By Barbara Rattle

The Enterprise

Ground will soon be broken for the first building in the Salt Lake City Foreign Trade Zone, a 71-acre project whose creation dates back to 2006.

Bountiful-based general contractor Sahara Inc. has been selected to build the structure, a 150,000 square foot building that will be occupied by FedEx Ground and which is expected to be complete in September. A building permit pegged the value of the construction at $6.2 million, however it is generally agreed the building permit valuations are about half market value.

FedEx spokesperson David Westrick said the building, to be located at 1095 W. 4800 W., will be larger than FedEx Ground’s existing station that currently serves the area, allowing the company to better meet customer demands in the region.

“When the facility opens, positions will transfer from the existing station and we will add to the workforce as necessary to support increased demand for service in the area,” Westrick wrote in an e-mail.

The new facility is part of a nationwide network expansion to boost daily package volume capacity and further enhance the speed and service capabilities of the FedEx Ground network. Since 2005, the company has opened 11 new hubs featuring the most advanced material-handling systems and expanded or relocated more than 500 local facilities.

The network enhancements have resulted in accelerating ground service delivery by one day or more in more than half of the United States. FedEx Ground delivers more than 61 percent of packages in two days or less and more than 82 percent of packages in three days or less.  With these changes, FedEx Ground is faster to more overall locations and FedEx Home Delivery is faster to more residential locations than any other ground carrier, Westrick wrote.

In 2006, Salt Lake City partnered with The Rockefeller Group, a New York-based foreign-trade zone (FTZ) and real estate developer to create an FTZ to boost international trade. Some 1.3 million square feet in seven buildings are expected to be constructed at the Salt Lake City FTZ, which serves as a Union Pacific Railroad intersection for eastbound freight from the three largest West Coast Ports — Los Angeles/Long Beach, Seattle/Tacoma and Oakland.

Calls to Rockefeller Group’s New York and California offices were not returned. Bob Farrington, economic development director for Salt Lake City, also could not be reached for comment. A member of the Commerce Real Estate Solutions team that is marketing the FTZ said all team members were required by contract not to comment on the FTZ’s first building.

Financial savings from U.S. FTZs are derived from a combination of benefits, including traditional savings from duty deferral, reduction and/or elimination, and logistics and supply chain facilitation. Essentially, instead of filing a Customs entry and paying U.S. duty (import tax) when a shipment arrives at a U.S. port, duty payment is deferred until the goods are withdrawn from the zone for consumption in the U.S., providing cash flow benefits, according to a document distributed by the city in 2009.

In a pure distribution FTZ environment, according to the document, merchandise from abroad can be de-consolidated and inspected and, in some cases, repairs, repackaging, labeling and marking may be performed to prepare the goods for final sale. For those products exported out of the FTZ, U.S. duty is eliminated entirely upon the export of the goods from the FTZ. Returns to vendors or destruction of product in the zone may also supplement duty elimination benefits in FTZs.

By Brice Wallace

The Enterprise

Utah’s position as an exporter continues to strengthen, but the nation’s top representative at the World Bank believes his organization can bolster export figures even further.

Speaking recently at the Salt Lake Chamber offices, Ian Solomon, the U.S. executive director of the World Bank Group, encouraged businesspeople to explore opportunities to bid on contracts through the World Bank as it works to fight poverty and improve living conditions in developing countries.

Elizabeth Goryunova, executive vice president and chief operating officer at World Trade Center Utah and director of international relations at the chamber, recently was named a World Bank private sector liaison officer, or PSLO, and Solomon said business owners can use her expertise to help them navigate the World Bank’s “complex structure.”

“Utah’s international business community continues to impress me and surprise me how strong it is,” Solomon said. “So hopefully the PSLO can provide some additional tools to help you scale up and grow further.”

For example, PSLOs can help teach companies about project time frames, finding and tracking contract opportunities, and how to engage with the World Bank to get information and expertise about particular sectors or particular countries, he said.

Through its institutions, the World Bank provides low-interest loans, interest-free credits and grants to developing countries for investment in education, health, public administration, infrastructure, financial and private-sector development, agriculture and environmental and natural resource management. The U.S. is the largest shareholder on the executive boards for the World Bank Group institutions. The bank has 187 member countries.

The World Bank has exceeded its goal to triple its lending over a three-year period. It made commitments of $106 billion in fiscal years 2009 and 2010 and has $220 billion in subscribed capital.

U.S. companies can be contractors, investors and development partners, Solomon said.

“Ninety-five percent of the world’s consumers live outside our borders, yet only 1 percent of U.S. companies export. ... And of the 1 percent that do export, three out of five only export to one country, often Canada or Mexico. There’s a huge market out there that we need to tap,” he said.

Development in low and middle-income countries is a moral, strategic and economic imperative for the U.S., he said. Among moral considerations are that one in six people in the world lives in “extreme poverty and vulnerability.” The World Bank aims to eradicate poverty and hunger, ensure universal primary education, improve gender equality, cut child mortality, improve maternal health, combat diseases and stabilize the environment.

“As the world population is growing, becoming younger and more urbanized, we’re facing increasing constraints on food and water and pressure from climate change,” Solomon said of the strategic component. “We cannot reduce conflict if we do not reduce poverty. We cannot reduce poverty if we do not achieve economic growth and development.”

The bank wants global growth to be balanced “so that developing countries have solid middle-class consumers rather than unequal and unstable societies,” he said.

“The public sector and these old public institutions are not going to solve the problems of poverty and governance around the world,” he said. “It’s going to be private firms, hopefully working in concert or in closer concert, and that’s where the bank can play a role.”

The visit was Solomon’s first to Salt Lake City. He praised the city for a “strong global outlook,” being a city with “an incredibly strong service ethic” and a desire “to get things done.”

One thing Utah has done recently is become a bigger player among exporting states. Federal statistics released the morning of Solomon’s visit showed that Utah led the nation in export growth during the first 11 months of 2011, with a 41 percent year-over-year increase. Lew Cramer, president and CEO of World Trade Center Utah, noted that Utah is the only state to double its exports over the past five years.

Utah-based Kneaders Bakery and Cafe, a chain of regional restaurants open for breakfast, lunch and dinner, plans to launch a number of new locations this year.

The firm just opened a location in Logan — its 16th — and plans 2012 openings in Heber, Ogden, City Creek (Salt Lake City) Saratoga Springs, The Shops At Riverwoods (Provo) and Spanish Fork, two new Arizona locations in Gilbert and Chandler, one new Denver location, one new Boise location and one new Oregon location.

The Four Foods Group has been Kneaders’ four-state development partner since 2008. CEO Andrew K. Smith said one of the key contributors to the successful expansion of the Kneaders brand is that the organization has consistently been able to work with local banks to secure traditional financing, even during the down economy. To date, banks have provided the company with more than $9 million to buy land, construct buildings and purchase equipment. The banks’ willingness to lend to the company has not slowed, as the company has performed on each loan.

“That is the key to securing additional financing,” Smith said. “Every financial institution determines who their top performing clients are, and that institution will do whatever it takes to support those clients in their future growth and needs. I have found this to be the case even more so during a downturned economy.”

In addition to securing capital, land acquisition has also become monumental in keeping Kneaders’ expansion plans on pace.

“Today, more and more developers are open to build to suit propositions from tenants like Kneaders,” Smith said. “Meaning, those tenants have a vacant piece of land that isn’t generating any solid cash flow. So instead of trying to sell that land at a loss, land owners are willing to chase their original investment with an additional sum of money to get a secure, constant flow of cash by occupying that land with a strong tenant.”

That is also the case with inline retail space.

“Vacancy isn’t good for developers or property owners,” Smith said. “They want to fill the space, so there is increasing negotiating power on the tenant’s side. However, the market is also starting to be flooded with other great opportunities, and many companies are realizing that now is the time to try to grow their business. As long as those companies can find the capital they need, they will be growing. That is what I believe is going to be a major factor in getting us out of this down economy much faster than we all anticipate.”

By Brice Wallace

The Enterprise

The past few years have seen interesting business cycles for cycle businesses.

A sampling of local bicycle retailers shows that some have experienced recent slowdowns because of the lingering effects of the recession, but most are picking up speed heading into 2012.

Mike Pratt, owner of Canyon Bicycles, with stores in Draper and South Jordan, injected some humor when asked how business is going. "Honestly, we’re pretty flat, which is the new ‘up,’ I hear,” he joked. “That’s what people say when I complain that we’re flat or maybe up a little.”

In business since 1993, the company expanded from the Draper store by adding the South Jordan location. “Last year, we had our first down year in our history [at the Draper store] but we were up overall as a corporation,” he said.

Actually, the number of units sold is down but the average price of a bicycle has risen, Pratt said. “People are willing to spend more. They want nicer bikes.”

He described bicycle retailing as “recession-resistant.”

“When you don’t have the money for a new swimming pool or a $1,000 summer vacation, you get a couple of road bikes,” he said.

During the past few years, he said, he has seen a shift toward road bikes, which start at $600 to $900, from mountain bikes, which start at $300 to $500.

“In a bad economy, people also might simply being wanting to recreate and enjoy themselves and improve their health. If you’ve lost your job, or if you have a job and you’re not getting what you want out of it, a lot of people want to do something for themselves, so they ride and get healthy. Biking is therapy,” he said.

As for the future, Pratt is unsure how his business will fare because of increased competition. But if the economy improves, he expects to sell more bikes that cost $4,000 to $10,000. “People would have more disposable income," he said. “More people would be willing to bump up. There was a time when people were buying houses and paying blindly. When things got a little scary out there, that demographic, with all that income, lost so much in the market and then didn’t buy the high-end bike. They were scared to spend the money.”

But people willing to spend on a bike have discovered it’s fun and economical. “First of all, it’s money that they want to spend,” Pratt said. “But you also have to take into account that you don’t need a trailer to tow it to a lake, and you don’t need to buy a lift pass.”

Dale Majors, owner of Bikewagon, is optimistic after his business experienced an economy-induced slowdown in 2011. The store is moving from North Redwood Road to 680 W. 200 N., North Salt Lake, with the new, 25,000 square foot location opening in March.

“Things are going well. We’ve had decent growth over the last year, and we’ll be opening up a new storefront,” Majors said.

Revenue growth is about 25 percent ahead of last year, but Majors cautioned that the figure represents the smallest revenue growth for the company, which has been operating since 2004 and typically has seen year-over-year growth topping 40 percent.

“It’s hard to move and we changed our back-end systems, so a lot of focus on sales was shifted to infrastructure issues, and that slows you down a bit,” he said. “But last year, we felt the economy more than any other year. People seemed to mention the economy more last year. It’s great having growth in a down economy, but we never really felt it much. Last year was the first time we felt it [the economy] being kind of an invisible hand where things slowed more than they had before, especially for the holiday season.”

But springtime usually gives a boost. “Things have already been picking up for us,” he said, “so I’m pretty optimistic.”

Richard Goddard, owner of Guthrie Bicycle, 803 E. 2100 S., Salt Lake, said his 10-employee business saw a rebound in 2011 from leaner times the previous two years.

Goddard said 2008 “was, without question, our best year. The economy was doing well and gas prices were really high. Combine those two and it’s good for bicycles. People were deciding to stay closer to home and said, ‘let’s buy some bikes.'”

But activity slipped in 2009 and even more in 2010 as the economy eroded.

“But in 2011, we had a little resurgence, and the last few months have been quite promising,” he said. “We’re back to where we were in 2009. We’re pleased. Last year, the spring and early summer had a lot of rain and snow, and we thought we would start off really poorly because the weather wasn’t cooperating. Yet, sales were quite good, and when the weathered improved, it exploded.”

One can debate whether the economy was any better in 2011 than in previous years, but Goddard said customer optimism might have been at work. “I don’t think people’s fear of the economy was quite as bad in 2011 as it was in 2009 and 2010,” he said.

And he added that while the bicycle industry might not be recession-proof, it is perhaps “refreshingly resistant.” Some people, he said, turn to cycling during a recession because they don’t want to drive their cars as much. Recession or not, he believes the resurgence of 2011 will be a springboard for even better sales at his company, in business since 1888.

“I’m very optimistic for 2012,” Goddard said. “When you look at the valley as a whole, I think it looks rosy.”

Masherz, at 1187 S. Redwood Road, has seen steady growth the past few years, regardless of the nation’s economic downturn. Owner Doug Lindeman noted, however, that the six-year-old company moved a little more than two years ago to its current, larger location.

“We were able to grow our storefront,” Lindeman said. “In West Bountiful, we didn’t have a huge storefront. We were able to expand our repair shop, too, and that was a big part of it, but mostly it was just having the space to properly sell the stuff we have.”

Business started taking off three or four years ago. Had the store been in business longer than six years, perhaps it would have had more data to better determine the impact of the recession. “It’s hard to say if it’s affected us at all. It’s probably affected everybody. Maybe we would have grown even more [without the recession],” Lindeman said.

As it is, Masherz saw 56 percent growth during 2011 from the prior year. “It’s been going really well,” he said.

Lindeman said 2012 growth will be perhaps 30 percent. “We expect to keep growing. Obviously, I don’t think we’ll have 56 percent growth this time next year,” he said. “But we’ve recently expanded and taken over some space next to the store, so we’ve tripled our storefront space in the last month.”

By Barbara Rattle

The Enterprise

Prime Trailer Leasing, a Denver-based firm that bills itself as the largest semi trailer rental company in the region, has established a facility at 1150 W. 2100 S., Salt Lake City.

The company, which rents primarily dry vans, flatbeds and refrigerated vans for over-the-road, local cartage and storage applications, also has a location in Reno. The company has a total of 30 employees, three of them in Salt Lake City.

Allen Gardner, marketing director for Prime Trailer, which was founded by his father, Wes Gardner, in 1992, said the company decided to establish a physical presence in Utah due in part to the exit of from the area of a major competitor. GE, owner of Transport International Pool, has begun moving out of the market, Allen Gardner said. He noted that Prime Trailer has revenues of roughly $15 million annually.

Prime Trailer’s customer base consists of both small and large trucking companies — “large carriers that either have seasonal needs or they need 10 trailers out in an area and they only have eight at their location,” Gardner said. “We help augment their fleets. But typically we work with smaller carriers, maybe those with 1,000 trailers or under. Now that we’re expanding to multiple locations we’re starting to be able to have the opportunity to serve some bigger customers in a way that makes sense for them.”

Gardner said the majority of the firm’s inventory consists of late models, 2003 or newer.

“We try and focus on newer equipment given all the new regulations that are coming out for our industry,” he said. “That’s the edge that we’re trying to take with the market out there because that’s where most of the demand is, especially if they [customers] are heading to California.”

He declined to say how many trailers are located at the Salt Lake City facility, noting that such information is proprietary.

Gardner said 2010 was a record financial year for Prime Trailer, noting the transportation industry is often considered a bellwether for the economy as a whole.

Employers are more optimistic about 2012. The 2012 Economic Trends Survey by The Employers Council shows employers’ optimism both for the overall economy as well as their own business.

The comprehensive survey of nearly 2,000 organizations reflects a more optimistic view of 2012 by executives across the nation. Interestingly, the results did not vary significantly by region or state.

Economy and Sales: Optimistic

An impressive 90 percent of the executives expect the overall economy will be about the same or better in 2012 compared to 2011 (58 percent about the same, 32 percent better). In Utah, executives are even more gung-ho, with 93 percent expecting the 2012 economy to be about the same or better compared to 2011. Similar to last year, respondents across the nation are more confident about their own business outlook than the overall economy. While 32 percent anticipate the overall 2012 economy will be better than 2011, 67 percent of business owners expect increases in their own sales/revenue. Not all respondents were quite as enthusiastic, with 23 percent of respondents that anticipate flat sales/revenue and 10 percent that expect a decrease in sales/revenue. In Utah, only 8 percent of business leaders expect a decrease in sales/revenue.

Plans for significant new investments in people, facilities and/or equipment are split. Fifty-one percent say they will not make investments while an optimistic 49 percent of respondents plan investments to improve service, capacity and/or revenue in 2012.

Job Creation Barriers

The greatest barrier to job creation, according to executives, is concerns about further economic decline (59 percent). The next two greatest response groups said the biggest barriers are limited consumer demand (16 percent) and excessive government regulations (15 percent).

Staff Size: Growing A Bit

Although 54 percent of the organizations reporting do not plan to increase the size of their staff in 2012, nearly 36 percent of the respondents plan to hire additional staff, with most of those expected during the first half of 2012. These national results are similar to last year.

In Utah, hiring is expected to slow this year compared to last with 33 percent of Utah employers planning to increase staffing levels in 2012 versus 45 percent in 2011.

Compensation and Benefits Strategies

Employer confidence has improved over one year ago with 70 percent of participating organizations actually giving a pay increase in 2011. This is up from the 59 percent of participating organizations that planned an increase in 2011. The latest survey paints a similar pattern for the 2012 forecast. Significantly fewer organizations are delaying or freezing wages (14 percent in 2012 vs. 20 percent in 2011) and nearly 66 percent of those surveyed are planning a pay increase in 2012 — up 7 percent from 2011.

A minority of the organizations surveyed, 35 percent, froze or reduced pay as cost cutting measures in 2011. Of the organizations that froze or reduced pay in 2011, 29 percent plan to completely or partially restore pay to some employees in 2012. These increases are in the form of merit, general or cost-of-living adjustment (COLA). Of the organizations that froze or reduced pay in 2011, 33 percent report a continuation of the pay freeze and 39 percent are uncertain.

More Cost-Cutting

As executives continue to manage their organizations through the challenging economy, 52 percent plan to trim costs by focusing mainly on lean/process improvement initiatives during 2012. Fifty-four percent of Utah respondents expect to do so. Other popular cost-cutting measures for 2012 are shifting a larger percentage of health care costs to employees (24 percent nationally, 23 percent in Utah); layoffs/permanent reduction in staff (6 percent nationally, 10 percent in Utah); and reduction of paid time off such as vacation and personal days (4 percent both nationally and in Utah).

Thirty-nine percent of respondents have no cost-cutting measures planned for 2012. This is a 5 percent decrease compared to last year’s survey results. It’s not clear if this is a barometer of employers’ optimism or if it is an indicator of how lean companies are operating after past cost-cutting measures.

By Barbara Rattle

The Enterprise

Ereplacementparts.com, an online retailer of parts for items such as power tools and appliances, is slated to make a significant expansion move.

The Sandy-based firm is moving its warehouse from approximately 10,000 square feet in Sandy to 115,200 square feet at 7036 S. 185 W., where 60 people will immediately be employed when the move is made in mid-February. The company will retain its headquarters office in Sandy, which measures about 10,000 square feet, said Michael Anderson, who co-founded the firm in 2003 with David Fairbanks.

According to a conditional use application on file with Midvale City, Ereplacementparts.com plans to employ more than 100 people at the Midvale warehouse within the next couple of years, and as many as 300 workers by the end of the firm’s seven-year lease.

The company, which relies heavily on Internet sales, will have a 1,500 square foot walk-in store and repair facility at the new location, which will be served daily by about nine cargo trucks from companies such as FedEx, UPS and LTL (less-than-truckload) carriers.

When Ereplacementparts.com was formed, it focused on carrying tool and machine parts and accessories nationwide. Today, the firm’s product selection has expanded to include well over 300,000 individual machine and tool parts and more than 3.2 million separate applications for those parts, including parts for lawn equipment, appliances, vacuums, grills, plumbing, restaurant equipment, exercise equipment, home office equipment, HVAC and GPS devices. A vast array of manufacturers are represented. The firm’s website includes more than 100,000 tool breakdown diagrams and downloadable PDFs of schematic documents. All items sold are OEM (original equipment manufacturer).

Ereplacementparts.com leased its new warehouse with the assistance of Randy Ross of NAI West. The property owner was represented by Lucas Burbank, Jeff Heaton and Brett Palmer, also of NAI.

David K. Williams, CEO of Orem-based software firm Fishbowl, last week presented Zions Bank president A. Scott Anderson and relationship manager Brad Adamson with a ceremonial $1 million check.

The money represents pre-payment in full of the $1 million loan Zions extended to Fishbowl as a critical piece of Fishbowl’s buyback from its prior majority investor to become 100 percent employee owned on May 20 of last year.

Without the loan, Fishbowl could have been sold or possibly broken in pieces. Instead, the company achieved record growth in 2011 and won multiple awards. Fishbowl launched key partnerships with Utah Valley University, eFileCabinet, Voonami and other Utah and national partners by developing Fishbowl Partner Nation.

“Our message is that we can transcend today’s economic challenges when we all work together as trusted friends and partners to honor the principles our forefathers brought to this great land,” said Fishbowl president Mary Michelle Scott.

“One of the timeless principles our forefathers taught was financial responsibility — not misuse or overuse debt,” said Williams. “We want to represent that message and to send it again, right now, to our Utah neighbors — and to our entire nation — that we must use debt prudently to remain strong. We want to underscore that message with our great working partner, Zions Bank, who believed in Fishbowl and extended us the loan we critically needed to become employee owned. In return, we are repaying the loan in full, 84 months early, on the date our first full principal payment has come due.”

Fishbowl executives noted that for a software company, finding collateral is difficult, and Fishbowl’s loan came at a time other banks were not providing software company loans.

Fishbowl and its cornerstone product, Fishbowl Inventory, make it possible for businesses to have the level of flexible and mobile inventory management solutions large organizations enjoy. Fishbowl Enterprise is a light and robust ERP (Enterprise Resource Management) solution that allows Fishbowl to provide organizations ranging from SMBs to mid-to-large enterprises with all the components required to meet their inventory and business management needs.

Despite a year filled with economic instability, a majority of small-business owners (72 percent) say 2011 was a successful year for their company — and new data shows new business activity saw a boost, too.

According to the latest Manta SMB Wellness Index, new business activity was up more than 12 percent in the third quarter of 2011 compared to the same time last year. The Manta SMB Wellness Index is a quarterly index on the state of small business released by Manta, the largest online community dedicated entirely to small business. The index examines nationwide data collected from multiple business resources and takes a “pulse” of small-business owners on hot topics. Manta’s latest survey polled more than 1,000 small-business owners about their feelings on the 2011 small business landscape, predictions for 2012 and how their business is impacting their personal well being.

The Manta SMB Wellness Index shows that while new business activity is up year over year, September saw the steepest decline in activity in the 18 months. Moreover, there’s been about a 12.5 percent decrease in new business activity in Q3 compared to Q2. Alaska, Utah and Oregon had the sharpest declines in activity year over year, while Wyoming, Colorado and Arizona had the biggest boost in business activity in Q3, as well as the most gains year over year.

But that success has come with a price for many small-business owners. Almost half of respondents (44 percent) say this year’s business climate has taken a toll on their personal health — one in three say they work out less, 22 percent say they’ve gained weight and 14 percent say they are more short-tempered and argue with family and co-workers. In addition, Manta’s survey found that most small-business owners (63 percent) averaged more than 40 hours a week at work, while nearly one in 10 report their average work week was upwards of 70 hours.

Life away from the office, however, has been brighter for small-business owners this year — 45 percent say their business has had a positive impact on their personal life. Small-business owners say they’re happier (31 percent), have more time for family and friends (15 percent) and even report that their marriages have improved (8 percent).

Pamela Springer, president and CEO of Manta, said the survey shows that 90 percent of small-business owners are optimistic about their company’s growth in 2012. Looking ahead, 70 percent of respondents think the small business economy will improve next year. That’s not surprising, since a majority of small business owners (62 percent) rank growing their business as their top New Year’s resolution — ahead of improving relationships with their family, working out more and eating healthier.

The Redevelopment Agency of Salt Lake City will purchase the former Deseret Industries building in Sugar House for $1.16 million from The Church of Jesus Christ of Latter-day Saints.

Agency executive director D.J. Baxter said the building, located at 2234 S. Highland Dr., “could be very important to a couple of different development scenarios in Sugar House; one of those is the streetcar.”

The streetcar project is a high priority for Salt Lake City, South Salt Lake and the Utah Transit Authority, which collaborated on grant applications for federal funding and were successful in obtaining $26 million in for the project, through the Federal Department of Transportation, in October of last year. As envisioned, the street car would run between and existing UTA right-of-way at approximately 2230 South between the Central Pointe TRAX station eastward toward an area between the Fairmont Aquatic Center and a former Granite Furniture freight rail corridor terminus.

“But we have a lot of interest from the business community in having the streetcar continue beyond that point, at least to Highland Drive and maybe even beyond,” Baxter said. “So we’re looking at a variety of options for initially getting to Highland Drive and where it ought to go after that. This is potentially a critical piece of property for making that work well.”

The RDA probably won’t demolish the building any time soon; estimated cost to do so is roughly $150,000.

“There are a number of studies in the works that will give us more information about which portions of that property we need for public spaces,” Baxter said. “Once we complete those studies and know more about how the property might be configured, when we’ll make a decision on what to do with the building.”