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Micron isn’t letting Lehi dreams die yet
If market upswing continues, plant might open in 2001

SHARE Micron isn’t letting Lehi dreams die yet
If market upswing continues, plant might open in 2001

LEHI -- Gov. Mike Leavitt hailed the announcement of Micron Technology's plans to build a semiconductor plant in this pioneer town four years ago Saturday as a red-letter day in the history of Utah's economy.

The jubilant governor celebrated as if he'd just won a bobsled race, cheering and slapping high-fives with key economic development advisers."It's hard to overstate what it means to Utah," he said at the time.

Later that same year, 1995, Salt Lake City erupted with glee over being selected to host the 2002 Winter Games. It was also the year the Enid Greene-Joe Waldholtz saga took on soap-opera proportions.

Since then, scandal has tarnished the Olympics and Joe and Enid have ridden into the sunset on separate horses.

And the year's other headline grabber has yet to come through with the thousands of jobs and millions of dollars in tax revenue the state envisioned, though Micron has not dried up and blown away completely.

"I think a lot of people are under the impression that nothing is happening," said Ed Collins, Lehi city manager.

Actually, there are some things happening. None of them, however, indicate the Boise-based computer memory-chip maker's $2.5 billion Lehi division will open anytime soon.

The Micron site at the base of barren, windswept Traverse Ridge in northeast Lehi -- about halfway between Salt Lake City and Provo -- has become a veritable ghost town since company officials brought frantic, around-the-clock construction on its " dream" plant to an abrupt halt in February 1996.

Some 2.3 million square feet of buildings sit largely empty, save pallet upon pallet of floor tiles, lights and other interior fixtures waiting for installation someday.

About 175 people work at the plant in various capacities from maintenance to information systems to engineering. None are doing what the massive plant was built for, making computer memory chips found in nearly every electronic device imaginable.

The facility isn't equipped to manufacture anything. The company scrapped plans last year to bring in equipment and hire 400 workers to test chips that were made in Boise.

Micron remains mired in the longest and worst market slump the semiconductor industry has seen. Like Geneva Steel a few miles south on I-15 in Utah County, the company has suffered from a flood of low-priced foreign imports. Computer memory chip prices have fallen 97 percent the past four years. The $3.75 Micron used to take in for each megabit of memory it created nose-dived to 16 cents per megabit.

The answer to whether the plant will open is the same now as the day Micron officials put it on ice.

"I'm sure your tired of this answer," said Kipp Bedard, vice president for corporate affairs. " It's really all market-driven."

Clark Fuhs, a semiconductor analyst with Dataquest, Inc., in San Jose, said the turnaround in the memory-chip market has basically started, but it will be inconsistent this year. If it continues upward, "you're looking at late 2001 before there's any activity in Lehi."

Micron doesn't intend to pack more than a billion dollars worth of manufacturing equipment into the Lehi facility without a steady upturn in the roller-coaster market. "Until we see that, we're going to keep the dollars pretty close to the vest," Bedard said.

Nevertheless, Micron bought Texas Instruments' memory operations last September and interest in production facilities in Japan, Italy and Singapore. Those acquisitions give rise to the question, why not expand in Lehi instead?

The answer is simple, Fuhs said. Micron isn't going to invest in a new project until the ones it has are at full capacity. "They get more bang for the buck in those operating concerns," he said.

Bedard said the company has scaled back or shut down those plants and isn't turning any more silicon wafers into computers chips today than it did four years ago.

"There's been a net reduction to the world supply, but we control more of it," he said. Micron has become more efficient, yielding about 500 chips per wafer compared to fewer than 300 a few years ago, he said.

Despite the market downturn, the company remained profitable until last year, when it lost $234 million.

Micron rode into Utah on the crest of a wave that netted it a record $844 million in 1995, thus the unbridled enthusiasm among state and local governments when Lehi aced out several other sites across the nation.

Officials remain optimistic the company's time will come.

"We still have great expectations that something will happen," said Rick Mayfield, state director of business and economic development.

The state has yet to provide Micron with the financial incentives that helped lure the company to Utah because those benefits are tied to employees making chips.

" We're not paying for anything," he said. "They're paying us to be here."

While Micron hasn't brought in the $10 million to $30 million in annual tax revenue state officials anticipated, it has pumped a considerable sum into small but rapidly growing Lehi.

The company has spent nearly $700 million on the Lehi project to date, including about $35 million on infrastructure for the city.

Under the terms of a redevelopment agreement, Micron has installed sewer pipes, improved roads, strung power lines and helped fund expansion of a wastewater treatment plant. It is currently spending $2.5 million to build a 2 million gallon water storage tank that Lehi needs to continue to provide culinary water to new housing developments.

The Alpine School District has received almost $2 million in tax revenue the past two years, which it's socking away for future schools. Alpine's boundaries blanket the area surrounding the Micron plant.

"We've basically banked the money," said Keith Bradford, the district's business administrator. "We're hanging on to it in anticipation of them opening. Micron really hasn't had that much of an impact -- yet."

"We'd probably make more deals like that if we could," Collins said, noting the city is benefiting without having to put out any money or feeling the strain of Micron-related residential growth.

Even one of the agreement's harshest critics, Lehi resident Richard W. Smith, grudgingly acknowledges Micron's presence isn't hurting the city.

"Evidently, it's been a pretty much of a positive, I guess. But there's so much left undone that they promised," he said.

Lehi and Micron are in a long-term relationship, Collins said. "We're still optimistic there are many more good things to come."

Micron's property taxes will go to the Lehi Redevelopment Agency for the next 12 years to pay for the improvements. Should the company not generate the taxes to cover its costs -- a real possibility if the plant remains idle -- it will have "contributed significant infrastructure to the community," said Utah County Commissioner David Gardner, a member of the taxing agency committee that oversees the RDA's budget.

Gardner said Micron tried to renegotiate the terms last year, but the committee held fast. He expects the company might yet come "crying and whining" for a new deal. His response would be direct:

"If you can't afford to lose it, don't offer it up front."

Micron is willing to take the chance.

"It's our risk and it's worth the investment to have a facility like Lehi ready," Bedard said.