Yakima County Development Association - Arvato Digital Services

Arvato Digital Services

New Vision Helps Backoffice Firm Fill Void From Whirlpool Closure

arvato quoteYakima received disappointing news in 2011 when Whirlpool announced it was shuttering its downtown call center facility.  Over 200 workers were laid off and there was a need to turn this situation around.  New Vision went into action contacting site selectors across the country about the available facility and labor force.  Our office coordinated several tours for prospective companies interested in the facility and finally a German company called Arvato Bertelsmann came to town with a strong sense that Yakima was an outstanding location for one of their new call centers.

Arvato visited Yakima several times on fact finding trips before making a commitment to Yakima.  Our office supported the company's due diligence introducing them to key local resources and people that could help them get established in our community.  As part of this process we helped the company assess the local labor market, organize job fairs and tap into public workforce placement and training programs.

The company started operations in early 2013 and plans to hire at least 150 employees initially.  Long term Arvato wants to fill the call center  space which could mean hundreds of additional jobs in downtown Yakima.

arvatoArvato's Return on Investment to the Yakima Valley - the impacts of Arvato Digital Service’s operations ripple throughout the Yakima Valley.  The following discussion details the direct and multiplier benefits of the company's operation within Yakima County’s economy.

Annual Business Income. Arvato produces an estimated $8.6 million of output in Yakima County. Arvato and their employees also purchase goods and services from other businesses in the county. This additional activity represents the indirect multiplier (or spin-off) effect. The dollar volume of the indirect business activity is estimated to be $5.0 million annually.

Annual Taxable Sales & Property Values.  An estimated $0.9 million of employee payroll is spent on local taxable goods and services. Employees also spend a portion of their income on housing. This analysis assumes employees spend one-third of their income on housing, which is estimated at a net present property value of $16.5 million.

Annual Employment & Income.  Arvato directly employs 150 workers. These workers are estimated to receive about $3.6 million in wages annually (not including benefits), for an average wage of about $23,900 per year.

This economic activity is estimated to support an additional 50 jobs throughout the economy countywide. The total employment impact is 200 jobs. Total annual wages, including economic multiplier effects, are estimated at $4.8 million.

Figure 19.      Annual Operational Economic Contributions of Arvato

 

Annual Economic Benefits

Impact Category

Direct

Indirect

Total

Business Revenues

$8,600,000

$5,000,000

$13,600,000

Number of Jobs

150

50

200

Total Payroll

$3,588,000

$1,212,000

$4,800,000

– Average Wage

$23,900

$24,200

$24,000

Taxable Retail Purchases

$900,000

   
Supported Housing Values

$16,500,000

   

Source:            Cascade Planning Group – based upon IMPLAN Input-Output model for Yakima County.

Tax Benefits. In addition to the private sector economic benefits, the expanded business activity also generates increased taxes for state and local government.

Arvato directly invested $1.0 million in business capital. In addition, income spent on housing from employees equates to an estimated $16.5 million in property values. Taken together, these activities support approximately $206,150 in property tax revenues to state and local government.

Retail spending by employees also generates sales taxes. As noted above, an estimated $1.0 million is spent annually at local retail stores. This retail spending is estimated to generate $16,000 per year for local governments and $65,000 annually to the state – for a combined total of $81,000 in annual state and local sales tax revenue. Another $81,000 in one-time sales taxes from the capital investments is generated for local and state governments.

Figure 20.      Fiscal Benefits Associated with Arvato

Tax Generated

Construction

Operations

Property Taxes:    
Business Capital Investment  

$1,000,000

Employee Housing Values  

$16,500,000

Supported Assessed Value  

$17,500,000

Average Property Tax Rate  

$11.78

Property Taxes  

$206,150

Retail Sales Tax:    
Business Capital Investment

$1,000,000

 
Employee Taxable Retail Purchases  

$1,000,000

Sales Tax Rate

8.1%

8.1%

State & Local Sales Taxes

$81,000

$81,000

Source:            Cascade Planning Group.



Multiplier effects with this analysis include what are technically termed as indirect effects (from added business spending) and induced effects (from added household spending).


"Thanks New Vision. Winning funds in the Enterprise Challenge has allowed me to expand our product line and develop new marketing materials. The teaching and mentoring during the contest helped me create goals to guide Nana Kates successfully into the future. " - Kate Platt, Owner, Nana Kates