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Front Page » May 30, 2013 » Carbon County News » County's economy depends on local purchases as well as pa...
Published 541 days ago

County's economy depends on local purchases as well as payrolls


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By RICHARD SHAW
Sun Advocate publisher

The local person's pocket book and how one uses it has a great deal to do with the well being of the community.

That's the conclusion of all experts when they discuss the local economy in Carbon and Emery Counties and what impacts the areas well being.

People can discuss the loss of jobs in the coal industry, that agriculture in the area has shrunk, the change in tourist visitation or new businesses possibly coming in to bolster the employment market, but what is in the area right now, what is being spent by residents has as huge an effect on the financial well-being of the area's dollar flow and consequently jobs.

And when dollars go out of the area it hurts everyone.

A recent study conducted by Price City, something they have done every couple of years for the past decade, shows that the amount of money going over the mountain or to those that sell over the Internet is large. While in the past few years some of what was once spent in other places has been largely recouped, in other areas the county is suffering.

Because it is almost impossible to directly measure what is being spent by local residents outside of Castle Country, the study conducted by a consultant for the city uses a complicated formula of sales tax revenue, averages and other factors to come up with dollar figures for what is going outside the county in almost every facet of business.

"This study shows how important it is for people to look to local business to supply what they need first," said Delynn Fielding, the economic director for Carbon County on Wednesday. "When a person spends money in the local area it not only provides jobs for the people who work at the place where it is purchased, it also generates local tax money. We also have to realize that without support businesses will leave empty buildings where owners are going without rent which supports property taxes."

In a nutshell what the report shows is what is called "sales leakage" or spending beyond the borders of the county. The report is based on figures from 2012 and compares where the county is at relative to the same categories in 2003, 2005, 2007 and 2012. While there are many figures on the reports representing per capita leakage and total leakage of dollars to other places, the columns containing "capture rates" is one of the most interesting because it shows percentage wise the total leakage for the area.

"The city has had this report done five times over the years," said Nick Tatton, the community director for Price City. "We had been doing it every other year, but this latest report is from a four-year span rather than an every other year basis."

Simply, the report's end figure when under 100 percent shows that the area is losing dollars to other places. When the percentage is higher than 100 percent, it shows that the area is more dollars than would be expected for the area. This does show up in a number of categories, particularly those related to travel, such as in travel, tourism and recreation.

The good news is that in some cases the county has made a complete turn around in capture rates from a decade ago. For instance in the total area of building and garden supplies the area is at 98.65 percent of what would be expected for consumers. Within that category lumber and other building materials has gone from only 45 percent of expenditures being spent in the area to over 123 percent. However in the area of nurseries and garden supplies the area only captures 5.9 percent of expenditures, and paint, glass and wallpaper suppliers only get a little over 24 percent locally.

Another area that is off the charts is that of convenience store sales. The area captures over 607 percent of what sales would be considered normal. That goes along with fast food eating establishments in another category where 130 percent plus is shown. The fuel dealers category also shows some huge numbers in that local distributors sell almost 407 percent of what would be expected. These all tie together with some others, though, because of two major factors: Interstate 70 and Highway 6. Travel both roads is heavy and Green River and Price particularly benefit from tourists, truckers and others stopping in to fuel up, or pick up snacks. This also shows up in hotels and lodging (189.32 percent) and in some tourism venues such as museums (112.32 percent).

This all looks rosy, but complications come from such high numbers in these areas too.

"The competition is high because there is so much business," said Fielding. "As we look at these figures that is not a business we would advise anyone to go into."

On the other end of the scale are some dismal figures, that relate much more to local spending that do the travel and food venues mentioned above.

For instance total furniture sales in the two county area are at only 35.21 percent of what would be expected. And that final number is bolstered by a sub-category of household appliances which sell at almost 500 percent above what would be normal. Things like home furnishings (18.09 percent), radio, television and electronics (1.95 percent) and computer and software sales (.01 percent) bring the average way down quickly.

Miscellaneous retail is also much lower than would be expected. This category comes in at 67.83 percent of what would be expected. That category represents such things as sporting goods and bicycles, book stores, stationary stores, jewelry stores, florists, optical goods, non-store retailers and used merchandise among others. Some of the sub-categories here are non-existent in the area. One, florists, does a lot of business (246.78 percent) of what is expected while jewelry stores only do 4.21 percent of what would normally be spent locally.

The results of the study are complicated and need to be weighed by the fact that some retail outlets are multifaceted. For instance the box stores in the area sell a lot of different things from groceries to sporting goods to jewelry to electronics. It is hard to discern and separate out those sales from stores that may specialize in a product such as bicycle or firearms sales only.

While not surprising by what is seen in the area when driving around, but surprising in that the population can support such sales is that of motor vehicle dealers. The report says that the area sells 160.34 percent of what would normally be expected for the population size. The strength of ATV/motorcycle and RV sales bring this category up, and used and new car sales are right in the same area of sales figures (200 to 320 percent). Certainly some of that is generated by sales to people outside the area, because of the exposure those dealers get by travel through the area and the recreational opportunities that are afforded in the two counties for motorized travel.

Economic development officials use the report to help people who want to start businesses or want to locate businesses in the area to pinpoint what would be best.

"We use this to help people to understand where they fit in with a new business idea," said Mike McCandless, the economic development director for Emery County. "Recently we had two sporting goods businesses move into the area and open within a month of each other. They do their research. When you look at sporting goods sales in the area you can see that that area was low in local sales (21.88 percent in area). They knew that."

Fielding also pointed out that new businesses are not the only place that can benefit from looking at a study like the one that just came out.

"We encourage existing businesses to look at the study too," he said. "An existing business may see a niche in the study that is weak that they can fill within their existing framework. They may add a line or a service that they didn't have to bolster their present business."

High or low numbers always skew a report like this. Overall the report shows that since 2003, when the first study was done, the two county areas sales leakage figures have improved from 102 percent to 116.13 percent. But the high numbers in such things as tourism related business and motor vehicle sales, affect that average a great deal. Many small local retailers suffer because people go out of the area to buy items and consequently so do jobs.

Most people know that almost everyone spends some money along the Wasatch Front. No exact figures are derived from those trips, but studies like this can be fairly accurate. What is harder for officials, however, is internet purchasing. Since it is usually done from home or work, there is no way to monitor how much buying is done that way. In addition, since there is no sales tax recorded for such purchases (for purchases made from companies outside of the state), it makes it even more difficult to judge what kind of money going out of the area for these transactions.

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May 30, 2013
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