By the BF Staff
From the January/February 2016 Issue
Consistent. Predictable. When it comes to business, rolling the dice on an unpredictable location can be disastrous for the bottom line. If you’re looking for consistent excellence, Utah is a sure bet. The Beehive State has planted its flag at the top of Forbes’ annual ranking of the Top U.S. States for Business: Utah claimed the top spot for 2015—again. That’s five out of the last six years the state has ranked No. 1 in the Forbes survey.
Utah has maintained its AAA bond rating since the rating agencies began tracking in the 1960s. The state has not raised its corporate tax rate in nearly 20 years. Energy costs have remained below national averages for decades.
Even Utah’s international airport is on top of its consistency game: last year Travel+Leisure ranked Salt Lake City International Airport the most punctual airport in America, the fifth such ranking for the airport since 2008.
This is all to say that Utah’s business environment is predictable—a trait cherished by business leaders.
Part of Utah’s success can be attributed to its diverse economy. Utah is credited with having the third most diverse economy in the nation. The state boasts manufacturing in the North, tech firms in the Provo-Orem area, mining, oil and gas in the Eastern region, not to mention the booming leisure and hospitality industries in Summit County and Southern Utah.
The state has dedicated considerable resources to becoming an enticing global business destination. Diverse industries aside, Utah is convenient to get to. It’s also massively multilingual with more than 130 languages spoken in the course of business every day and has a foreign trade zone and intermodal inland port.
In terms of job growth and economic performance, Utah ranked as the overall best performing state for the second year in a row, according to the U.S. Chamber of Commerce Foundation’s annual Enterprising States study. While the Enterprising States survey ranked Utah No. 3 for economic performance, behind North Dakota and Texas, it was the only state to land in the top 10 in all six major categories of the study. Gov. Gary Herbert attributed the state’s high scores to government policies that “empower the private sector” and advocate job growth in both high-tech and middle-skill industries.
This land-locked state has cultivated new business and expanded its international presence by attracting global brands like Adobe, Goldman Sachs, Procter & Gamble, Boeing, Orbital ATK and eBay to name a few.
It is important to Utah to keep homegrown companies in the state while also recruiting new companies domestically and internationally. To this end Utah offers highly successful post-performance refundable tax credits—economic development tax increment financing (EDTIF) incentives—to companies that want to expand and those that would like to relocate to the state.
Utah’s Centers of Excellence Program funds viable research at the college and university level, bridging the gap between technological innovation and marketplace success. The Economic Development Corporation of Utah plays a dual role in the state’s commercial success, promoting expansion of local companies as well as relocation for out-of-state firms. EDCUTAH offers a considerable network of public- and private-sector contacts, as well as support with site selection, media relations, and industry research.
The Utah Small Business Development Center (USBDC) helps established and start-up companies prepare business plans, set sales goals, identify customers and the competition, analyze the market, and research financing sources. The USBDC operates in partnership with the U.S. Small Business Administration, the Utah Department of Community and Economic Development, and Salt Lake Community College. It offers training and resources in the areas of entrepreneurship, business development, the law, international business, financial management, e-commerce, and computer technology. The Salt Lake Chamber of Commerce represents 1,900 businesses across the state, lobbying the government and providing networking opportunities to benefit its member companies.
Custom Fit is an employee training program offered through the Utah College of Applied Technology, state colleges, and the local business community. It provides training in specific technologies, computer skills, safety certification, leadership, management and team building. The Utah State Legislature allocates annual funding to Custom Fit, covering a substantial portion of the cost to employers.
State funding is also provided for Short Term Intensive Training programs across Utah. Training is offered at the state college level at a 66 percent discount to potential employers or employees. The program is customized to match full-time job seekers with the needs of specific companies.
Companies such as SolarCity, EMC, OOCL, Ottobock Healthcare, Stadler Rail, Oemeta, Beijer Electronics, Lin Manufacturing and FLSmidth are a few of the notable firms that have received recent incentives to expand in Utah. But the incentives Utah offers are not its lead recruiting card; Utah’s energy and real estate costs are low, its healthy young workforce is recognized as exceptionally productive and the state’s quality of life is considered second to none. With these factors, a competitive incentive just seals the deal.
Utah exports primary metals, sports equipment and medical and IT devices. It houses established, world-renowned companies, but also the innovative startups that keep an economy vibrant and attract top investors. It’s an unlikely “David” that has entered the “Goliath” of the global arena and excelled.
For more information, visit business.utah.gov or contact email@example.com.
SALT LAKE CITY: STARTUP CENTRAL
In a recently released ranking, Datafox, a business intelligence firm, named Salt Lake City the No. 12 best city to found a startup. Citing the need for a strong culture of growth and high standard of living, Datafox ranked Utah highly in availability of capital, affordability, success of early-stage companies and entrepreneurial culture.
Another important aspect highlighted: startups aren’t just created by 20 year-olds. As the study says, “A founder with a family can buy a large home with a backyard in Salt Lake, rather than an overpriced condo she’d struggle to afford in San Francisco.”
“Utah is the perfect example of striking the right work-life balance,” said Val Hale, executive director of the Governor’s Office of Economic Development (GOED). “The balance looks different for everyone. Whether it’s recreation opportunities for the outdoor enthusiast or simply having a backyard that kids can safely play in, we can provide a strong sense of community for anyone.”
“Salt Lake City isn’t trying to be Silicon Valley,” said Anisha Sekar, a researcher on the Datafox study. “The natural beauty, strong community and low cost of living make it ideal for entrepreneurs who are looking to maintain a high quality of life as well as start a business. Salt Lake City ranked above average in three of the four early-stage startup metrics that we considered: startup density, growth potential and affordability. Between those, the city has an amazing combination of available capital, low cost of living and a culture of success.”
Beyond Salt Lake City, Utah has a large number of startups coming out of the Provo-Orem area. The Milken Institute agrees with some of Datafox’s findings, recently ranking the area as the No. 3 best-performing city in the country for high-tech industries. When looking at wage growth, job growth and high-tech GDP growth, greater Provo provides not only a world-class business environment but also abundant opportunities for a healthy and robust startup culture, emblematic of the overall entrepreneurial spirit across the state.
This spirit is made possible by a strong business environment. Utah’s recipe for success includes reasonable regulation, low tax rates, a diverse economy based in six strategic industry clusters and an unparalleled quality of life.
“Quality of life and economic strategy are not mutually exclusive,” said Ben Hart, managing director of urban and rural business services for GOED. “This is a large part of what makes Utah different. By supporting our entrepreneurs through collaboration among education, government and private industry we can ensure that they have a solid, long term foundation to build businesses and thrive.”
Salt Lake City is investing more in education. A recent study found that Salt Lake pays secondary-school teachers more than the national average and more than nine of 12 other Western metropolitan statistical areas—including $17,000 more on average than Tucson and $8,000 more than Austin, TX.
Salt Lake City was named the sixth-best-performing city in the U.S. for 2014 in the annual report published by Milken Institute that dubbed the area “a financial hub with a highly skilled workforce.” According to the report, the city has benefited post-recession from leading companies seeking lower-cost locations for their operations. “Goldman Sachs continues to add jobs in the metro and employs more people in Salt Lake City than anywhere else in the United States outside of New York City,” said Milken researchers.
Salt Lake City was originally a farming community; it also depended on mining until the early 1980s when foreign competition began to erode profits from that industry. Today it has grown into a diverse economic region. As the state capital, county seat of Salt Lake County, and the largest city in the four-county Wasatch Front metropolitan area, the city is a government, commercial, and industrial center for Utah and much of the Intermountain West.
The service sector produces the most jobs in the city, especially computer and health care services. Government employment is considerable, with the State of Utah, University of Utah, and Salt Lake County among the city’s top employers. A number of national financial institutions have established branch offices in Salt Lake City, making it the center of banking and finance for the region.
The Salt Lake County Office of Business Economic Development offers incentives to new and existing companies in the form of loans, grants, and on-the-job training. It also provides no-cost monthly workshops. The Salt Lake City Department of Economic Development offers similar incentives as well as assistance with site selection, financial planning, and permit applications.
FILM PRODUCTION, DIGITAL MEDIA ARE ACCELERATING IN UTAH
The Utah Film Commission says 2015 was a blockbuster year for movie makers in Utah.
In addition to the 35 movies that were filmed in Utah in 2015, the state also played backdrop to ABC’s drama Blood and Oil, the first time Utah has hosted a television series in 10 years, according to the Utah Film Commission Director Virginia Pearce. “We have definitely seen an increase in film production,” Pearce said, in a recent interview with KUTV.com. “[Blood and Oil] was our first series in over ten years and I think that really opened the door for us to start talking to bigger productions.”
Among several other films, Warner Brothers Point Break series about extreme athletes turned robbers shot several scenes in Southern Utah. Highland Film Group produced Jackie & Ryan, starring Katherine Heigl, which was both shot and set in Utah.
In 2011, the state legislature passed The Motion Picture Incentives Amendment, which issued tax credit certificates to motion picture and digital media companies. Since 2011, filmmakers have brought more than $195 Million to Utah, according to Pearce. “We have robust resources, [film makers] can get everything they need here,” Pearce said. “Our location really is the draw.”
In addition to the 35 films that were shot in Utah, the film commission says there are currently nine projects in the pre-production phase in the state.
Early last year, business leaders came together to launch an industry association, the Utah Digital Entertainment Network (UDEN). “We seek to be a single voice for digital entertainment creators in Utah,” said association chairperson Jon Dean. “To put Utah on the global map, we need to share information, expertise and opportunities. It’s a long term vision to build a community.”
Dean points to this need for better communication and awareness when he speaks of Utah’s talent pool. “We need to be able to help our graduates live here and work here. Part of UDEN’s role is making sure graduates know of openings with local companies, and that companies know about talented graduates.”
UDEN did not arise by accident, rather it evolved by design. In 2011, state agencies convened a Utah Cluster Acceleration Partnership to examine digital entertainment. Collaboration from industry partners and higher education institutions identified a number of needs, and one such need called for an industry association to drive faster growth.
Further supporting the industry, the Utah Film Commission offers incentives for film and digital media production, as well as a range of producer services. “Film has changed. Today you can no longer talk about film without talking about digital production,” says Virginia Pearce. “The Film Commission is looking at ways to accelerate this convergence.”
While the universities and state support company formation and growth, Utah’s quality of life and cost of living are factors in keeping and attracting talent from both in-state and out-of-state.
“There were many opportunities for us to start our company in California, Washington or Texas, but we love the beauty of Utah, and the economic opportunities here,” Mustard says. “I love the proposition that we could form a company here, and pay our employees a wage competitive enough that they could have a house, a yard, and start a family. Given the cost of living elsewhere, that’s much harder in other states. A dollar goes further here.”
“How do you sum up Utah’s advantages?” Dean asks. “The quality of life, quality of the universities, quality of the talent, and a state with a great business climate. All of these things together align really well.”