WHAT BREED OF BUSINESS grows during a statewide economic downturn? This latest survey of Utah's top 100 privately owned companies reveals hardy local enterprises that defy conventional expectations and thrive in today's austere economic environment.
Whether in retail, manufacturing/sales, information technology or construction, certain leading non-public companies are quietly making money, reinvesting profits, hiring new employees, buying additional equipment and opening additional outlets--despite 2002's sour economic report card.
And it is tough to beautify last year's employment news. The net loss of 11,000 jobs was the state's first year of negative job creation since 1964. Even Gov. Mike Leavitt said it was "the toughest year for Utah's economy since 1954."
The state's economic slump reflects the national recession, and Utah's slowdown is worse than most of its Mountain West neighbors, including Nevada, Montana, Wyoming and New Mexico, according to the 2003 Economic Report to the Governor. But as the following story shows, the growth of sturdy local companies occurs despite the difficult economic setting.
Greenbacks/All a Dollar
"We opened 24 new stores in 2002; it was a growth year for us," says Joe W Norwood, director of marketing for Greenbacks, Inc., headquartered in Salt Lake City.
Company pioneer Brent Bishop, of Franklin Quest Day Planner fame, found a theme that rocked the local retail realm by combining several types of stores into one--party, variety, convenience and discount--and pricing all of its merchandise at one dollar or less.
Bishop began in 1990 with one Sandy store; today, 94 Greenbacks tills are Ka-Chinking in Colorado, Arizona, Idaho, Nevada, New Mexico, Texas and Washington.
By design, a trip to Greenbacks is a treasure hunt. "We try to make it fun to shop," says Norwood. "in addition to regular replenishables, there are always new types of items available each time you come in." Shoppers are surprised to discover what merchandise can be had for a buck, from reading glasses to gardening gloves. "We have a purchasing team that goes all over the world to ferret out products to sell at our dollar price-point," says Norwood.
"One reason we're doing well in a recession is our high value position among retail stores," says Joe Franceschi, senior vice president of operations. "In addition, our stores are conveniently located in neighborhoods, unlike busy big-box retail stores" that may be difficult to get in and out of with small purchases.
Business managers haven't quite settled on what constitutes the perfect Greenbacks outlet yet, so they continue to revamp displays and remodel. But the stores are bright and inviting because, "our target demographic is middle-income women ages 18 to 49," says Norwood.
Private ownership works well for the company. "We can do what's right for our business, and we don't worry about the monthly vagueness of the stock market," says Pranceschi. "The downside of private ownership would be access to capital, of course, but we capitalize with the cash we generate." The strategy is working; Greenbacks plans to add 20 to 25 new stores every year.
Morinda/Tahitian Noni Juice
Squeezing our $392 million in annual sales and landing No. 26 on the inc. 500 list in 2001 put this Provo-based juice manufacturer and marketer on the world business map.
Morinda is growing quickly in the robust alternative-healthcare industry, manufacturing what it characterizes as "healthy juice" from a puree of the Polynesian noni fruit combined with blueberry and grape juices. Sale of Tahitian Noni Juice is person-to-person through 500 individual reps in 50 countries.
That unusual business model has occasionally been less than fruitful. In 1998, the attorneys general of four states investigated Morinda concerning alleged medicinal properties of the beverage. A voluntary compliance agreement was concluded. (The company says it has not sought or received Federal Drug Administration approval to make medicinal claims for its product.)
Noni juice sales are potent. "We did $424 million in business in 2002, and we've just had the best January and February yet," says Andre Peterson, public relations manager. "We're very optimistic about the future. Even in a recession and with global economic uncertainty, we're growing."
Company roots are in the Beehive State, even if the noni fruit only grows in French Polynesia. Four of the five company founders are graduates of Brigham Young University, and one of them, Stephen Story. is founder of locally famous Stephen's Gourmet Cocoa. The company recently built a 150,000-square-foot office complex in Orem and is now constructing a 140,000-square-foot bottling plant in American Fork.
"As a privately owned company, we're in a wonderful position," says Peterson. "We can try new things, and our board can do what they feel is best without the worry of meeting quarterly earnings expectations." But, he adds, "The downside is that if we were publicly owned, our good sales news would be reported in the Wall Street Journal."
"Like many software companies, ours started with two guys and an idea," says Dynix CEO Jack Blount. One of those founders was a BYU librarian who, in 1983, saw the opportunity to create computer software to replace traditional library card catalogs. Today, Dynix library technologies arc the most widely deployed in the world. "Three thousand four hundred libraries in 42 countries use our systems," says Blount. Headquartered in Provo still, Dynix (formerly epixtech) also has corporate offices in France and Germany.
Several other companies offered competing library computer systems in the early '80s, Blount says. "But today we have the largest market share and twice as many library systems installed as our next closest competitor. And 2002 was good; we hired 80 more people. We stay ahead, and we always push the technology envelope."
Initially shy about offering the Internet to patrons, libraries soon discovered that integration with the World Wide Web greatly expanded their services and their fan base. Libraries are undergoing a rebirth as managers of digital information and have experienced a surge in patronage. "With our systems today, you can search libraries online and search multiple libraries at once. We have software that allows you to read books and journals online so you don't even need to come in," says Blount.
Tech innovation isn't the only factor in Dynix's success. "We have many libraries who are loyal customers, and [we] rarely lose one to a competitor. Notably, most of our first customers were Utah libraries. We are rightly linked with this community. In fact, we pay very little in new-hire relocation costs because we recruit so heavily from local universities.
"I'm very excited to see what the next 20 years bring," says Blount. "I believe libraries are a core American value, and the availability of libraries is a fundamental reason the United States is so competitive in today's world economy."
The Layton Companies
Hiring 100 new employees and adding a Phoenix business unit in 2002 gave The Layton Companies plenty to celebrate on their fiftieth birthday in February of this year. "2002 was a good year for us, even if Utah's economy wasn't 100 percent," says Alan D. Rindlisbacher, director of corporate marketing for the Sandy-based builder.
Layton is one of the largest privately owned construction companies in Utah and engages in an array of commercial construction services including general contracting, design-build and construction management. Many Utahns know Layton from high-profile building projects such as the Olympic Speed Skating Oval in Kearns, as well as Social Hall Plaza and Eagle Gate Tower in Salt Lake City.
Increasingly, Layton's customers are asking them to build out of state. "Our continuing success is largely coming from repeat work from satisfied customers for whom we've built facilities in Utah. For example, we built a transportation terminal in Utah for Michigan-based Conway trucking company. Now Conway has us building facilities in Oklahoma and Dallas."
Layton has diversified geographically and in the type of work it performs. "We are looking out for niche construction opportunities such as healthcare facilities. We just completed the Critical Care Pavilion at University of Utah Hospital, and we're building the Huntsman Cancer Hospital. We're looking ahead for opportunities. While education funding is down and there are few University of Utah-type projects, the state will need many K-12 educational facilities built. We're planning to go into school construction in a big way," Rindlisbacher says.
Also, a backlog of good projects can bridge slow economic times. Layton has jobs in progress that will take from nine months to three years to complete.
Says president and CEO Alan S. Layton, "Companies that grow in a down economy must continually adjust to current marker trends. You have to maintain focus on the...