Even in these difficult economic times, positive things can
happen and there are chances for companies to thrive. Some of the world’s top
companies were founded during recessions, notably Disney in 1923 and Microsoft
in 1975. At February’s meeting of the Utah Chapter of the American Society of
Public Administration (ASPA), top economic development experts from the state
discussed Utah’s short and medium-term economic outlook. While all of them
acknowledged that these are difficult economic times, they also pointed out
some of the positive things happening in Utah. This article is a recap of those
presentations and explains some of the reasons to be (somewhat) cheerful about
Utah’s economic outlook.
Positive Factors
Jason Perry, Executive Director of the Governor’s Office of
Economic Development (GOED) started his talk by reiterating what Governor
Huntsman has said: “If Utah were a stock, people should be buying.”According to Mr. Perry, the State of
Utah has opportunities to grow even in these difficult times because companies
around the world are looking for opportunities here. There are several reasons
for this:
- Utah
is entrepreneurial. Last year, Utah was the #1 state for inventor patent
applications in the U.S.
- The
University of Utah is second only to MIT for the number of businesses
coming out of technologies created by a university.
- There
are a number of great companies growing inside the state.
- Utah
has been listed as the most dynamic economy in the U.S. by the Kauffman
Foundation.
- Utah
is global: exports rose last year by 38% and high tech industries
increased by 127%.
- Utah
is good at tying knowledge, innovation, and technology together.
Utah’s Proactive Strategies
Competition between the states to bring businesses is
fierce. However, Utah has been successful in a number of areas, and has continued
strategies to attract business to the state. GOED and Economic Development Corporation
of Utah (EDCU) are working in partnership to be proactive in growing and
recruiting companies to Utah.
While there are a variety of incentives for bringing
business to Utah, there are two main ones. First, the State Industrial
Assistance Fund, which is “available to companies seeking relocation and
expansion of operations to the State of Utah. The IAF provides grants for the
creation of jobs paying higher than prevailing wages within the community.
Grant disbursements are made on a post-performance basis after jobs have been
created and retained.”
[1]
Second, the Economic Development Tax Increment Fund is a
“tax credit of new state revenues consisting of sales, corporate, and
withholding taxes paid to the State. It is available to companies seeking
relocation and expansion of operations to the State of Utah.”
[2]
Other incentives include film incentives, an aerospace aviation tax increment
financing program, and incentives for firms bringing businesses to rural areas
of Utah.
Added to the formal incentives are the “natural” incentives.
For example, Utah has a young and skilled workforce and the cost of doing
business here is low.
Measures of Success
Utah’s unemployment rate is rising. According to the Bureau of Labor
Statistics, the seasonally adjusted jobless rate in Utah was 4.2% in December
2008, compared to 2.9% in December 2007.
[3] However, while Utah’s unemployment rate
has moved up significantly in the last few months, it is still better than many
states: the overall U.S. unemployment rate in December 2008 was 7.2%, up from
4.9% in December 2007.
[4]
Despite the increase in
unemployment, there have been successes in the last 3 years in attracting new
and growing business to Utah. At the ASPA meeting, Jeff Edwards, President of
the Economic Development Corporation of Utah (EDCU) talked about the successes
that Utah has had in this area.
First, the joint efforts of GOED and EDCU have created more
than 15,000 new jobs in Utah in the last 3 years. This has come to fruition
through the incentive programs and other efforts. These are jobs that most likely
would not have come to the state if there had not been this effort. These jobs
represent $6 billion of capital investment and around 18 new headquarters
operations.
Second, site visits to Utah from businesses looking to
locate here are on the rise. In 2001 there were 12 site visits; in 2008 there
were 120. During site visits, representatives from EDCU work with the companies
to encourage them to bring business to Utah and show them what a great place it
is to be. In addition, the number of projects on EDCU’s books continues to
grow. In 2001, there were 35 projects; now there are 250. This shows the amount
of activity going on in this area. Downtown Salt Lake City is very important,
and according to Lane Beattie, President and CEO of the Salt Lake Chamber,
right now there is more going on downtown than any other city in America. Four
years ago there were 4 projects in hand and today there are 54, plus what the
Church of Jesus Christ of Latter-day Saints is doing with the City Creek project.
Third, there is a diverse list of companies that have
located in Utah in the last few years, for example, an insulation company near
Nephi; Barnes Aerospace in Ogden; Proctor and Gamble in Box Elder County;
Sephora in Salt Lake City; and E-bay in South Jordan.
Fourth, the Daybreak development is moving forward. Don
Whyte, President of Kennecott Land Company (Daybreak developer) told ASPA
members that Daybreak has suffered through the downturn as well as many
others, but still sold 351 homes last
year. In addition, Daybreak is the only community in the world that will have
light rail transport within 3 years of groundbreaking.
Future Growth Areas
In the future, there are three areas where growth in Utah is
likely to be focused because of the expertise we already have here:
- Life
sciences, especially personalized medicine.
- Renewable
energy
- Aerospace
Lane Beattie noted that there are things that can be done to
stimulate the economy right here in the state, but these have to meet three
criteria in order to be effective: timely, targeted and the right size.
Conclusion
The economy leaves most of us nervous, and there are real
threats that we see happening around us all the time: job losses, business
closures, and budget cuts. However, there are some reasons to be cheerful.
Utah’s economy is not as bad as many other states, and when the economy does
turn around, we are in a great position to take advantage of improved
conditions.
