GOED board meeting: 2 new subsidies, bratwurst and ‘economic gardening’

At this month’s meeting for the Board of the Utah Governor’s Office of Economic Development (GOED), the board approved two new corporate tax subsidies and discussed efforts to grow businesses in rural Utah through an approach called “economic gardening.” The meeting was held at the offices of Ballard Spahr, LLP, where GOED board member Jerry Oldroyd is a partner.

The board unanimously approved a $125,000 “post-performance” grant for Genpak, a food packaging manufacturer with a plant in Cedar City. According to board members, Genpak has looked at expanding operations in Arizona, Nevada and South Carolina but is considering purchasing a vacant building in Cedar City. Genpak operates 17 plants in the U.S. and Canada and employs approximately 2,200 total people with 181 at its location in Cedar.

The board also unanimously approved a subsidy worth up to $30,000 for Silver Peak Productions, a company affiliated with the Utah film company Candle Light Media Group. Silver Peak is planning to produce a film called “The Mill” at Johnson Mill in Midway.

Marshall Moore, director of the Utah Film Commission, said that filmmakers in Los Angeles are pleased that Utah recently increased its film incentive cap from 20 to 25 percent. According to Marshall, they said, “Thank goodness Utah is moving forward, not backward, though at a slow rate.”

Of course, opinions on the cap increase depend on one’s perspective. Some filmmakers certainly like it because they stand to benefit from it directly, whereas filmmakers who don’t receive subsidies and companies in other industries might feel otherwise.

Meanwhile, though Governor Herbert’s efforts to focus more on Utah companies are beginning to show, GOED has a lot of work to do. Today the board heard from Randy Maxfield of Hi-Grade Meats Inc., which operates in South Salt Lake. Maxfield spoke of the company’s roots in Utah and presented a package of bratwurst to each board member. (Incidentally, just five minutes earlier the board attorney had explained that GOED board members cannot accept gifts.)

When asked what challenges Hi-Grade Meats faces, Maxfield said its main challenge is “trying to compete with the big guys.” Interestingly, most of Utah’s corporate subsidies go to large companies; in fact, at least two companies that have received incentive offers compete with Hi-Grade Meats.

West Liberty Foods, a company with 1,650 employees headquartered in Iowa and a direct competitor of Hi-Grade Meats, received an incentive offer worth as much as $2,000,000 from GOED in 2006. In 2007, GOED also offered a $2,000,000 subsidy to U.S. Food Service, which produces and distributes meat products and has 25,000 employees. To our knowledge, Hi-Grade Meats has received no subsidies from GOED.

The good news from the meeting is that GOED is expanding its efforts with economic gardening, an approach that Sutherland supports. Through a program called Business Expansion and Retention (BEAR), GOED is helping individual companies identify what keeps them from growing and then pointing them to business resources that can help them solve their problems and thrive.

According to Les Prall of GOED, recruiting companies to parts of rural Utah doesn’t work because of their limited capacity, but the BEAR economic gardening program is working very well. Sutherland applauds GOED for its work with economic gardening and encourages it to expand these efforts statewide.

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