The Impact of Micron Technology Virginia on the Economies of the ...

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Executive Summary <strong>Micron</strong> <strong>Technology</strong>, Inc. is a major source <strong>of</strong> employment, payroll, and business investment that benefits the economies <strong>of</strong> the City <strong>of</strong> Manassas, Prince William County, and the Commonwealth <strong>of</strong> <strong>Virginia</strong>. In 2005, <strong>Micron</strong> employed 1,013 workers within the Commonwealth with 524 (or 52 percent) <strong>of</strong> these employees residing within Prince William County and 120 <strong>of</strong> these workers living within the City <strong>of</strong> Manassas. <strong>The</strong>se jobs supported a total payroll outlay <strong>of</strong> $68.8 million with <strong>Micron</strong>’s Manassas resident workforce accounting for $8.5 million or 12 percent <strong>of</strong> this total. Combined with the 404 Prince William County residents working at <strong>Micron</strong>, these workers represent more than one-half <strong>of</strong> all <strong>Micron</strong>’s <strong>Virginia</strong> employees and 54 percent <strong>of</strong> its payroll outlays. <strong>The</strong> average annual wage for all employees <strong>of</strong> <strong>Micron</strong> in the Commonwealth in 2005 was $67,900 with <strong>Micron</strong> employees living in Manassas and Prince William County having a slightly higher average income <strong>of</strong> $70,900. <strong>The</strong> operating and capital outlays <strong>of</strong> <strong>Micron</strong> generate important economic benefits in Northern <strong>Virginia</strong> and the Commonwealth <strong>of</strong> <strong>Virginia</strong>. <strong>The</strong>se economic benefits resulted from both one-time capital outlays incurred during the 2002–2005 period that were required to modernize the plant and equipment at its Manassas facility and from the operating outlays in 2005 that will recur annually. Capital outlays in Northern <strong>Virginia</strong> during the 2002–2005 period totaled $178.2 million. <strong>The</strong>se capital outlays had a total accumulated impact on the Northern <strong>Virginia</strong> economy <strong>of</strong> $279 million over this four-year period; they generated $56.5 million in new, personal income to the benefit <strong>of</strong> local residents; and they supported 1,560 full-time equivalent year-round jobs, or almost 390 new jobs annually over the four-year period. <strong>The</strong>se benefits at the state-level, inclusive <strong>of</strong> those benefits accruing to the Northern <strong>Virginia</strong> economy, included $376.2 million in added value to the Commonwealth’s economy, $99.3 million in new, personal earnings for state residents, and supported a total <strong>of</strong> 3,760 new, year-round, full-time equivalent jobs, or 940 new jobs annually. Table 1: Summary <strong>of</strong> Local Economic <strong>Impact</strong>s from <strong>Micron</strong>: 2005 Payroll and Operating Outlays and Capital Investment (in millions <strong>of</strong> dollars) Jurisdiction Direct Total Personal Jobs and Type Outlays Output (1) Earnings (2) Supported (3) City <strong>of</strong> Manassas Payroll $8.5 $10.7 $1.3 6 Operations $49.2 $63.2 $11.7 400 Prince William Payroll* $37.1 $56.6 $11.8 494 Operations $78.2 $121.3 $22.4 767 Northern <strong>Virginia</strong>** Operations $134.7 $217.6 $59.4 2232 Capital Outlays $178.2 $279.0 $56.5 1560 <strong>Virginia</strong>** Payroll $68.8 $137.6 $41.1 1802 Operations $135.7 $285.6 $76.9 2824 Capital Outlays $179.0 $376.2 $99.3 3760 Sources: <strong>Micron</strong> <strong>Technology</strong>, Inc., GMU Center for Regional Analysis Notes: (1) the total value <strong>of</strong> goods and services generated directly and indirectly as a result <strong>of</strong> the initial <strong>Micron</strong> outlay within the jurisdiction; (2) the additional earnings generated within the respective jurisdiction from the new economic activities supported by the initial <strong>Micron</strong> outlays; (3) the additional new jobs supported nationwide by the spending and re-spending <strong>of</strong> the direct <strong>Micron</strong> outlays. *County payroll total includes resident workers in Manassas. **Totals for Northern <strong>Virginia</strong> and <strong>Virginia</strong> include City <strong>of</strong> Manassas and Prince William County totals. <strong>The</strong>se economic impacts from payroll and procurement outlays recur annually; economic impacts from capital outlays reflect spending over the 2002-2005 period.
In Northern <strong>Virginia</strong>, the 2005 annual operating outlays by <strong>Micron</strong>, exclusive <strong>of</strong> regular payroll, totaled $134.7 million, involving contracts with 331 local vendors. Vendors located in the City <strong>of</strong> Manassas captured $49.2 million <strong>of</strong> these annual outlays. In the City <strong>of</strong> Manassas, these outlays included $4 million for contract and service labor, $5.9 million for purchases <strong>of</strong> supplies, $2.8 million for pr<strong>of</strong>essional services, and $5.1 million for taxes. This spending added an estimated $63.2 million in total outlays to the City’s economy in 2005, generated $11.7 million in new personal earnings to the benefit <strong>of</strong> City residents, and supported 400 new jobs. At the state level, <strong>Micron</strong>’s operating outlays (excluding direct payroll) totaled $135.7 million and added $285.6 million to the state’s economy in 2005, generated $76.9 million in new, personal earnings to the benefit <strong>of</strong> state residents, and supported 2,824 jobs. <strong>The</strong> economic benefits <strong>of</strong> <strong>Micron</strong>’s operating outlays, and its annual payroll disbursements will recur annually. This analysis demonstrates the magnitude <strong>of</strong> economic impact that flows from the operating and capital outlays <strong>of</strong> <strong>Micron</strong> to the benefit <strong>of</strong> the City <strong>of</strong> Manassas and Prince William County as well as the expanded impacts <strong>of</strong> this spending as it circulates through the Northern <strong>Virginia</strong> and Commonwealth <strong>of</strong> <strong>Virginia</strong>. While the effects <strong>of</strong> direct employment and annual spending outlays are important, it is their multiplier effects that provide a full measure <strong>of</strong> this importance in stimulating additional job and income growth, and its full contribution to each respective economy as measured by the aggregate addition to their gross local and state products; that is, the increase in the total value <strong>of</strong> goods and services produced within each respective economy resulting from the direct payroll, operations, and capital outlays <strong>of</strong> <strong>Micron</strong>. <strong>The</strong> capital investment required to modernize <strong>Micron</strong>’s plant and equipment during 2002-2005 added a total <strong>of</strong> $376.2 million to the State’s economy and $279 million to the economy <strong>of</strong> Northern <strong>Virginia</strong>. Annual operations added $121.3 million and $63.2 million, respectively, to the economies <strong>of</strong> Prince William County and the City <strong>of</strong> Manassas in 2005. <strong>The</strong>se annual operating outlays, exclusive <strong>of</strong> payroll, also make a significant contribution to the economies <strong>of</strong> Northern <strong>Virginia</strong> ($217.6 million) and the Commonwealth ($285.6 million). <strong>The</strong>se favorable impacts recur annually to each respective jurisdiction’s economy. For the City <strong>of</strong> Manassas, the combined spending <strong>of</strong> payroll, capital (annualized), and operations by <strong>Micron</strong>’s resident workers and local vendors accounted for a total <strong>of</strong> $57.7 million in direct income and generated a total contribution to the City’s economy, estimated at $73.9 million. This annual spending in 2005 represented 3.5 percent <strong>of</strong> the total City’s estimated $2.1 billion total Gross City Product. Additionally, <strong>Micron</strong>’s local job base <strong>of</strong> 1,013 workers accounted directly for 4.1 percent <strong>of</strong> the City’s 24,685 jobs. For one company to account for so large a contribution to the local economy is noteworthy. In addition to the contributions to the City’s, County’s and State’s economies, personal earnings, and job base, <strong>Micron</strong> generates a significantly positive fiscal benefit to the City <strong>of</strong> Manassas as well as to the Commonwealth. Based on the fiscal impact analysis, it is estimated that <strong>Micron</strong>’s presence in the City <strong>of</strong> Manassas resulted in a net fiscal benefit <strong>of</strong> $4.8 million in FY 2005 or $4,787 per <strong>Micron</strong> employee. This fiscal benefit reflects the estimated contribution <strong>of</strong> revenues from all sources totaling $5.657 million (real estate and property taxes totaling $5.01 million were the largest single source), and the local public expenditure demand by <strong>Micron</strong> and its employees on the City estimated at $808,141. In the absence <strong>of</strong> this net fiscal contribution to the City’s treasury in 2005, the City would have had a budget deficit <strong>of</strong> $3.665 million rather than the surplus <strong>of</strong> $1.184 million it enjoyed. At the state level, corporate income tax, payroll withholding, and unemployment taxes totaled $5.96 million in FY 2005. <strong>The</strong>se fiscal benefits at the local and state levels finance public expenditures for government services to residents that the residential tax base cannot support, thereby enhancing the quality <strong>of</strong> life for all <strong>Virginia</strong>ns.
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The Impact of Micron Technology Virginia on the Economies of the ...

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