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Evaluate a proposed manufacturing facility by defining the region and time period first, then estimating construction and ongoing operations separately. Use project-specific spending, jobs, payroll, production, and procurement data in a regional input-output model such as the U.S. Bureau of Economic Analysis (BEA) RIMS II. Report direct effects and modeled supplier and household-spending effects as distinct measures—and assess public costs, incentives, and the no-project alternative separately. A gross impact estimate is not proof of a net benefit to the community.
How to evaluate the local economic impact of a new manufacturing facility
A defensible evaluation answers two different questions: how much economic activity the facility may generate within a specified region, and whether the project produces a net benefit for the community or government. An input-output model can help with the first question; it cannot settle the second on its own.
BEA describes RIMS II estimates as approximate and best suited to small-to-medium changes in a regional economy. The model estimates how a specified change in final demand may ripple through industries; it is not a guarantee that projected jobs or spending will occur. BEA’s RIMS II materials explain the model and its measures.
1. Define the region, time horizon, and comparison
State the facility location and the geography whose economy is being evaluated. RIMS II regions can consist of one or more contiguous counties. A county boundary may be appropriate for some questions, but it may exclude suppliers or workers who live just beyond it. Consider the labor commuter shed when evaluating resident employment and household-spending effects, and disclose the boundary so readers can see what “local” means.
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Also specify the years covered and the counterfactual: no facility, a competing site, or another use of public funds. Keep construction years distinct from operating years. A temporary construction estimate and an annual operating estimate describe different periods; do not add them together without labeling the periods and avoiding double counting.
2. Request project-specific inputs
Ask the project sponsor for auditable figures, with projections distinguished from commitments. The inputs should match the facility’s expected location, industry, scale, and schedule.
- Construction spending by year and industry, including the portion expected to be purchased within the study region.
- Expected production or output, industry classification, opening date, and operating horizon.
- Direct facility jobs by occupation, wage, and shift, plus annual payroll.
- Expected purchases from local and nonlocal suppliers, including imported inputs and other spending outside the region.
- Assumptions about hiring, production ramp-up, and whether figures represent a typical operating year or a cumulative period.
BEA’s practitioner guidance emphasizes detailed inputs and careful treatment of assumptions and limitations. The BEA RIMS II practitioner paper is a useful reference for understanding why project definitions matter.
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3. Model construction and operations separately
Construction
Enter construction activity as a temporary project phase using its expected spending schedule and appropriate industry detail. Report the years covered and whether the result is a one-time or multi-year total. Do not present this temporary activity as recurring annual employment or output.
Facility operations
Model ongoing production and payroll as a separate operating case. State whether results describe one operating year, a ramp-up year, or a cumulative period. If the facility is expected to change output or staffing over time, show the relevant years or scenarios rather than implying a constant annual effect.
Direct, indirect, and induced effects
Show the facility’s direct activity alongside any total modeled effects. Direct effects are activity at the facility; indirect effects arise through suppliers; induced effects reflect household spending supported by labor income when included by the model. Clarify whether employment means facility jobs or all jobs estimated in the region, and whether it is annual or cumulative.
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4. Report measures without conflating them
RIMS II reports gross output, value added, earnings, and employment. Present each separately. Gross output can include intermediate purchases as they move through supply chains; value added is a different measure. Earnings and employment answer different questions again. Do not add these indicators together or use one as a substitute for another.
- Output: modeled gross production activity, including intermediate transactions.
- Value added: a distinct measure of economic contribution; it is not interchangeable with gross output.
- Earnings: modeled labor income associated with the activity.
- Employment: modeled jobs in the study region, with the reporting period and definition stated.
5. Check how much activity is actually local
A regional multiplier depends on the region’s ability to supply the facility and its workers. Spending on inputs sourced outside the boundary does not circulate through local suppliers in the same way as local purchases. Workers who commute from outside the study area may contribute less to local household-spending effects than workers who live in it. Taxes and savings also reduce subsequent local spending rounds.
BEA’s model regionalizes national industry relationships using regional employment and wage information and uses commuting patterns in estimating labor-related effects. Its technical discussion explains how regional supply capacity, imports, and commuting affect estimates: BEA’s RIMS II technical article. Inspect likely suppliers and worker residence rather than assuming every dollar of project spending stays within the boundary.
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6. Make the estimate reproducible
For every result, disclose the geographic definition, industry and multiplier selection, model vintage, price year, construction horizon, operating horizon, and key assumptions. Show direct estimates alongside modeled totals. If comparing candidate sites, keep project scope and reporting conventions consistent; explain differences in local supplier capacity, commuting patterns, and multipliers.
BEA’s current RIMS II portal states that multipliers released May 5, 2026 use 2024 regional data and 2017 national benchmark input-output data. That is model-vintage information, not a facility-specific forecast. The portal lists current multiplier purchase fees, which can change; check the portal for current terms rather than treating a quoted fee as permanent. Check BEA’s RIMS II portal.
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7. Evaluate public value separately
An impact model does not by itself calculate whether the project leaves the community or a government better off. Request a separate fiscal and policy analysis that identifies revenues, costs, timing, and who bears them.
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- Taxes and fees expected to accrue to each level of government.
- Incentives, publicly funded land, infrastructure, utilities, or services, with the timing of each cost.
- Which public costs are genuinely incremental to the project rather than costs that would occur anyway.
- Potential displacement of existing firms or workers, labor-market constraints, and environmental or infrastructure externalities.
- The no-project alternative and other plausible uses of public funds.
Without location- and project-specific evidence for these items, a gross modeled increase in activity cannot establish a net community or fiscal benefit.
How to compare proposed sites or projects
Use the same project scope and time frame for each candidate, and compare:
- Local supplier capacity and expected purchases outside the region.
- Worker residence and commuting patterns.
- Direct jobs, wages, occupations, and job quality.
- Output, value added, earnings, and employment as separate measures.
- Public incentives and service costs by government and by year.
- Uncertainty, displacement, and the no-project counterfactual.
Do not compare unlike geographies or mix one-time construction totals with annual operating estimates. The latest RIMS II multiplier vintage and its methodology are available from BEA; the model’s estimates remain conditional on the specified project inputs and region.
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