When Jim Durham resolved to move his machine shop out of California, where the cost of doing business had gone through the roof, he took a hard look at five Western states.

He settled on Utah, where living costs are more reasonable, workers seemed more motivated and there was a railroad hub, an international airport and interstate freeways heading every direction.Fortune magazine last year pegged the Salt Lake metropolitan area as the nation's best for business. Another magazine, U.S. News & World Report, called the area an emerging boom town.

That doesn't mean the Salt Lake area is immune from urban woes. Planners still struggle with snarled traffic and air pollution. Utah's classrooms are notoriously crowded. Each year brings a new round of public programs that go un-der-funded.

"Every state has pros and cons. (But) there were more pros here than cons," Durham said.

Five months after moving his AMS Machine Products Inc. to Clearfield, about 30 miles north of Salt Lake City, Durham figures he has saved up to 35 percent on operating costs over his former location in Anaheim, Calif.

The lower cost of living is one of many reasons companies like AMS Machine Products are moving to Utah, state economic developers say. Other incentives include cheaper utilities, state and local tax breaks and inexpensive or even free land, they say.

In 1990, 29 new companies opened their doors in Utah, while 11 announced substantial expansion plans, adding up to 3,800 new jobs, according to the Department of Community and Economic Development.

Like AMS Machine Products, many companies work through the state's National Business Development Program, an agency of the Department of Community and Economic Development.

State workers put inquiring companies in touch with local governments' redevelopment agencies and establish training programs, said program director Marian Hein. The program also advertises Utah heavily in magazines and at conferences and trade shows.

Cash incentives are rare, although the Utah Legislature recently approved a $10 million "industrial assistance fund" that will principally benefit a McDonnell Douglas subsidiary in Salt Lake City.

Durham had employed about 30 people in California. He has 14 workers now but hopes to hire more. There's certainly plenty of room: For the same rent he paid in California, he quadrupled his workspace in Utah to 27,000 square feet.

More important, insurance costs plummeted. Durham said he paid $32,000 a year in California for workmen's compensation premiums but just $5,000 in Utah.

"It's hard to understand. A machinist is a machinist. He can get hurt working here just as easily," he said.

Durham said experienced machinists will earn about the same wages, $15 to $20 an hour. Workers with fewer skills will make less than their California counterparts, but he estimates his payroll is about the same as before.

Tim Dooher, technical manager of Lucas Western Inc., also depends on skilled workers for his new aircraft component plant in Summit County, about 30 miles east of Salt Lake City.

Lucas' Geared Systems Division plant opened in 1989. About 190 employees, many educated at the company's training center in nearby Park City or Salt Lake Community College, manufacture high-speed gearing for military and some commercial aircraft engines.

"Utah offers an excellent work ethic. They're not afraid to work, and they're not afraid of overtime. There's nothing bad I can say about the people who work here," he said.

"If you can get the same amount of work done, or more work done, in fewer pay dollars, it's obviously a huge benefit."

Lucas Western also took advantage of a state sales tax exemption on capital equipment purchases and a sliding local property tax exemption on 10 acres of land that Summit County gave the company.

Besides, Dooher said, it costs less to live in Utah. Where basic needs may be the same, housing is far less expensive. For example, a three-bedroom home in the Los Angeles area might cost $250,000. It's around $90,000 in Utah.