Underwritten by MHI, a new analysis and report developed by three of North Carolina State University’s Supply Chain Resource Cooperative (SCRC) fellows has been released. The report, “Understanding the Economic Impact of North Carolina’s Supply Chain: Conduit for Prosperity and Economic Development,” and provides detailed perspective on the importance of the supply chain in North Carolina. It was researched and prepared by SCRC fellows Dana A. Magliola, Lindsay T. Schilleman and John C. Elliott, three Jenkins’ masters of business administration (MBA) graduate students at NC State’s Poole College of Management.
Elliott initially started the research during the spring 2015 semester, focusing first on the transportation sector within the Tar Heel state. Magliola and Schilleman then took over the project in the subsequent fall 2015 semester. The pair was tasked with expanding Elliott’s initial work into a wider examination of the North Carolina supply chain and its economic impact, both within the state and on the broader national economy. Areas for analysis included direct, indirect and induced employment, labor income, output, gross domestic product (GDP) contribution and taxes.
The undertaking was, in a word, enormous.
“We discovered that a comprehensive view of the supply chain had never been done before, at least not in North Carolina that we are aware of,” Schilleman says. “In fact, it almost became two research projects—one to figure out how to do a state-level supply chain economic impact analysis, and the second to actually do the analysis itself.”
For that reason, Magliola and Schilleman captured the best practices they noted in other economic impact studies and developed a “how to” guide included in the final report, explaining their methodology. “We saw an opportunity to bring all these best practices into a step-by-step, systematic process to help others who might want to undertake their own supply chain economic impact analysis elsewhere,” notes Magliola.
Their first task, recalls Schilleman, was to define the supply chain. “That led us to identify 14 different supply chain sectors within North Carolina,” she says. Leading sectors include Pharmaceutical, Biologics & Medical Products, Chemical Manufacturing, Industrial Machinery & Transportation Equipment Manufacturing, Transportation, Distribution & Logistics and Tobacco & Foodstuffs.
“We also felt that it was important to bring the numbers into context, not just within the state, but also nationally and globally,” explains Magliola. “We ultimately settled on a parallel format for each section of the report, allowing us to talk about each sector in the same narrative style, which we think makes it easier for the audience to better understand each sector’s impact.”
According to the report, North Carolina supply chain industries employ nearly 12% of the state’s workforce, or more than 479,800 employees. Supply chain average labor income is more than $67,700, 56% higher than the state’s average non-farm wage. Indirect and induced impact on North Carolina’s economy accounts for an additional 770,000 jobs across all industries. Together that represents more than 31% of North Carolina’s entire labor force.
Interestingly, industries that the state is known for—including textiles, furniture and tobacco—are still relevant contributors to the economy, while newer sectors (such as pharmaceuticals and biologics) are gaining ground. “In the more-established sectors, North Carolina clearly has the lion’s share of a shrinking market,” says Magliola. “From a planning and policy standpoint, the state needs to be thinking about what measures to take to replace this potential hole in the economy as the dynamics continue to change.”
For that reason, Magliola and Schilleman presented a preview of the report to members of the Port and Rail subcommittee of the North Carolina State HouseSelect Committee on Strategic Transportation Planning and Long Term Funding Solutions on February 1. The report was formally released on February 9 in Charlotte, at the Council for Supply Chain Management Professionals (CSCMP) Charlotte Roundtable.
“It’s been interesting to see how many audiences are finding the report to be of interest,” Magliola concludes. “We thought about that as we were writing it. For any policy maker or business person who wants to understand what the North Carolina landscape really looks like, this is an excellent resource for them.”
The full report can be accessed here.