On The Economy: Manufacturing, services expand Longmont mix

LONGMONT — Longmont’s economy is a healthy, diverse mixture of manufacturing and service activities. Employees in the 80501 to 80504 ZIP codes add $1.52 billion of value to the products and services created for local consumption and export.

This number has a definition similar to Gross Domestic Product at the national level. The largest aggregated sector is manufacturing, with 24.5 percent of value added; services follow with 20.6 percent. Finance, insurance and real estate is third with 15.8 percent, government is fourth with 13.7 percent, and trade is fifth with 13.3 percent.

Agriculture and mining are insignificant, barely more than 1 percent of local regional product (value added).

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Employment is greatest in the services sector, with almost 27 percent of total employment. Trade and government each have about 20 percent of employment, followed by manufacturing, with 17.2 percent.

Employee compensation is greatest in manufacturing, with 25.2 percent of total employee compensation, suggesting wages are higher in this sector relative to other aggregated sectors. Services and government each have about 23 percent of total employee compensation.

Total sales in the economy, including intermediate goods, are $2.65 billion, 33.3 percent of which are in the manufacturing sector, almost double the next largest sector. There are about $660 million of industry imports and $453 million of intermediate goods trading within the economy.

This indicates that supply interactions among companies within the economy are strong, a sign of strength in a competitive economy.

No industry dominates the Longmont economy, a favorable indicator. Poultry processing (Longmont Foods) produces 5.1 percent of total commodity supply, electromedical apparatus 4.95 percent, miscellaneous plastics 2.9 percent, and computer and data processing 2.58 percent.

The Longmont economy has 103 separate manufacturing industries, compared with 376 in the U.S. economy. Forty-three of the possible 47 service industries are represented.

Demand in the Longmont economy is greatest in residential housing, real estate, wholesale trade, computer-storage devices and health care. These industries account for about 22 percent of total demand.

Exports from Longmont total about $790 million. Electromedical apparatus and poultry processing account for about 27 percent of this, evenly divided between the two industries.

Miscellaneous plastic products account for 9.4 percent and computer and data processing for 5.1 percent. These are the export base industries which bring money into the local economy.

Industry imports into the economy are only slightly less than the value of exports, suggesting there may be many opportunities for import substitution, i.e., local production of imported commodities. However, many of these importing industries may be located just outside the ZIP code boundaries we are using to define the Longmont economy.

The largest importing industries are computer-storage devices (7.35 percent), wholesale trade (4.27 percent), poultry (3.93 percent), and computer peripheral equipment (2.95 percent).

Employment multipliers are highest in the basic industries such as agricultural production, but there is very little of these industries in the Longmont economy. Employment multipliers in the larger industries in the Longmont economy are in the two to three range, the normal range for manufacturing industries of this type.

Personal-income multipliers are also largest in the basic agricultural industries that are not significant in the Longmont economy. Personal-income multipliers in the significant industries are in the same range as the employment multipliers.

The Longmont economy is very diversified; no industry dominates the manufacturing sector. Most service industries are represented, a benefit to both producing and consuming sectors.

Although many industries export, somewhat troublesome is the amount of imports. But that could be a function of the fact that we are examining a small regional economy, defined by just a few ZIP code areas.

The Longmont economy is healthy and growing. The June issue of The Boulder County Business Report details annexation procedures adding business and residentially zoned land to the city’s boundaries.

John Green is a consultant and professor of economics at the University of Northern Colorado in Greeley. Eric Siverts is president of Siverts & Associates in Fort Collins.