Early in his 2012 State of the State speech, Gov. Gary Herbert threw up a challenge to the state’s private-sector employers. With 80,000 Utahns unemployed, Herbert dared them to create 100,000 jobs in 1,000 days.
On Thursday, roughly midway through the timeline Herbert laid out, the governor announced that Utah companies are ahead of his schedule. Since November 2011, when the clock actually started, 63,600 positions have been created, he said. (The Bureau of Labor Statistics says the number is actually higher — 63,900 jobs.)
“At the halfway point, today’s number supports Utah’s compelling story of economic vitality and growth,” Herbert said. “This is no celebration of the state’s efforts, but a celebration of Utah’s dynamic business ecosystem.”
Herbert spoke at Exelis Aerostructures, which opened a design and manufacturing center west of Salt Lake City International Airport in August. The center employs 300 people, who produce parts for military and commercial aircraft. That number is expected to increase annually by 100 over the next several years.
Herbert’s use of the word “ecosystem” underscored a key theme during the event. He and other state officials borrowed the word from biology to drive home their message that the growth hasn’t been haphazard.
Exelis, for example, may employ 300 workers at the new plant. But that isn’t the whole story. Spokeswoman Heather Kralik said the operation is served by 354 Utah-based vendors — businesses that provide products and services to the 250,000-square-foot building . Some are well-known names — Hexcel Corp. produces carbon fiber at its Salt Lake City factory, while Sandy-based Layton Construction is a commercial contractor.
Others aren’t so well known. Intermountain Rigging and HeavyHaul in Salt Lake City provides rigging, millwright, heavy transportation, warehousing, packaging, and shipping services to Exelis. JM Grisley Machine Tools, also of Salt Lake, sells metalworking tools. Hydraulics International makes gas and oil well components for Exelis.
“They have certainly grown to be a huge part of my business. They’ve grown to be my biggest customer,” Hydraulics CEO Robert Wallace said, adding that he’s hired 17 people in the past 18 months because of Exelis.
“There is so much room for this program that the sky is the limit on it,” Wallace said.
His and the other companies are just a tiny fraction of the businesses that have expanded or moved to Utah because of Exelis, said Michael Sullivan, spokesman for the Governor’s Office of Economic Development.
“If we make an assumption of an average of 25 employees per vendor, that is over 8,700 employees whose companies touch the Exelis operation,” Sullivan said.
There are other examples. Chipmaker IM Flash in Lehi has 200 vendors who support the company’s 1,600 employees.
“There are a lot of contractors who come to work at IM Flash every day to support our production,” spokesman Stan Lockhart said recently.
Earlier this month, MSC Aerospace said it would build a $400 million factory in Cedar City that is expected to bring 1,200 SyberJet manufacturing jobs to the region over the next 20 years. GOED thinks that will be accompanied by “several hundred” vendors to support the operations, Sullivan said.
Utah’s labor market is far healthier than it was when Herbert threw down his challenge. Back then, the unemployment rate was 5.7 percent; today it’s 4.6 percent — well under the U.S. rate of 7.6 percent. The number of unemployed 500 days ago was roughly equivalent to Ogden’s population.
Even so, 63,400 people are still without jobs (more than 20,000 young people age into Utah’s labor pool every year). And the year-over-year job growth rate slowed noticeably in May, to 2.5 percent — the slowest pace since October’s 2.3 percent and lower than the 3.1 percent average over the 18 months since January 2012.
Economists are betting the slowdown doesn’t last, though. Since Herbert’s 2012 speech, software and life sciences companies have created 24,000 jobs in the state’s Silicon Slopes epicenter between Sandy and Orem. That number is almost 40 percent of all the jobs created in the state since then.
“The spectrum of jobs created is widely diverse — engineering, sales, technical, accounting and service jobs — and so it is a wide variety of jobs at all levels,” Sullivan said.
500 days ago versus today
Unemployment rate • 5.7 percent, 4.6 percent
No. of unemployed • 80,000, 63,400
Year-over-year job growth rate • 2.8 percent, 2.5 percent