A majority of Utah's manufacturers don't believe local government provides enough incentives, such as tax credits, abatements and exemptions, allowing the business community to expand.
In a local survey conducted by the Salt Lake City office of national accounting and consulting firm Grant Thornton, 69 percent of the 95 manufacturers questioned said local governments have not created enough opportunities for local business to use business incentives.
Given three examples of incentives, a large majority said tax breaks are the most important to their businesses. Investment tax credits, property tax abatements, tax exemption and sales and use tax incentives would be the most important incentives to 82 percent of those manufacturers surveyed.
Forty-one percent said direct financial assistance such as loans, grants and industrial revenue bonds were important, while 59 percent didn't; 46 percent liked business development, technological and trade promotion programs, and 54 percent didn't think those programs were significant incentives.
The local study coincides with Grant Thornton's national survey released this week, in which Utah's manufacturing climate ranked 10th out 21 states with low concentrations of manufacturing.
In the national study, business incentives were ranked 14th out of 21 factors important to manufacturers expanding their operations. Utah improved its position from 45th in 1986 to 32nd in the area of business incentives for economic development.
But Utah manufacturers apparently want more in the way of local government helping existing operations grow and bring in new business, which shouldn't come as a big surprise.
"We've heard all along that incentives are meaningful and important," said Utah Manufacturers Association president Larry D. Bunkall.
He explained that incentives, particularly tax breaks, are a win-win situation for both business and local government because whatever is foregone in revenue paid by manufacturers is made up by taxes paid through increased employment and additional development spawned by a growing manufacturing industry.
But state economic development officials, while agreeing that incentives are needed, said the jury is still out on whether tax incentives for business actually do pay off in the long run.
"There is a lot of feeling around the country that tax incentives are not good long range planning," Kirk Green, director of urban development for the state Division of Economic Development. "We want to offer more incentives and be creative in attracting business to the state, but we also want to be sure the dollars we invest through tax incentives are paid back."
Lawmakers have put in place an equipment sales tax exemption for manufacturers and additional incentives for businesses locating in special "enterprise zones," areas throughout Utah with low employment and desperate for development. But the thrust of the state's economic development policy is to make Utah an inherently beneficial state to establish operations without tax breaks, Green said, but "in certain cases we may sweeten the pie with incentives."
Green noted that McDonnell Douglas and Fidelity Investments _ two plum projects that located in Utah during Gov. Norm Bangerter's administration _ came here because of the state's inherent qualities, such as an available work force and quality of life, and not because of tax incentives.
Indeed, 94 percent of the local manufacturers questioned agree that quality of life for employees is important, the Grant Thornton survey said, while large majorities said the availability and quality of Utah's skilled and unskilled labor meet their company's needs.
Roger Brown, managing partner of Grant Thornton's Salt Lake City office, will address the UMA Monday during a luncheon meeting at the Marriott Hotel on the local and national manufacturing climates studies conducted by the accounting firm.