SEMA Releases Groundbreaking Economic Impact Report
By Mike Imlay
SEMA has released new data surrounding the significant contributions of the specialty-equipment industry to the American economy, along with regional breakdowns of that economic impact across the nation. Commissioned by SEMA, the first-ever "SEMA Economic Impact Report" was researched and prepared by John Dunham & Associates based on 2023 economic data. Access the data at the following link: sema.org/advocacy/2023-industry-economic-impact-study
The report complements the association's annual market research, which recently showed that consumers spent $52 billion on industry products in 2022. Taking that research several steps further, the economic impact study highlights the industry's financial output and support to the U.S. economy.
Key findings include:
- Nationwide, the specialty-equipment industry supports more than 1.3 million American jobs.
- More than $104 billion worth of wages and benefits earned by American workers annually are supported by the industry.
- The industry accounts for more than $40 billion in taxes, including $24 billion in federal taxes and $16 billion in state and local taxes, which support the development of critical national and local infrastructure.
- The industry contributes more than $336 billion to the American economy annually.
According to Karen Bailey-Chapman, SEMA senior vice president, public and government affairs, the report "contains these and other vital numbers that we can communicate to our own member companies, other members of the automotive industry, the American media and, most importantly, lawmakers and public officials."
"Numbers like these give us the opportunity to change the conversation about our industry," she continued. "By comparison, we're actually bigger than many other familiar U.S. sectors. For example, we employ more people than the U.S. aircraft industry and more people than the entire motion picture and video production industry. We're bigger than the candy and wine industries. We have more member companies in SEMA than the Beer Institute has brewers, and we employ more people than the non-alcoholic beverage industry."
"This new report looks at the broad impact that our industry has across the economy, beyond the $52 billion in revenue that we generate annually," added SEMA Director of Market Research Gavin Knapp.
"One way to think of it is that whenever you spend $1, you get $1 worth of benefit, but that $1 doesn't then disappear. The person you give that $1 to spends it on something else and gets a benefit from that. This economic impact report looks at how dollars spent on our industry filter out through our employees, purchase goods and services from other companies, and ultimately support other aspects of the American economy."
From conception to completion, the entire research project took the better part of 2023. "We started the project in late winter a year ago, as soon as the SEMA Board of Directors approved it," Bailey-Chapman explained. "We knew it would take a bit of time. Our industry is somewhat unique in terms of government data sets. But the biggest piece of the project was creating a tool for our community to access and share the data."
"We're talking roughly six months in terms of figuring out the research setup and how to define our industry and who's in it," added Knapp. "There was not only gathering data but running it through economic modeling and simulations and then building an appropriate website to get it all out there."
The extensive research employed standard econometric models first developed by the U.S. Forest Service and now maintained by IMPLAN Inc. Data was derived from SEMA, Data Axle and other government sources. The study measured the number of jobs within the specialty-equipment industry, the wages paid to employees and total economic output. In addition, it measured the impact of the suppliers that support the industry, as well as those industries supported by the induced spending of direct and supplier employees.
The study also estimated taxes paid by the industry and its employees while factoring in the wide variation of federal, state and local tax systems.
Visitors to the study's webpage will find all this complex work organized in a readily understood fashion. The splash page presents an interactive map of the United States with fast facts about the industry's impact on the nation at large. Clicking on each state allows users to drill down to reports detailing their congressional district, state house and senate districts. Users can also access and download related fact sheets and talking points to share with others.
"In Michigan, for instance, our industry contributes 116,000 jobs in total. In Indiana we account for more than 57,000 jobs. In California we're at almost 150,000 jobs," Bailey-Chapman noted. "We encourage our community to utilize such data for their advocacy and discussions with governmental officials and media, especially on a local level. In fact, that community level is vitally important, because we're such a highly localized industry in where we live, work and play."
"We're also working on other reporting that member companies could possibly use when looking for financing or funding, such as seeking a business loan or venture capital," Knapp added. "It will be another way the membership can show there's a vibrant industry behind them."
Given the size and scope of the industry's impact on American jobs and the overall economy, the report is bound to raise the aftermarket's clout with lawmakers and the general public.
"A lot of trade associations in Washington, D.C., do these kinds of studies, so for us this research is extremely important," noted Bailey-Chapman.
"Sometimes people sort of see us as simply the 'cool car crowd.' But our 'cool cars' actually matter because there's $52 billion that's being spent with the industry. We create jobs; we pay taxes; we pay wages. How our dollars trickle throughout the economy is a powerful story to tell."
Going forward, SEMA will deploy the data in various government and public-relations programs and initiatives, including the annual Washington, D.C., Rally in spring when industry representatives meet with elected officials in the U.S. Capitol. In addition, SEMA's public and governmental affairs office plans a special email to state and federal lawmakers to educate them about the report's key points.
"The report is going to be something that we share whenever we attend a fundraiser or address legislation," Bailey-Chapman emphasized. "In fact, we're already using some of the data in advertising for our Right to Modify campaign. We want both lawmakers and their constituents to understand the impact of our industry in their respective states."
But that's just the tip of the iceberg. According to Knapp and Bailey-Chapman, the research yielded a trove of yet-to-be released information that will become useful for many other industry communications and campaigns going forward.
"We didn't know what to expect. We knew the data would be good, but we didn't know how good. You can't deny these numbers. And I'm most proud of the fact that they come from an industry comprised of small businesses," said Bailey-Chapman.
"This report adds something entirely new to our arsenal," agreed Knapp. "In many sectors, our industry is kind of under the radar. If you're a car enthusiast, you get the idea of customization, modification and accessories. But for a lot of people, we're more out of sight, out of mind."
"This changes that," he continued. "Consumers spending $52 billion on our industry is awesome, but producing $100 billion in wages and benefits and 1.3 million jobs means we're supporting people's livelihoods and businesses. And contributing $40 billion in taxes helps the public build infrastructure—it supports schools, it supports local economies. This is all about showing how our industry gives back to the community."
The report also shows the aftermarket industry fueling the overall U.S. economy in several other significant ways.
"Everyone has been writing the obituary for the American manufacturing sector for years," Bailey-Chapman noted. "I grew up in a manufacturing family in a manufacturing town in Canada. Factories went away there a long time ago, well before they did in the United States. But the reality is, within our industry the manufacturing sector is alive and well. We remain a critical and active part of America's manufacturing fabric."
According to Knapp, the industry's entrepreneurial roots also remain strong, with small businesses continuing to form the aftermarket's backbone—a characteristic that's good for the nation as well.
"When you're looking at the macro level and the broader aspects of an economy, small businesses aren't always easy to see," he observed. "But this report really shows how our collection of small businesses add up together to make a really big impact in the greater scheme of things. Even a local small business can make a notable impact on all of the other businesses around it."
For Bailey-Chapman, the most rewarding aspect of the "SEMA Economic Impact Report" is the enhanced sense of pride it can bring to those who live and work within the specialty automotive industry.
"If there's one thing I was hoping to get out of this study, it's that I wanted it to be a morale booster for our industry," she explained.
"Everyone outside the industry is always, 'yeah, you guys are just those little speedster and hot-rod people,' you know, those 'loud car people' and all that kind of stuff. But the reality is that we're actually a pretty major factor in the American economy. We're pretty darn substantial and we have every right to claim that hill. We should stand proud for everything that we represent."
ACCESSING AND UTILIZING THE STUDY
To view key "SEMA Economic Impact Report" findings, and/or download industry talking points and fast facts, including those pertaining to your specific state and region, go to the following link: sema.org/advocacy/2023-industry-economic-impact-study