Regional Economic Growth Report
This report contains the results of an analysis of data from the Cincinnati USA Partnership’s 2007 Capital Investment Survey. The analysis was performed by the Economics Center for Education & Research (Economics Center), a unit of the College of Business at the University of Cincinnati.
The first section describes how “Cincinnati USA Growth Businesses” are defined, presents the 2007 survey findings, and compares 2007’s economic impact results with results from the 2006 report. The second section of the report presents the economic impact results of the capital investment survey by business type, state, and county. The third section of the report explains the key assumptions used in this analysis.
A. Cincinnati USA Growth Businesses
The Cincinnati USA Partnership surveyed the businesses in the Cincinnati USA1 region to determine total business investment in the region during 2007 and the new and/or retained jobs associated with this investment. The following analysis examines the results of businesses that had a substantial number of added or retained jobs, added investment, or added square footage in 2007. This group of 184 businesses is referred to as Cincinnati USA’s Growth Businesses.
B. 2007 Survey Results
Benefits from Investment
The Cincinnati USA Partnership identified 184 “Cincinnati USA Growth Businesses” that added or retained jobs, added investment, or added square footage in 2007. Of the $2.71 billion total investment, 51.4 percent came from expanding businesses, 38.2 percent from new businesses and 10.4 percent from intraregional relocation.
In 2007, 38 percent of total investment occurred in the manufacturing industry (21 percent in 2006), 33 percent was office/service investment (50 percent in 2006), 14 percent was in the medical/hospital industry (10 percent in 2006), 14 percent in the distribution industry (13 percent in 2006) and 1 percent in the hotel industry (6 percent in 2006). In addition, less than 1 percent of total investment occurred in research & development, which was close to the previous year’s investment.
The three counties with at least $100 million of investment in 2007 were Hamilton County with $1.13 billion in new investment, Butler County with $973.7 million, and Warren County with $403.3 million.
Among counties, Butler, Clermont and Hamilton showed substantial increases in investment during 2007 compared with 2006.
The total economic impact of 2007 capital investment by Cincinnati USA Growth Businesses is $5.78 billion. Of this, $1.76 billion will enter the homes of Cincinnati USA workers in the form of wages.
In 2007, investment by Cincinnati USA’s Growth Businesses totaled $2.71 billion and directly accounted for 20,931 new and retained jobs. One job was either created or retained for every $129,313 in investment spending by the Growth Businesses.
Benefits from New and Retained Jobs
The economic boost created by business investment and employment will support 53,736 jobs in the Cincinnati USA region.2
According to the survey of Growth Businesses, a total of 6,109 new jobs resulted directly from investment and 14,822 jobs were retained. Of the total 20,931 jobs that were created or retained, 41 percent were in the manufacturing area, 33 percent were in office/service, 13 percent were in medical/hospital3, 13 percent were in distribution, less than 1 percent were in research & development and hotels. These jobs paid $1.20 billion in household earnings to Cincinnati USA workers.
As a result of the business investment and new jobs created by these businesses, local government revenues from sales, personal income, and real property taxes are expected to be $25.4 million and state government revenues are expected to be another $14.9 million.
C. Investment and Employment Trends in Cincinnati USA
The total economic impact of 2007 capital investment in Cincinnati USA was $5.78 billion. This was 46.7 percent higher than the $3.94 billion capital investment impact of 2006. The impact on jobs increased similarly, as total jobs increased from 20,141 in 2006 to 20,931 in 2007. The economic impact of employee earnings increased to $1.76 billion from $1.14 billion in 2006.
Overall, the level of investment from Cincinnati USA Growth Businesses increased by 31.5 percent between 2006 and 2007, from $2.06 billion in 2006 to $2.71 billion in 2007.
Three counties showed dramatic growth in their levels of business investment. Business investment in Clermont County increased from $36.1 million in 2006 to $63.7 million in 2007, investment in Butler County went from $559.1 million to $973.7 million and investment in Hamilton County went from $695.5 million to $1.13 billion.
The manufacturing sector proved to be an important sector of the local economy, accounting for 38 percent of all investment by growth businesses in 2007.
The amount of investment spending associated with a new or retained job was $129,313 in 2007, an increase from recent years.
In 2007, Growth Businesses created a total of 6,109 new jobs resulting directly from investment and retained 14,822 jobs. In 2005, Growth Businesses created a total of 10,907 new jobs resulting directly from investment and retained 9,234 jobs. Overall, jobs created and retained with 2007 capital investment were 3.9 percent higher than the 2006 level.
Of the total 6,109 new jobs linked with 2007 investment, 44 percent were in office/service (35 percent in 2006), 38 percent were in manufacturing (15 percent in 2006), 10 percent were in distribution (36 percent in 2006), and 8 percent were in medical/hospital (14 percent in 2006). Less than 1 percent of new jobs were created in R&D facilities (less than 1 percent in 2006), and 1 percent in the hotel industry (1 percent in 2006).
In the distribution of retained jobs linked to 2007 investment (not pictured), 42 percent were in manufacturing industries, 28 percent in office/services, 16 percent in medical/hospital, and 14 percent in distribution.
D. Fiscal Impacts of Cincinnati USA Growth Businesses
Hamilton and Butler County jurisdictions will derive the largest shares of local tax revenues. Total state government revenues will be $14.9 million and the local total will be $25.4 million. Fiscal impact is primarily the result of jobs created and retained.
1 Cincinnati USA, sometimes referred to as Greater Cincinnati, is the 15-county Metropolitan Statistical Area (MSA) designated by the Office of Management and Budget. (See Key Assumption 1 on p. 9.)
2 The total economic impact of Cincinnati USA’s Growth Businesses’ investment includes the direct impact and the multiplier effects of the investment spending, and the direct impact and multiplier effects of the employee earnings whose jobs were created or retained due to the investments.
3 Medical/hospital business type is comparable to the bio-medical growth type in previous reports. The nomenclature has been changed to make the category name self-explanatory.