Author Archives: Janet Perez

Janet Perez

About Janet Perez

Janet Perez was managing editor of community and tourism magazines for Gannett Pacific Publications. She has worked as a national news producer for Westwood One/Metro Source, a nationwide radio news network. She was also a reporter for the Phoenix Gazette, and a reporter and producer for CBS and Fox affiliates in El Paso, Texas and Phoenix. She started her career as a reporter at the Gannett paper The El Paso Times. Her work has been featured in such publications as The Chicago Tribune and The New York Times.

E012850

Greater Phoenix Economic Forecast 2011: “Painfully Slow”

The economy may be better in 2011 than it was in 2010, but the road to full recovery will remain long and full of potholes. But hey, it could be worse. It could be 2009.

That’s according to economist Elliott D. Pollack, CEO of Elliot D. Pollack & Company. Pollack was speaking at the Greater Phoenix Chamber of Commerce’s Economic Outlook 2011 breakfast today at the Arizona Biltmore Resort & Spa.

Pollack said population growth in the Valley should settle at 1 percent this year and rise to 2 percent in 2011. Net job growth will contract by 1 percent in 2010 and climb by 2 percent in 2011. Retail sales will increase 1 percent this year and rise by 8 percent next year. Building permits will increase by 20 percent in 2010 before jumping 50 percent in 2011.

In summarizing his 2011 forecast for the Valley, Pollack read a laundry list of good news and bad news:

  • The housing market is at or past bottom, but there are many negatives still trumping a full recovery, most notably slower migration flows.
  • The commercial real estate market is at or past bottom, but recovery will be slow and “take a long time.”
  • Sales tax revenues are no longer falling, but they aren’t growing quickly enough to fix the state’s battered budget.
  • Retail sales have past bottom and there is pent-up demand among consumers, however, those same consumers are still so worried about personal debt that they will continue to curb spending, thus thwarting a big recovery.

While Pollack said the Valley’s economic recovery will be “painfully slow,” he points out that a recovery is indeed underway. For example, the state’s standing in employment growth compared to the rest of the nation is gradually improving — but only after a precipitous decline. In 2006, Arizona ranked second in the nation in job growth; that dropped to 22nd in 2007; 47th in 2008; and 49th in 2009. Up to July of this year, the state had moved up to 42nd in job growth.

Another indication that the Valley’s economy is showing improvement is in the number of economic sectors that have shown net job gains. Of the state’s 12 major economic sectors, five have shown net job gains so far this year (education and health services; trade; leisure and hospitality; professional and business services; other services). That compares to the same time last year, when no economic sectors reported net job gains.

But, Pollack pointed out again, the Valley and state can’t expect the robust and recoveries that have accompanied past recessions.

He says the Valley’s housing market continues to be weighed down by:

  • Weak job growth
  • Tough underwriting standards
  • Negative home equity
  • Loan modification failures
  • High foreclosures
  • Option ARMs (adjustable rate mortgages) peaking in 2011

In terms of equity, 51 percent of houses in the state have negative equity. The national average is 23 percent. Such negative equity severely curtails people’s ability to buy and sell homes. In addition, supply still outstrips demand in the single-family home market, with an excess inventory of houses somewhere between 40,000 to 50,000 units, Pollack said. A balance between supply and demand will not be fully achieved until about 2014, he added.

The picture is bleaker for the commercial real estate market, with delinquencies on loans still very high. In the office market, Pollack cited forecasts from CB Richard Ellis that said vacancy rates would peak at 25.6 percent in 2010 before dropping to 23.9 percent in 2011. As Pollack pointed out, there currently is no multi-tenant office space under construction in the Valley. In fact, he expects “no significant office building in Greater Phoenix for the next five years.”

Industrial space vacancy rates are faring only slightly better, with CB Richard Ellis predicting year-end vacancy rates of 16.4 percent for 2010 before falling to 15.2 percent in 2011. As for the retail market, the vacancy rate will rise to 12.3 percent in 2010 and hit 12.9 percent in 2011.

For office, industrial and retail commercial real estate, Pollack said he did not expect vacancy rates to reach normal levels until 2014-2015.

Still, Pollack maintained that the economic outlook for the Valley “remains favorable,” thanks to the recovering national economy, increased affordable housing in the Valley, a rise in single-family home building permits, unemployment bottoming out, consumer spending improving and continued problems in California.

unemployment rate was unchanged at 9.6 percent after the economy lost 54,000 jobs in August

Nation’s Unemployment Rate Holds Steady

The nation’s unemployment rate was unchanged at 9.6 percent after the economy lost 54,000 jobs in August.

The U.S. Bureau of Labor Statistics (BLS) reported today that government employment fell as a result of shedding 114,000 temporary workers hired for the Census. Private-sector payroll employment rose by 67,000.

“The August jobs report, albeit tepid, does show the economy is holding steady, despite speculation to the contrary,” says Frank Armendariz, Arizona regional director at Manpower. “This is consistent with what I’m seeing in the market, as well as what the quarterly Manpower Employment Outlook Survey (MEOS) has been reporting for the past three quarters. Our quarterly MEOS survey measures employers’ intentions to increase or decrease the number of employees in their work force during the next quarter, and we’ve seen consistent results in our Phoenix-area survey this year.”

According to the BLS, the number of jobless Americans stands at 14.9 million. The number of long-term unemployed (those who have been out of work 27 weeks or more) declined last month by 323,000 to 6.2 million. In August, 42 percent of the nation’s unemployed had not worked for 27 weeks or more.

Government employment fell by 121,000, largely due to the loss of Census 2010 workers. Total private employment continued a rising trend. The BLS reports that since its most recent low in December 2009, private-sector employment has risen by 763,000.

“The fact that we’ve seen eight straight months of private-sector job growth is very encouraging and is consistent with what I’m seeing — employers are continuing to hire each quarter, but in limited quantities, with a majority of firms holding steady with their current labor force,” Armendariz says. “This is an improvement from last year when we were seeing mass layoffs and very little hiring.”

Employment gains were seen in health care, mining and construction. The manufacturing sector lost jobs, while employment in retail trade was essentially unchanged.

“The recession brought about huge changes in the labor market in a very short period of time,” Armendariz says. “Now we’re seeing new jobs come back very slowly. At the current pace, it will take years for us to get back to pre-recession employment levels. As a result, the limited labor market growth we’re experiencing feels almost imperceptible in comparison to the free fall we took in the wrong direction last year.”

The State’s Tourism Industry Puts A Face To Those Hurt By The Corporate Meetings Backlash

The image the word tourism often brings to mind is of fun, sun, and beautiful destinations and resorts. But with the industry under siege last year, those who work in the sector here in Arizona decided it was time to give tourism a new face — that of a relative, a friend, a neighbor, someone you know, even you.

In 2009, the tourism industry across the nation was hit by the recession and the fevered backlash against corporations that had received billions of dollars in taxpayer bailout money. To those in tourism, this became know as the “AIG effect,” so-called because the foundering insurance giant went ahead with lavish retreats after getting an initial $85 billion bailout in September 2008 under the federal government’s Troubled Asset Relief Program (TARP). The Valley became connected to the controversy when ABC News reported in November 2008 that AIG had spent more than $340,000 on an event at an area resort. AIG countered that the event was not a corporate retreat, but rather a conference for independent financial advisers. But the damage was done.

“For us, to be in a destination that just happens to be lovely, that just happens to have nice weather, that happens to have those beautiful structures that are really good at providing a great amount of business opportunities inside them in the form of meetings — we got really hit,” says Rachel Sacco, president and CEO of the Scottsdale Convention and Visitors Bureau.

The result was plunging occupancy rates, declining tax revenues, curtailed employee hours and even layoffs at Valley resorts and hotels.

In an effort to diffuse the hostility, the U.S. Tourism Association began a Face of Tourism media campaign to spotlight the people who were directly hurt by corporations canceling all manner of events — the millions who work in the tourism and hospitality industry. Over the past summer, the various players in the state’s tourism industry, including the Arizona Tourism Alliance, joined forces to launch the Face of Arizona Tourism campaign.

“The Face of Arizona Tourism campaign was really about trying to make sure that there is an understanding of how personal this industry is,” Sacco says. “ … it’s people at all different levels that are doing work that is meaningful and important, and frankly is their livelihood. I think the campaign was really successful to see that there is a face, that I might even know that face, and I might even be that face.”

The person selected to embody the Face of Arizona Tourism campaign is Mia Yates, a banquet server at the Westin Kierland Resort & Spa in Scottsdale.

“My story is this is my full-time job, working in the banquet department at the Westin, and I’m a single mom with three children.” Yates says. “When businesses stopped coming to Arizona, and more specifically the Westin, my hours were affected. They don’t need me to work, so I don’t work, I’m unable to hold onto my health benefits that allow my children to go to the doctors. I guess the Westin felt that I had a story. I was pretty close to the average working bear.”

Yates acknowledges that the Westin weathered the worst of the downturn better than other resorts, and she credits the efforts of management to look after its employees.

“They opened up positions around the resort and allowed us to cross train to help us keep our hours,” she says. “We only had to do that during the summer months, and pretty much we’ve been back up to nice hours in the banquet department.”

Bruce Lange, managing director of the Westin Kierland, says getting out Yates’ story — and all the others she symbolizes — was critical in short-circuiting the AIG effect.

“I’m absolutely certain we reacquainted our elected officials with where the rhetoric was hurting our economy, specifically if you know that one out of every eight people in the nation is engaged in the industry called tourism,” Lange says. “We are able to put the faces of the Mia Yates of the world and say, ‘Here’s your victim. Your intended victim may be the CEOs of those organizations, but here is where it’s really coming home to roost.’ I’m absolutely certain it’s had a positive impact.”

As a result of the recession and the AIG effect, Lange says the Westin Kierland’s business was off 25 percent in 2009 as compared to 2008. But the numbers only tell part of the story.

“If I tell you that our business is off 25 percent and we send, from a tax revenue standpoint, to state and local government $12,000 a day, is that impactful?” Lange asks. “Or is it more impactful for me to say that our average employment is about 1,000 people and if we’re down 25 percent we have 25 percent fewer folks? I think where the rubber meets the road is the human aspect much more so than the statistical aspect.”

Sacco adds that it’s important to educate the public as a whole about how hard times in the tourism industry have a far-reaching effect.

“The impact tourism had of losing hundreds of millions of dollars in our community gets back to the Face of Tourism, because when you start losing money and business, it hurts that face of tourism, it hurts the small business that isn’t getting all of the trickle-down impact, it hurts all the galleries that have closed,” she says. “It didn’t just hurt people in the tourism industry.”

www.scottsdalecvb.com | www.kierlandresort.com


Arizona Business Magazine

February 2010

ATA Is Promoting The Message That Tourism Will Bolster The State’s Economic Recovery

Tourism is not an expense — it’s an investment.

That’s not an official slogan for advocates of Arizona’s tourism and hospitality industry, but it is a message they are working hard to imprint in the public consciousness as legislators eye further cuts to the state’s budget. As in past budget crises, funding for marketing the state’s tourism and hospitality industry is vulnerable once again.

“Too often, public officials wrap up tourism with the other cost sectors rather than looking at it as an economic engine that can help bring new spending, support new jobs, support incremental tax revenues,” says Mitch Nichols, president of the Nichols Tourism Group and treasurer of the Arizona Tourism Alliance.

Nichols says the ATA is developing an advocacy program to better explain the role tourism can play in the state’s economic recovery.

“Tourism helps Arizona’s economy on two levels. One is its role as a base industry where it can bring new spending which will support new jobs and new taxes. So it’s role as a base industry is really critical,” he says. “The other element with tourism is its role across the state. A couple of years ago when the state did an economic development plan and looked at the various clusters, they looked at tourism as the common denominator. It was the only base industry that has applications in all 15 Arizona counties.”

According to a report prepared last year by the Portland, Ore.-based economic and marketing research firm Dean Runyan Associates for the Arizona Office of Tourism, the total direct and secondary impact of the Arizona travel industry in 2008 was 310,000 jobs and $10.2 billion in earnings.

The report also found that in 2008, direct travel spending was associated with $1.4 billion in state and local tax revenues and $1.2 billion in federal tax revenues. That was the equivalent of $1,080 per household in Arizona.

In other findings:
Total direct travel spending in Arizona in 2008 was $18.5 billion, a 3.2 percent decrease over 2007.
Travel-related employment, earnings and tax receipts declined in 2008.
The collapse of the housing market and recessions in Southern California and Arizona contributed to the travel decline.

Nichols warns that while it may seem easy to cut state funding for tourism marketing, the result could be long-term damage to the industry and the derailing of a fragile economic recovery. The effects could be even more troubling as competitor states such as California hold firm despite their own economic difficulties.

“There are other states that do see the full potential of tourism,” Nichols says. “California doubled its tourism budget up to $50 million a few years ago. The state is maintaining that budget despite cuts.”

Quite a lot is at stake, according to Nichols. Citing the Dean Runyan study, Nichols says U.S. leisure and business travel spending is expected to increase 4.5 percent and 5 percent in 2010 respectively. That has the potential to create 90,000 new jobs nationwide.

Nichols says Arizona needs to step up — not back — if it wants to bring a portion of those jobs and tax revenues to the state. In order for Arizona to compete against California and Nevada, the state needs to aggressively market at both a state and regional level.

Nichols points to Flagstaff as an example of how substantial the ROI on marketing tourism can be for a community. Last spring, as the economy continued in freefall, the Flagstaff City Council acted on a recommendation by the city manager to provide a $250,000 tourism “stimulus.” The money went toward marketing Flagstaff during its traditionally slow months of May and June.

The effect on Flagstaff’s tourism industry was positive and immediate, says Heather Ainardi, director of the Flagstaff Convention & Visitors Bureau.

Ainardi says Flagstaff’s hospitality tax collections dropped almost 10 percent in March, compared to 15 percent for the state. In April, when the city began its tourism marketing push primarily in the Valley and Southern California, hospitality tax revenues fell just 1.5 percent for Flagstaff, compared 11 percent for the state. In May, Flagstaff’s hospitality tax revenues were flat and dropped 7 percent in June.

“So, although we were still down, we were doing well compared to the state. Where everybody else was seeing double-digit declines (in tax revenue), we were either flat or saw small declines. Our occupancy actually went up in May and June,” Ainardi says. “I think people look at marketing and don’t understand the return. It’s not something where you can put in a quarter and a dollar comes out. It truly is something where you put in a quarter and you see an across-the-board impact.”

According to a study the city conducted with the Arizona Office of Tourism, the tourism and hospitality industry has a $501 million annual impact on Flagstaff and creates 5,400 jobs every year.

And Ainardi and other tourism supporters in Flagstaff are on a mission to educate residents about how those tourism dollars affect their lives.

“We really promote that revenues from that tax don’t just go toward marketing,” she says. “They actually go toward parks and recreation, they go toward public beautification, economic development and the arts and sciences. In Flagstaff, we have a system developed where we can help people understand that the 47 miles of urban trails that they utilize on a daily basis are built and maintained through tourism dollars.”

As a member of ATA, the Flagstaff CVB has worked closely with the group in its efforts to save funding for the Arizona Office of Tourism. Ainardi says her organization plans to continue its partnership with ATA to further the alliance’s advocacy mission.

“Tourism is amazingly important and it’s been one of the traditional backbones of some of our economies,” she says. “It’s not everyone’s favorite industry, but it is one that continues to grow and benefit our communities.”

www.nicholstourismgrp.com | www.flagstaffarizona.org


Arizona Business Magazine

February 2010

Moving Valley Arizona 2010

Moving the Valley and Arizona Forward

Oh, give me land, lots of land
Under starry skies above.
Don’t fence me in.

That little tune written by Cole Porter and Montana engineer Bob Fletcher has served as the unofficial song of the West for almost 75 years. It’s captured the lure of the West; with all this room, there’s no need to grow up — grow out!

Despite warnings dating back decades, Western cities have been growing out at a rapid clip. Now we have to face the fact that our resources cannot sustain this type of urban sprawl.

It’s estimated that the state’s population will swell to 10 million by around 2040. Eight million of those residents will be living in the “megapolitan” Sun Corridor, a swath of land stretching from the middle of Yavapai County to western Cochise County to the Mexican border.

Fortunately, one organization, Valley Forward Association, has been working steadily on this problem for 40 years. Valley Forward’s mission is to bring business and civic leaders together in order to find ways to improve the environment and livability of Valley communities.

One of Valley Forward’s signature events, the Environmental Excellence Awards, takes place this weekend. The awards program is the state’s oldest and largest environmental competition. The program, now in its 29th year, recognizes buildings and structures, site development and landscape, art in public places, environmental technologies, environmental education/communication, environmental stewardship and livable communities that promote the cause of sustainability. The event is held in partnership with SRP.

While Valley Forward has long been at the forefront of the sustainability movement in the region, several others now have joined the cause. In recognition of that, the U.S. Green Building Council is holding its prestigious Greenbuild International Conference and Expo in Phoenix, Nov. 11-13. The keynote speaker is Nobel Peace Prize winner,  former Vice President Al Gore.  AZ Big Media is a proud in-kind partner of Greenbuild.

Another sustainability event that’s making its presence known is AZ BIG Media’s own Southwest Build-It-Green Expo & Conference, presented by SRP. The second annual event takes place March 18-20, 2010.

This year’s inaugural BIG Expo & Conference made good on its promise to be the Southwest’s largest annual event on sustainability for the commercial and residential marketplace. Nearly 9,000 people attended the BIG Expo at the Phoenix Convention Center, visiting the up to 300 exhibitors from commercial and residential businesses that offer sustainable products and services that affect everyday life.

The conference portion of the BIG Expo brought together industry experts, Valley leaders, instructors from Arizona State University’s Global Institute of Sustainability and members from such organizations as Valley Forward, Valley Partnership, BOMA, SRP, APS, the U.S. Green Building Council and many more.

While Arizona has made significant progress in the sustainability movement we have to remember to keep moving forward.

Janet Perez
Editor-in-Chief
Arizona Business Magazine

www.valleyforward.org
www.greenbuildexpo.org
www.builditgreenexpo.com

Pizza Parlor

The Parlor Turns An Old Beauty Salon Into A Pizza Paradise

There are no hair dryers, manicure stands or various grooming products to be found at The Parlor, a new gourmet pizzeria in Phoenix, but the ghost of them remains.

The Parlor now occupies the long-time site of the Salon de Venus on 20th Street and Camelback Road. The co-owner of The Parlor, Nello’s Pizza scion Aric Mei, salvaged as much as he could from the old beauty salon for use in his new eatery. Using the wood from the original roof, Mei created a new bar, tables, wall treatments, a host stand and the front doors. From the steel of the salon’s old sprinkler system, Mei constructed a wine storage, fireplace, door handles, bar pendants, bench supports and various other items.

Mei took his recycling efforts one step further. When he found out that a restaurant across the street was being razed, he purchased the contents of the building and outfitted The Parlor with its booths, bar, kitchen equipment, faucets, sinks, flush valves, shelving and speakers.

His efforts at sustainability didn’t end there. Committed to utilizing solar technology on the restaurant, The Parlor installed a thermal solar system that supplies the building’s hot water. Mei says he has the plans and The Parlor has the dedicated space to eventually have a 10-kilowatt array of solar panels on the roof.

The resulting look is simple and streamlined without being oh-so-trendy. Hipsters, power lunchers, couples and families all have a place at The Parlor.

But enough of that; what about the food? In a word — great.

The Parlor combines simple and gourmet ingredients to create seemingly simple dishes that boast complex tastes. We started our evening at The Parlor with its meat and cheese selection appetizer. The meats are primarily ham, prosciutto and salami, paired with an array of hard and soft cheeses and served with grilled rosemary flatbread.

For the next course, we dove into the salad selections. The table settled on the Parlor Insalata with mixed greens, feta cheese, olives, cucumbers, tomatoes, crispy chickpeas, pepperoni and oregano dressing.

The Parlor also serves sandwiches and burgers, and like the décor, they are deceptively simple. For example, The Parlor’s version of a club sandwich features duck breast, apple wood smoked bacon and a red wine tomato jam. The Parlor also offers a limited but imaginative selection of pasta dishes. The pappardelle Bolognese has a hearty meat sauce and tender but firm noodles that had everyone raving.

But of course, the stars of The Parlor are the pizzas, which range from the exotic (wild mushrooms with goat cheese and truffle oil) to the familiar (pepperoni). The crusts are light and crunchy — the perfect foundation for the rest of the pie. We chose the salsiccia pizza, which is topped with a special Parlor sausage, grilled radicchio, sage and saba, a type of vinegar. The combination of ingredients was delightful and quickly won over my dining companions. We also ordered the pepperoni pizza just to see how they executed the pie.After all, as any chef will tell you, it’s the simple dishes that are the easiest to ruin. The Parlor hit it dead on. You can also create your own pizza from a list of toppings. I put together goat cheese, rock shrimp and prosciutto for my pizza. My companions opted not to try my creation, which was fine with me because I loved it and got to eat it all by myself.

If you have room for dessert, make sure you pick The Parlor’s chocolate cake with Italian cherries, vanilla cream and chocolate sauce. Hey, if you ate a whole pizza, you might as well grab dessert.

    If You Go:
    The Parlor
    1916 E. Camelback Road, Phoenix
    (602) 248-2480

Prime Bone In Ribeye

J&G Steakhouse Makes The Former Mary Elaine’s Location Its Own

Over the past two years, the dining scene at the Valley’s top resorts has undergone an extreme makeover. The most high profile of those makeovers took place at The Phoenician, where that staid first lady of dining for 20 years, Mary Elaine’s, was shuttered last year. Now occupying the spot where Mary Elaine’s once stood is the far trendier and far less formal J&G Steakhouse.

Gone are the high-backed chairs and linen tablecloths. In are butcher-block tables and modern designs. Out is French cuisine; in is a new take on steak and seafood. But one thing has remained the same — those fabulous views Mary Elaine’s was so famous for.

The restaurant’s interior is swathed in purple and gold, a palette the establishment’s owners say was inspired by steak and wine. A tempesta onyx wraparound bar welcomes patrons as they head into the main dining room. There are also two private dining areas and the terrace has oval banquettes and fire pits.

J&G Steakhouse, which opened in December, is the creation of Michelin-starred chef, Jean-Georges Vongerichten. He has developed a menu in which the classic fare of a big city steakhouse is re-imagined with a modern twist.

After getting over the initial wonder of how the space that had once housed Mary Elaine’s has been transformed, I was pleasantly surprised by the variety of food on J&G Steakhouse’s menu. For a steakhouse, it has a generous selection of seafood.

Our dining party started the meal with J&G’s specialty cocktails. While most of the drinks were variations of more familiar libations, such as a grapefruit gimlet, others were of the kind I thought went out with the Rat Pack. Case in point is the Sazerac, made with 100-proof Rittenhouse rye whiskey, Pernod Absinthe, Peychaud’s bitters and Angostura bitters. You don’t want anyone lighting a match around this drink.

The appetizers were an unexpected treat. Many restaurants fail to find a balance with their appetizers; they are either afterthoughts or so good they overshadow the main menu. At J&G, the appetizers are inventive and tasty. The restaurant succeeds in not overwhelming the main courses by keeping portions small. Of the four appetizers we chose, every one was a winner. Special mention goes out to the savory French onion soup, the rich sweet corn ravioli in basil butter and the salmon tartar, served diced with warm garlic toast and mustard oil.

With so much good seafood on the menu, we couldn’t resist splitting our orders into two meat dishes and two fish entrees. First up was the 8-ounce filet mignon, which, good thing for a steakhouse, did not disappoint. The milk-fed veal porterhouse was also a treat. Normally, I won’t eat veal because I don’t like the taste, but J&G’s rendition of the cut may make me a convert. The first fish entrée was a roasted striped bass encrusted with chilies, herbs and lime.But the true star of our evening at J&G was the sautéed Dover sole grenobloise. Carved tableside, the sole was light and flavorful, and was a wonderful alternative to the meat dishes.

Like many steakhouses, J&G is a la carte, so if you want side dishes you have to order them separately. The sides at J&G are pretty straightforward fare, but they don’t take a backseat to the entrees. Of particular note were the roasted mushrooms with herbs — if you have a large party, make sure to double your order.

Fogo de Chao Tableside Gauchos

Fogo de Chão Brings The Taste Of Southern Brazil To Scottsdale

Let’s get one thing straight at the outset: If you don’t eat meat for whatever reason, Fogo de Chão, Scottsdale’s newest eatery, is simply not for you. Sure it has a nice salad bar (more on that later), but Fogo de Chão is a steakhouse — end of story.

Well not quite. Fogo de Chão is a Brazilian steakhouse, so it prepares and serves up its meats in a manner quite different from that found in our own American steakhouses. In fact, showmanship is as much a part of the Fogo de Chão eating experience as the food itself.

But now I’m getting ahead of myself. First an explanation of what Fogo de Chão is; it is a churrascaria, or barbecue, in which the meats are prepared the way cowboys, or gauchos, in Southern Brazil have cooked them for centuries. The meats are prepared over an open grill, mimicking the gauchos’ fogo de chão, Portuguese for “fire on the ground” or “campfire.”

Fogo de Chão has a prix fixe, all-you-can-eat, menu that allows guests to eat as little or as much as they want. And there is a lot to eat. The meal starts off with a gourmet salad bar that bears little resemblance to what you’d find at an average chain restaurant. There’s little by way of fixings for a traditional American-style salad. Instead, the “salad bar” operates more like an antipasto bar with meats, cheeses and breads sitting side-by-side with the vegetables. You’ll find smoked salmon and prosciutto; fresh, whole mozzarella and Manchego cheeses; and artichoke bottoms, olives, hearts of palms, sun dried tomatoes and more. If it’s your first trip to Fogo de Chão, you might load up at the salad bar because you simply don’t know any better. Here’s a word of advice: don’t, because you’ll miss out on the main event.

That main event is made up of the 15 cuts of fire-roasted beef, pork, lamb and chicken that are served via espeto corrido, or continuous service. When you sit down at your table, you’ll notice a little coaster-like disk, with one side green and the other red. When you turn over the disk to the green side, waiters dressed like Brazilian gauchos and carrying skewers of meat, surround your table and offer to carve you a slice of meat. One skewer can hold the same cut of meat, but prepared rare, medium rare and medium well. Just tell your server which one you want.

As for the cuts of meat, almost all the choices are delectable. At our table the favorites were the picanha, the prime part of the sirloin, which is served seasoned with sea salt or garlic; the filet mignon, served with or without bacon and tender beyond belief; the alcatra, which is cut from the top sirloin; the fraldinha, which is cut from the bottom sirloin and is perfectly seasoned; the beef ancho, the prime part of the rib eye; the cordeiro, which is young leg of lamb; lamb chops; and the lombo, tender filets of pork loin encrusted with parmesan cheese. You can also get a variety of cuts of chicken, plus pork sausages.

While you’re eating all that meat, the servers are also constantly replenishing side dishes of cheese bread, mashed potatoes, fried polenta and caramelized bananas. When you’ve had enough, turn your disk over to the red side — and flip it back to green when you see something else you like. Besides the food, the best part of Fogo de Chão is the environment. It’s dinner with a floorshow. If you go, take a large group of people with you, as the communal atmosphere makes dining at Fogo de Chão that much more fun.

Tucson, Arizona

Southern Arizona Trying To Set The Stage For A Post-Recession Surge

Like the rest of the state, Southern Arizona has been in a recession since 2007, and at least one prominent economist says the situation won’t be getting better anytime soon.

“My forecast is that it’s going to take a while to get (credit markets) straightened out again and functioning as they should,” says Marshall Vest, director of the Economic and Business Research Center at the University of Arizona’s Eller College of Management. “I think that takes up most of 2009. Then we have all the excess housing that needs to be absorbed. That’s going to take some time and we’re not really absorbing the housing right now because credit markets have been essentially frozen. So, I think it’s the end of 2009 before the economy really regains its footing. I think we’ll start to move up in 2010. By move up, I mean the economy will once again begin to expand and enter a recovery phase.”

Joe Snell, president and CEO of Tucson Regional Economic Opportunities (TREO), says that despite the already deteriorating economic conditions, Tucson still managed to draw new companies and expansions in 2008.

“We’re definitely seeing a slow down in a lot of ways, both in the recruitment of companies and the expansion of companies, but not a massive downtick,” he says. “Our pipeline is as full as it’s ever been. But what we are seeing are companies that may have been ready to announce a $100 million expansion in November saying, ‘We’re going to wait on that until January, we’re cautious, we want to see what’s going to happen in the next three months.’ ”

Last year, the region still saw growth in the health care, bioscience, alternative energy and aerospace industries. Of particular note was the purchase of Ventana Medical Systems in Oro Valley by Swiss drug maker Roche for $3.4 billion. Roche also announced plans for a $100 million expansion at Ventana that would increase employment from 750 to about 1,000. In addition, Roche purchased more than 17 acres of land around the Ventana site to expand the location.

“Possibly the most significant thing we can point to though, is that 57 percent of the successful projects were in our targeted industries, and that’s important because those targeted industries represent quality rather than quantity, meaning, closing the wage gap,” Snell says. “Historically, Tucson has ranked somewhat below both the state and the national average in wages. So we’re rapidly moving in the right direction to close that gap. To me, that’s a big takeaway.”

Southern Arizona has not been immune to the effects of the housing market collapse and its devastating impact on the construction industry. For example, one of the first companies TREO recruited, window and doormaker Pella Corp., announced in November 2008 that it was idling its Tucson plant, affecting 65 workers. When Pella first located to Tucson in 2005, company officials said it had plans to employ more than 400 people at its facility.

Still, as Vest points out, since the construction boom was not as great in Southern Arizona as it was in the Phoenix area, the drop has been less precipitous. For example, year-over-year job losses in the construction industry in October 2008 stood at 4,000 in the Tucson metro area, according to figures from the Arizona Department of Commerce. In the Phoenix-Scottsdale-Mesa area, 30,000 construction industry jobs were lost during the same period.

“Commercial (construction) is still in relatively good shape. Vacancy rates are moving up, but they are still fairly low. Tucson didn’t see the construction boom in commercial that you saw in Phoenix, so, commercial construction here in Tucson doesn’t have as far to fall,” Vest says. “For residential, the indicators that I see are pretty comparable to Phoenix, except for the housing price data. I don’t think the declines have been quite as large (in Southern Arizona).”

Snell says that so far, Southern Arizona has managed to hold its own on employment.

“We have losses in construction, but we’re gaining it on biotech, we’re gaining it on solar, we’re gaining it in logistics companies. I think right now we’re sort of a wash,” he says.

Vest, however, expects more job losses across the state as the recession drags on through 2009. In fact, comparisons of unemployment rates from 2007 and 2008 already are startlingly eye opening.

In October 2008, the unemployment rate for the state, the Phoenix metro and the Tucson metro stood at 6.1 percent, 5.5 percent and 5.8 percent, respectively. In October 2007, the state’s unemployment rate was 3.9 percent, Phoenix’s was at 3.4 percent, and Tucson came in at 3.9 percent.

“I think the unemployment rate will likely reach 8 percent before we’re through,” Vest says.

Vest adds that rate is in line with the jobless figures of the last major recession of the early 1980s. Back then, unemployment peaked at 13 percent in the state, 8.9 percent in Phoenix and 10.5 percent in Tucson.

Fortunately for Southern Arizona, Vest says, the region’s economy is considerably more diverse than it was in the early ’80s. But with credit still tight and the housing market stuck in freefall, Vest cautions about being too optimistic on the strength of a recovery.

“I really think this recovery is probably going to be muted. I don’t see us rebounding very strongly. The process is going to take awhile,” he says. “This recession is going to be longer than the recessions of the early ’80s or mid ’70s. If it stretches through 2009 and the recession began in the fourth quarter of 2007, we’re talking about a two-year-long recession. Nationwide, the longest recession has been 16 months.

“It’s been a very long time in this country since we have encountered a very severe recession. The recessions of 2001 and 1991 were both very short and shallow. They barely qualified as recessions, rather than a growth slowdown. It’s only the gray hairs that remember what a severe recession is like,” Vest adds. “This is scary. This is messy. But we’ve been through this before. If you are a business and you can hang on and remain solvent and get through this, there will be plenty of opportunities on the other side. I would also say that it’s during times like this that the seeds are sown for fortunes to be made. Savvy investors will take positions in markets where assets are cheap and will benefit handsomely as the economy recovers —as surely it will. And the deep pockets know that and there is a lot of money on the sidelines waiting for the right opportunity.”

Snell agrees, adding that now is the time for Southern Arizona to stake a claim in future growth and prosperity.

“We’re not going to ride out the recession. I’m a big believer that now is the time to get aggressive,” he says. “I think we have a good head of steam. At this point, I would say Tucson is as competitive as any major city in the country, including Phoenix. That’s a first for us. Are we going to get cooled off by the national economy? Yes, absolutely. But I think we’re in as good a position as anyone coming out of this recession to capitalize, and maybe within this recession to capitalize.”

www.arizona.edu
www.treoaz.org
www.azcommerce.com

Blood Systems Inc

Blood Systems Inc. Succeeds With A Delicate Balancing Act

When donating blood, many people probably only have a vague understanding of how the entire process works. Most donors certainly don’t understand how complex the mechanisms are that take blood to its final destination, or about the people who make it all happen.

“The general public does not understand what goes on behind the walls of a blood bank,” says Susan Barnes, Vice President and Chief Financial Officer for Blood Systems Inc. “I actually had someone say to me, ‘Oh, you’re the guys who take my blood, don’t give me anything for it and then sell it to the hospitals and make a fortune.’ I said, ‘There’s a lot in between that you don’t know.’ ”

Founded in 1943 as the Salt River Valley Blood Bank, the nonprofit Blood Systems is one of the nation’s oldest and largest blood service providers with operations in 18 states. Blood Systems is also a high-tech, efficiently run company entrusted with a life-or-death mission.

“We budget very carefully to return to the bottom line just enough to allow us to re-invest in our facilities, in processes that the FDA requires, and to keep things state-of-the-art so we can make sure we always provide the quality of blood product that the community expects,” Barnes says. “Not everyone understands that we can’t have a zero bottom line just because we’re a not-for-profit. It’s important to make money to re-invest, because if you don’t re-invest in the organization, you can’t continue the mission.”

Blood Systems mission is “to make a difference in people’s lives by bringing together the best people, inspiring individuals to donate blood, producing a safe and ample blood supply, advancing cutting-edge research and embracing continuous quality improvement.”

To keep such a noble mission in these trying times is a difficult balancing act, says Blood Systems President and CEO Dan Connor.

“In this particular environment that we have now with the economy, we see many companies laying off folks, so there are fewer people available to donate blood and that makes our job more difficult,” Connor says. “Our hospitals are less able to withstand any new tests or new procedures or new costs that we might have to pass along. As a result, we are trying to do that balancing act between doing everything we can to ensure an ample and safe blood supply, while also understanding the limitations that hospitals face as far as paying a reasonable cost for the blood products that are provided to their patients. That’s particularly difficult right now.”

Thanks to Barnes’ financial acumen, Blood Systems has built up a strong bottom line in its cash reserves.

“These reserves allow us to proceed with projects and expenditures, as well as still give our employees a cost-of-living increase in those years that we are not going to generate as much cash,” Barnes says. “There are also those years that we know our customers (hospitals) cannot afford to absorb our entire increased costs, and these reserves allow us to hold some of these new costs without our usual reimbursement.”

Perhaps Blood Systems greatest strength to its bottom line is its diversification, which has helped the company create new and needed revenue streams. That diversification is centered on four main divisions.

The Blood Centers Division is a network of more than a dozen regional blood centers and about 70 donor centers stretching from the West Coast to the Gulf of Mexico and from the Canadian border to the Rio Grande. The centers are operated through United Blood Services and Blood Centers of the Pacific, and serve patients in more than 500 hospitals. Last year, nearly 700,000 people donated blood an average of 1.5 times through the Blood Centers Division.

The Blood Systems Research Institute in San Francisco has conducted scientific research into transfusion medicine for more than 50 years, studying infectious diseases such as HIV and the West Nile virus. A second institute is located in Tempe.

Blood Systems Laboratories operates two of the most highly rated and high-volume blood-donor testing and infectious disease reference laboratories in the nation. The labs in Tempe and the Dallas area tested about three million donations in 2007, with two-thirds of the blood coming from other nonprofit blood centers.

BioCARE distributes plasma derivative therapies available to patients 24 hours a day, every day of the year at more than 200 locations across the country.

Blood Systems is also extending its reach internationally. For about the last four years, Connor says Blood Systems has sent the plasma portion of blood donations to the United Kingdom in order to help that country reduce the risk of transmitting the human form of Mad Cow disease.

But diversification alone hasn’t made Blood Systems a company that just recently received an upgraded ‘A’ stable credit rating from Standard & Poor’s at a time when many other companies are being downgraded. Blood Systems has instituted performance-improvement efficiency standards such as Six Sigma and LEAN tools, which have resulted in the reengineering of processes in the Blood Centers Division and Blood Systems Laboratories. That in turn has improved efficiencies and ushered in cost savings of more than $2.5 million throughout the organization in 2007 alone.

Blood Systems is also investing in its human capital by developing its own program to produce specialists in blood banking.

“We were having trouble finding qualified blood banking specialists to staff our laboratories,” Barnes says. “We partnered with the University of Texas Southwestern Medical Center (at Dallas), and wrote the actual online modules to train the students and taught them through the University of Texas to become specialists in blood banking.”

Blood Systems graduated its first class of specialists in blood banking in 2007.

“It’s basically growing our own blood banking specialists,” Barnes says. “We have the opportunity to put our own staff through the course and allow them to earn the certification. This enhances their careers while staffing our laboratories with the most qualified specialists.”

Making such long-term investments in its employees’ futures has helped Blood Systems decrease turnover by more than2.5 percentage points from 2006 to 2007, with the average length of service now up to almost seven-and-a-half years. And then there’s the mission.

“When I interview a candidate for a job here at Blood Systems,” Barnes says, “one of the things I always make a point of telling them is it doesn’t matter whether you’re collecting blood from a donor, or volunteering to give the donor a cookie and juice afterward, working in our testing laboratory, or working in accounting and finance — everyone who walks in the door every morning understands and is proud of the fact that they’re helping to save a life that day.”

Chef Eddie Matney Returns With Eddie's House, 2008

Chef Eddie Matney Returns With Eddie’s House

Chef Eddie Matney, Eddie's House, AZ Business Magazine Oct. 2008

The Valley’s original celebrity chef, Eddie Matney, would like to invite you to his house for dinner. Well, it’s not his actual house, but at Eddie’s House, Matney’s newest Valley restaurant, it’s like eating home cooking as only this chef can make it.

It’s been a couple of years since Matney had an eatery in town that bears his moniker, but the wait was well worth it. Eddie’s House in Old Town Scottsdale combines all the things Matney is famous for, plus some new and comforting elements.

Overall, the decor strives for a stylish, but inviting and casual vibe. Those who sit at the head of the table get to relax in large, comfortable armchairs upholstered in a mix of leather and green and purple striped fabric.

But you don’t go to Eddie’s House for decorating tips. You go there for the food, and once again, Matney doesn’t disappoint. His food has always lived in a region where America meets the Mediterranean.

The appetizers reflect all of these influences. Matney’s flatbread and tartar starters change daily. The day my party went, the flatbread was topped with smoked salmon and roasted garlic, while the tartar selection was a tuna blend that had my dining companions raving.

We followed that with the soup and salad portion of the dinner. I jumped at what the menu dubbed the “serious” lobster bisque cappuccino. Unlike other bisques that tend to have a cream base, this lobster bisque appeared to be made primarily of a lobster stock that allowed the sweet, rich taste of the lobster meat chunks inside to really shine.

On to the entrees, where Matney kept to his tradition of hearty portions. The special that night was a pork chop dish, which quickly became a favorite at the table. The chops were tender and tasty, with everyone claiming more than one bite. Another favorite was the bacon-infused meatloaf. Oh Eddie, you had me at bacon. Add to that Yukon gold mashed potatoes and onion strings and we all forgot our diets that night.

Arizona Business Magazine October 2008 Cover

Earning special notice was the EHC or Eddie’s House Chicken. The chicken was cooked to perfection, but what captured everyone’s attention wasthe presentation. While the breast was served on a dish, the legs and thighs were placed in a small, whimsical ceramic “basket” painted to look like a bucket of chicken from that famous colonel.

Although I thought I couldn’t eat another bite, dessert is de rigueur for me. The dessert that earned the most “ooos” and “ahhhs” was the crème brûlée, so rich and sweet and surprisingly light. While the crème brûlée was very good, my personal favorite was the baked chocolate pudding topped with whipped cream. It was almost like a mousse. I became even fonder of the dessert after Matney told the story behind it; he was inspired by his memories of his mother making a similar dish while he was growing up. How appropriate for a restaurant named Eddie’s House.

www.eddieshouseaz.com

Mr.WestValley

John F. Long Didn’t Just Build Houses In The West Valley, He Also Built A Community

About the only person who would disagree about calling the late John F. Long the father of the West Valley would be John F. Long. For more than 60 years, the man described by friends and colleagues as quiet and unassuming, held the vision that transformed the West Valley from fields to thousands of homes for soldiers returning from World War II to emerging cities.

The legacy of John F. Long will live forever,” says Jack Lunsford, president and CEO of WESTMARC. “Unlike footprints in the beach sand, which are eventually washed away, John’s are cast in concrete. And that doesn’t just mean buildings. He left us foresight and philanthropy, all with humility and without fanfare, simply because he loved the area, he loved people, and he wanted to make the West Valley a great place for families to live.”

Long died in February at the age of 87, but his legacy in the West Valley — indeed the entire Valley — will live on, not just in the communities he built, but also in the people whose lives he touched.

“His vision and reality of building a master-planned community is certainly important,” says his son, Jacob Long, who is chief operating officer for the company his father founded, John F. Long Properties. “Not only was he providing an affordable place to live for so many, he was also providing jobs for so many people. A lot of those people not only stayed here, but they are an integral part of helping the West Valley grow as business and community leaders. At least once a week I meet someone who says, ‘Because of your father, my family or I was able to buy a solid home at a great price. It helped me build equity.’ ”

A Phoenix native, John Long got his start in the building industry with a G.I. loan, his own hammer and other tools he borrowed from his stepfather. He first set out to build a home for his new wife, Mary. Instead, he ended up selling the home for twice what it cost to build.

By 1954, John Long was thinking big. He set out not only to build a collection of tract homes in one area, but also to create a community with schools, churches, hospitals, shopping centers and parks. Long created the state’s first master-planned community and named it Maryvale, after his wife.

By applying mass production techniques to homebuilding, Long was able to offer a three-bedroom, two-bath house with a swimming pool for less than $10,000. Houses began selling at a rate of 100 per week, and John F. Long Properties was born.

Despite his success, Long never forgot who he was building the homes for, says Diane McCarthy, director of business partnerships and legislative affairs for West-MEC. For example, when Long first began constructing homes, he realized the VA loans didn’t cover such essentials as refrigerators and stoves. So Long trekked to Washington, D.C., and went before Congress to change the scope of the VA loans.

“He didn’t do it to make money. Making money was a sidebar to what he was doing,” McCarthy says. “He wanted to build communities. He knew with all those returning servicemen after World War II who had served out here either at Williams or Luke, he knew they were going to come West and he wanted an affordable place for them to live.”

Already hailed as an innovator for his assembly line methods of homebuilding, Long adopted sustainable methods years before it became popular. In 1988, John F. Long Homes was chosen by the U.S. Department of Energy to develop, construct and test a demonstration model home featuring roof-mounted photovoltaic solar cells. His Solar One became the world’s first solar subdivision. The 24-home subdivision in Glendale has almost all of its power needs met by ground-mounted photovoltaic cells.

“I think John was probably one of the greatest entrepreneurs and innovators, at least in the housing end, in water conservation, in just general development,” says Rep. John Nelson, (R-Phoenix). “He was a step ahead of everybody in those areas.”

John F. LongFor Long, finding new ways to build homes was just one part of his vision. He was interested in building a community; more specifically, he wanted the West Valley to be a place where people lived and worked. Rather than resent the fact that the West Valley was perpetually in the East Valley’s shadow, Long took the East Valley model and used it to reshape the West Valley. To that end, WESTMARC was born

“WESTMARC wouldn’t have happened without him. It’s just that simple,” says McCarthy, who first met Long in 1992, when she became the first director of WESTMARC. “He provided a lot of the seed money for us to get started, and in addition to the money, he talked to a lot of people. When you’re starting up an organization like that, you don’t have a lot of credibility because you don’t have a track record. He was willing to talk to other people and say, ‘Look, I really believe in what this organization can do and we have to give it a chance. And we all have to be willing to roll up our sleeves and get involved and help make a lot of these things happen.’ ”

Making things happen was a John Long specialty. He was always quick to donate money, land or services to make sure his beloved West Valley would continue to grow and be a place where people could raise families and build communities. A very small portion of what he gave includes the labor and material to fill potholes on 550 miles of West Phoenix streets; building and donating 21 townhouses to the city’s Affordable Housing Program; and when the Milwaukee Brewers were looking for a new Spring Training home, donating 60 acres of land for the Maryvale Baseball Park – as well as lending the city $10 million for construction.

Besides giving out of his own pocket, Long made sure others with the wherewithal gave as well.

“Dad was born and raised in Phoenix,” Jacob Long says. “This makes a huge difference. You have that sense of ownership and pride. He always was looking for ways to help others help themselves, who in turn might have the same feelings and be inspired. That is how true communities flourish.”

John Long had a standing challenge to other developers who built in the West Valley, Nelson says.

“He’d say, ‘I’ll do this if you do that,’ ” Nelson adds. “If you took a look at the developers who took a project on the West Side, they always had that challenge with John to put a project in pace that had benefits for those who lived there.”

McCarthy recalls a time when the library and senior center just north of Indian School Road and 51st Avenue badly needed repairs. Long made sure money for the upgrades was included in a bond measure. The measure succeeded, but when he found out the renovations weren’t scheduled until years later, Long took matters into his own hands.

“He went to the city and said, ‘Here’s the check for $10 million. Get it done sooner and pay me when the bond proceeds come in,’ ” McCarthy says. “So that beautiful, beautiful library and senior center he lived to see done.”

Exactly how much Long gave to the community is not exactly known, as most of his work was done behind the scenes and with no fanfare.

“Both parents instilled in us the need to be aware of someone who truly needs help and is experiencing a tough time through no fault of their own,” Jacob Long says. “One such person, a teenager, experienced a very bad athletic accident. He was confined to a wheelchair and his parents didn’t have the resources to modify their home. Dad read about this in the newspaper and he contacted the family and offered to remodel their home to accommodate the son’s special needs. This way he could be with his family. No one asked (my Dad) to do this.”

His philanthropy was not a recent development. In fact, he established the John F. Long Foundation, a nonprofit group supporting local charities, schools, education events and general community needs, in 1959. Long was generous in the extreme, but he was still a businessman and he would fight to protect his interests and those of the community he loved.

“He had a heart of gold and was tough as nails when he had to be,” Nelson says. “John sued the living daylights out of the city of Phoenix (in 1986) because they sold water to Palo Verde (Nuclear Generating Station). That was another side of John; he was not afraid to fight. If he felt he was right, he’d drag you to court. He didn’t care who you were.”

In 2000, WESTMARC created a lifetime achievement award and named it after Long. Despite all of his years working for the West Valley, the honor came as a surprise to him, McCarthy says.

“We told him we named it after him and I had never seen him speechless up to that point,” she says. “He was so thrilled at that. And then every year, I would take a couple of names to him and ask him, ‘Who do you think should get it?’ And he’d pick out the one and say, ‘That’s the one.’

“He never, ever flaunted anything. He was the most humble person. He would walk into a room and quietly sit down and unless you knew John Long, you wouldn’t know it was him,” McCarthy says. “I miss him. He was always somebody to call if you had an idea and he was willing to call you if he had an idea. And that’s how things get done.”

Phoenix Children's Hospital Expansion Will Try To Meet Critical Health Care Need, 2008

Phoenix Children’s Hospital Expansion Will Try To Meet Critical Health Care Needs

Building Hope

Phoenix Children’s Hospital expansion will try to meet critical health care needs

By Janet Perez

With the Valley falling short of health care resources such as doctors, nurses and facilities, Phoenix Children’s Hospital has an eye toward future needs as it launches its $588 million expansion. When Phase I of the expansion, which broke ground in May, is completed in 2012, the number of beds at Phoenix Children’s Hospital will grow from 299 to 632.

Those beds will be critical as officials at Phoenix Children’s estimate that by 2030, the number of children in metro Phoenix is projected to increase to more than 1.5 million, compared to 900,000 today. “There is a bed shortage in pediatrics in the Valley, as signified by things that are going on today, where we are basically running full all of the time. We turned away 1,700 children in 2007, so if you look at an admission base of 12,000, it’s 15 percent that are being turned away,” says Robert Meyer, president and CEO of Phoenix Children’s Hospital. “We already have a crisis. And if you look at the physician side, there are backlogs for many specialties. There are four to six weeks before you can get a new appointment. We have been working to reduce those backlogs. So in response to all of those issues, we are making an expansion of the bricks and mortar, which is the hospital beds themselves. We are also doing a geographic expansion to make ourselves more accessible and to get the specialists themselves — not primary care physicians — but specialists out into the community.”

Along with the expansion, Phoenix Children’s is also busy building a series of ambulatory centers around the Valley, the first of which opened in the East Valley in December at Southern Avenue and Higley Road. The second is set for Avondale and McDowell roads and should be open early in 2009. Another center is set for the Northwest Valley, along with one that already is up and running at Scottsdale Road and Shea Boulevard.

But the main building effort is taking place on Phoenix Children’s Thomas Road campus. Currently, the hospital is in a cramped location in a landlocked area of Phoenix. Meyer says hospital leadership looked at whether it should buy land in the suburbs and build a new campus altogether before opting to stay put.

“We vetted all those options out and came back to the idea that we really needed to stay basically where we are for a number of reasons,” he says. “One is freeway access and a central location to the Valley. Because we are a high end, tertiary referral center, access and a good central location are important. So literally, getting off the 51 freeway, you’re on our campus.”

For the expansion, property adjacent to the Thomas location was acquired, increasing the size of the campus from 19 acres to more than 34 acres. Phase I improvements include:
• A central plant.
• A 750-car employee-parking garage.
• A new, on-campus Ronald McDonald House.
• A new hospital featuring an 11-story patient tower and outpatient clinic space.
• A new main entry boulevard off Thomas Road.

Dave Cottle, executive director of planning, construction and design for Phoenix Children’s, says there may be a need for a Phase II expansion in the future, but in the meantime, half of the 10th and all of the 11th floor in the new tower will be shelled but not finished in anticipation of a demand for more beds.

“If our bed need increases right away, we can simply finish it off,” Cottle says. “We won’t have to bring the cranes back. We’ll be ready to go. So you build a little flexibility into your projects and that’s what we’ve done.”

The new tower will keep in place such Phoenix Children’s Hospital hallmarks as the bright color palette.

“Colors are everything for kids. You don’t see very many adult hospitals that use bright colors. It works well on kids, where it doesn’t on adults,” Cottle says. “Our artwork is different. It’s very playful versus serious. We have special committees that are going to help us with our artwork, with community input. We are going to have themes in our hospital that have to do with animals.”

Besides the children, construction of the new tower is taking into consideration the young patients’ families as well.

“This is family-centered care, so we not only look at the sick children, we really take care of the parents and give them a space to sleep in the privates rooms, we get them wireless connection to the Internet and easy access down to the cafeteria,” Cottle says.

Kitchell is constructing the new additions and the architectural firm HKS is handling the interior design.

Although the expansion comes with a more than half-a-billion dollar price tag, the current economic slump has not derailed plans, Meyer says.

“All the financing related to debt instruments for the new hospital was done in early ’07, so we avoided all those issues, and we structured it in a way that we are not affected by the current credit crunch in any way,” he says. “In terms of donations, yes, it will be much harder to raise money in this environment than it was two to three years ago. That said, in the longer-term perspective, we’re looking at a capital campaign of about $100 million to $105 million to support the expansion project over the next five to six years. Which again, is well within the capacity of this community to do.”

In fact, Cottle says, the economic malaise has actually helped the expansion, because with the residential building industry at a near standstill, construction workers are now more readily available. The cost of materials is also declining.

“Our hospital will be a steel building. Steel has gone down somewhat over the past few months because of the market,” Cottle says. “So we are enjoying good pricing on steel for instance. Of course, we’re not into the copper, the wiring and such, so we are keeping an eye on that as well. Some of those materials you can pre-purchase to keep the costs down.”

Besides the physical improvements to Phoenix Children’s Hospital, the expansion will help the facility maintain its ability to attract new talent. Since taking the helm at Phoenix Children’s in 2003, Meyer says the hospital’s medical group has gone from 46 physicians to 155, many of them specialists in such areas as juvenile rheumatology. In addition, the hospital has opened the state’s only pediatric kidney dialysis unit, and is the only place in Arizona children can go for bone marrow transplants.

The expansion is expected to be a boon to the local economy as well. Phoenix Children’s estimates that the expansion will add 1,800 to 2,000 new jobs to the Valley, in addition to the current annual employee payroll of $164 million and an estimated $11.5 million in uncompensated carelast year.July Cover 2008

Phoenix Mayor Phil Gordon says the hospital’s expansion also fits in with his vision of making the city a center of science, medicine and research. But it’s the intangibles that he finds even more rewarding for the community.

“It represents hope for a lot of people that are going through some of the most difficult and horrifying experiences they will ever face,” he says. “The hospital and its employees really represent this spirit of, what I define, as a city with heart and soul. You can just look at how dedicated the doctors are and the nurses are. I’m grateful to them being an asset to the community.”

www.phoenixchildrens.com
www.kitchell.com
www.hksinc.com

AZ Business Magazine July 2008 |
The merger between the Arizona Chamber And The AAI Has Given Business A Stronger Voice, 2008

The merger between the Arizona Chamber And The AAI Has Given Business A Stronger Voice

United and Standing

The merger between the Arizona Chamber and the AAI has given business a stronger voice

By Janet Perez

After years of wooing, the Arizona Chamber of Commerce and Industry finally succeeded last year in merging with the Arizona Association of Industries (AAI), and the result has been to give a stronger voice to a wider swath of the state’s business community.

“I think the merger has really served to strengthen the business agenda as a whole. (Legislative) policymakers have sometimes been confused in the past about what business needs and what business wants in this state to strengthen the economy, to strengthen the marketplace. I think the merger has allowed us to speak with a more unified voice,” says Eileen Klein, vice chair of public affairs for the Arizona Chamber of Commerce and Industry and vice president of government relations for UnitedHealthcare of Arizona. “It’s really allowed us to approach the Legislature with more diversity and also with the strength of more business behind our agenda.”
Overtures to merge had been made on-and-off by the chamber to the association for more than a decade, but in the spring of 2007, the talks became serious, says Mark Dobbins, former chairman of the AAI and current vice chairman of manufacturing for the chamber. AAI leaders agreed that by 2007, the chamber had changed to the point it was compatible with the association and they shared almost all of the same concerns.

“When (the AAI) board made the decision that we did not see any distinct differences in our policy positions, that was kind of the point that the wedding happened,” says Dobbins, senior vice president of human resources and general affairs at SUMCO, a manufacturer of electronic-grade silicon wafers for the semiconductor industry.

Not surprisingly, the merger led to a major restructuring of the chamber and its members’ functions. One of the first things the chamber did was restructure its board of directors and executive committee, says Ivan Johnson, chairman of the chamber and vice president of community relations and tele-video at Cox Communications. One major change was to put a board member as the chair of each chamber policy committee.

“And what that has done is that it has involved our board in developing the public policy agenda, which I think gives us a better agenda,” Johnson says.

The merger also brought the AAI’s longtime lobbyist, Jim Norton, who now uses his lobbying skills on behalf of the chamber, Johnson says. The changes have allowed the chamber to craft a more proactive public policy agenda.

“This year, for the first time, once we developed our public policy agenda, we presented that to the Legislature at our Legislative forecast luncheon. Rather than them telling us, which we always invite them to do, we said, ‘Here’s our agenda,’ ” Johnson says. “Those are things we hadn’t done historically.”

In addition, key chamber staff members now regularly attend Legislative hearings that affect the business community, as well as meeting with Legislative leadership and giving Gov. Janet Napolitano briefings every few weeks.

“We are more connected to the process at the capitol, and because of that, we have the opportunity to present the recommendations that come out of the state chamber on behalf of the business community,” Johnson says.

These changes allowed the chamber to accomplish something most said would have been impossible to do this year — make changes to the state’s controversial employer sanctions law. The law, which went into effect on Jan. 1, punishes businesses that knowingly employ illegal immigrants. The chamber has come out in force against the law and has even joined a lawsuit to get it overturned.

“Most betting people thought it would be impossible this year to make any significant changes to help law-abiding businesses through the Legislative process,” says Glenn Hamer, president and CEO of the chamber. “Through a combined effort, and working with other business groups and chambers from across the state, we were able to make some important changes to that law.”

One of those changes was to make the law apply only to employees hired after Jan. 1, 2008, and not retroactively as it had originally stated.

Another significant change to the chamber has been to create a fiscal task force that formulates policy both on how it thinks the Legislature should spend state funds and also how to allocate those increasingly scarce resources.

“We took about a dozen people on this task force through an education process of how the budget process at the state capitol works and what are the levers the Legislature and the governor have to pull to solve these issues,” Hamer says. “And then we came up with some recommendations that we then presented to both the Legislature and to the (governor). Then we started a dialogue between all of those folks and ourselves, which I think was very productive in terms of trying to come up with solutions.”July Cover 2008

While the merger has gone relatively smoothly internally, it did initially cause some confusion within the business community, Klein says. An announcement made in January when the chamber released its Legislative business agenda “really helped to clarify that this is really going to be an entity that is going to speak out on behalf of the statewide business community,” Klein says

Another challenge is to make sure members of the defunct AAI understand they hold a prominent place within the Arizona Chamber of Commerce and Industry.

“We wanted to integrate them into the chamber because we believe that together we are stronger. But we also wanted them to continue to maintain an identity within the chamber, which we think makes us all stronger. They are not losing their identity; we are keeping them visible and their point of view very front-and-center in our deliberations in the things that we advocate for,” Johnson says. “I think the merger has been one of the best things for both organizations.”

AZ Business Magazine July 2008 |
branding - AZ Business Magazine April 2008

Branding: The Mark Of Excellence

Companies need to build trust to build a successful brand

Great brands are made, not born. Ask any marketing expert and they’ll tell you that it takes a lot of hard work to build the recognition and trust necessary to create an indelible brand for a product or company.

“Really and truly that is what a brand is — trust,” says Nancy Stephens, an associate professor of marketing at the W. P. Carey School of Business at Arizona State University. “When I see your brand mark on your service or your product, that tells me, ‘Yes, I know that company, I’ve had great experiences there every time, I know I can trust it. If it’s different, I don’t know if I can trust it, but maybe I can give it a try and I’ll see if I can.’”

The Valley is home to major companies that have dealt with significant branding issues over the last decade. The first, and most high profile, came about as the result of America West Airlines’ merger with US Airways in 2005. Almost overnight, a brand that had been ubiquitous in Arizona disappeared.

“It was a difficult decision to give up the America West name for us, because it was just so well-known and, we’d like to think, well-loved within the Valley and also certain communities like Las Vegas where we have another hub,” says Michelle Mohr, a spokeswoman for US Airways.

Eventually, of course, America West took on the US Airways name because company executives felt it better captured the more national and global direction the airliner was heading toward. Not unexpectedly, the name change created confusion among customers.

“We had logistical issues,” Mohr says. “US Airways had their ticket terminals in Terminal 2 in (Sky Harbor International Airport) and America West had theirs in Terminal 4. For some flights, you had to go to Terminal 2, for some you needed to come to Terminal 4. And then we had two separate ticket counters because there were two separate reservation systems at the airline. That could be rather confusing and frustrating to a customer.”

In the end, Stephens says the test for any company re-branding itself is how customers will react — and how the company will respond.

“(Changing a brand) is not an ideal thing to do and it’s an expensive thing to do because you’re going to have to send a message to a very crowded market that says, ‘We were that, now we’re this,’ ” she says. “I would not hammer with the media money until you have the experience down right, because then you get killed. Because if you say, ‘We’re still the same great company and we really care about you, and it’s going to be efficient and our employees are going to be very nice to you,’ and it’s not that way, then all your media money works against you.”

Another longtime Arizona company that is in the process of re-branding itself is the former Phelps Dodge. Louisiana-based Freeport-McMoRan Copper & Gold acquired Phelps Dodge in 2006. Despite the radical name change, Stephens says Freeport-McMoRan has different branding challenges than those faced by a retail customer-fueled corporation. Freeport-McMoran is a business-to-business company, but it still has constituents in the form of suppliers, buyers, investors and even the communities in which the old Phelps Dodge made its mark.

Another branding challenge companies’ face is when they take steps to change the look or even the name of a product. Locally, the Shamrock Foods Company decided to change things up in 1994 by creating the Shamrock Farms line of products, revamping its packaging and adding an illustrated “spokescow” named Roxie. It was a daring move for a company that had been around since 1922 in an industry not known for generating much excitement.

“They have taken a really boring, old product and made it pretty exciting with this new packaging,” Stephens says.

Sandy Kelly, director of marketing for Shamrock Farms, admits shaking things up was exactly what the company had in mind.

“It was a real pivotal turning point for the business overall and for the brand,” Kelly says. “We really looked at what was going on and how other consumer packaged goods brands went to market, and what we realized was that the dairy industry has typically been more commodity driven and there isn’t a lot of branding going on nationally. So we wanted to be different.”

Kelly adds that consumer focus groups continue to say they love Roxie, and as a result, the bovine has become the cornerstone of the company’s marketing campaign. In 1998, in an effort to take on soft drinks, Shamrock made some noise again by introducing milk in single-serve bottles instead of the traditional carton. The single-serve bottles are available across the country, including at 21,000 Subway locations. Just recently, Subway launched a milk mustache television ad featuring the company’s spokesman, Jared, holding a single-serve bottle of Shamrock Farms milk.

Also, the company has launched a new line of organic milk and emphasizes that it does not use the synthetic hormone rBST on its dairy cows.

While the company continues to update and add to its brand, it hasn’t lost sight of what makes a brand successful.

“We use the saying: ‘Tradition meets innovation,’” Kelly says. “We have a lot of trust built up with our consumer, but at the same time, we’ve been able to stay relevant with the needs of today, which is a challenge, especially in the dairy category. We’ve been able to have that trust, we’ve been able to build that trust.”

For more information regarding these companies visit:

wpcarey.asu.edu
fcx.com
shamrockfarms.net
usairways.com