Solar modules 20% lower than last year

Two of the key metrics that will be watched closely in the global solar industry reporting season that has just commenced are the price of panels sold, and the cost of manufacture. The difference is what the industry calls the margin.

For the past few years, the surplus of capacity meant that margins were mostly negative, but the rebalancing of the market, as some manufacturers go out of business, and the Chinese, Japanese and US markets drive strong growth, mean most manufacturers are in positive territory.

One of the most misunderstood aspects of the solar industry is that once the market is re-balanced, then prices of solar modules will rebound, and the recent lows will never be seen again.

That assumes that the price fall was driven only by over-capacity, but what is clear from most manufacturers is that the cost of manufacture of solar modules will also continue to fall, and in some cases quite dramatically. Renew Economy

Lehi Roller Mills for sale: Court CRO determines assets must go

A historical community landmark-- Lehi Roller Mills SEmD is about to change ownership.

Having started the bankruptcy process in December 2012, Lehi Roller Mills owner Sherwin Robinson had said he hoped to keep the business intact by filing a Chapter 11.

Instead, the U.S. Bankruptcy Court appointed a Chief Restructuring Officer in March, Mark Hashimoto, CPA for Piercy, Bowler, Taylor & Kern.

To date, KEB Enterprises, a holding company, has offered $4.4 million for nearly all of the Lehi Roller Mills assets. If there are higher or better offers received by Aug. 13, then an auction will take place between the competing bidders on Aug. 15.

"The amount of debt we had was pretty insurmountable. The total debt was in excess of $10 million," Hashimoto said. Daily Herald

ATK to acquire ammunition maker Caliber Co.

ATK said it has entered into an agreement to acquire Caliber Co., the parent company of Savage Sports Corp., one of the world’s largest manufacturers of hunting rifles and shotguns.

The purchase would expand ATK’s portfolio of munitions-related operations of commercial and security ammunition. The transaction is subject to regulatory approvals and conditions, with closing anticipated by the end of June.

ATK is an aerospace, defense, and commercial products company with approximately 15,000  employees and operations in 21 states, including Utah, and internationally. Salt Lake Tribune

Under one (big) roof, Utah offers low-cost way to do business

Informally known as the "Crossroads of the West," Utah long has been viewed as a place ideally suited as a staging ground for the movement of manufactured goods between the East and West coasts, Canada and Mexico.

A study by The Boyd Co. of Princeton, N.J., found that the state and the Salt Lake City area in particular, have a lot more going for them than just their central location and easy access to the interstate highway system and major railroad lines. The cost of operating a 500,000-square-foot distribution warehouse locally, that employed 175 workers at annual salary of $31,500 was $15.1 million a year, the second lowest among 30 cities it studied.

Many cash-strapped communities are actively courting logistics industries because the economic benefits are clear, he said. Large warehouses that sit on huge parcels of property can translate into a significant source of property tax revenue. And many of the jobs no longer entail just stacking cardboard boxes or driving a forklift to move and load pallets of merchandise onto a waiting truck.

For Utah, that means the competition for new warehousing projects will be getting a lot tougher, John Boyd Jr., a principal in The Boyd Co. said. Still, he anticipates that new warehouse and distribution facilities will be a major source of new investment and jobs for the state in the years ahead, making the state a major player. Salt Lake Tribune

Rumors of a cheap-energy jobs boom remain just that

Despite the news that the glassmaking company Libbey’s shares have risen, Libbey has announced it would lay off 200 workers in Louisiana. This is another example of why manufacturing, for all its renewed promise, is likely to fall far short of the claims by industry groups that millions of new factory jobs are about to be created in the United States because of the unlocking of abundant supplies of domestic energy.

While the sector has added 500,000 jobs since the recession ended and the value of what the nation’s factories shake out is close to a high, there are nonetheless two million fewer manufacturing workers today than in 2007. Ever since the early 1960s, the share of jobs in manufacturing has been on a nearly uninterrupted downward slope, now accounting for less than 9 percent of all employment in the United States. New York Times

Industry making its way back to Southern Utah

Crews are finishing work on the 800,000-square-foot Family Dollar distribution center, an $80 million project expected to open operations this summer. The Family Dollar facility has been touted as bringing in 350 much-needed jobs to Washington County, along with the ancillary benefits that come from having such a large operation.

In addition, local firms that measure the manufacturing industry are seeing a steady decrease in vacancy rates on industrial properties. The rates are back below 10 percent after hovering in double digits for several years according to NAI Southern Utah.

 In Iron County, vacancy rates are still much higher, at 24.6 percent, according to NAI’s research, but rates have improved for spaces less than 20,000 square feet and lease rates are ticking up slightly as well, indicating that things may be trending positively. The Spectrum

Manufacturing employment in Utah improving

After suffering two recessions resulting in decreased employment since 2000, Utah’s manufacturing industry has improved since 2010 and is projected to continue its growth into 2013. Manufacturing employment peaked in 2007, but the recession led to three years of declining employment. The 2013 growth rate from 2012 is forecasted to be 0.9 percent, placing employment at 90.6 percent of the 2007 peak. Turnaround from the most recent recession has been slower than the relatively quick recovery earlier in the decade.

The largest share of Utah manufacturing employment is in miscellaneous manufacturing which includes production of medical equipment and supplies, jewelry, sporting goods, toys, office supplies and other products that cannot readily be classified in specific subsectors in manufacturing. Other top subsectors in terms of manufacturing employment share in Utah are food manufacturing and computer/electronic product manufacturing. Compared to the national average, these two subsectors have a high concentration of employment in the state, revealed through an analysis of location quotients. These quotients measure the rate of concentration of an industry’s employment in Utah compared to the U.S. average. High location quotients imply that food manufacturing and computer/electronic product manufacturing are export-oriented industries with more of their products being consumed outside of Utah. In fact, these subsectors produce the state’s second and fourth largest exports to the U.S. in terms of value, electronic integrated circuits and food preparations, respectively, according to the U.S. Department of Commerce.

To read the entire article, click here.

Winter 2012/2013 Trendlines issue available on the Web

This issue features Looking Forward to 2013, and includes how Utah's economy fared in 2012, plus a look at the Construction and Manufacturing industries.

Check out the web issue here.

Like to subscribe to a hard copy? Contact us at greidling@utah.gov or call 801-526-9785.

To get notifications when future issues become available, just fill out your email address here, and choose the items that interest you.

Output Continues Slide in Utah, Although Rate Healthy

Manufacturing in Utah slipped again in December as falling numbers for new orders failed to offset job growth, the Goss Institute for Economic Research said Wednesday,

The institute’s Business Conditions Index fell to 54.2, the lowest reading of 2012, from November’s 57.3. A reading of 50 or more indicates growth. Readings above 57 are considered robust.

Nationally, the Institute for Supply Management said its index of manufacturing activity rose in December, to 50.7. That’s up from a reading of 49.5 in November, which was the lowest reading since July 2009, one month after the recession ended.

In Utah, the Goss index has declined three consecutive months. Even so, manufacturing economy is performing well, although at a slower pace than earlier in the year, economist Ernie Goss said. Salt Lake Tribune

Manufacturing in U.S. Expands After Reaching Three-Year Low

Manufacturing in the U.S. expanded in December at a pace that shows the industry is stabilizing after reaching a three-year low a month earlier.

The Institute for Supply Management’s manufacturing index climbed to 50.7 last month from November’s 49.5, which was the weakest since July 2009, the Tempe, Arizona-based group’s report showed today. Fifty is the dividing line between expansion and contraction. The median forecast of economists surveyed by Bloomberg called for a rise to 50.5.

Sustained growth in the U.S., in part due to a housing rebound, and steadying overseas markets are helping underpin factory orders and keeping manufacturing from faltering. At the same time, while lawmakers moved to extend tax cuts for about 99 percent of households, corporate confidence in the economic expansion will take time to build as Congress prepares to debate spending cuts and the debt ceiling.

“The worst part of the manufacturing slowdown is behind us,” Bricklin Dwyer, an economist at BNP Paribas in New York, said before the report. “We’re seeing some decent consumer demand.” The possibility of fiscal tightening has been “limiting the ability of businesses to release their cash and increase investment.”

The median forecast was based on projections from 71 economists in the Bloomberg survey. Estimates ranged from 48 to 52.

Stocks held gains after the figures as lawmakers passed a bill averting immediate tax increases on most Americans. The Standard & Poor’s 500 Index jumped 2.1 percent to 1,455.64 at 10:15 a.m. in New York. Bloomberg

Utah Companies Expected to Lead Nation in IT Hiring

Companies in Utah and the surrounding states are projected to lead the nation in the hiring of information technology personnel during the first three months of 2013.

Robert Half Technology’s "Q1 2013 Hiring Index and Skills Report" said that 18 percent of chief information officers in Utah and nearby states plan to hire additional information technology staff in the coming quarter — nine points about the national average.

Nationwide, 17 percent of chief information officers indicate they plan to expand their IT department and 8 percent expect cutbacks, for a 9 percent projected increase, the Robert Half report stated.

"CIOs report higher demand for IT professions in the first quarter, especially for those with skills in hot areas such as applications development and IT security," John Reed, senior executive director of Robert Half Technology, said in a news release.

Reed pointed out that with the beginning of each new year, there often is an increase in demand for personnel as annual company budgets get approved and they are able to hire additional workers.

Other findings:

• Among the CIOs surveyed, 87 percent reported being somewhat or very confident in their companies’ prospects for growth in the first quarter of 2013.
• Forty-nine percent of CIOs also said they were confident their firms would invest in IT projects in the first quarter of the coming year, while 48 percent said they were not very or not at all confident.
• CIOs noted, however, that it is difficult to find skilled IT professionals in the areas of IT security, applications development and data/data-based management.

The Robert Half report indicated that 26 percent of executives in the manufacturing industry expect the most IT hiring, followed by 14 percent in the services industry and 12 percent in the financial services arena.

The quarterly "IT Hiring Index and Skills Report" was developed by Robert Half Technology and conducted by an independent research firm. First published in 1995, the study is based on more than 1,400 telephone interviews with CIOs from a random sample of U.S. companies with 100 or more employees. Salt Lake Tribune

Study: TARP’s Pay Limits Didn’t Doom Those Who Were Bailed Out

Its shortcomings aside, the controversial Troubled Asset Relief Program has been effective despite initial concerns about its restrictions on executive pay, according to a new study from the David Eccles School of Business at the University of Utah.

The $700 billion TARP program was used about four years ago to rescue AIG, General Motors, Bank of America, Citigroup, Wells Fargo, JPMorganChase and other firms during the height of the financial crisis. And its executive pay restrictions were meant to end a spate of "golden parachute" exits by leading officers of failing companies, as well as restrain the huge bonuses they were collecting.

Critics contended the policy would lead to a "brain drain" of firms’ best and brightest to nonparticipating corporations, which would put taxpayer money at risk.

But in a paper published this fall in the Journal of Business Finance & Accounting, University of Utah researcher Brian Cadman writes that although some executives did bail out of their troubled firms, those companies went on to recover and even thrive.


"Our most important finding, in fact, was that compensation restrictions led to a more efficient allocation of the TARP funds," said Cadman, an assistant professor of accounting. "It’s not that we want to argue that asset relief should always come with ways to limit executive compensation, but in this case, those limits actually helped the government allocate TARP funds more efficiently."

Further, "those who needed TARP took the money and ended up performing as well as those who didn’t," noted Cadman and fellow researchers Mary Ellen Carter of Boston College and Luann Lynch of the University of Virginia in their paper "Executive Compensation Restrictions: Do They Restrict Firms’ Willingness to Participate in TARP?"

Indirectly, the study also may be instructive to economists and business leaders worried about the twin threats of the nation’s pending "fiscal cliff" — the draconian spending cuts and tax increase the federal government faces at year’s end without reforms — and the looming threat of a renewed recession if budget woes, and the nation’s $16 trillion-plus debt, are not addressed.

"From an academic standpoint, the type of increased lending represented by TARP increased the national debt at a time of credit crisis. Whether the long-term payback of this will outweigh the cost? That’s hard to say," Cadman acknowledged. "But the positive we documented is that TARP did actually increase lending from recipient banks, and that, in effect, led to a healthier economy."

Cadman and his colleagues reached their conclusions by comparing economic and compensation characteristics from 228 firms that accepted TARP funds to 35 other firms which, though approved for TARP, opted to decline the aid. Salt Lake Tribune

‘Cliff’ Worries Curtail November Output in Utah, U.S.

Manufacturing in Utah, regionally and across the U.S. shrank in November as worries about automatic tax increases that could kick in next year cut demand for factory orders and manufacturing jobs.

The Institute for Supply Management said Monday that its national index of manufacturing conditions fell to a reading of 49.5, down from 51.7 in October, and the lowest level since July 2009 — the first month after the Great Recession ended.

Utah’s manufacturing was the strongest of the three states. Even so, its index dropped to 57.3 in November from October’s reading of 60.1, economist Ernie Goss said.

Any reading above 50 signals expansion, while readings below 50 indicate contraction; In Utah, a reading of 57 or higher is strong, Goss said.

The Utah index has fallen for two months from a 2012 high of 61.7, despite stronger orders for durable goods, especially computer and electronic components and metals.

Worries about the fiscal cliff have led many companies to pull back on year-end purchases of machinery and equipment, which signal investment plans. Salt Lake Tribune

Utah Job Fair Set for Ex-Hostess Employees

In Utah, Hostess employed about 600 people in operations at two bakeries, nearly a dozen retail stores and nine depots.

The Utah Department of Workforce Services and Ogden/Weber Technology College will host a job fair Thursday for former Hostess employees.

The job fair will run from 1 p.m.-4 p.m. at the Ogden/Weber Technology College, 200 N. Washington Blvd. in Ogden.

Employers participating include Lofthouse, Kroeger, Kellogg’s, FedEx, CSM Bakery and U.S. Food Services.

Job seekers are urged to bring an updated resúmé and to dress professionally for interviews.
A series of free resume/job search workshops will be presented by the Department of Workforce Services this week. For a list of dates and locations go to: www.jobs.utah.gov.

In Utah, Hostess employed about 600 people in operations at two bakeries, nearly a dozen retail stores and nine depots. Salt Lake Tribune

Manufacturing Employment Recovering in Utah

After suffering two recessions since 2000, employment in Utah’s manufacturing industries has been improving since 2010 and is projected to do so into 2013. With the most recent downturn, manufacturing employment peaked in 2007 and thereafter commenced four years of declining employment figures. As figure 1 shows, if the trajectory from the turnaround continues, manufacturing employment can match previous peaks in only a few years. The 2013 forecast places employment at 122,490, which is a 3.8 percent growth from 2012 and 96 percent of the 2007 peak. By 2020 employment in manufacturing will have fully recovered jobs lost in the most recent recession and will have grown beyond recovery, according to long-term industry projections released by the Department of Workforce Services.

Figure 1: Manufacturing total employment and forecast

The largest concentration of Utah’s manufacturing employment is in the Miscellaneous Manufacturing subsector (NAICS 339), which includes medical equipment and supplies, jewelry, sporting goods, toys, and office supplies (figure 2). An analysis of this subsector’s location quotient, which measures the level of concentration of an industry’s employment in Utah compared to the US, reveals a high concentration in Utah. This implies an export-oriented industry with more of its products being consumed outside of Utah. Another top subsector in terms of employment concentration is Food Manufacturing (NAICS 311), which is also export-oriented and produces the fourth largest US export in terms of value, according to the US Department of Commerce.

Figure 2: Manufacturing employment by industry sector

Manufacturing experienced some of Utah’s largest job losses during the most recent recession and continued this trend for a few years. But it has been steadily recovering employment and is expected to continue to grow through 2013.

Utah’s Black Diamond is Manufacturing Skis in China

Holladay-based Black Diamond, Inc. has opened a ski manufacturing factory at its Asian operations in Zhuhai, China.

The 43,000-square-foot factory is producing samples of the 2013-14 line of Black Diamond skis for use in company sales pitches that emphasize how new manufacturing processes enhance performance and quality control.

"Our decision to bring Black Diamond’s ski manufacturing in-house represents a significant expansion of our manufacturing footprint, and demonstrates our commitment to the category and passion for the sports we serve," Peter Metcalf, Black Diamond’s president and CEO, said in a statement.

He said Black Diamond manufactures about one-third of its proprietary products in-house. "So we are confident in our capabilities," Metcalf added. "Ski manufacturing will allow us to be more responsive to our customers, while maintaining a competitive pricing position."

Black Diamond Equipment Asia was established as a wholly owned subsidiary in 2006. It has about 200 employees, the company said. Salt Lake Tribune

Occupations Related to Electric Vehicles

Did you know that electric vehicles actually outsold gas-powered vehicles in the early 1900s? Now they’re making a comeback! Electric vehicles are better for the environment, and – given the rising cost of gas prices – might also be more affordable over the long run. This industry employs a variety of workers in Research, Engineering, Manufacturing, and Maintenance. For example, there are research scientists who are focused on improving battery technology, including a group at Utah State University who just received a $3 million grant improve electric vehicle battery performance. Chemical, electrical, industrial and mechanical engineers all play a role in the design, development, and testing of electric vehicles and the various systems involved in making those vehicles run efficiently. The largest concentration of U. S. workers in electric vehicle manufacturing occupations (assemblers, CNC tool operators, and machinists) is in the Great Lakes region, but workers that maintain electric vehicles are needed all across the country. No matter what the occupation, people who work on electric vehicles require specialized training. 

You can learn more about these occupations, and find schools that offer related programs via UtahFutures. You might also be interested in this article in the Occupational Outlook Quarterly: Electric Vehicle Careers: On the Road to Change. And – just for fun – learn about an electric vehicle company on “our side” of the country: Tesla Motors. Tesla’s Chief Technical Officer got his start in the industry at age 14 when he discovered a discarded golf cart and re-built it!UTAHCTE

Output in Utah continues its climb

Utah manufacturing activity in September climbed to the highest level in seven months as companies linked to energy production turned robust demand and high prices to their advantage.

The overall index of manufacturing conditions advanced to 61.7 from an already healthy 60.6 in August, the Goss Institute of Economic Research said Monday. A reading above 50 indicates growth; 57 is considered robust.

Among the components of the monthly index, production and new orders were strongest, with readings of 70.8 and 62.7, respectively. That suggests production will increase in the coming months and could signal that factory activity is picking up after a weakening this spring because of declining consumer demand and a drop in exports. Salt Lake Tribune

2012 Utah Legislature Highlights for Businesses

After 45 days, the legislative session has come and gone and in its wake Utah businesses must decipher the most important points from the hundreds of bills passed, blocked, introduced and circled this year. The Legislative highlights for businesses from the 2012 Utah Legislature include:

Gains in Tourism Marketing Appropriations: According to the Utah Office of Tourism, tourism accounts for $6.5B of Utah's gross domestic product, employs 122,000 people and reduces Utah household's tax burden by $1,000 through tourism taxes paid to state and local governments.

DABC Restructuring Laid Out: Along with adding two more commissioner positions and providing more oversight over the director's position, legislators passed a bill that would study alcohol use in Utah that may provide better information in forming alcohol-related laws in the future.

S.B. 66 and H.B. 354 passed and are currently awaiting Gov. Herbert's signature.

Ski Interconnect Supported: The Utah Senate passed a resolution in support of any ski interconnect project that would link resorts. The bill expresses support for low-impact interconnection of the seven resorts in Salt Lake County and Summit County to enhance the ski and snowboard industry's contribution to Utah's economy, jobs, and tax base.

S.C.R. 10 passed and is currently awaiting printing.

Environmental Boards Revamped: The Utah Department of Environmental Quality was revamped by legislators in S.B. 21, shifting certain controls and responsibilities away from the five boards that address air quality, radiation control, water quality, drinking water and solid and hazardous waste, the five boards that currently deal with permitting and rule making. The legislation was developed by the Utah Manufacturers Association and the Utah Mining Association with the hopes that businesses would be able to move through the permitting process more quickly.

S.B 21 passed and is awaiting enrollment from the Legislative Research and General Counsel. Park Record

Manufacturing Highlight

In an industry focus article on the manufacturing industry, Mark Knold, Chief Economist at the Utah Department of Workforce Services, states:

If some sage were to come and prophesize that in 2016 the economy would fall into a recession, and then ask me what industry I believe this would impact the most, my answer would be manufacturing. Why? History shows that manufacturing always loses jobs during a recession.

 Roughly 17,000 manufacturing jobs downsized in Utah from mid-2007 to mid-2010. That’s not much of a surprise considering the severity of the Great Recession. But what’s interesting is the industry’s performance since mid-2010. Manufacturing job losses have not only stopped, but are now starting to rebound.

To read the rest of this article and more features, jump to our new edition of TrendLines magazine by clicking here.