An economic study commissioned by three rail supply trade groups has determined that the U.S. rail supply industry’s impact to the nation’s GDP exceeded $75 billion in 2020.
The report, sponsored by the Railway Supply Institute, the Railway Engineering-Maintenance Suppliers Association and the Railway Tie Association, suggests that the industry’s contributions come from more than $15 billion in tax contributions at the federal, state and local levels, as well as employment impacts of more than 680,000 jobs — for which the average pay of $91,200 is 34% higher than the national average.
The railway supply industry includes companies that produce rail cars and locomotives as well as rail infrastructure assets such as signals, rail ties and railway maintenance equipment. These components would be for both freight and passenger rail.
The report was prepared in partnership with Oxford Economics and designed to show the direct and indirect ways that the railway supply industry contributes to the U.S. economy.
“The contribution of the rail supply industry underscores the far-reaching importance of the rail manufacturing sector’s support of quality jobs, which enable rail transportation to move billions of tons of raw materials and finished goods. Our modeling shows that rail supply supports economic activity in every state,” said Hamilton Galloway, head of consulting for Oxford Economics, in a Monday release.
To determine the industry’s economic contribution, the study looked at direct impacts, such as those working directly for the industry, indirect impacts, such as those who are part of the rail suppliers’ supply chains, and induced impacts, or the economic activity supported as direct and indirect employees spend their wages on consumer goods.
The railway supply industry’s direct contribution in 2020 included $27.7 billion in economic output and 239,272 jobs, while the indirect contribution consisted of $22.2 billion in economic output and 191,071 jobs. Meanwhile, induced impacts were calculated to be around $25.9 billion in output and 252,082 jobs.
“As the $75.8 billion total GDP footprint is 2.7 times the $27.7 billion GDP of the railway system itself, the GDP multiplier of the rail supply industry is 2.7,” the study said. “This means that every $100 of value-added output in the rail supply industry leads to $170 of additional value-added output in other industries due to the production in the supply chain and employee spending impact. This multiplier is similar to that of rail transportation, retail gasoline stores, and air transportation industries.”
The study determined that the railway supply industry’s jobs multiplier is 2.9. “This means that every job in the rail supply industry supports 1.9 jobs in other industries. This puts it ahead of other US industries such as machine shops, truck transportation, and ferrous metal foundries.”
The study concluded: “The rail supply industry serves a critical role in the efficient operation of the rail transportation sector by producing rail equipment and infrastructure and providing maintenance and repair services. Freight rail is one of the major industries in the US economy as it transports more long-distance freight than any other mode of transportation. However, consistent investment in maintaining rail infrastructure and updating the fleet is needed to ensure that rail transport can meet demands for freight transportation in the next decade of economic growth.”
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