Geneva Steel's contribution to the local economy is greatly exaggerated, says a Brigham Young University student's study.
In addition, air pollution in the county - much of which comes from the steel mill - has discouraged businesses from locating in the valley or expanding operations here. The Deseret News has learned of at least one local company that did not expand its operations, in part because of air pollution.Jeffrey R. Bohn, who completed a bachelor's degree in economics at BYU last semester, studied effects of Geneva Steel on the local economy. His honors class was taught by Arden C. Pope, an economics professor who also is the author of a study correlating the steel mill's operation with increased respiratory illnesses among Utah County residents, particularly children.
Local business leaders have varied responses to Bohn's conclusions; Geneva Steel officials would not comment on his study.
Bohn's economic evaluation of Geneva is contrary to other studies, including a study in 1989 by University of Utah business researchers R. Thayne Robson and Boyd L. Fjeldsted, who found Geneva made a significant contribution to the state's economy in fiscal 1989.
Bohn examined quarterly data for employment, gross retail sales and building permits for Utah County from 1978 through 1989 and surveyed 57 local business owners or managers about factors that encouraged or discouraged them from locating or expanding in the area.
"I came into this with actually no idea one way or another which aspects of the county were important or not (to businesses)," Bohn said in a telephone interview with the Deseret News. Bohn is in California visiting relatives. He is an assistant finance director for MacEnglish in Tokyo.
Bohn contacted business representatives by telephone between December 1989 and April 1990 and asked three open-ended questions about why the company located in Utah County. He also asked a series of more specific questions about aspects of Utah County and the degree of influence these factors had on decisions to locate or expand operations here.
Bohn concluded that "significant health costs created by the air pollution coupled with the data casting doubt on the mill's employment multiplier suggest the mill does not significantly contribute to economic development in the county."
An employment multiplier is the number of jobs created as the result of a business operation both directly and indirectly and can be used to assess economic contributions of a business.
Robson and Fjeldsted, of the University of Utah's Bureau of Economic and Business Research, released a study in November 1989 that said Geneva generates more than $242 million in compensation to Utah households and results in more than 7,800 jobs directly and indirectly.
Their study concludes Geneva was a "major factor in the rebound of the Utah economy from its soft years in 1986 and 1987." Fjeldsted told the Deseret News that the researchers will "stick by" their conclusions.
Steve Densley, president of the Provo/Orem Chamber of Commerce, said that because Utah Valley's economy has diversified over the past 10 years, closure of Geneva would not be "devastating, but it would still be felt."
Richard Bradford, executive director of the Utah Valley Economic Development Association, said studies he's done indicate "steelmaking supports about 20 percent of Utah Valley's economy."
Bohn ranked and weighted responses to survey questions and concluded that while Utah County is looked upon very favorably as a place to locate businesses, the "most negative factors in terms of their impacts on companies' decision to locate in Utah County were air pollution and proximity to Geneva Steel."
Actually, almost half of the businesses contacted by Bohn - 49 percent - said proximity to Geneva Steel had no impact on their decision to locate in Utah County. Fourteen percent said the mill's nearby location was a plus, while 11 percent indicated Geneva's proximity was a discouraging factor and 21 percent said it was a strongly discouraging factor.
Based on percentage breakdowns of responses, taxes were the second most negative factor affecting business in Utah County - given negative marks by a total of 33 percent of businesses.
Fifty-five percent of the respondents said air pollution was a discouraging or strongly discouraging factor in locating or expanding operations in Utah County.
Densley agrees that "along the Wasatch Front we are going to have to cope with and improve pollution problems."
Bohn said one company with a branch in Utah County planned to expand its operation, adding about 2,000 jobs, but eventually opted not to, primarily because of the county's poor air quality. Bohn refused to name the company, because of confidentiality promised to survey participants.
However, the Deseret News has learned that the company may be Signetics, a computer circuit chip manufacturer in Orem.
Neil Bullock, plant manager, told the Deseret News that 31/2 years ago Signetics' parent company, N.V. Philips of the Netherlands, decided to expand its plant in Albuquerque, N. M., rather than its Orem plant, in part because of poor air quality here. Signetics' production process is adversely affected by poor air quality, Bullock said.
He also said the company has had difficulty attracting technically skilled people from outside Utah to work at the Orem plant because of poor air quality.
2 views on Geneva
Air pollution is the most negative factor in companies' decisions whether to locate or expand in Utah County.
- Survey of businesses conducted by BYU economics student.
Geneva was a "major factor in the rebound of the Utah economy from its soft years in 1986 and 1987."
- Report from University of Utah's Bureau of Economic and Business Research.