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Front Page » June 4, 2013 » Carbon County News » Energy industry still rules an undiversified economy
Published 537 days ago

Energy industry still rules an undiversified economy


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By RICHARD SHAW
Sun Advocate publisher

A diverse economy can protect an area from economic downturn or from the failure of one key industry. Unfortunately, the diversification in the Castle Country is not as great as it could be.

According to the latest report from the Division of Workforce Services, the energy industry, particularly coal, plays by far the biggest part in keeping the local economy well. The report released last week shows that among the 12,506 non-farm jobs that exist in the county 2,226 are directly related to mining with another 3,128 related to utilities and transportation, which in many cases are direct offshoots of the energy industry in Carbon County. That adds up to almost 43 percent of the jobs in the county.

Add to that the payrolls for these people and the other sectors that are all affected by those numbers and the impact of any reduction in energy production, whether it be in the coal mines themselves or power generation, and the snowball effect is obvious.

A view of the top 20 employers show just how interrelated everything in the local economy is. The largest employer in the county is Carbon School District. Its funding comes largely as a direct result of property taxes and the number of students that are enrolled. This in turn determines how many people can be employed by them.

The second biggest employer is Canyon Fuels. In the top 20 biggest employers, energy jobs are also represented by the West Ridge Mine (fifth largest employer), Savage (seventh largest employer), Hidden Splendor Mine (12th largest employer), Joy Machinery (13th largest employer), PacifiCorp (16th largest employer), Tram Electric (18th largest employer) and DBT America (20th largest employer). So of the top 20, eight employers are energy or energy related companies, largely dealing with coal extraction, transportation, support services or use of the resource in one way or another.

The rest of the top 20 employers in the county are almost all government entities, like the school district. USU Eastern (third largest employer), Carbon County (eighth largest employer), Utah State government (ninth largest employer), the Federal government (10th largest employer), Price City (the 14th largest employer) and Pinnacle Canyon Academy (15th largest employer) are all dependent in one way or another on funding from taxpaying entities. Probably the only one that is insulated from the local economy is the Federal government, although state employers are also not as dependent on tax paying entities in the county as more local organizations are.

That leaves five private businesses beyond the energy companies that are large employers. Castleview Hospital is the largest of these (fourth largest), Walmart (sixth largest), SOS Staffing Services (11th largest), Smiths (19th largest) and Sorenson Communications (17th largest) are all included in that list.

Looking at the rundown of employers, it is obvious what can happen when energy goes into a slump. An example might be a mine slowing down its operations. Under such circumstances it can either lay people off or cut back hours for miners and other workers. This process affects the mine support companies such as Tram or Joy and they have to cut back workers or cut hours, unless they can find other business to replace the lost business. The workers who are laid off or lose hours from any of these actions will not have as much money to spend. Some may even move away taking their families with them as well.

Transportation is another factor. If coal is not being produced the number of trucks moving it will change. Drivers and other personnel at places like Savage are hurt. Included in this is all the people that work there including supervision and maintenance workers.

Less money spent by these reduced time or laid off workers will affect some of the other big employers such as Walmart or Smiths. That could then affect their payroll as well. During these times SOS Staffing may get more people looking for work, but there will also be fewer jobs in which to place them.

If families move out of the area this affects both Carbon School District and Pinnacle Canyon Academy, because that reduces their funding.

All the spending the laid off or reduced hours employees are forced to cut back on will also affect the sales tax base that supports Carbon County and Price City, both in the top 20 as well.

Laid off workers usually lose health insurance, and reduced hour employees sometimes do as well. Many will delay going in for a surgery or procedure. Others will ignore health problems because they don't have the money to pay for the service. And even if they have an emergency that does require medical support at the hospital their ability to pay will be reduced. Then the hospital ends up eating more debt that can't be repaid. The reductions in health care needs can also affect employment at the hospital, as well as at other ancillary facilities or doctors' offices.

Property taxes that also support many government entities can also be affected with idled businesses, residents that can't afford to pay property taxes on their private property and a reduction in spending on such things as vehicles which not only generate sales tax but also have an assessment for personal property tax.

It gets very complicated very quickly, and this is not even all the scenarios that take place when any employer lays off or reduces hours on employees.

The changing viability of energy has always been a problem in coal country. The industry has faced it many times before over the last century. But this time it may be different. Emerging countries may use more coal but the United States may use less. Coal has built industrial civilization, but things could change.

With that possibility in mind, the evolution of the industry may be one way out. Or it may be that the county as a whole needs to look in a different direction. What can be done has endless possibilities. But the evolution in the thinking of people who live in this area will become the key to success.

So what needs to be done to achieve and hold onto a bright economic future for Carbon County?

(Editors note: This is the third in a series of four articles concerning the economy of Carbon County and what the future may hold).

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