ECONOMIC IMPACT OF LEASING $300BILL
ECONOMIC IMPACT OF LEASING $300BILL
2004-03-08 at 10:01:00 am #6394
Equipment Leasing Association Releases Report on the Economic Impact of Leasing
Industry Produced $100 to $300 Billion Additional Real GDP, Three to Five Million Additional Jobs
Arlington, VA —Global Insight and the Equipment Leasing Association (ELA) today releases a study, The Economic Contribution of the Equipment Leasing Industry to the U.S. Economy, on the impact the equipment leasing and finance industry has on the U.S. economy and jobs. The study was conducted by Global Insight, a global economic and financial forecasting company, at the request of ELA in August 2003. ELA President Michael Fleming and Global Insight Senior Consultant Christopher Swann, Ph.D. unveil the results in a press teleconference today at 11 a.m. Eastern time.
An audio file and the transcript of the teleconference will be available at http://www.elaonline.com/press/ on Tuesday, March 2.
A copy of the full study may be found at http://www.elaonline.com/industryData/ELAEconomicContrib.pdf
Key results of the study show that, over the 1997-2002 period, the equipment leasing industry:
Produced between $100 billion and $300 billion additional real GDP.
Produced between $227 billion and $229 billion additional real equipment investment.
Created between three million and five million additional jobs.
“The most important contribution of the equipment leasing industry lies in providing access to capital,” said Michael Fleming, who has led the association for the last 25 years. “If leasing were unavailable many entities, from non-profit to private organizations, from tax-exempt entities to public companies, would not be able to acquire the equipment they need. This report clearly shows that when leasing is unavailable, the demand for equipment is curtailed.”
“Recently we had to restructure our financials to expand our entire plant and we were able to move quickly with leasing,” said Richard Viti, Executive Vice President and CFO of Tast i Twist Bakers, Inc. dba Delorio’s Frozen Dough Co., a $7.6 million commercial frozen dough processor. “We lease for a variety of reasons: convenience, shorter term around time, tax reasons, balance sheet management.”
But, Viti said leasing also helps with labor. “We’re in the position of growing and needing people. With leasing we acquired better equipment, faster, so we were able to reduce labor needed to produce our products and hired additional people to help sell them,” he said. “Also, with freed up capital, we were able to offer more competitive salaries and benefits when recruiting for upper management and administrative positions.”
IT Market Spurred By Leasing
The Global Insight study shows that, of the total $229 billion impact on equipment investment, more than one half ($122 billion) is concentrated in computer equipment. Industrial equipment categories – aircraft, especially transportation and industrial equipment – account for most of the balance.
“Leasing is the smartest way to invest in IT. This strategy gets us into an IT refresh cycle and is an affordable way to have the latest technology working for us. Plus, leasing lets us spread our IT costs out over time,” said Michael Strohmaier, IT Manager, Delicato Family Vineyards, one of the leading family winegrowers in America.
Global Insight also estimated that an additional $120 billion accrues to the rest of the economy through additional spending on goods and services in markets that are peripheral to equipment markets.
Several factors exist to show why leasing’s fundamental contribution is critical, and why its value to the economy is so large, including:
Leasing, as a way of acquiring the use of equipment, cuts across goods-producing and services-producing industries in the U.S. economy.
Leasing is a crucial approach to acquiring a variety of equipment types, especially high-technology equipment, which is vital to innovation and growth.
Leasing arrangements are used by all sizes of businesses, even though their capital requirements may differ.
Fleming added, “Greater access to capital permits greater entry into markets than might occur without leasing. This third-party report reinforces what we knew: the leasing industry clearly has a significant, positive impact on the economy.”
ELA requested that Global Insight undertake the study to measure the value and contribution of the equipment leasing industry on the U.S. economy. Utilizing its state-of-the-art macroeconomic and industry models, Global Insight was able to evaluate the economic contribution to the U.S. economy.