In generations past, northern Utah County was renowned for its orchards. On Monday, the area landed an economic plum of a whole different kind.
Boise-based Micron Technology Inc. announced Monday it will locate its new $1.3 billion computer microchip plant on 950 acres of land adjacent to Lehi and Highland - about halfway between Salt Lake City and Provo. Micron, with headquarters in Boise, is the sixth largest manufacturer of memory computer chips in the world.The Lehi site won out over Omaha, Neb., and Oklahoma City after a high-profile national selection process that included hundreds of applicants and heated debate over the company's engineering education demands and multimillion-dollar incentive packages.
Gov. Mike Leavitt and key economic development officials watched the Micron announcement on television from the governor's office, responding with cheers and high-fives. The unbridled enthusiasm left a grinning Leavitt admitting that all attempts to remain dignified amid the euphoria had failed.
"This is a very exciting event and a red-letter day in the history of Utah's economy," Leavitt said. "Not only is this a new business for Utah, but a new industry, as well. It means thousands of paychecks and people being able to buy new automobiles and homes."
And, he added, it makes it possible for thousands of Utahns to remain in Utah with higher-paying engineering jobs rather than move out of state. "It's hard to overstate what it means to Utah," he said.
In addition to the 3,500 Micron jobs, Joe Jenkins, director of the Department of Community and Economic Development, said the development will create another 3,500 to 7,000 jobs in support industries and jobs related to population growth.
Jenkins also expects a lot of other computer companies to now look to Utah because of the environment created by the Micron development. A similar phenomenon was observed when software giant Novell announced it would stay in Utah.
The Micron plant will consist of four separate buildings, each about 250,000 square feet and costing about $125 million. Total construction costs will be about $490 million, and Micron will spend another $800 million equipping the buildings.
The four-year construction project will employ about 1,800 workers, half of Utah County's total construction work force. When complete, Micron expects to hire about 3,500 workers at an average salary of about $30,000 a year.
Steve Appleton, chief executive officer of Micron, said Micron's site selection committee chose the Utah County site because of the state's highly educated work force and low labor and construction costs.
"It had a lot of things that interested us," Appleton said.
The site is also accessible to transportation systems and the company's Boise operations. The most important asset is the proximity to quality engineering programs at University of Utah and Brigham Young University.
"They've been longstanding good programs for some time," he said.
Company executives told Associated Press that a decision by the Idaho Board of Education in January not to recommend an independent engineering college at Boise State University contributed to Micron's decision to look beyond Idaho for expansion.
Perhaps the most crucial factor in the Micron decision was a bill passed by the 1995 Utah Legislature that removed the sales tax on new and replacement manufacturing equipment. "It was critical," said Rick Mayfield, director of business development for the DCED. "Utah would not have been very attractive to them if we hadn't passed that."
In the highly competitive world of computer chip manufacturing, companies are forced to retool every three years or so. The sales tax exemption means they save millions of dollars every time they retrofit the manufacturing plant. Micron's initial investment in equipment is estimated at about $800 million.
Leavitt emphasized that the sales tax exemption was more than just a "Micron bill." Rather it benefits all Utah companies and reflects the state's economic development policy of not extending benefits to new companies that are not enjoyed by existing companies.
Utah is also offering Micron $3 million from its Industrial Assistance Fund, but that, Leavitt said, is a drop in a $3.5 billion budget. "We didn't offer much in terms of cash incentives," he said.
Leavitt and Utah County officials helped Micron secure about 950 acres, and the company secured another 1,400 acres of adjacent property on its own for future expansion and a larger buffer zone.
County officials will encourage Lehi to annex the land and then create a redevelopment district to purchase the land and pay for infrastructure improvements through bonding. The land will cost about $12 million and road, utility, water and sewer improvements will cost about $18 million. The bonds will be repaid with Micron property tax revenue.
Leavitt believes Micron chose Utah first and foremost because of its well-educated and effective work force, followed by a favorable regulatory environment, good site location, an equitable corporate tax structure and nearby colleges that offer "custom fit" training opportunities for company employees.
The cornerstone of the state's economic strategy, Leavitt said, is to "create an environment where people can operate profitably."
Other high-tech companies are currently looking to relocate to Utah, but Leavitt and Jenkins refused to comment on who they might be until the companies are ready to make a formal announcement. Micron's announcement will make Utah's economic development efforts that much easier.
"Because of this, other companies continue to look at us, high-tech companies and others," Jenkins said. "It's big step in the computer industry for the state of Utah."
Local officials were also ecstatic over the announcement. "This basically takes care of our job creation needs in this area for many years," said Richard Bradford, director of the Utah Valley Economic Development Association. "This means those in our high schools don't have to worry any more about leaving this area someday just to find a job that will pay them enough to build a house and raise a family."
In trying to describe what landing Micron means to the state, Utah County Commissioner Gary Herbert said it's one of the top five things ever to happen to Utah. The company might expand someday and employ as many as 9,000. The plant also is expected to create another 14,000 spin-off jobs and bring more than $200 million of new money annually into the economy.
"They'll probably be the biggest employer in Utah someday," Herbert said.
The challenge now facing local officials is to educate those in colleges and high schools so the jobs don't go to out-of-state workers, Herbert and Bradford said. "We now need to invest in ourselves," Bradford said.
Herbert said Payson officials deserve much of the credit for landing Micron. When the company decided not to build in Payson, Mayor Russell Hillman convinced Micron officials to look elsewhere in Utah County.
"They were a very big asset in this whole thing," Herbert said.
Besides computer memory chips, the company founded in 1978 also makes computers and custom-manufactured computer boards. Micron reported $400.5 million in earnings on revenues of $1.6 billion in 1994. It employs about 6,000 people at two sites in Boise and one in neighboring Canyon County.
Expansion plans announced last Oct. 18 call for doubling Micron's semiconductor manufacturing capacity during the next four years. Utah County won out despite intense lobbying by Oklahoma and Nebraska.
Oklahoma trumpeted its law allowing companies to be reimbursed up to 5 percent of withholding taxes on new employees for up to 10 years. And Gov. Frank Keating promised to offer master's degree programs in chemical and electrical engineering at the plant if it located in Oklahoma.
The Nebraska Legislature granted various breaks on taxes and utility costs to Micron or any other company creating at least 250 jobs and investing $100 million. The University of Nebraska system also promised to locate engineering programs in Omaha - or anywhere Micron would want them.
"I was convinced that we had the strongest package and the balance," said a disappointed C.R. "Bob" Bell, executive director of the Greater Omaha Chamber of Commerce. "But even five years ago, we weren't considered for these things.
When a decision was finally reached Sunday afternoon, Appleton said Utah County had the edge because of its freeway access and room for future expansion - factors beyond the control of officials in other states.
"We thought that all three locations had the potential to serve us well," Appleton said.