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2011 RANKINGS: UT, TX Have Best Business Climate

Utah has planted at the summit of our flagship Best Business Climate category in Business Facilities’ 2011 State Rankings Report, edging out perennial leader Texas.

“We thought it would be tough for Utah to top last year’s across-the-board success in our rankings, but the Beehive State has maintained its momentum,” said Business Facilities Editor-in-Chief Jack Rogers.

Rogers noted that while Texas finished second in the highly competitive Best Business Climate category, the Lone Star State recently became the first in the nation to achieve its pre-recession employment levels.

“By any measure, Texas is one of the most business-friendly states in the nation,” he said.

Virginia, Florida and South Carolina finished in the third, fourth and fifth slots, respectively, in the Best Business Climate category. Florida Gov. Rick Scott told Business Facilities in a recent interview that his administration is in the process of eliminating more than 1,000 regulations he says have hampered Florida businesses in the past. “If it’s not good for business, we’re not doing it,” Scott said.

Utah’s economic development strategy is built around seven industrial clusters, including software and IT development; life sciences; energy and natural resources; financial services; defense and homeland security; aerospace and aviation; and outdoor products/recreation. In each of these sectors, Gov. Gary Herbert is working to establish what he calls “competitive accelerators of empowerment and collaboration.”

While Utah has proven to be fertile ground for entrepreneurs, the state also has had remarkable success in attracting big-ticket projects from major corporate players, especially in its burgeoning data center, software and IT cluster, which now includes Adobe, eBay, Twitter, Oracle, Microsoft and Goldman Sachs.

The common threads that link all of these major projects are long-term commitments by the companies to the creation of high-wage jobs, generous financial incentives provided by the state, and, in some cases, the foundation created by a homegrown business. Two of the biggest success stories that have deployed these elements involve software giant Adobe Systems Inc. and IM Flash Technologies, jointly owned by computer chipmakers Intel Corp. and Micron Technologies Inc.

Adobe is creating up to 1,000 high-tech jobs at its new $100-million technology campus in Utah. The new Adobe campus, to be completed in 2012, will accommodate future growth for the company and its Omniture Business Unit operations, currently based in Orem. The multi-phase project provides space for additional facilities expansion. Adobe acquired Omniture, a homegrown Utah company, for $1.8 billion in October 2009. The Omniture unit currently employs 620 people in Utah and 1,100 worldwide.

The Governor’s Office of Economic Development (GOED) Board approved a generous post-performance, refundable economic development tax incentive for the campus project. New state tax revenue is expected to exceed $134 million over a 20-year period as a result of Adobe’s projected expansion, job creation and capital investment in Utah. The maximum value of the tax credit incentive is $40.2 million, or 30 percent of new state revenue for 20 years.

Gov. Herbert emphasizes the incentive for Adobe is structured so that it costs nothing to taxpayers. “Post-performance incentives are a good model, a fair model,” he told Business Facilities in an interview. “At no time are the taxpayers at risk. We are creating 1,000 new jobs that may pay up to 175 percent of the average county wage and we will get well over $100 million in new tax revenue.”

Also receiving a healthy dose of tax incentives has been IM Flash, which recently announced it will add 200 high-wage jobs and invest $1.5 billion into its flash memory chip plant in Lehi, UT. At the same news conference in Lehi, Massachusetts-based EMC Corp. said it will be hiring about 500 tech-savvy employees for a customer-service operation in Utah to service clients worldwide of its computing hardware and software used to create and manage large banks of computers called clouds.

Utah has about 66,000 high-tech jobs, a number that besides computer-related businesses includes medical device manufacturers, telecommunications companies, medical researchers, Internet broadcasters, aerospace companies and those dedicated to engineering testing and scientific research.

Here are the top 10 finishers for this category:

2011 STATE RANKING—BEST BUSINESS CLIMATE

1. UTAH
2. TEXAS
3. VIRGINIA
4. FLORIDA
5. SOUTH CAROLINA
6. INDIANA
7. LOUISIANA
8. TENNESSEE
9. GEORGIA
10. SOUTH DAKOTA

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