The Enterprise - Utah's Business Journal

Volume 40, Number 50

UTAH’S BUSINESS JOURNAL$1.25July 11-17, 2011www.slenterprise.com

THIS WEEK

• Industry Briefs •See page 6.

• Calendar •See page 16.

Legal MattersSee page 7.

Fetzers' to double size ofWest Jordan

plantExpansion will bring

warehousing in-house.See page 4.

Legal Matters

Legal Matters

Legal Matters

Legal Matters

Legal Matters

Legal Matters

Design Matters

Executive Lifestyle

Legal Matters

Staffing Matters

HR Matters

Real Estate Matters

Executive Lifestyle

Legal Matters

Industrial gases firmto launch 'radical' new tech plant in Tooele

Textile recycler picks Utah as location for newcarpet recycling plant

By Barbara RattleThe Enterprise Air Products & Chemicals, an Allentown, Pa.-based firm that is one of the world’s larg-est producers of industrial gases, has leased the former Conestoga Cabinet property in Tooele and plans to turn it onto a plant that manufactures ceramic modules that are key to a new technol-ogy that shows promise for clean energy applications. The 115,000 square foot build-ing is located at 600 N. Industrial Loop, will employ roughly 55 and should be fully functional by mid-2013, said Ted Foster, direc-tor of business development for Air Products. In the meantime, the company will be procuring, installing and constructing process equipment at the site, he said. Salt Lake City-based

Ceramatec, an advanced ceramic technology research and devel-opment firm, is partnering with Air Products at the Tooele facil-ity. Ceramatec will manufacture the extremely thin ceramic mem-branes that a crucial component to a new oxygen separation technol-ogy. “Ceramatec has been work-ing with Air Products for many years now to develop a radical new way to make high-purity oxy-gen by extracting oxygen from the air,” said Ceramatec vice presi-dent Dale Taylor. “In this case, it uses a ceramic membrane that is highly selective to oxygen — only oxygen will transport through the

Leigh Fibers will be taking over the 66,000 square foot former Alumatek building in Woods Cross.

Misleading conclusions can be drawn about the extent of Utah foreclo-sures unless the data is interpreted.

By Barbara RattleThe Enterprise Leigh Fibers Inc., a Wellford, S.C.-based global processor of textile waste and fiber byproducts serving the automotive, construction, erosion control, home furnishings and other industries, has chosen Utah as the site for its first facility dedicated solely to carpet recycling. The firm has leased the former Alumatek facility at 1173 W. 2425 S., Woods Cross. Company spokesperson Parris Hicks-Chernez was unsure when the 66,000 square foot plant would open or how many it would employ, but did say it will have the capacity to recycle millions of

pounds of carpet annually. The facility will be owned and operated by a new subsidiary, Leigh Carpet & Plastics Recycling LLC, and will be the Leigh Fibers’ fifth location. Others are situated in South Carolina, Massachusetts, Montreal and California and are engaged in all types of textile recycling. Leigh, which is close to turning 100 years old, estimates that over the lifetime of the company, it has kept roughly 14 billion pounds of textiles out of landfills. The Environmental Protection agency estimates that carpet and textiles, which are not

Report: Utah foreclosure dataneeds to be interpreted

Top court tackles underinsured motorist coverage issue

Recent news report about the Great Recession resulting in a record number of foreclosure filings require that foreclosure data be interpreted in order to avoid misleading conclusions, according to the head of the Bureau of Economic and Business Research at the University of Utah. In a report created for Salt Lake City-based Commerce Real Estate Solutions, Jim Wood notes that recent data from RealtyTrac ranks Utah fourth in the country

for foreclosure filings, with one in every 322 households in Utah receiving a foreclosure notice in April. That amounts to 2,725 foreclosure notices statewide in April. This is an extraordinarily high number, much higher than a local source — Newreach — of foreclosure data as well as the results of a Mortgage Bankers Association survey, according to Wood. For the first quarter of 2011

Insurance companies that provide lower limits for underinsured motorist coverage than for liability coverage can comply with Utah law so long as they satisfy the consumer notification requirements contained in the Underinsured Motorist Statute, the Utah Supreme Court has held. Because notification requirements differ depending on when the insured’s policy was issued, a court must first determine whether a “new” policy exists on or after Jan. 1, 2001. The justices found that a “new” policy exists on or after that date when the insurer and the insured enter into

a new contractual relationship or if changes are made to the terms of an existing insurance contract that materially alter the levels of risk contained in the contract. For such “new” policies, the law requires that the insurer obtain either a written waiver from the insured or provide underinsured motorist coverage in an amount equal to lesser of the limits of the insured’s motor vehicle liability coverage or the maximum underinsured motorist coverage limits available from the insurer under the insured’s motor vehicle policy, the court found.

see AIR page 2

see LEIGH page 4

see FORECLOSURE page 4 see COURT page 2

membrane — leaving nitrogen and other things in the air behind. Its value is that it reduces the cost of making that oxygen by more than a third.” The U.S. Department of Energy is particularly interested in the project, and is helping to fund it, because it could be of great importance to making clean electrical production from coal

realistic. “You sometimes hear in the news about the idea of captur-ing all the CO2 that goes out when you burn coal,” Taylor said. “To capture all the CO2 and to sequester it into the ground is economically impractical if the CO2 is swamped with all this air that’s mixed in with it. You need to have it concentrated, and the only practical way to do that is to, instead of burning the coal with air — and air is 80 percent nitro-

gen — to burn it with pure oxy-gen, essentially. Then all of your combustion products coming out of the exhaust stack become CO2 and water, and that’s very easy and inexpensive to separate.” The Tooele plant, Foster said, will manufacture ceramic modules for oxygen separation, which has “lots of applications, a lot of clean energy applications like integrat-ed gasification combined cycle. Burning coal with pure oxygen rather than air enables high levels of CO2 capture. Our intention is to expand it commercially. This is a whole new radical innovation in technology that has broad applica-tion in our markets. We’re very enthused.” Air Products leased its Tooele facility with the assistance of Jim Sheldon of NAI West.

The case involved a couple who were insured with State Farm Mutual Insurance Co. for more than 20 years, purchasing a number of policies, each with a different policy number. At one point, they changed the principal driver on one their policies to their son, increasing their premium significantly. In February of 2007, State Farm sent the couple a renewal notice with an insert that informed them of the costs and benefits associated with uninsured motorist and underinsured motorist coverage. The company sent the couple the same insert in their next four renewal notices in 2001, 2004 and 2005. In 2003, the couple added a PT Cruiser as an additional vehicle to their coverage, and State Farm issued a new policy number to reflect it. At no point during their 24-year insurance relationship with State Farm did the couple submit a written waiver from either the son or the mother that affirmatively authorized State Farm to issue the couple underinsured motorist coverage. In July 2005, mother and son were killed in a head-on collision with an underinsured motorist while driving the PT Cruiser covered by their policy. The personal representative of the couple’s estate asked that State Farm provide underinsured motorist coverage in an amount equal to the liability policy limits of $50,000 for one person and $100,000 for two or more. State Farm instead offered $20,000, the limit under the couple’s policy as written for underinsured motorist claims. The personal representative then sued State Farm, claiming the company was required to obtain a written waiver, pursuant to state law, before it could provide underinsured motorist coverage in an amount less than the liability policy limits because the changes made to the couple’s policy since Jan. 1, 2001 made that policy “new” under the Underinsured Motorist Statute. State Farm didn’t dispute that it never obtained a written waiver from the couple, instead claiming that a written waiver was not required because it never issued the couple a new policy. Utah’s federal court referred

to the Utah Supreme Court the question of whether provision of lower limits for underinsured motorist coverage than for liability coverage complies with state law. The justices concluded that the meaning of a “new policy” includes not only new contractual relationships but also material changes that are made to existing policies. The language of the 2000 and more recent versions of the Underinsured Motorist Statute is clear, according to the justices: insurance policies existing before Jan. 1, 2001 trigger different coverage notification requirements than do policies written on or after that date. According to the law, new policies written on or after Jan. 1, 2001 must provide underinsured motorist coverage with limits equal to the lesser of the limits of the insured’s motor vehicle liability coverage or the maximum underinsured motorist coverage limits available by the insurer under the insured’s motor vehicle policy — unless the insured purchases coverage in a lesser amount by signing an acknowledgement form that waives the higher coverage. Without the waiver, the law mandates the underinsured motorist coverage of these policies must be equal to the lesser of either the policy’s liability limits or the maximum limit the insurer provides under the policy. In contrast, another section of the law provides that written waivers aren’t required for insurers to provide underinsured motorist coverage with lower limits than the policy’s liability limits if the policy is not “new” as of Jan. 1, 2001. Because the consumer notification requirements differ depending on whether a “new” policy was created on or after Jan. 1, 2001, the definition of “new policy” becomes central to determining insurers’ obligations under the statute. The statute contains no definition of “new” policy. Ruling unanimously, the justices concluded that the legislative history and policy considerations underlying the law support a definition of “new” policy that includes not only new contractual relationships but also material changes to existing policies that alter the risk relationship between the insurer and the insured. Statements made during the discussion of the law, they said, reveal the law was designed to affirmatively inform consumers about uninsured/underinsured motorist coverage by allowing them to sign a waiver saying, “I recognize I am taking a lesser amount of underinsured coverage.” The broad view of “new” policy is supported by the changing nature of insurance policies over time and by public policies, the justices said.

2 The Enterprise July 11-17, 2011

THE ENTERPRISE[USPS 891-300]

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COURTfrom page 1

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The EnterpriseJuly 11-17, 2011 3

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4 July 11-17, 2011The Enterprise

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Business lendingis our business.

Ron BagleyBusiness Lending Expert(801) 924-3606

Member FDIC

the Mortgage Bankers Association reported foreclosure notices running at about 1,700 per month statewide. “RealtyTrac’s foreclosure estimates are typically very high and have been challenged in some states,” Wood writes. One of the advantages of the Mortgage Bankers data is the tally of the total inventory of loans in foreclosure. In other words, according to Wood, a total of the actual number of foreclosure properties, not just the number of new notices in a specifi c month. The most recent Mortgage Bankers data show that the inventory of foreclosure fi lings totaled 12,659 in the fi rst quarter of this year. This amounts to 2.91 percent of the 435,000 mortgage loans in the Mortgage Bankers Association’s Utah database. By this measure, Utah ranks 33rd among all the states in the percent of mortgage loans in foreclosure. But perhaps most signifi cant, according to Wood, is the recent decline in the number of foreclosure properties in Utah reported by the Mortgage Bankers Association. Compared with the fourth quarter of 2010, the number of foreclosure properties has declined by 1,500. When compared to the fi rst quarter of 2010 the number is down by 2,250. Some of the decline may be due to foreclosure processing delays, but it’s “important to note that the fi rst quarter decline in Utah was three times greater than at the national level,” according to Wood. It’s also important to note that not all homeowners have mortgage loans. The Census Bureau reports in 2009 that more than 160,000 Utah homeowners — one in four — has no mortgage loan. Including the homeowners without a mortgage in the foreclosure equation changes the conclusions, according to Wood. Rather than a recently reported one in 10 Utah homeowners struggling to make

house payments or already losing their property, that number drops closer to one in 16. Furthermore, a signifi cant share of the struggling households — 25 percent — are those only 30 days past due. Many in this group often recoup with a late payment. This is shown by the signifi cant drop — nearly 60 percent — between the percentage of homeowners 30 days late versus 60 days late. Generally, according to Wood, the severely threatened homeowner is defi ned as “seriously delinquent,” which includes homeowners 90 days or more delinquent plus those in the foreclosure process. The percent of mortgage loans seriously delinquent in Utah is 5.95 percent of all loans, which totals 25,900 homeowners. Utah ranks 27th among the states in the percent of mortgage loans seriously delinquent. “It is fair to say that 3 to 4 percent of Utah homeowners are suffering through a fi nancial nightmare; nevertheless the fi nancial incentives of homeownership — mortgage interest deduction, property tax deduction, capital gains exclusion and some future equity — combined with other non-economic advantages will continue to preserve and prolong the American Dream for most Utah households,” Wood concludes.

FORECLOSUREfrom page 1

LEIGHfrom page 1

biodegradable, compose about 6 percent of the nation’s landfi lls. Blue Ridge Recycling, based in Charlotte, N.C., will collect carpet throughout the West for recycling at the Woods Cross facility, where workers will shear off the carpet’s fi bers and bale them for use in a variety of products, ranging from composite decking to automotive products, Hicks-Chernez said. “Every ton of carpet we can recycle saves 198 gallons of oil and prevents the emission of two metric tons of greenhouse gases,” said George Martin, executive vice president of marketing and sales for Leigh Fibers. “Our goal is to reduce the over six billion pounds of post-consumer carpet waste that goes into landfills each year, while giving customers the high-quality materials they need to mold new products. Not many U.S. companies have the capabil-ity to separate the face fibers from the carpet backing and sort them by type. And fewer still can turn those fibers into pellets, ready for [plastics] molders to use. Leigh Carpet & Plastics Recycling has the equipment and experience to do both.”

Fetzers' to double size of West Jordan plant Fetzers’ Architectural Woodwork, Kearns, will double the size of its facility in West Jordan this year. The company currently operates a 45,000 square foot manufacturing plant at 5360 Dannon Way that will be expanded to 90,000 square feet in order to bring warehousing in-house, said chief operating offi cer Erik Fetzer. Currently, the company warehouses its product off-site in Salt Lake City. “We have the ground and the opportunity to double the size of the [Dannon Way] building,” he said. “We did the math and it’s just cheaper in this market to actually build and own than to pay rent. We’re already paying for storage

facilities of about 60,000 square feet. We’re going to consolidate our warehousing into 45,000 square feet. Construction costs are

favorable and we’ll actually come out ahead by building it.” Dan Baugh Construction will design and build the addition. Fetzers’ traces its roots back to 1909, when German immigrant Kaspar Fetzer launched a cabinet shop in Salt Lake City. One of his early jobs was the addition of the two wings on either side of the Mormon Tabernacle organ in Salt Lake City. During the war years, Fetzers’ made wooden ammunition boxes, airplane propellers and toboggans to aid the war effort. Today, the fi rm employs nearly 200 people.

Fetzers' expansion will bring warehousing in-house.

July 11-17, 2011 5The Enterprise

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Utah 27.2 percent higher than national averagein technology jobs per capita, according to report Utah is 27.2 percent higher than the national average in tech-nology organizations per capita, according to data compiled from the 2008-2009 Workforce Data Report, according to the Utah Technology Council. The state is 20.9 percent above national average for tech employment per capita, according to UTC, as com-pared with other western states and with the U.S. overall. In 2009, Utah’s technology firms produced more than $4.5 billion in wages for the state; information technology accounted for more than $3 billion in Utah wages while life sciences account-ed for $1.5 billion in wages. The growth of technology-related businesses as defined by 61 selected national NAIC codes from 2009-2010 was modest — .9 percent. However, during a peri-od marked by extreme recession, Utah has fared better than most U.S. states, said UTC founder and

chairman Richard Nelson. “Utah’s tech industries employ more than 76,000 Utahns with an average salary that is 62 percent higher than the average non agricultural wage,” Nelson said. “In 2010 we exported more than $1.8 billion in computer and electronic parts and more than $564 million in medical device products. Clearly, our technology companies continue to be the life-blood of our state.” Legislative actions were a huge priority for 2011, Nelson said, with UTC taking direct involvement in more than 15 high priorities to protect and grow the industry, with 14 of 15 achieved. Nelson also noted that Forbes recently ranked Utah the No. 1 state for business and careers, a characterization that he believes is heavily influenced by Utah’s technology companies and skilled technology workforce. Utah is home to nearly 6,000

technology companies. These firms reside most strongly in Salt Lake County, with 53.9 percent, followed by Utah County with 20.3 percent and Davis County with 8 percent. Some of the most surprising changes UTC notes in the 2010 data are that while the total number of technology companies in Salt Lake County has declined slightly (1.8 percent) from 2009, Utah County’s tech presence has continued to grow, with an increase of 5.1 percent, Davis County increased by 3.6 percent and Washington County, much smaller in its total numbers, recorded an increase of 10 percent in 2010. The U.S. Census Bureau ranked Utah No. 1 for computer ownership, while the Center for Digital Government has ranked the state as the No. 1 most technologi-cally advanced state in the nation. TechAmerica Ranked Utah No. 1 in the nation for fastest high-tech growth during 2007-2008.

JC Smedley’s Tex Mex and Barbecue is slated to open this month at 305 N. Main St., Bountiful, in a structure built in 1893. It will replace the Sego Lily Cafe, which, according to JC’s co-owner Christine Healy, closed after it lost its chef. JC’s will have seating for 75 inside and 75 outside and will serve lunch and dinner, she said, eventually expanding to serve Sunday brunch. A daily lunch special costing $5.99 will be on the menu. JC’s will be open Monday through Saturday and will open with a beer license. A full liquor license is being sought from the state; there will be a beer garden on the property’s north side. The name JC’s was

chosen not only because of James Smedley, who constructed the building, but also because the eatery’s chef is named James Davison and Healy’s fi rst name is Christine. She and her husband Jack have owned the building, in partnership with Richard and Alice Smith, for a number of years. Alice Smith, the granddaughter of James Smedley, was raised in the historic structure.

6 The Enterprise July 11-17, 2011

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Member FDIC

• Industry Briefs • ACCOUNTING

• The Utah Association of Certified Public Accountants (UACPA), a nonprofit organiza-tion for certified public accoun-tants in Utah, is gearing up for its annual golf tournament at Fox Hollow Golf Club in American Fork on Aug. 25. The tournament raises funds to support financial literacy programs offered by the Utah CPA Foundation. To register,

visit www.uacpa.org and search the course catalogue for “golf.” The cost is $350 for a team of four or $90 for an individ-ual. Continental breakfast, green fees, cart and lunch are included. ECONOMICINDICATORS/DEVELOPMENT • EDCUtah, an investor-based public/private partnership

working to promote the state of Utah, has made additions to its staff. Todd Brightwell has been promoted to senior vice presi-dent of business development. Brightwell will lead the business development team and manage the recruiting process with clients. EDCUtah has also hired Beth Colosimo for the position of busi-ness development manager and Timothy Loftis as Salt Lake City

economic development manager. Colosimo will manage multiple projects that will include planning site visits, facilitating research and needs assessment for corporate real estate representa-tives and national site selectors pursuing interest in Utah. Loftis’ primary responsibility will be to sell downtown Salt Lake City. EDUCATION/TRAINING

•

Utah State University Research Foundation’s Energy Dynamics Laboratory, a company that devel-ops and deploys transformational energy systems, headquartered in Logan, operated the first high-power, high-efficiency wireless power transfer system capable of transferring enough energy to quickly charge an electric vehicle. The system demonstrated 90 per-cent electrical transfer efficiency of five kilowatts over an air gap of 10 inches, proving that elec-tric vehicles can be efficiently charged with wireless technol-ogy. The wireless power transfer technology will be discussed with industry leaders from around the world and demonstrated during the Conference on Electric Roads and Vehicles, Feb. 27-28, 2012 in Park City.

FINANCE • VentureCapital.org and the Wayne Brown Institute, sponsors of the 2012 Investors Choice Conference, are accepting early bird submissions from start-up companies that are preparing to raise money to grow their busi-nesses. The event will be held at Zermatt Resort and Spa in Midway on Feb. 9, 2012. Companies select-ed will be screened and mentored through a number of sessions with teams of professionals throughout the angel and venture capital field. After practice presentations, the companies will then make their pitch at the conference in hopes of raising capital with investors. Deadline for early bird submis-sions is Sept. 30. For submission information, visit venturecapital.org. INSURANCE/BENEFITS • Spectra Management, a provider of health insurance, savings and retirement plans, Salt Lake City, has hired Deb

continued on page 9

July 11-17, 2011 The Enterprise 7

Legal Matters

Legal Matters

Legal Matters

Legal Matters

Legal Matters

Legal Matters

Design Matters

Executive Lifestyle

Legal Matters

Staffing Matters

HR Matters

Real Estate Matters

Executive Lifestyle

Legal Matters A company attempting to raise funds by issuing securities needs to comply with federal and state securities laws. Securities laws regulate the manner in which all securities, including stock and debt instruments, can be sold. Securities laws may also dictate the amount of secu-rities that can be offered and the persons to whom securities can be offered in a particular offering. Securities laws are exceedingly complex and technical. To add to the complex-ity, federal and state securities laws are not completely consis-tent with each other, and compli-ance with federal securities laws does not assure compliance with applicable state securities laws. In addition, a particular transaction may require a business to comply with the securities laws of several states, all of which may be differ-ent from each other. Compliance with applicable federal and state securities laws is important even

with respect to sales of securi-ties to friends or family members, which are not uncommon at the start-up or development stages of

a business. A failure to comply with these secu-rities laws can result in significant penalties for both a company and its directors and officers. Some of these penal-ties include imprison-ment, monetary fines, refund of amounts paid by investors and pro-hibition on conducting

future sales. This article has been prepared to provide entrepreneurs and other business owners with a general understanding of securities laws. Businesses interested in raising capital should seek competent professional advice, both legal and financial, prior to commenc-ing any capital raising activities.

What is a Security? Companies are often sur-prised to learn that they have sold a security without complying with

securities laws. This surprise is attributed to a lack of understand-ing of the term “security.” Most people think a security is a share of stock. However, the definition of security for purposes of federal securities laws is quite broad, and includes, in addition to stock, any note, bond, evidence of indebted-ness, option or investment con-tract. This broad definition of security means that virtually any type of instrument in which the investor has a reasonable expecta-tion of profit solely as a result of the investment of money will be subject to the rigor of the federal securities laws, regardless of the structure of the investment. For example, a company that sold investors strips of land in an orange grove and then entered into contracts with the investors to cultivate the land and harvest the oranges on behalf of the investors was found to have engaged in the sale of a security. Another con-sequence of the broad definition of a security is that a company that borrows money and issues a

promissory note as evidence of indebtedness has engaged in the sale of a security for purposes of federal securities laws. This exam-ple illustrates how a company can unwittingly run afoul of securities laws which, as alluded to ear-lier, can have significant adverse effects on the company and its officers. Other common types of securities that newly formed com-panies often sell to raise capital include common stock, preferred stock, promissory notes, convert-ible notes, options, warrants, units and limited liability company interests.

Registration or Exemption In order to comply with fed-eral securities laws, a person sell-ing any security, must either “reg-ister” such sale with the SEC or identify a specific exemption that allows such sale to be conducted without registration. Because the cost of registration is prohibi-tively expensive for most com-panies, most companies seek an exemption from registration. The most common exemptions used

for early-stage capital raising are the “private placement” exemp-tions. Private placement exemp-tions are often utilized when a relatively small amount of money is being raised from a limited number of investors. The private placement exemptions consist of Regulation D and Section 4(2) of the Securities Act.

Regulation D The substance of Regulation D is contained in three separate rules of the Securities Act, Rules 504, 505 and 506. Each of these rules allows a company to raise different amounts of money, and each contains different require-ments that must be complied with when conducting an offering under such rule. A key definition embodied in Regulation D is the term “accredit-ed investor.” An accredited inves-tor is generally an individual who meets certain minimum require-ments with regard to their net worth. The concept of an “accred-

Raising capital: overview of securities laws

Nate Brower

see SECURITIES next page

KEEPING YOUR BUSINESS LEGAL

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The Enterprise July 11-17, 20118

ited investor” is important for two reasons. First, both Rule 505 and Rule 506 allow sales to be made to an unlimited number of accredited investors. This is particularly note-worthy for offerings made under Rule 506, which has no limitation on the offering amount, because by targeting a large number of accred-ited investors, a substantial amount of money can be raised. Secondly, if securities are sold to a non-accredited investor under either Rule 505 or Rule 506, the investor must be furnished with specific information about the busi-ness. The amount of information that must be furnished is depen-dent upon the size of the offer-ing. However, regardless of the size of the offering, some audited financial information will need to be provided to the non-accredit-ed investor. The cost of preparing audited financial statements can be prohibitively expensive for busi-nesses. Therefore, most businesses conducting an offering under Rule 505 or Rule 506 will sell only to accredited investors. It is important to note that Regulation D does not provide an exemption from anti-fraud, civil liability and other provisions of the federal securities laws. Accordingly, regardless of the requirements of any particular exemption, business-es should always consider the appro-

priateness of full and complete dis-closure of all material information regardless of the requirements of Regulation D. If there is some mate-rially adverse information about a business that has not been made public, such information should be disclosed to investors prior to a sale of securities. If such information is withheld, a purchaser may be able to rescind the transaction at a later date.

Section 4(2) Under Section 4(2) of the Securities Act, a transaction by an issuer “not involving a public offer-ing” is exempt from registration. Unfortunately, Section 4(2) does not provide any guidelines as to what does and does not constitute a “public offering.” While a com-pany can assure itself of compli-ance with federal securities laws by following the specific rules set forth in Regulation D, a company that avails itself of an exemption under Section 4(2) cannot look to a set of requirements that must be followed to assure compliance with federal securities laws. A company seeking to deter-mine whether an offering will be exempt from registration under Section 4(2) will need to evaluate a number of factors which, although routinely addressed by courts, sel-dom lead to a definitive answer as to whether an offering is a “pub-lic offering” under Section 4(2). Different courts emphasize different factors critical to the Section 4(2) exemption, no single one of which

will necessarily control. These fac-tors are simply used as guidelines. The five factors given the most weight in this determination are the sophistication of the offerees; whether the company engaged in advertising or other promotional activities; availability and accuracy of information, including financial information, given to offerees and purchasers; number of offerees and number of purchasers; and absence of intent to redistribute the securi-ties. Generally, the fewer offerees and the more current the informa-tion available, the more likely it is that an offering will not be con-sidered a “public offering.” Due to the uncertainty about whether any particular offering will constitute a public offering, most companies prefer to rely upon Regulation D instead of Section 4(2) when con-ducting a securities offering.

Nathan G. Brower is an attorney at Strong & Hanni Law Firm. His prac-tice focuses primarily on corporate and securities law for businesses of all sizes. He has significant experi-ence representing clients with pri-vate equity transactions, mergers and acquisitions, SEC reporting, private placements, public offerings and other business transactions. He can be reached at [email protected] or (801) 532-7080.

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Rosenhan as the firm’s chief operating officer. Prior to join-ing Spectra, Rosenhan worked at Altius Health Plans in Salt Lake City as vice president of sales and marketing. Her previous work includes sales management posi-tions as well as account services and regional manager positions with Intermountain Healthcare. • Kristen Cox, executive director for Utah’s Department of Workforce Services, received the “UI Integrity Award” from the National Foundation for Unemployment Compensation and Workers’ Compensation. The Integrity award is given to an individual who has demon-strated commitment to preserv-ing the unemployment system. Utah is recognized as a leading state in the nation for administer-ing the Unemployment Insurance Program. The National Foundation for Unemployment Compensation and Workers’ Compensation helps individuals from industry, govern-ment, associations and other pro-fessions gain an understanding of

the nation’s unemployment insur-ance and workers compensation laws. LAW • Scott Sabey, attorney with Fabian Law, a law firm based in Salt Lake City, has been elected chairman of the Sandy City Planning Commission. Sabey practices real estate and business law and related litiga-tion. He is also a lobbyist for the MPAA, Aflac and other national organizations. • Matthew Anderson, an attorney with Fabian Law, Salt Lake City, has been appointed to serve on the Kaysville City Planning Commission. Anderson represents clients in commercial litigation matters, including real property, secured lending, bank-ruptcy and complex collection actions. He also assists clients in transactional matters includ-ing real property conveyances, secured lending agreements and debt restructuring. MEDIA/MARKETING • C&S Creative, Park

City, an advertising and strategic communications firm, has hired Micheala Kerr as account man-ager and Web designer. Kerr grad-uated from the University of Utah in 2009 with a bachelor’s degree in public relations. Additionally, she completed an extended pro-gram in Web design and develop-ment.

NATURAL RESOURCES • David Houghton, Price, has been named director of the Utah Office of Coal Mining Safety (OCMS). The OCMS exists to maximize coal mine safety, prevent coal mine accidents and provide for effective coal mine accident response in the state. Houghton has been employed in the coal mining industry in Utah for 36 years and has worked in many of the coal mines in the Carbon and Emery county areas. • Kennecott Utah Copper’s Bingham Canyon Mine is offering free admission to its visitor center through July 17. The visitors center is opened daily from 8 a.m to 8 p.m. Tour buses and mini-tour buses remain

at their fee rate throughout the season and require an entry form. Outside of the free days, the regu-lar rate for passenger vehicles is $5 per car. PHILANTHROPY • DesignBuildBLUFF, a group of graduate students that choose a Navajo family in need of a home each semester, has created a program called Design Build Buy to raise funds for houses by partnering with businesses in Park City. Every week dur-ing summer months in Park City and Salt Lake City, a new part-ner will donate proceeds of sales to DesignBuildBLUFF. Partners of the program include Mary Jane’s, High West Distillery, Park City Coffee Roasters the Paisley Pomegranite and the Exchange. Interested partners can contact DesignBuildBluff at [email protected], or (435) 649-0780.

REAL ESTATE • International Paper, a paper and packaging manufacturer in Salt Lake City, selected IPG Commercial Real Estate, a Salt

Lake City-based industrial real estate firm, to market their facili-ties as a result of the consolida-tion of their its brands — Xpedx, Western Paper and Zellerbach — into one 277,000 square foot facility in the Landmark Industrial Park. Of the four facilities, two will be subleased and two will be sold. International Paper plans to move into its new facility later this year. The four former facilities, totaling more than 300,000 square feet,

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will become available at that time and are currently being marketed by Michael Jeppesen and Jeremy Jensen of IPG Commercial. • KBS Capital Advisors has signed four long-term new and renewal leases totaling more than 78,000 square feet at South Towne Corporate Center in Sandy. Constituting more than 30 percent of the 248,352 square foot build-ing, the leases bring total occu-pancy of South Towne Corporate Center to more than 93 percent. The Class A, two-building office property was acquired in 2007 as part of the KBS REIT I port-folio. The four leases are with Ampian Staffing , a staffing orga-nization headquartered in Salt Lake City that inked a new lease for 3,810 square feet in Building I; SecureAlert , an international provider of electronic monitoring systems, case management and services, that finalized an expan-sion agreement of 3,356 square feet in Building I, bringing its total building presence to 11,462 square feet; Moreton & Co. of Salt Lake City, the largest privately owned insurance brokerage firm in the Intermountain West, which signed a lease extension and expansion from 3,356 square feet to 5,658 square feet in Building II; and E*TRADE Financial Corp. , a financial services company based in New York, which renewed a lease totaling 65,388 square feet in Building II. Scott Wilmarth of CBRE in Salt Lake City rep-resented E*TRADE Financial Corporation and Moreton & Co. Cody Black of Coldwell Banker in Salt Lake City represented Ampian Staffing in the lease agreement. Nadia Letey of CBRE’s Salt Lake

City office represented KBS in all four transactions. • Home sales in Salt Lake County in May were down, but pending sales for the month were up 58 percent, according to the Salt Lake Board of Realtors. In May, there were 1,026 closed home sales, a 20 percent drop compared to 1,278 closed sales in May 2010. However, pending sales (signed purchase contracts on a home) rose to 1,135 contracts in May, up 58 percent compared to 720 pending sales in May 2010. The median home sales price (all housing types) in May declined to $186,200, a 6.9 percent decrease compared to a median price of $200,000 in May 2010. Based on sales trends over the past year, there is an 8.8-month supply of housing inventory in Salt Lake County, up slightly from an 8.3-month supply of inventory in May 2010.

RESTAURANTS • Fifty of Utah’s chefs and restaurants will participate in Share Our Strength’s Taste of the Nation Utah, the state’s most popular culinary benefit, at Solitude Mountain Resort on Aug. 7 from noon to 4 p.m. Taste of the Nation utah will raise funds to support Share Our Strength’s efforts to end childhood hunger in Utah and across the nation. Guests can enjoy live music, a silent auc-tion and dining experiences. One hundred percent of ticket sales go toward the Share Our Strength’s program. Tickets are $75 for general admission and $125 for reserved seating, if purchased in advance. Purchase tickets online at www.TasteOfTheNation.org/utah.

SPORTS • Utah’s “Life Elevated” brand will be featured during the Larry H. Miller Tour of Utah, scheduled for Aug. 9-14. The Governor’s Office of Economic Development, The Utah Office of Tourism and the Utah Sports Commission partnered to sponsor the cycling event, which will be nationally broadcast and available to a worldwide audience. Television spots and vignettes highlighting economic development will air on FOX Sports Network, ROOT Sports and KJZZ-TV. Host cities and venues for the 2011 Tour of Utah include Salt Lake City, Utah Olympic Park at Park City, Ogden City, XANGO headquarters near Provo, Vivint headquarters at The Shops at Riverwoods in Provo City, Snowbird Ski and Summer Resort and Miller Motorsports Park in Tooele. TRAVEL/TOURISM • Christopherson Business Travel, Salt Lake City, is the largest travel management company in the western U.S. in air ticket sales, according to Business Travel News’ annual business travel survey. Surveying travel agencies since 1984, BTN ranks participating companies based on annual air ticket transaction and sales data. Christopherson increased 2010 air sales over 2009 by 23 percent to $121,367,106. Ranking second in the West in 2010 air transactions (number of tickets sold, excluding refunds, exchanges and voids), the firm saw a nine percent increase over 2009 to 212,841. Embarking on third quarter, the company’s overall bookings for 2011 are up 14 percent, signs of positive market-share gains.

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By the time you read this, the holiday will be over. This par-ticular holiday was the Fourth of July. But it doesn’t matter which one it was, all holidays carry with them the same sales stigmas: • No one is in the office. • Everyone is on vacation. • Everyone left early. • People aren’t will-ing to meet with me until after the holiday. • I can’t get anyone on the phone. • It’s a slow time of the year, I’d rather wait until ____. (You can fill in the blank.) • It’s taking longer to get a decision made because of the holiday. • Customers aren’t in the mood to buy. • Blah, blah, blah. Puke. All of these excuses create a frame of mind for salespeople somewhere between, “I’m not going to make any sales,” and “I’ll just wait until the holiday is over.” Both of these thoughts are recipes for sales disaster. NOTE WELL: Many deci-sion-makers stay in their office until the day before the holiday. When there is no activity, execu-tives can get personal work done. Many business owners (like me) stay in the office through the holiday because all of their employees want to take a well-deserved extra day off. And some-one has to be there to guard the business. Oftentimes, companies are in the middle of important deals or circumstances that preclude them from taking extra time off around a holiday. REALITY: • Every day is a sales day if you believe it to be a sales day — and vice versa. • Everyone will return your call if you believe they will return your call. • Everyone will return a favorable decision if you believe they will return a favorable deci-sion. When you’re lamenting your fate, what you are really saying is, “Based on the actions I’ve taken, and the results I’m getting, I really don’t believe strong enough in my company, my product or myself.” If you would spend as much time strengthening your belief, taking better actions, and improv-ing your value offerings as you did complaining that someone won’t return your call, or isn’t in their office, you could make a fortune. But most salespeople would

rather gripe. Rather than griping that no one is available, why don’t you take a few days off yourself and renew your attitude? Why don’t you take a few days off and revive your attitude, so when you come back to work you’re in high gear and high frame of mind? And please don’t think this

message is specifical-ly about the Fourth of July. It’s the same for Christmas, New Years, Thanksgiving, Labor Day, Super Bowl, President’s Day and any other day deemed by the government or you as a “holiday.” You, as a salesperson, already know the holi-days are coming. Your

job is to prepare your pipeline in advance of the holiday so one day after the holiday you are full of meetings and full of activity that is directly related to your sales and your success. This way, when you do go away, you’ll feel great about leaving and great about coming home! It never ceases to amaze me how many salespeople grumble about “what isn’t” — The guy isn’t in. The guy isn’t calling me back. Yadda, yadda — rather than embrace and take advantage of “what is.” The fact is holidays are NOT a surprise. They’re are on the cal-endar years in advance. Everyone knows when the Fourth of July occurs — it’s on July 4! If your mindset is still “no one’s in their office. Everyone’s on vacation,” take off the third, take off the fifth, go somewhere to relax and come back to a full calendar. Oh, and while you are on vacation, read a book.

Jeffrey Gitomer is the author of Social BOOM!, The Little Red Book of Selling and The Little Gold Book of YES! Attitude. President of Charlotte, N.C.-based Buy Gitomer, he gives seminars, runs annual sales meetings and con-ducts Internet training programs on selling and customer service at www.trainone.com. He can be reached at (704_ 333-1112 or [email protected].

© 2011 All Rights Reserved

There are fireworks everywhere, except in the sales profession

Jeffrey Gitomer

If you haven’t figured it out by now, there is a lot more to creating good ads — or marketing projects of any kind for that matter — than merely throwing something together and spending your hard-earned resources on media. In my role as a marketing speaker, I have point-ed out many times how message trumps media time and time again. But people don’t like to spend their resources on message. They think they need to spend them on media. My point is, an investment in what you say can be a tremendous multiplier of your media budget, easily one worth investing either time or money in, or both. If you create your own ads, these six crite-ria will keep your writing on target. If you hire somebody to create the ads for you, judge their work by these six to make sure you’re getting the best for your investment. 1. Is there a good headline? Nothing is more important. Headlines MUST accomplish 50 percent of the work of all ads. That’s not an arbitrary number. It is exact. The head-line MUST capture attention AND CONVERT attention into interest. That is precisely half the work of any ad. (The other 50 percent is cultivating desire and inspiring action.) The headline MAY do more than that first 50 percent, but not less. And don’t forget, since the headline is responsible for the FIRST TWO functions of the ad, which hap-pens before the “meat” of the message is delivered, and because if it fails, the meat never gets tasted, we say that the headline accounts for up to 80 percent of the success of your ad. It stands to reason, a lot of time should be spent coming up with the right headline. 2. Is the UPA — the UNIQUE PURCHASE APPEAL in there? The UPA is one sentence to one paragraph that describes how your business is dif-ferent from the competition in a way that appeals to your target customer. It must include a POINT OF ONLY-NESS. There may be a lot of ways to say it, but like the sauce, it’s gotta be “in there.” If you fail to differentiate yourself from the competition, one of the consequences it that your ads may actually help your competition almost as much as it does you. And you certainly won’t be able to justify higher prices. 3. Are the BENEFITS clearly articulated? Typically, they’re not. It is dismaying that so many businesses are so focused on the features of their product, service or company that they forget the WIIFM (What’s In It For Me) that the prospect is exclusively interested in. Remember, there are two kinds of benefits. Primary benefits are emotional in nature, appealing to our needs to feel important, to love and be loved, for variety and convenience. They are not imme-diately recognizable — unless you point them out — to your prospects, because they’re feelings-based. Secondary benefits are cognitive in nature. Less compelling normally, but easily recognized because they are immediately recognizable results. Like save money, save time, better fuel economy, greater con-trol, etc. 4. Are the features featured? Just because benefits are the most important doesn’t mean there is no place for features. Your features provide the believability for your benefit promises. You’ll save money BECAUSE our car gets 35 mpg, or you’ll enjoy maximum health benefits because our brown glass bottles keep your supplements fresh longer. There are three kinds of features: Physical features are the physical characteristics of the product or service. A 6.2 liter engine, graphite frame, etc. Credibility features are often overlooked and very important. Thirty-five years experience, 97 percent customer satisfaction, etc. Deliver features are HOW you deliver your products or services. Twenty-four hour service, three easy payment plans,

etc. 5. Is the message in BENEFIT language? It’s one thing to have benefits, but if you put them in feature language, you reduce their impact. On the other hand, you can put features in benefit language and improve their effectiveness. For example, a typical claim would be, “Our high-efficiency furnace saves you money.” Well, saving money is a benefit, but this statement is in FEATURE language. It talks “us” instead of “you.” Better said would be, “You’ll save money with our high-efficiency furnace.” That’s benefit language. By the same token, “Choose from three easy pay-ment plans,” is a feature. But we’ve made it sound and feel like a benefit by starting the sentence with a

verb (choose), which makes it sound like a result, which is a benefit. 6. Does it have a compelling OFFER? Maybe I should have put this in the No. 2 position. Because offers come close behind headlines in importance for making your ads effective. In fact, with the right headline and the right offer, you don’t have to have very good copy. Not that you shouldn’t, but headlines and offers are so important to the success of your ads that if you get them right, you

may only need to make sure your body copy doesn’t get in the way. Your offers are made of CONDITIONS and APPEALS. The conditions are the price of the prod-uct and the terms or limitations. In other words, the things about the offer the prospect would just as soon do without. But structured properly, they can provide real incentive for the prospect to act now rather than delay. For example, offer ends Saturday or only 27 units available are conditions that would discourage delay. Appeals are the pot-sweeteners that prospects like. Bonuses, premiums, free samples and guaran-tees. Look at the ads that come to your mailbox, that you see on TV, hear on the radio, read in papers or magazines or see online. Practice analyzing them with these six criteria and your skills at creating and evaluating your own ads will increase, your results will improve and you’ll be rich by Tuesday.

Jim Ackerman is a Salt Lake City-based marketing speaker, marketing coach, author and ad writer. For his speaking services, go to www.marketingspeak-erjimackerman.com or contact him directly at [email protected]. Subscribe to his VLOGS at www.YouTube.com/MarketingSpeakerJimA, where you get a video marketing tip of the day, and at www.YouTube.com/GoodBadnUglyAds, where Ackerman does a weekly ad critique and lets you do the same.

©2011, Jim Ackerman All Rights Reserved

Six secrets for making your ads more effective

Jim Ackerman


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Austerity — the concept of a nation living within its means will spread across Southern Europe as European authorities, the IMF and global financial markets demand change. The Greek people hate it. Banks (European) — one of the major incentives for German and French leadership to throw hundreds of billions of euros at Greece, Ireland and Portugal? G&F banks own mas-sive amounts of bonds issued by the smaller nations. China — government efforts to keep inflation and excessive lending under wraps, while also avoiding a real estate bubble, should see this jug-gernaut’s growth pace slow somewhat. Dollar — with no short-age of critics, the American currency will remain the global community’s “primary currency” for years to come. Europe — here’s thinkin’ the Germans and the French wish they had never heard of the “European integration” concept. Financial System — the U.S. and global financial systems emerged from the Great Recession bruised and battered, but still largely viable. The eventuality of a Greek default in one form or another could challenge it again. Global Economy — slow-ing down a bit as the U.S., China, and India downshift. Europe will be sluggish (with the exception of a solid German economy.) Hunger — a child starves to death every six seconds somewhere in the world. Can’t we work together to stop this travesty? Inflation — higher oil and food prices have hurt hundreds of millions of people around the globe. Japan — very sluggish eco-nomic growth (at best) over the past 20 years, after powerful performance in the ’60s, ’70s and ’80s. Tens of millions of Japanese citizens won-der, “what happened?” Korea (North) — massive fail-ure of this centrally planned econ-omy leads to frequent “saber rat-tling.” Meanwhile, the South Korean economy continues to prosper. Latin and South America — growth prospects from mild to strong, with Brazil leading the way. Excessive government bureau-cracy and corruption in the region will limit gains. Mexico — even as drug cartel violence dominates the headlines, economic growth has been the best in 10 years. Greater employment opportunities at home are most wel-come. Neighbor to the North — Canadian economic growth has slowed in recent months. Still, by most measures, this nation is outper-forming its southern neighbor. Oil — major advances in explo-

ration and production technology should help keep prices under con-trol over the longer-term horizon. At the same time, what happens in Northern Africa and the Middle East still counts big-time. Politics — a number of major nations have moved to the “right” in recent elections, with an eye toward reversing some of the massive gov-ernment expansion of prior years. The U.S. in ’12? Quagmires — as before, there never seems to be a short-

age. Today’s list includes Afghanistan, Chechnya, Iran, Iraq, Libya, the Sudan and the Middle East. Russia — corrup-tion, crime and questions about whether Medvedev or Putin will be “minding the store” in coming years make life a challenge. Saudi Arabia — whether the tens of billions

of dollars the Saudi king is throwing at unemployed young people will keep social unrest under wraps will be a key factor in oil prices in com-ing years. Travel — spending on glob-al tourism remains solid, even as visitors largely avoid political “hot spots.” Those visiting the U.S. are BIG spenders. U.S.A. — nearly three times the size of China’s $5.5 trillion annual economy, with one-fourth as many people. In my book that says American workers are roughly 10 to 12 times more productive. Volatility — pick any descrip-tor — economic, financial market, political. Wallets — lighter these days for millions of people around the world after the Great Recession led to the loss of more than 50 mil-lion jobs globally. Hits to retirement funds and housing values globally hasn’t helped either. eXports — a bright spot of overall sluggish U.S. economic growth of the past 12 months, with nearly a 20 percent annual rise. Like it or not, a modestly weaker dollar has helped. Young People (around the world) — facing a rising tax bur-den in coming decades to finance the retirement years of baby boom-ers (and boomers’ parents) if minor changes are not soon made. Zones (trading) — as before, Asian, European and North American trade zones will dominate trade flows.

Jeff Thredgold is the only economist in the world to have ever earned the CSP (Certified Speaking Professional) international designation, the highest earned designation in professional speaking. He is the author of econA-merica, released by major publisher Wiley & Sons, and serves as eco-nomic consultant to Zions Bank.

Global ABCs

Jeff Thredgold

Recent developments in technology have rapidly changed the way companies are commu-nicating to their employees, customers and busi-ness partners. How can you tell? Try dialing an outside line beginning with the area code or the number first. Those calls that go through are uti-lizing today’s voice and data transport of choice, Session Initiation Protocol (SIP). If you have to dial a 1 or a 9 before you make a phone call, you might as well be using smoke signals to communicate. Now ready for prime time, SIP has opened the floodgates for small to mid-sized businesses to ben-efit from greater business applications, reduced costs and enhanced efficiency. SIP is an Internet-based protocol that is enabling an unseen level of flexibility to end-users. Similar to the way Apple’s iPhone redefined what we expect from our cell phone’s functionality, SIP is on the leading edge of unified communica-tions. The convergence of voice and data onto the same network has forced the demand in the mar-ketplace for a single solution. SIP is the “missing link” required to connect these two networks and the cost justifications are supporting this transi-tion. What makes SIP so special? In simple terms, SIP supports any form of real-time communication regardless of whether the content is voice, video, instant messaging or a collaboration application. Additionally, SIP enables users to inform others of their status, their availability and how they can be contacted before communication is even initiated. Due to the nature of IP communications, these benefits often cost justify and provide business owners the return on investment they need to run their

businesses efficiently and effectively. SIP is no longer in its infancy. According to Frost & Sullivan, SIP trunks will increase from 950,000 in 2006 to about 14.52 million in 2012. The early majority is beginning to see SIP’s value, and adoption is increasing at an accelerat-ing rate. The core reason SIP is here to stay is because it’s simple. Rather than having to track, analyze and spend money managing several dif-ferent streams of communication, SIP gives busi-nesses a single transport to focus on. A few years

ago the market didn’t have the capability to properly support SIP, but technology has evolved. For most companies, the transition to SIP will come with all new technology, including a phone system containing all of the latest applications that drive profitability, employee productivity and competitive advantages. By eliminat-ing traditional phone lines and turning

to SIP, the ROI for new equipment comes in a matter of months rather than years. With a recent AT&T statement advising the federal govern-ment to move away from “plain-old telephone service”, known in the industry as POTS and the Public Switched Telephone Network (PSTN), SIP is eventually inevitable for all businesses. So the question becomes why not benefit from SIP now and gain a leg up on the competition, instead of waiting for the train to pass you by later? The SIP train is here ... all aboard.

Jay Brown is president of Murray-based TriTel Networks Inc., a telephone and data communica-tions company established in 1984 He can be reached at (801) 2656-9292.

If you're dialing a 1 or a 9 before you make a phone call, something's wrong

Jay Brown

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As a management team, we knew that our people saw things in their daily tasks that could provide cost- and time-saving measures. Tapping into our valuable employee resources, we believe could provide an anticipated bottom-line savings of $200,000 a year. We are glad to have gone through this training and hope that some of the clients we work with regularly will embrace the same ideology and want to pursue this philosophy as well.” — Craig Madsen, Partner/Founder, J&M Steel

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• Calendar • • July 14, 11:45-2 p.m.: Utah Valley Entrepreneurial Forum “Top 25 Under Five” awards. In a tradition that goes back 12 years, UVEF grants the award to the best emerging companies (five years or younger) based on revenue growth and job creation. This year’s Top 25 created a combined 800 jobs and brought in nearly $190 million in revenue in 2010. Emcee will be Omniture co-founder John Pestana. Free to UVEF members, nonmem-bers pay $25. Register at http://uvef.net. • July 19, noon-1:30 p.m.: “Selling and Licensing Technology in Emerging Markets,” a Utah Technology Council internation-al clinic. David Rudd, chair of the International Practice Group at Ballard Spahr, and Barbara Bagnasacco, vice chair of the International Practice Group, will discuss legal considerations in sell-ing and transferring technology in foreign markets and strategic tips on how to minimize risks. Location is the offices of Ballard Spahr, 201 S. Main St., Suite 800, Salt Lake City. Free to UTC members, nonmembers pay $30. Register at www.utahtech.org. • July 29, 1-3 p.m.: “Tips and Tactics for Using Even A Little PR for Maximum Business Results,” sponsored by the Utah Technology Council. The team from Snapp Conner PR will lead

this PR clinic with information on how companies of all sizes — even without a PR agency or the ability for a formal program engagement — can be savvy about creating PR opportunities that can put their organizations on the map. Location is Argosy University, 121 West Election Road, Room 328/329, Draper. Free to UTC members, nonmembers pay $30. Register at www.utahtech.org. • Aug. 11-Sept. 8, Thursdays from 8 a.m.-4 p.m.: Supervisory Skills Program-Five-Day Certificate Program, sponsored by The Employers Council. The program is designed to provide par-ticipants with thorough knowledge of contemporary skills to be effec-tive in the workplace. Instructor will be Dr. Brent Soffe. Location is the Salt Lake Community College Downtown Campus, 231 E. 400 S., Salt Lake City. Cost is $640 for council members, $799 for non-members. Enrollment is limited to 30. Download the registration form at http://ecutah.org/ssp.pdf. • Aug. 18: Seventh Annual Utah Manufacturers Association Best Practices Expo. Location is Weber State University, Ogden. Cost is $30 for UMA members, $40 for nonmembers, includ-ing breakfast and lunch. RSVP to Teresa Thomas by Aug. 14 at (801) 363-3885 or [email protected].

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U T A H



Anyone paying attention to the costs of U.S. military action in Iraq and Afghanistan must have known that the president badly underestimated those num-bers on June 22, when he told the nation that we have spent “a trillion dollars” waging war over the past decade. For well over two years, we have known that the total monetary cost of those wars will eventually amount to well over $2 trillion, and might well rise higher, according to Nobel economist Joseph Stiglitz and his associate Linda Bilmes. What we didn’t know until this week is that the expense in constant dollars — leaving aside the horrific price paid by the dead, wounded, displaced and ruined in every country — will likely reach well over $4.4 trillion. That is the conclusion of a study released by the Eisenhower

Research Project, a group of schol-ars, diplomats and other experts based at Brown University’s Watson Institute for International Studies. The Eisenhower study doesn’t scant the human damage,

which its authors say has been underestimated as badly as the fiscal costs. According to them, “an extremely conserva-tive estimate of the toll in direct war dead and wounded is about 225,000 dead and about 365,000 physically wounded in these wars so far” —

including those in Pakistan, which is embroiled in war just as lethally as Afghanistan. The American military dead in all three countries now total more than 6,000, a figure that does not include another 2,300 in U.S. military contractors; the American wounded, military and civilian, are well over 100,000, which doesn’t include the psychological destruc-

tion wreaked on those who served and their families. The most obvi-ous indicator is the exceptionally high suicide rate among the mil-lion or more returned veterans. The Eisenhower study’s authors concede that they cannot readily estimate the full value of the economic and social damage we have sustained as a nation — in lost years of work and wrecked families, as well as huge interest costs on the money borrowed to finance these interventions. Nor can they fully account for the growth and investment forfeited because such a great proportion of the nation’s resources was squan-dered on war rather than pressing needs in infrastructure, energy, education and health. For less than 5 percent of what we have spent on war -- to consider one example among many — we could have complet-ed an American high-speed rail system and repaired most of our crumbling infrastructure, too.

Even if the current war could somehow be concluded instant-ly, however, the moral and fiscal obligations incurred so far will continue for decades. Beyond the mandatory disability payments, medical and psychiatric care, and additional benefits to which our veterans are entitled, we will face the prospect of increasing mili-tary budgets to restore the equip-ment and readiness of the battered Army and National Guard. And those costs in turn will subtract from the scant dollars left for domestic programs — as President Eisenhower himself observed when he said, “Every gun that is made, every warship launched, every rocket fired, sig-nifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.” It is sobering to revisit the question of what war has cost us in this generation at a moment when the debate over the nation’s

finances is so furious and yet so often frivolous. But it is ever more important to remember how we arrived at this dead end, especially as we listen to the braying Republican leaders who refuse to consider any tax increase. Our fiscal woe is the legacy of their policy, waging war at enormous expense, while sharply reducing taxes on the rich. What we live with now is what “conservatism” has wrought.

Joe Conason’s articles have been published in Harper’s, The Nation, The New Republic, The Guardian (London) and The New Yorker, among many other periodicals in the United States and abroad. He also appears frequently as a com-mentator on television and radio programs. A winner of the New York Press Club’s Byline Award, he has covered every American presidential election since 1980.

Copyright 2011 Creators Syndicate

Four trillion for war — and rising

Joe Conason


It is hard to understand poli-tics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not. Not only among pol-iticians, but also among much of the media, and even among some of the public, the quest is not for truth about reality but for talking points that fit a vision or advance an agen-da. Some seem to see it as a personal contest about who is best at fencing with words. The current controversy over whether to deal with our massive national debt by cutting spend-ing, or whether instead to raise tax rates on “the rich,” is a classic example of talking points versus reality. Most of those who favor sim-ply raising tax rates on “the rich” — or who say that we cannot afford to allow the Bush “tax cuts

for the rich” to continue — show not the slightest interest in the his-tory of what has actually happened when tax rates were raised to high levels on “the rich,” as compared to what has actually happened when there have been “tax cuts for

the rich.” As far as such peo-ple are concerned, those questions have already been settled by their talking points. Why confuse the issue by digging into empirical evidence about what has actually happened when

one policy or the other was followed?

The political battles about whether to have high tax rates on people in high income brackets or to instead have “tax cuts for the rich” have been fought out in at least four different administra-tions in the 20th century — under Presidents Calvin Coolidge, John F. Kennedy, Ronald Reagan and George W. Bush. The empirical facts are there,

but they mean nothing if people don’t look at them, and instead rely on talking points. The first time this politi-cal battle was fought, during the Coolidge administration, the tax-cutters won. The data show that “the rich” supplied less tax rev-enue to the government when the top income tax rate was 73 percent in 1921 than they supplied after the income tax rate was reduced to 24 percent in 1925. Because high tax rates can easily be avoided, both then and now, “the rich” were much less affected by high tax rates than was the economy and the people who were looking for jobs. After the Coolidge tax cuts, the increased economic activity led to unem-ployment rates that ranged from a high of 4.2 percent to a low of 1.8 percent. But that is only a fact about reality — and, for many, real-ity has no such appeal as talking points. The same preference for talk-ing points, and the same lack of

interest in digging into the facts about realities, prevails today in discussions of whether to have a government-controlled medical system. Since there are various coun-tries, such as Canada and Britain, that have the kind of government-controlled medical systems that some Americans advocate, you might think that there would be great interest in the quality of medical care in these countries. The data are readily avail-able as to how many weeks or months people have to wait to see a primary care physician in such countries, and how many addi-tional weeks or months they have to wait after they are referred to a surgeon or other specialist. There are data on how often their gov-ernments allow patients to receive the latest pharmaceutical drugs, as compared to how often Americans use such advanced medications. But supporters of govern-ment medical care show virtually no interest in such realities. Their

big talking point is that the life expectancy in the United States is not as long as in those other coun-tries. End of discussion, as far as they are concerned. They have no interest in the reality that medical care has much less effect on death rates from homicide, obesity, and narcotics addiction than it has on death rates from cancer or other condi-tions that doctors can do some-thing about. Americans survive various cancers better than people anywhere else. Americans also get to see doctors much sooner for medical treatment in general. Talking points trump reality in political discussions of many other issues, from gun control to rent control. Reality simply does not have the pizzazz of clever talk-ing points.

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His Web site is www.tsowell.com.

Copyright 2011 Creators Syndicate

Politics versus reality

Thomas Sowell

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