Since Toyota Motor Co. announced in February 2003 that it would open a truck plant in San Antonio, various groups have estimated the economic impact of the new operation. The most commonly estimated impact is for the total number of jobs created. This is usually based on the number of employees who will work at the plant— 2,000—and a multiplier based on supplier and other indirect jobs. For example, the Texas comptroller’s office forecast that the state would gain 16,000 jobs, 12,000 of them permanent. The UTSA Institute for Economic Development estimated an impact of 7,300 jobs in Bexar County.

Defining job multipliers

    A job-creation multiplier is the total number of jobs created as a result of a new production facility, divided by the number of employees who will work there. For example, if a manufacturing plant opens with 100 people and this leads other firms to increase their employment by 100, the multiplier would be 2 (200 divided by 100).

    The total job impact can be divided into three main categories: direct, indirect and induced. Direct jobs are those with the new firm — 100 in this example. The remaining 100 jobs are indirect and induced jobs. The indirect jobs are supplier and construction jobs that support the establishment and production of the manufacturing plant. The induced jobs are those needed to fulfill the household demands of the direct and indirect employees, such as retail store jobs in the area near the new plant.

    While all multipliers look at permanent indirect effects from suppliers, not all count temporary indirect jobs and induced jobs. So one source of differences in multipliers is what types of jobs are being counted.

    Other differences occur in forecasting which inputs will be produced locally and which will be imported. The more goods and services that are imported, the fewer the indirect and induced jobs created locally. In areas with a large existing supplier base, suppliers will likely expand output to accommodate the new plant. In regions without a supplier base, suppliers are often reluctant to build until they can be sure they will have adequate business to make the move profitable. One measure of the likely use of local suppliers is a survey of the existing local firms in the industry to determine how many of their supplies come from...

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