economic Analysis; U.S. Department of Commerce.
Retrieved at https://www.bea.gov/iTable/index_regional.cfm
Miller, Ronald E.; Blair, Peter D. (2009). Input-Output Analysis: Foundations and
Extensions. Cambridge, GBR: Cambridge University Press 10. Retrieved at
http://site.ebrary.com/lib/mitlibraries/Doc?id=10329730&ppg=44
Rebecca Bess and Zoë O. Ambargis (2011) Input-Output Models for Impact Analysis:
Suggestions for Practitioners Using RIMS II Multipliers. Presented at the 50th Southern
Regional Science Association Conference. March 23-27, 2011, New Orleans, Louisiana
U.S. Department of Commerce (1997) Regional Multipliers. A User Handbook for the
Regional Input-Output Modeling System (RIMS II). Third Edition. March 1997
15
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General Electric's Impact on the State of Georgia’s Economy
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