Brian Harger, M.S.

, EDFP, EGc
February, 2019
 Background
Fiat Chrysler US recently announced the elimination of third shift production at its
Belvidere Assembly Plant. The company stated that this is being done to better
align production with global demand1.
• This will result in the loss of 1,371 jobs at the Belvidere Assembly Plant.
• Beyond this direct impact on the local economy is the reduction of the plant’s
purchases of goods and services from other industry sectors, which in turn support
additional jobs and sales. This includes a wide range of other industries such as
parts and components manufacturers, transportation and distribution, and
business and professional services.
• In addition, the wages and salaries paid to the affected employees will also impact
other areas of the local economy. These workers, as well as the employees of
related suppliers, will spend a portion of their incomes on groceries, rent, vehicle
expenses, healthcare, entertainment, and other household goods.
• This analysis estimates the loss of jobs and related income, as well as reductions in
business spending on the economy of Northern Illinois2.
1 Source: WREX.com, February 26, 2019; Link: [https://wrex.com/category/2019/02/26/belvidere-assembly-plant-to-layoff-more-than-1300-workers/].
2 This includes Boone, DeKalb, McHenry, Ogle, Stephenson and Winnebago counties in Illinois.

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 Methodology

• These estimates were calculated using IMPLAN, a popular Input-Output statistical

model, to determine the indirect (business-to-business spending) impacts, and
induced (household spending of employees) impacts.
• The direct employment figures were derived from information obtained by media
accounts and may subject to errors, omissions or revisions at a later date.
• Note that these estimates were generated based on the limited data contained in
media accounts. Therefore some assumptions were made, such as:
– The impacts of the layoffs at the Belvidere facility were estimated based on the job
numbers alone and were assumed to be taking place within a single year (2019). All
other impacts, including employee compensation were estimated using the default
numbers in the IMPLAN model.
– Some of the affected employees may be offered transfers or jobs at other FCA plants,
others may be offered early retirement or buy-out packages. The model does not
calculate these potential impacts or that of employee severance payments.

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 Key Concepts

• Employment (Jobs) – An employee is someone who enters into an agreement

formal or informal, to perform work in return for compensation in cash or in kind.
• Output is the value of an industry’s production. For the manufacturing sector this is
sales plus or minus any change in inventory.
• Value-Added in the IMPLAN framework is the same as the official measure of
“Gross Domestic Product” or “GDP” at the national or state level. In contrast to the
concept of output, it represents the difference between the value of goods and
services purchased as production inputs and the value of the goods and services
produced.
• Employee Compensation includes wages and salaries and the estimated value of all
employer provided benefits, plus employer paid payroll taxes.
• The Multiplier Effect estimates the magnitude of the economic response in a
geographic area associated with a change in business activity, either in terms of
jobs or spending.

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 Summary of Impacts

DIRECT
Jobs, wages and output sourced Estimated Impacts of Job Losses at the FCA Belvidere Assembly Plant (2019)
directly to the automobile
manufacturing sector

Northern Illinois* Direct Indirect Induced Total Multiplier

INDIRECT
Impact of the automobile
manufacturing sector’s suppliers
and vendors Employment -1,371 -1,332 -950 -3,653 2.66

INDUCED
Impact of automobile Output ($Millions) -1,824.6 -$262.5 -$118.5 -$2,205.6 1.21

+ manufacturing employee’s
spending on the economy

Value-added ($ Millions) -$265.3 -$134.6 -$66.7 -$466.6 1.76

TOTAL Employee Compensation

Sum of direct, indirect and induced -$114.3 -$69.1 -$31.3 -$214.7 1.88
impacts ($ Millions)

* This includes Boone, DeKalb, McHenry, Ogle, Stephenson and Winnebago counties in Illinois.
IMPLAN Code: 343 Automobile Manufacturing.
Source: IMPLAN, 2019.

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 Employment Impacts
For every 100 jobs lost …another 166 jobs are
through the elimination of impacted in other industries.
the Belvidere Assembly
INDUCED plant’s 3rd shift…
950 Jobs

INDIRECT
1,332 Jobs

TOTAL
3,653 Jobs
Source: IMPLAN,
2019.

DIRECT
1,371 Jobs

A jobs multiplier of
2.66
 Key Employment Impacts
Industries experiencing the greatest indirect employment impacts:
Wholesale trade 554 Jobs
Truck transportation 163 Jobs
Management of companies and enterprises 42 Jobs
Other motor vehicle parts manufacturing 41 Jobs
Employment services 37 Jobs
Warehousing and storage 35 Jobs
Real estate 28 Jobs
Couriers and messengers 27 Jobs
Business support services 23 Jobs
Services to buildings 20 Jobs

Industries experiencing the greatest induced employment impacts:

Hospitals 59 Jobs
Limited-service restaurants 55 Jobs
Full-service restaurants 48 Jobs
Real estate 41 Jobs
General merchandise stores 38 Jobs
Food and beverage stores 30 Jobs
Offices of physicians 30 Jobs
Non-store retailers 23 Jobs
Other financial investment activities 22 Jobs
All other food and drinking places 22 Jobs
Source: IMPLAN, 2019.
 Output Impacts

INDUCED
$118.5 M For every $100 in reduced …will result in an additional
output resulting from the FCA reduction of $21 in output
layoffs… of other business sectors

INDIRECT TOTAL
$262.5 M $2,205.6
M

Source: IMPLAN,
2019.

DIRECT An output multiplier of

$1,824.6 M
1.21
 Key Output Impacts
Industries experiencing the greatest indirect output impacts:
Wholesale trade $124.7 Million
Truck transportation $23.3 Million
Other motor vehicle parts manufacturing $19.5 Million
Management of companies and enterprises $8.8 Million
Motor vehicle steering, suspension component (except spring), and brake systems manufacturing $6.4 Million
Electric power transmission and distribution $4,3 Million
Real estate $3.9 Million
Warehousing and storage $3.1 Million
Automobile manufacturing $2.9 Million
Couriers and messengers $2.6 Million

Industries experiencing the greatest induced output impacts:

Owner-occupied dwellings $20.0 Million
Hospitals $9.4 Million
Real estate $5.8 Million
Wholesale trade $4.7 Million
Offices of physicians $4.6 Million
Limited-service restaurants $4.6 Million
Monetary authorities and depository credit intermediation $3.4 Million
Other financial investment activities $3.0 Million
General merchandise stores $2.7 Million
Non-store retailers $2.3 Million
Source: IMPLAN, 2019.
Note: Figures have been rounded to the nearest one hundred thousand dollars.
 Value-Added (GDP) Impacts
• The auto industry’s contributes approximately $788.5
million to the Northern Illinois economy (2016); 2.4% of INDUCED
the total GDP of the Region. (-$66.7 Million)

• The FCA layoffs and the corresponding reduction in

operations will represent a loss of $466.6 million, or
1.4% of the region’s 2019 GDP* when the impacts on INDIRECT
suppliers and the household spending of affected (-$134.6 Million)
workers is taken into account. TOTAL GDP
LOSS
• The types of businesses most affected by the auto -$466.6 M
manufacturing sector's spending on goods and services
necessary to make and distribute their products include
wholesalers, parts manufacturers, transportation, DIRECT
(-$265.3 Million)
warehousing and logistics.

• The types of businesses most affected by the household

spending of those employed in the auto manufacturing
sector include housing, healthcare and consumer goods.
Source: IMPLAN, 2019.
Note: Figures have been rounded to the nearest one hundred thousand dollars.
*The estimated GDP of the region (Boone, DeKalb, McHenry, Ogle, McHenry and Winnebago counties) is $33.2 billion.
 Key Value-Added Impacts
Industries experiencing the greatest indirect value-added impacts:
Wholesale trade $80.0 Million
Truck transportation $8.3 Million
Management of companies and enterprises $4.7 Million
Other motor vehicle parts manufacturing $3.3 Million
Real estate $2.2 Million
Electric power transmission and distribution $1.8 Million
Employment services $1.7 Million
Warehousing and storage $1.7 Million
Motor vehicle steering, suspension component (except spring), and brake systems manufacturing $1.6 Million
Support activities for transportation $1.3 Million

Industries experiencing the greatest induced value-added impacts:

Owner-occupied dwellings $13.0 Million
Hospitals $5.5 Million
Real estate $3.3 Million
Offices of physicians $3.2 Million
Wholesale trade $3.0 Million
Limited-service restaurants $2.5 Million
Monetary authorities and depository credit intermediation $2.1 Million
General merchandise stores $1.7 Million
Food and beverage stores $1.5 Million
Motor vehicle and parts dealers $1.2 Million
Source: IMPLAN, 2019.
Note: Figures have been rounded to the nearest one hundred thousand dollars.
 Employee Compensation Impacts

INDUCED For every $100 in employee …will result in an additional $88

$31.3 M
compensation lost by the FCA in reduced employee
layoffs… compensation other industry
sectors
INDIRECT
$69.1 M TOTAL
$214.7 M

Source: IMPLAN,
2019.

DIRECT
$114.3 M

An employee compensation
multiplier of
1.88
 Key Employee Compensation Impacts
Industries experiencing the greatest indirect employee compensation impacts:
Wholesale trade $36.8 Million
Truck transportation $4.8 Million
Management of companies and enterprises $3.8 Million
Other motor vehicle parts manufacturing $2.2 Million
Postal service $1.3 Million
Warehousing and storage $1.3 Million
Employment services $1.2 Million
Motor vehicle steering, suspension component (except spring), and brake systems manufacturing $1.0 Million
Securities and commodity contracts intermediation and brokerage $0.8 Million
Couriers and messengers $0.7 Million

Industries experiencing the greatest induced employee compensation impacts:

Hospitals $4.5 Million
Offices of physicians $3.1 Million
Wholesale trade $1.4 Million
Retail - General merchandise stores $1.1 Million
Full-service restaurants $0.9 Million
Limited-service restaurants $0.9 Million
Monetary authorities and depository credit intermediation $0.9 Million
Retail - Food and beverage stores $0.8 Million
Automotive repair and maintenance, except car washes $0.8 Million
Offices of dentists $0.7 Million
Source: IMPLAN, 2019.
Note: Figures have been rounded to the nearest one hundred thousand dollars.
Contact 815.753.0934
Brian L. Harger, MS, EDFP, EGc bharger@niu.edu
Research Associate
Center for Governmental Studies https://www.cgs.niu.edu

Northern Illinois University https://www.linkedin.com/in/brianharger/

148 North Third Street
https://www.slideshare.net/BrianHarger/
DeKalb, Illinois 60115