The Export Economy of Salt Lake City (Yes, Land-Locked Salt Lake City)

Salt Lake businesses are booming as they find international markets for their goods.

India is one of the newest markets for some of Salt Lake City's exporters.
National Journal
Nancy Cook
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Nancy Cook
April 18, 2014, 8:55 a.m.

This art­icle is part of a weeklong Amer­ica 360 series on Salt Lake City—The New West.

SALT LAKE CITY — If you drive out of down­town Salt Lake City and travel south­w­est for about 20 minutes past sub­di­vi­sions and strip malls, you’ll even­tu­ally no­tice a massive open-pit cop­per mine in the dis­tance, set against the back­drop of Utah’s snow-capped moun­tains and bril­liant blue sky.

This par­tic­u­lar mine has op­er­ated for more than 100 years in the re­source-rich state. And for many of those years, the Utah eco­nomy propped it­self up by ex­port­ing cop­per and gold and re­ly­ing on ag­ri­cul­ture. Now, the land-locked state is try­ing a seem­ingly out­rageous feat. Utah no longer just wants to be known simply as the home to the 2002 Winter Olympics or the headquar­ters of the Church of Je­sus Christ of Lat­ter-day Saints. It also wants to earn a repu­ta­tion as a busi­ness-friendly state that teaches its loc­al com­pan­ies—from miners to com­puter chips makers to cos­met­ic brands to med­ic­al device man­u­fac­tur­ers—to sell their products in­ter­na­tion­ally and molds them in­to ex­port­ing power­houses. “We’re run­ning eco­nom­ic mod­els to fig­ure out which coun­tries can buy what Utah is mak­ing,” says Vin­cent Mikolay, man­aging dir­ect­or of busi­ness out­reach and in­ter­na­tion­al trade for the gov­ernor’s of­fice of eco­nom­ic de­vel­op­ment.

Five years ago, less than one per­cent of the Utah’s busi­nesses sold goods abroad. Now, that’s jumped to just un­der four per­cent, ac­cord­ing to state of­fi­cials. They, like Mikolay, hope that that growth is only the be­gin­ning of a trend. Utah com­pan­ies now sell goods to Canada, China, Ja­pan, Taiwan, Ger­many, Thai­l­and, In­dia, Mex­ico, Switzer­land, Bel­gi­um, and Singa­pore, among oth­ers. In 2009, Utah ex­por­ted roughly $10.3 bil­lion worth of goods (roughly half which came from min­ing). This year, the gov­ernor’s of­fice of eco­nom­ic de­vel­op­ment es­tim­ates the state is on track to double that amount.

The goal of the gov­ernor’s eco­nom­ic team is to in­crease the num­ber of Utah busi­nesses that sell goods abroad as a way to both di­ver­si­fy the eco­nomy and give loc­al busi­nesses a broad­er set of cus­tom­ers. Fo­cus­ing on ex­ports makes sense for the re­gion be­cause, for one, many of Utah’s Mor­mon res­id­ents already speak an­oth­er lan­guage flu­ently and have spent ser­i­ous time abroad, thanks to the church’s em­phas­is on two-year in­ter­na­tion­al mis­sions. Secondly, teach­ing Utah’s busi­nesses to ex­port helps the state cap­it­al­ize on the value of goods it already makes; it’s an­oth­er way to bol­ster busi­ness without hav­ing to just rely on lur­ing new com­pan­ies to the area and of­fer­ing the typ­ic­al eco­nom­ic de­vel­op­ment sweeten­ers like tax breaks.

For the busi­nesses them­selves, the ex­port push has opened up new mar­kets. Just ask Nat­alie Kad­das, gen­er­al man­ager of her second-gen­er­a­tion, fam­ily-run com­pany, Kad­das En­ter­prises. Based in Salt Lake City, the ther­mo­form­ing plastic man­u­fac­turer em­ploys 22 work­ers. They make plastic parts, both cus­tom and pre-de­signed, for util­ity and trans­port­a­tion com­pan­ies. Their most pop­u­lar product is a plastic device called a ‘Bird­guard’ that cov­ers power lines and poles so that birds do not in­ter­fere with the lines and cause out­ages.

About a year ago, Kad­das star­ted to work closely with the gov­ernor’s eco­nom­ic aides to ex­pand the reach of her fam­ily busi­ness out­side of the U.S. She traveled with a group of oth­er Utah ex­ec­ut­ives on trade mis­sions to Mex­ico and Is­rael (the lat­ter hap­pens to have the same mi­grat­ory bird pat­terns as Salt Lake City, she says). Now, she’s fo­cused on find­ing new cli­ents in Lat­in Amer­ica and the Euro­zone. In 2013, the com­pany did just un­der $1 mil­lion in in­ter­na­tion­al sales out of total sales of $3.5 mil­lion. “It’s caused us to re­think our mar­kets,” she says. “Hav­ing an in­ter­na­tion­al fo­cus was not our strategy un­til last year.”

Utah and Salt Lake City are not the only places join­ing the race to be­come loc­al ex­port­ers. In 2010, the U.S.’s 100 largest met­ro­pol­it­an areas pro­duced roughly 65 per­cent of the coun­try’s ex­port sales, ac­cord­ing to re­search from the Met­ro­pol­it­an Policy Pro­gram at the Brook­ings In­sti­tu­tion. While the over­all eco­nomy con­tin­ued to shed jobs in 2010, ex­port-re­lated jobs in the U.S. in­creased by 6 per­cent. In Utah, they now ac­count for roughly 20 per­cent of the state’s jobs, says Nat­alie Goch­nour, the As­so­ci­ate Dean of the Dav­id Ec­cles School of Busi­ness at the Uni­versity of Utah.

The chal­lenge for Utah of­fi­cials is to main­tain the rate of growth for ex­ports in the com­ing years. Eco­nom­ic de­vel­op­ment of­fi­cials also need to con­tin­ue to sup­port min­ing ex­ports (which ac­count for the bulk of the state’s ex­port rev­en­ue) while pivot­ing and grow­ing the state’s oth­er bur­geon­ing sec­tors. Out­side of min­ing, some of the state’s top ex­port­ers in­clude a med­ic­al device man­u­fac­turer, a cos­met­ics com­pany, and a chem­ic­al com­pany that is a di­vi­sion of Uni­lever. By 2015, the cur­rent Utah gov­ernor, Gary Her­bert, would like half of the ex­ports to come from land re­sources like min­ing and half to come from the oth­er areas.

That’s a big goal for a state eco­nom­ic de­vel­op­ment of­fice that’s been al­loc­ated just $2 mil­lion for the in­ter­na­tion­al ex­ports pro­gram. For loc­al busi­ness own­ers, like Kad­das, the ef­fort has changed the tra­ject­ory of her busi­ness. “Those in­ter­na­tion­al op­por­tun­it­ies were nev­er avail­able for me be­fore,” she says. “This has opened doors.”

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