Choosing a Career: ASAP
Issue
I discuss the results of our economy from both an employment and unemployment perspective on a regular basis on this blog. It is fine to record and analyze market results, but how as individuals can we have a proactive positive impact on our careers; whether looking for new employment, enhancing our current situation, or looking toward future career objectives?
Process
Colleague and career consultant Gary Crossley has written a short article (PDF) about choosing a career. This four step process is about taking a measured approach to selecting the career right for a person. Using Assessment, Skills, Analysis, and Preparation (ASAP) can only lead to a more logical approach to discovering your best path to an interesting career field. (Workforce Links PDF)
Hotel Impact on “Tourism”: Methodology for Estimating Economic Impact
Issue
This impact analysis was created by Julie Flowers, a retired statistician for the South Carolina Parks and Recreation Department, using Travel Industry of America (U.S. Travel Association) data. Julie is a pretty sharp statistician and does a nice job of outlining what is important when thinking about tourism impacts.
Analysis
Ms. Flowers uses IMPLAN to create a final economic impact based on TIA data. To create an economic impact, we need either spending or employment patterns by industry. As Ms. Flowers points out, there is no “tourism” industry. Our closest proxy is the Hospitality and Leisure super-sector. When it comes to hospitality, the big dog is lodging (hotel and motels). This is not apparent at first glance, but without this industry there is no tourism other than tenting! Within the hospitality industry it is clear that other businesses leverage lodging’s strength.
Hotel Impacts
TIA developed a strong method for collecting and analyzing hospitality data that is generally available to the public. What comes to light when exploring economic relationships within the travel industry is that for every dollar spent on lodging, $3.60 is spent on travel-related items – food, retail, recreation, etc. In employment, that number leaps to 5.3 jobs* for every job in the hotel industry. In other words, the hotel industry provides the anchor for other businesses to flourish. TIA data states that every $1 million in travel spending creates 13.5 jobs outside the hotel industry. Therefore, every million dollars spent in hotels likely generates over 70 jobs in hospitality-related industries!
Conclusion
Hospitality analysis requires a fair amount of data to create economic impacts, in this case supplied by TIA. Furthermore, TIA provides a solid methodology for justifying these spending patterns. Ms. Flowers’ process starts with a analysis of spending, then plugs the data into an economic analysis program, IMPLAN. With this transparent method further analysis is possible, uncovering the deeper relationships within this cluster. In this case, the end result provides a more clear picture of how supporting the hotel industry leads to significant gain in both employment and industry output within hospitality related industries.
*Spreadsheet addition error in report.
Manufacturing: Decline or Revitalization?
Issue
The Post and Courier recently printed an article from the Associated Press on the national economy. It is an interesting article in that unlike many articles of this type, there is a limited amount of talk, and actually some interesting data. Unfortunately, most of the data points were taken out of context and in one instance actually mislead the reader. Of particular interest are the manufacturing data.
Manufacturing Expansion – NOPE!
The data which were quoted appear to be from the U.S. Census, but are actually from the Federal Reserve Board.
“U.S. manufacturing output expanded in May at the slowest pace in 20 months”
Actually manufacturing declined* by -0.4 percent. The Federal Reserve goes on to explain these data in more detail:
“In April (2011), manufacturing output fell 0.4 percent after increasing 0.6 percent in March. The rates of change for manufacturing were also revised down for both January and February; lower estimates for the production of cigarettes, petroleum products, pharmaceuticals, microprocessors, and military aircraft contributed to the downward revisions. The index for manufacturing in April was 4.6 percent above its year-earlier level. Capacity utilization for manufacturing moved down 0.4 percentage point to 74.4 percent, a rate 10.0 percentage points above its trough in June 2009 but still 4.6 percentage points below its average from 1972 to 2010.”
Analysis: Wish the Late 80s Were Back
When evaluating manufacturing, two important measurements are production and capacity utilization (CU). Production (Federal Reserve, St. Louis) had been increasing since the end of the recession. Because this trend was broken well before reaching production output established late in the past decade, April’s release was disturbing.
More troublesome however, is the continued long term slide in CU. Fortunately, we rebounded from the recession in this statistic too, but again the numbers seem to be leveling off. Most manufacturers operate best when they run between 80 to 83 percent of full capacity. Any number higher than this typically means that the manufacturer has to bring old, less efficient equipment on line. So although there is an increase in production, efficiencies actually drop. In addition, high CUs tend to dominate the business model, leaving other areas of the business to suffer, such as quality (think Toyota).
Unfortunately, this is not our current problem. The current state of production is low capacities resulting in machines sitting idle, workers being laid off and budgets being reduced – all of which are a real drag on the recovery. So how do we get back on track?
Solutions
Solutions to America’s long term decline were the subject of a paper by Timothy J. Bartik, “Thoughts on American Manufacturing Decline and Revitalization” back in 2003. He outlines six ways to support manufacturers. We have noted these suggestions over the years but maybe now, as a result of hitting a manufacturing ceiling, it is the time to take a hard look at policies such as retraining, capital formation and access to information to improve this industry’s competitiveness.
For the best information on the economic indicators, see The Federal Reserve Bank of Richmond (National Economic Indicators)
*See Major Industry Groups Manufacturing (April)
