Utah’s Elevated Exports
THE BEEHIVE STATE HAS BEEN BUZZING WITH NEW GLOBALLY FOCUSED PROGRAMS
Exporting had never been on the mind of Tom Dickson, founder of Orem, Utah-based Blendtec, Inc. until he was approached by a staff member of the Governor’s Office of Economic Development (GOED).
“The state literally came to us and said, ‘We’d love to help you export products. We’ll help you go to these different countries and we’ll do everything we can.’ And they assigned a state [employee], who was from Austria, to help us in multiple countries. They were so helpful and it didn’t cost us a penny to get established.”
It helped Blendtec, a manufacturer of consumer and commercial blenders, develop an international program that now spans 90 countries with its dealers and distributors. But this export assistance wasn’t the first time the company received help from the state. Founded in California in 1978, when Blendtec moved to Utah in 1989, it needed and obtained from the state an $80,000 loan and the deed to land by the City of Orem.
The company has also benefitted from participation in state trade missions. “I just got invited to join a trade trip to Mexico and I’ve been on other trips,” Dickson says.
Utah has been active in its co-sponsoring of trade missions, often cooperating with such entities as the U.S. Commercial Service, FedEx and Zions Bank, one of the nation’s major SBA lenders and a recipient of the SBA’s Export Lender of the Year award.
Besides co-sponsoring trade missions—most recently one to Colombia and Panama to take advantage of last year’s free trade agreements with those countries—the bank, every May, has “a large trade and business conference where we focus on business and economic opportunity, including foreign trade,” explains Mark Garfield, a senior vice president for International Banking at Zions Bank, who also chairs Utah’s District Export Council.
“In recent years,” Garfield points out, “we’ve really increased our focus on supporting small- to medium-sized enterprises as they reach out to other countries to export.”
The bank, an SBA Export Express lender, also manages one of the state’s 14 Business Resource Centers.
In the past decade, Utah has assisted businesses—particularly in exporting—by establishing the Governor’s Office of Economic Development, an International Trade and Diplomacy office, a fellowship and internship program, a Corporate Recruitment and Incentives program, federal and university Small Business Development Centers, the Utah District Export Council, World Trade Center Utah, private non-profit centers such as the Utah Economic Council and the Economic Development Corporation of Utah, and the 14 Business Resource Centers created under a state act approved in 2008, not to mention funding the federal State Trade and Export Program (STEP).
In addition, says Vincent Mikolay, managing director of the Governor’s Office of Economic Development, “The governor leads foreign trade missions twice a year. This year, those will be Mexico and Brazil. In the past, the governor’s trade missions have gone to China, the U.K., Israel, Canada and Mexico.”
The 2014 Mexico trade mission was preceded by a Mexico Business Symposium aimed at educating business leaders on steps to strengthen Utah’s business relationship with Mexico.
One of his office’s goals, Mikolay explains, is to help small businesses “understand international markets and have an export-readiness plan in hand. Ultimately,” he adds, “we connect them with buyers and potential partners in other countries, matching foreign needs with Utah companies.”
“Utah,” says SBA Region VIII administrator Matt Varilek, “has developed a comprehensive export assistance network. The state, local resource partners and the SBA strategically work together to open the international marketplace for small business.”
How well has it worked? Exports have nearly tripled since 2007.
All this activity in a state that accounts for less than 1 percent of the nation’s total population has certainly been a factor in Utah being ranked as best state in business strength and economic growth and third for exports by the U.S. Chamber of Commerce in 2013; best state for business in 2010, 2011 and 2012, and third best in 2013 by Forbes; and the best state for small business in 2013, according to a survey by Thumbtack and the Ewing Marion Kauffman Foundation.
The state also provides ETIFs—economic tax increment financing—to companies that meet such specific expansion goals as hiring a certain number of new employees at 125 percent of their county’s average wage. A company can then deduct a designated amount from their state taxes the following year.
IM Flash Technologies, a Lehi, Utah-based manufacturer of flash memory chips for electronic products, has received three ETIFs totaling $54 million, according to GOED Director of Communications Michael Sullivan.
“The jobs have to come and the capital investment has to take place,” says IM Flash’s Governmental Affairs officer Stan Lockhart. “And then they give you a post-performance rebate on some taxes. There are other places—in fact, a majority of other places—that have far more generous incentive packages, but it’s the can-do attitude of the governor’s Office [of Economic Development] that really makes a big difference for us.
“When we want to get some additional skills out of our workforce, we can have presidents of local universities or officials from the public education community in our office in a few days to have discussions; or maybe people from the governor’s Office of Economic Development; or maybe it’s a group of legislators or the governor or a federal delegation. They’ve all been to IM Flash and spent time wanting to know what they can do to help us succeed. It’s a wonderful working relationship.”
IM Flash, which once accounted for as much as one-fourth of the state’s non-precious metals exports, hires so many engineers that it needed to go out of state to find sufficient numbers, according to Lockhart. To fix the issue, he met with the governor who then worked with the legislature to increase the state’s Engineering Initiative program by $2.5 million to enhance university engineering programs.
Hycomp, Inc., a Hyde Park, Utah-based manufacturer of oil-free air and gas compressors, had no intention of exporting. Then its website prompted inquiries from companies in India and China, says company president Robert James.
“We hooked up with the Utah District Export Council,” he explains, “and they’ve been of tremendous help. Figuring out how to ship [to international customers] and what you can ship certainly was a challenge without them. And the DEC has helped hook us up with customers overseas. We also attend DEC classes in Salt Lake about twice a quarter.
“Shipping from Utah is not as hard as it seems,” James points out. “Everything we ship has to be on a flatbed because it’s going overseas, about 95 percent of the time, by ship. We contract with a Salt Lake freight forwarder. We don’t do the containerization ourselves.”
Other help has come from the company’s revolving line of credit with the SBA’s export loan program, and from the local Export Assistance Center, James says.
“The local Export Assistance Center has never turned us down,” he says. “If they say they can’t help us, they’ll usually tell us who can. Once, someone from the Export Assistance Center even came out and visited us.
“Utah is a great place to do business,” James concludes. “There’s good support for business. And it has access to everything we need.”
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