What is it about Utah and its economic success? How is it that the Beehive State has the second fastest growing economy and the fourth most diverse economy in the country? Is there a great secret?
During his economic summit at the Grand America Hotel in Salt Lake City last week, Gov. Gary R. Herbert told a sold-out audience of business, civic, education and government leaders that Utah’s success boils down to the fundamentals: low taxes, a business-friendly regulatory environment and a state government that lives within its means.
“We believe in the fundamentals and know how to execute them to grow our economy,” he said. “We know time and circumstances change, but the fundamentals remain constant.”
Themed “Executing the Fundamentals of Economic Development,” the Governor’s Utah Economic Summit highlighted how to leverage resources to achieve a better bottom line, while a post-summit networking session featured Utah’s Own food grown or manufactured in the state. Since 2010, about 150 of Utah’s Own companies have created 591 new jobs, or about four new employees per company. Those same 150 companies expect to create another 260 jobs a year through 2015, according to the Governor’s Office of Economic Development.
The summit’s first round of breakout sessions included “Bottom Line Economics” and “Leading from the Heart,” which tied back to the event’s focus on fundamentals. Even keynote speaker and renowned Harvard business scholar Clayton Christensen spoke of getting back to fundamentals when he described “The New Church of Finance,” a belief system that economists and finance professors have adopted, which encourages efficiency innovations over empowering innovations and focuses on profitability ratios.
“Something has fundamentally gone wrong with our economy. It’s just harder and harder and harder to bring employment back,” Christensen said. He noted that because of The New Church of Finance, jobs remain scarce in the United States despite the economic recovery and the fact that corporate balance sheets and profits are in the best shape they have been in for half a century. The country is awash in capital, he said, but businesses are spending capital on efficiency innovations, which have a negative effect on employment, rather than the empowering innovations that create jobs.
A second round of morning breakout sessions focused on public relations and social media, employing people with disabilities; cloud computing, workforce development through the WorkKeys program and the Goldman Sachs 10,000 Small Businesses Program. The summit’s afternoon breakout sessions focused on Utah’s air quality challenges, recruiting and keeping employees with disabilities, business development through tourism and outdoor recreation, investing in STEM education to develop qualified talent and the state’s booming IT sector, which has made Utah the go-to state for venture-backed technology startups.
Herbert said Utah’s focus on fundamentals included the hard work of eliminating unnecessary business regulations. “They are like weeds in a ditch bank. They impede the flow of commerce,” he added. “Business, not government, is the backbone of Utah’s economy. [Business leaders] are the ones who create the lion’s share of jobs across the state and make Utah the envy of the nation.”
In 2012, Herbert challenged Utah’s business leaders to create 100,000 jobs in 1,000 days. During his summit speech, he reported that 90,000 jobs have been created in the state to date. What’s more, when he took office the unemployment rate was 8.4 percent. Now it is 3.9 percent, a level he said some economists would classify as full employment.
“The economy is strong. We are just as diverse as we are dynamic,” he explained. “We don’t have all of our economic eggs in one basket, and we aren’t subject to the economic volatility of one single economic sector.”
Utah’s industry structure is, indeed, as diverse as the nation’s, which helps spread the risk. But as Herbert noted, the state’s economic strength and diversity is no reason to forget that the competition is formidable and growing. To meet the competition, he said, Utah must find ways to fund the state’s education and transportation systems, clean up the air and increase exports.
“Dirty air cuts worker productivity and raises health-care costs, imposing an additional burden on business,” he said, adding that it also hurts Utah’s image, discourages visitors and reduces tourism revenue. Utahns are now more engaged in air quality issues than ever before. During the air quality breakout session, Bryce Bird, director of the Utah Division of Air Quality, said the state expects to achieve a 30 percent reduction in air pollution along the Wasatch Front by 2019.
Speaking about exports, Herbert set a new goal for the state: to increase its value-added exports to $9 billion by the end of 2015. “Ninety-five percent of the world’s customers live outside the United States, and we are ready to do business with them,” he said.
Saying Utah must go after the global market, Herbert explained he would lead a trade mission to Mexico this week and another to Brazil later this year. During this week’s trade mission in Mexico, the governor will visit Mexico City and Guadalajara, where he will conduct investment seminars before Mexican investors and business owners and explain why Utah is the best location for expansion opportunities in the United States.
“Our message to business in other states and countries is clear. If you’re looking to expand and become more profitable, there’s no better place to do that than in Utah,” he said. “Our taxes are low, our entrepreneurial spirit is high, and we have a pro-business and regulatory climate that is second to none.”
The road to Utah’s economic prosperity has been paved by collaboration and partnerships, and Herbert called on the state’s public and private leaders to work together to identify solutions regarding the state’s most difficult challenges, which include air quality management, funding for education and transportation.