McDonnell Douglas Corp. could receive the first appropriation of a controversial $10 million loan program by June or July, an economic development official said Wednesday.
"Trucks are on the road this very day bringing equipment to the state," said Lynn Blake, co-director of the Utah Division of Business and Economic Development.State officials estimate McDonnell Douglas will bring $600 million worth of business into Utah over the next 10 years through expansion of its Salt Lake operation.
The Industrial Assistance Fund, established earlier this year by the Legislature, will provide nearly $10 million in loans to McDonnell Douglas or any other large companies at 10 percent interest.
If a company generates enough Utah contracts, payroll and related economic activity, the loans are not repaid in cash. Instead, the companies are granted "credits." State economic development officials say the state will be repaid by economic activity generated by that business.
Blake told members of the Legislature's Economic Development Interim Committee that McDonnell Douglas is hosting a series of two-day procurement fairs throughout the state to encourage Utah businesses to supply goods and services to the aerospace manufacturer.
The Industrial Assistance Fund has produced some unexpected spinoff benefits, Blake said. The division has received unsolicited inquiries from small businesses that do business with McDonnell Douglas and are interested in relocating in Utah.
Blake said three other major companies, both in- and out-of-state businesses, anticipate major development within the state and may apply for loans from the assistance fund.
"I would hope we would come to call it the Industrial Assistance Fund, not the McDonnell Douglas fund," Blake said.
Committee chairman Sen. Ronald Ockey, R-Salt Lake, said he believes the $10 million of state money earmarked for the Industrial Assistance Fund was a good investment and the Legislature should consider additional funding for the loan program. "If we believe in the program and it does bear fruit, we ought to breathe new life into it," Ockey said.
Ockey said he expects that the McDonnell Douglas loan will be much more cost-effective than the deal Colorado Gov. Roy Romer has cut to land United Airline's huge maintenance facility at Denver's new airport.
Romer will call a special session of the Colorado Legislature to approve the proposed agreement, which would bring 6,500 to 10,000 jobs to the state but could cost as much as $609 million from the state's general fund.
"By comparison to that, what we're doing with McDonnell Douglas - to leverage 2,000 jobs for $10 million - I think we're light years ahead in competing with other states," Ockey said.
Said Blake: "We feel we've created something very innovative."