Murray, Thomas J.

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W&M ScholarWorks Reports 9-1-2015 Economic Importance of a Marine Railway to the Northern Neck of Virginia Working Waterfronts Case Study “Ampro Boat Yard” Thomas J. Murray Virginia Institute of Marine Science Follow this and additional works at: https://scholarworks.wm.edu/reports  Part of the Aquaculture and Fisheries Commons Recommended Citation Murray, T. J. (2015) Economic Importance of a Marine Railway to the Northern Neck of Virginia Working Waterfronts Case Study “Ampro Boat Yard”. Marine Resource Report No. 2015-13; VSG-15-07. Virginia Institute of Marine Science, College of William and Mary. http://dx.doi.org/doi:10.21220/m2-reqy-8k09 This Report is brought to you for free and open access by W&M ScholarWorks. It has been accepted for inclusion in Reports by an authorized administrator of W&M ScholarWorks. For more information, please contact scholarworks@wm.edu. Economic Importance of a Marine Railway  to the Northern Neck of  VirginiaWorking Waterfronts Case Study  “Ampro Boat Yard”  September 2015Thomas J. MurrayVirginia Institute of Marine ScienceVirginia Sea Grant-Affiliated ExtensionVIMS Marine Resource Report No. 2015-13VSG-15-07Additional copies of  this publication are available from: Thomas J. MurrayMarine Advisory ServicesVirginia Institute of  Marine ScienceP.O. Box 1346Gloucester Point, VA 23062804/684-7190tjm@vims.eduwww.vims.edu/advCover Photo: Stuart McKenzie, Northern Neck Planning District Commission.This work is a result of  research sponsored in part by, under Grant No. NA13NOS4190135, to the  Virginia Department of  Environmental Quality through the Virginia Coastal Zone Management Program. The views expressed herein do not necessarily reflect the views of  any of  those organizations. In addition, this work is affiliated with the Virginia Sea Grant Program, by NOAA Office of  Sea Grant, U.S. Department of  Commerce, under Grant No. NA10OAR4170085.  The views expressed herein do not necessarily reflect the views of  any of  those organizations. 1IntroductionAmpro Boat Yard, located on the Western Branch of  Cart-er’s Creek in Weems, in Lancaster County, Virginia has been repairing fishing vessels and smaller recreational boats for over a century.  It was first incorporated as Rappahannock Marine Railway Co. in 1905.  Mr. H.R. Humphreys bought into the company in 1912 and reorganized it as “Humphreys Marine Railways and Lumber Corporation,” better known as “Humphreys Railways.”  It became “Ampro Boat Yard” in 1988.  Its primary purpose has not altered over time as the yard primarily has provided repairs for menhaden boats, although several large fishing vessels are reported to have been built by the yard as well.  In its heyday, during the 1950s and 60s, it is reported that the yard employed upwards of  150 people, making it one of  the largest employers in Lancaster County.  Until several of  years ago, the yard was hauling scallop boats from Seaford, Virginia, finfish draggers from Cape May, New Jersey and smaller menhaden boats known as snapper rigs.  And then the rail bed broke.  The estimated cost for repair to a rating of  1000 tons is in the neighborhood of  2.5 million dollars.  The owner is uncertain that the return will justify that degree of  investment.  It was estimated that with the repair, a minimum of  25 employees could be hired to sustain the operation.  In the meanwhile, local large fish boat operators are having to transit farther from their home ports in order to have work performed on the hull bottoms, and qualified workers are unemployed. Economic AssessmentAny decision to invest or reinvest in this facility is clearly the owner’s and many factors influence such significant reinvest-ment.  Those factors are not to be determined or evaluated by others.  The purpose of  this exercise is to demonstrate the economic impact of  this unique piece of  working water-front, in its current use, to the local community and Lan-caster County, Virginia.  Demonstrating the public goods which may arise from privately held working waterfronts is of  interest beyond the owners of  the property and of  ongoing interest to local economic development oriented organizations, both public and private. This evaluation utilizes traditional regional economic base theory, to define the economic linkages of  a working boat yard in the community.  Economic impact models are con-structed for two primary purposes:1. To demonstrate the economic size of  an industry or activity;2. To evaluate changes in economic activity of  an industry or activity.This report addresses the second goal.  The intent is to “recast” the economic impact of  the facility if  it returned to historic levels of  activity as reflected by the numbers of  employees at the facility.  As noted above the historic stature of  the railway was significant supporting 150 full time workers at the height of  its activity.  At the other end of  the employment picture a minimally sustainable railway opera-tion would create a demand for an estimated 25 employees.  This evaluation investigates the overall economic activity to Lancaster County and the Commonwealth of  Virginia asso-ciated with differing levels of  employment at the facility. Economic Impact EstimationThe information collected is utilized in estimating the initial economic activities in the Lancaster County economy associated with the Ampro Boat Yard maintenance and repair business.  These economic impacts take the form of  initial expenditures, economic output, wages, salaries, and employment. Values for each of  these are estimated by employing the IMPLAN model, computer software and Database package designed for regional economic impact analysis in the United States at the county level (Minnesota Implan Group, Inc., 2013).  The analytical framework for IMPLAN is the “input-output” economic modeling approach originally described by Leontief  (1959).  The model utilizes databases consist-ing of  a set of  social/economic accounts which describe the structure of  the US economy in terms of  transactions between households, governments, and over 500 standard-ized industry sectors classified on the basis of  the primary commodity or service produced.  This model utilized the IMPLAN economic data package for Lancaster County and the Commonwealth of  Virginia.   Regional models may be constructed in IMPLAN for any county, group of  counties, state or territory in the United States.  Economic impacts for a given region are specified in IMPLAN as a change in final demand, output, or employ-ment for a particular industry sector or social institution, (e.g., households, government).  The aggregate economic impact of  these changes is calculated by a matrix inversion procedure that develops economic multipliers, which reflect the direct, indirect and induced impacts.  Direct, indirect, and induced impacts are set in motion within the County by changes in the supply and demand of  boat yard services, 21See Appendix 1 for a Glossary of  Economic Impact modelling definitions. 2 The impacts from the boat yard activities on Lancaster County also multiply throughout the Commonwealth of  Virginia.     Those summary economic impact tables appear in Appendix 2.  which in turn affects the demand for the goods and services associated with conduct of  repair and refitting. Lancaster County boat yards represent a “basic” industry in that they produce a product for sale outside the local area.  Dollars generated through these out-of-county sales (or consumption locally by non-residents), when re-spent in the community, produce additional countywide economic impacts.  A “basic” industry directly affects economic activity in the region when its product is sold outside the local area.  These direct activities produce additional indirect effects in the local economy, as dollars earned through the repair of  vessels are re-spent locally1.   Indirect effects represent purchases of  local products by repair yards.  All the indirect effects are additional economic activity in the community and are indicative of  additional jobs and income generated by the boat yard businesses. Direct and indirect activities associated with boat yards in Lancaster County then produce additional (induced) local impacts.  These impacts are associated with the spending of  income earned in the direct and indirect activities.  This spending translates into local retail sales, local bank deposits, and the purchase of  a diverse mix of  consumer goods.  An assessment of  the total economic impact of  a basic indus-try, such as Lancaster boat yards, must consider the sum of  the direct, indirect, and induced activities.  In essence, the local boat yard sales to owners from outside the com-munity trigger a chain of  local spending, which generates income and leads to additional spending.  This process, however, is not infinite in nature.  At each round of  spend-ing, for example, some dollars are lost (leaked) from the local economy.  Leakages are in the form of  savings in non-local institutions, taxes/fees paid to the state and federal govern-ments, and payments for goods and services used in the boat yard activity, which are initially purchased outside the local area.  Thus, the true economic impact from non-local sales Dania Cut located businesses is represented by the new dollars remaining after accounting for the various “leaks” in the economy. Thus, the total economic activities and impacts to the County economy initiated by Ampro Boat Yard activity are estimated.  The direct, indirect, and induced effects, are expressed in standard impact terms of  economic output (sales), personal incomes, total value added and employment is estimated via the IMPLAN model.  The estimates of  busi-ness activity for 2013-2015 are used. As the increases in business activity accrue at local busi-nesses the changes spread throughout Lancaster County and the Commonwealth of  Virginia as well.  In order to capture the multiplication of  the direct boat yard impacts an input output model is used here to quantify the growth using various traditional economic impact measures. The models project the impacts associated with various levels of  output at the subject firm or locale.  With the Ampro estimates the levels of  employment necessary to produce a million dollars of  output are the beginning point to project.  Associated with those levels of  employment are resulting impacts quantified using various established metrics which follow in the tables below and on the next 2 pages.Table 1 summarizes the changes in labor income associated with the various output and employment levels.  Labor income includes all forms of  employment compensation, including employee wages and salaries, and proprietor income or profits. 3Table 2 provides the impact estimates on sales associated with the various levels of  activity at the boat yard. Table 3 provides the impact measurements in terms of  “value added.”  Value added includes wages and salaries, interest, rent, profits, and indirect taxes paid by businesses.  In these IMPLAN results tables, Value-added equals the sum of  Labor Income, Other Property Type Income, and Indirect Business Taxes.  Value added is a key measure and is considered the fun-damental measurement of  local economic growth. Table 4 accounts the impacts in terms of  business tax collections generated.  “Indirect business taxes” include sales, excise, and property taxes as well as fees and licenses paid by businesses during normal operations.  It does not include taxes on profits or income.4Table 5 provides the total employment impacts at the various levels of  activity.  Employment or jobs represents the total numbers of  wage and salaried employees as well as self-employed jobs.  This includes full-time, part-time and seasonal workers measured in annual average jobs.References Consulted Kirkley, J. E. and T. J. Murray.  2005.   Economic Contributions of  Virginia’s Commercial Seafood and Recreational Fishing Industries:   A User’s Manual for Assessing Economic Impacts.  VIMS Marine Resource Report No. 2005-9.  Leontief, W.  1959.  The problem of  quantity and quality in economics. Daedalus, 88(4), 45–57.Minnesota IMPLAN Group, Inc.  2008.  IMPLAN Professional 3.0, Economic Impact and Social Accounting Software and Data.  2010 IMPLAN State Package for Virginia. Stillwater, MN.  http://implan.com.Murray, T. J. and K. Hudson.  2013.  Economic Activity Associated with Shellfish Aquaculture in Virginia - 2012.  VIMS Marine Resource Report No. 2013-4.5Direct effects/impacts: Direct impacts represent the revenues, value-added, income, or jobs that result directly from an economic activity within the study area or a regional economy. Employment or Jobs: Represents the total numbers of  wage and salaried employees as well as self-employed jobs. This includes full-time, part-time and seasonal workers mea-sured in annual average jobs.Indirect Business Taxes: Include sales, excise, and property taxes as well as fees and licenses paid by businesses during normal operations. It does not include taxes on profits or income. Indirect effects/impacts: Indirect effects occur when businesses use revenues originating from outside the region, or study area, to purchase inputs (goods and services) from local suppliers. This secondary, or indirect business, gener-ates additional revenues, income, jobs and taxes for the area economy.Induced effects/impacts: Induced effects or impacts occur when new dollars, originating from outside the study area, are introduced into the local economy. Induced economic impacts occur as the households of  business owners and employees spend their earnings from these enterprises to purchase consumer goods and services from other busi-nesses within the region. This induced effect generates addi-tional revenues, income, jobs and taxes for the area economy.Input-Output Analysis: The use of  input-output models to estimate how revenues or employment for one or more particular industries, businesses or activities in a regional economy impact other businesses and institutions in that region, and the regional as a whole.Input-Output Models: A mathematical representation of  economic activity within a defined region using inter-industry transaction tables or matrices where the outputs of  various industries are used as inputs by those same industries and other industries as well.Appendix 1.  Glossary of Input-Output TermsLabor Income: All forms of  employment compensation, including employee wages and salaries, and proprietor income or profits. Local/ Resident revenues/expenditures: Local rev-enues or spending represent simple transfers between individuals or businesses within a regional economy. These transactions do not generate economic spin-off  or multi-plier (indirect and induced) effects.Margins: Represent the differences between retail, whole-sale, distributor and producers prices.Non-resident /Non-local revenues/expenditures: When outside or new revenues flow into a local economy either from the sale of  locally produced goods and services to points outside the study area, or from expenditures by non-local visitors to the study area, additional economic repercussions occur through indirect and induced (multi-plier) effects.Other Property Type Income: Income in the form of  rents, royalties, interest, dividends, and corporate profits. Output: Revenues or sales associated with an industry or economic activity.Total Impacts: The sum of  direct, indirect and induced effects or economic impacts.Value-added: Includes wages and salaries, interest, rent, profits, and indirect taxes paid by businesses. In the IMPLAN results tables, Value-added equals the sum of  Labor Income, Other Property Type Income, and Indirect Business Taxes. 6Appendix 2.   Economic Impacts to the Commonwealth of Virginia

Economic Importance of a Marine Railway to the Northern Neck of Virginia Working Waterfronts Case Study “Ampro Boat Yard”

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Economic Importance of a Marine Railway to the Northern Neck of Virginia Working Waterfronts Case Study “Ampro Boat Yard”

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