Micron's Side of the Story

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In a recent edition of the Eagle Chamber of Commerce newsletter, we got the longest version of Micron's side of things we've heard yet, from their lobbyist Mike Reynoldson.

In his open letter to the chamber, which we'll print in its entirety after the jump, Reynoldson talks about the reasoning for Micron's layoffs, what the state's economic incentives mean to the company and where Micron is going in the future. It's good timing, since the state's tax incentives for Micron have drawn some scrutiny, as documented here by the Idaho Business Review.

Since Appleton's not talking much, this is as close as we get to a view into their side of the story. The letter is not unlike any number of presentations lobbyists like Reynoldson might make to lawmakers in hopes of either (a) getting out ahead of scrutiny on the worth of fat incentives or (b) explaining the need for more. Not that you'll get new inside dope here, but it's worth the read all the same.

The letter was sent by Nancy Vannorsdel, the president and CEO of the Boise Metro Chamber of Commerce.

Here's the letter:

Friends,

Recently, you may have read or seen some news, opinion, commentary, or speculation on Micron Technology and our operations here in Idaho.

Micron is the largest private employer in the state, so when we announce a downturn in our business, it is very appropriate for the news media to cover that activity.

But press coverage can also be a little frustrating - particularly when those leveling the criticism are giving "opinion" or "speculation" in 400 words or less. The WHOLE story does not typically make it in these types of articles - Which brings me to this email that I am sending to you today. I want to make sure you have the whole story about Micron's commitment and investment in Idaho.

Unfortunately, some of the figures I am providing to you sound like I am bragging. I prefer to let the investment by the company speak for itself, but with all of the misinformation floating around, I felt like I had no choice but to provide you with some relevant facts to provide some balance.

Incentives

The Idaho State Legislature and state leaders have consistently encouraged employers like Micron to invest in Idaho. They recognize that U.S. manufacturing (particularly high-tech manufacturing) has decreased or been lost to other countries over the years, and the best source for new investment is from those who already have a footprint in the state.

Some have criticized the efforts by the legislature. The critics look at the downturn in our industry and somehow claim that economic development incentives in Idaho are not working. But if you look at what Micron has done since 2005, you will see that we have made substantial investments and brought in new employers who are investing in the state as well.

Please keep in mind, incentives only kick in if a business spends money. The examples below are just a few of the Idaho investments by Micron since the legislature established economic development incentives in 2005:

*In Fiscal Year 2006 (Sept. 1, 2005 through August 31, 2006) Micron spent over1 Billion dollars directly in our Idaho Operations. This includes equipment, tools, remodeling, real property, and research & development. I challenge you to find any other private employer in the state that has come close to this type of annual investment.

*In May of 2006, Micron formed a joint venture with a Connecticut-based company, Photronics. The result of this partnership is a state-of-the-art fabrication facilitycurrently being built on our Boise site. This is a $150 million investment and 100 new jobs. (and a new company investing in Idaho)

*In February of 2006, Micron purchased the former Zilog (company) facility in Nampa. This is a 19 acre site that had not been in operation for several yearsand had not been benefiting the Idaho economy or tax base. Micron has invested tens of millions and is now employing hundreds of people at the site.

*In 2006, Micron also purchased (formerly) California-based Lexar Media. This company has been merged with Micron subsidiary "Crucial Technology" in Meridian, Idaho.

Return on Investment for Idaho State and local government, along with local schools, have seen a great deal of benefit due to Micron's recent investments in the state. Below are some figures that relate directly to Micron and the company's workforce. Additional benefit due to outside vendors and local merchants are not included in this data, but obviously have a substantial impact.

*Micron pays over $13 MILLION in property taxes every year. Incentives encourage companies to invest in local people and property which results in revenue to local government and schools.

*Since 2005, Micron has employed over 10,000 Idahoans every year. It is estimated that Micron employees pay over$40 million in property taxes each year. Incentives encourage companies to invest in local people and property which results in revenue to local government and schools.

*The state sees its share of revenue as well. It is estimated that Micron employees pay over$25 Million in income taxes and over$19 Million in sales and fuel taxes. Once these dollars are collected, they are distributed by state government to benefit the entire state.

Community Contributions

*The Micron Technology Foundation is the largest corporate foundation in the state with over $130 Million in assets.

*Since 2002, the Micron Foundation has paid $14.6 Million to Idaho organizations and individuals.

*Beyond those already awarded, and additional $16.8 Million in future grants have been committed by the Foundation.

*For the school term 2006-2007, Micron's K-12 Programs (outreach programs to Idaho schools) provided:

811 educational events reaching 18,746 students and 1,681 teachers and counselors in 163 different participating schools.

Downturn

Micron is the only U.S. based company producing the specific products we sell. This was not always the case, but all others have either ceased doing business or moved on to something else. It is no secret that other parts of the world have significant cost advantages, and an environment that is very supportive of business development, all of which our competition takes great advantage of. But since Micron was founded in 1978, our corporate headquarters and largest employee base has been in Idaho.

Following the recent reduction in workforce, Idaho remains the largest employment center for the company - employing about half of the company's entire worldwide workforce.

Unfortunately Micron has seen losses of $277 Million in calendar year 2007. Our current structure needs to be adjusted in order for us to better compete in our industry.

We are able to control some of the factors affecting our business such as reducing our costs, but other factors are out of our control - namely the prices being paid for our products. Our prices are subject to market forces, and they declined 40% in just 3 months. Think about the ramifications to ANY business of a 40% decline in sales prices in just 3 months! This type of a price decline makes it very difficult to achieve profitability.

While many speculate on our business decisions and motives, or try to push an agenda, they often overlook or ignore the fact that we have lost $277 Million in the first 6 months of 2007. Could your business or industry survive such losses without making a change?

Friends, these are some of the highlights. I hope that I have not taken too much of your time and that you find the above information useful.

My motive is simply to help provide you with the facts.

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