Tag Archives: April 2009

merger

The Wave Of Bank Mergers Has Changed The State’s Financial-Services Landscape

The banking industry has plenty of troubles, but in Arizona, the least of its problems is the aftermath of recent mergers. Bankers and industry observers say the state’s financial-services landscape hasn’t significantly changed because of the consolidations. Other than the usual branch closings and potential employee layoffs, they don’t see a big shakeup looming. One expert, however, wonders if continuing mergers nationally will lead to a banking system dominated by giant institutions that no one can afford to have fail.

There have been five bank mergers in Arizona since last summer. JPMorgan Chase & Co. acquired Washington Mutual, Wells Fargo & Company acquired Wachovia Bank and National Bank of Arizona absorbed Silver State Bank branches in Arizona. Mutual of Omaha entered the local market with its acquisition of First National Bank of Arizona, and US Bank acquired Downey Savings & Loan branches in Arizona.

“If you take a look at Phoenix and compare it to other communities, we have a large number of financial institutions,” says Lynne Herndon, Phoenix city president of BBVA Compass, formerly Compass Bank. “If you paint it with a broad brush, while there have been a significant number of mergers, this does not necessarily have the impact one might think.”

The impact would have been much greater in a smaller market, where the number of financial institutions dropped precipitously, Herndon says. But the mergers have generated a few ripples.

Herndon and Doug Hile, chairman and CEO of Meridian Bank, note that the elimination of a handful of players perpetuates the return to more traditional lending standards recently prompted by Arizona’s real estate meltdown and the ensuing recession. Hile also sees a higher concentration of retail deposits flowing into larger banks and shrinking market share for smaller banks.

“Most of the smaller banks are not in a position, or even have an opportunity, to acquire those deposits,” Hile says.

Dwindling market share is somewhat detrimental to community banks because it means Arizona’s large banks are just getting bigger, he notes.

While large banks rule the retail banking realm, community banks are the backbone of commercial banking and likely will remain so, Hile says.

“Business customers often want to have contact with the decision makers at their bank and that’s how small banks operate,” Hile says. “In that regard, the (small) banks that are healthy will have an opportunity to acquire new commercial customers.”

Alex Wilson, senior lecturer at the Eller College of Management at the University of Arizona, has a different point of view. “Your number of choices in commercial banking is disappearing,” Wilson says. “And creativity is lost as it becomes more corporatized.”

Wilson laments two potential outcomes of bank mergers — the weakening of a sense of community and the loss of institutional knowledge when middle and senior management are laid off. “

Well-run big banks know enough to try to reinstate that as quickly as they can,” Wilson says. “Badly run big banks lose that.”

Customers more concerned about fees, interest rates and having a variety of banking products to choose from are assured that competition is alive and well despite the mergers.

“There are still plenty of banks in Arizona and there is still plenty of competition,” says Marshall Vest, an economist at the Eller College of Management. “I don’t think we’re at the point where we have just one or two major players that will dictate fees and rates.”

Felecia Rotellini, superintendent of the Arizona Department of Financial Institutions, agrees: “We have a lot of competition. We always have. This is a very popular place for banking.”

Mergers probably have strengthened Arizona’s banking industry, Rotellini adds. “The banks that remain are healthy because of the merger-and-consolidation process and are a testament to our federally insured banking system,” Rotellini says. “Banks that were not healthy were acquired by healthier banks and that was done without any disruption in business.”

But as Wilson watches mergers roll out coast-to-coast, he wonders about the ultimate outcome. “

We’re probably heading for a world of three super national banks and probably a handful of little community niche banks,” Wilson says. “The good-sized regional banks are disappearing from the spectrum very quickly. As a result, (Bank of America) will be there, Wells (Fargo) apparently will be there and there will be Citi (Citigroup). I don’t know who will be left standing. The only ones left may be those little community banks.”

Citigroup, a global behemoth with multiple lines of business in financial services, is struggling and Wilson points to it as an example of the kind of risk that comes with an ever-expanding corporate waistline.

“In normal times, I would say (getting bigger) deepens the balance sheet and creates more international presence,” Wilson says. “But in the face of what is happening … I’m not sure you can make that statement. If one of these biggies falls, the ground is going to shake severely. Bigger is more efficient, but it is not necessarily better.”

| www.azdfi.gov | www.compassbank.com | www.ebr.eller.arizona.edu | www.meridianbank.com |

money line

Stabilizing Asset Prices Is Key To An Economic Recovery

The declines in asset prices are sweeping around the globe like a giant tsunami tumbling everything in its wake. Equity prices are down 47 percent from their highs, commodities 53 percent and, of course, residential real estate 25 percent. Industrial production, retail sales and personal consumption expenditures are all showing losses year-over-year and do not appear to be decelerating in any meaningful way.

In the first quarter of 2009, the negative feedback loop — the lower prices go the lower they will go — is being exacerbated by the erosion of confidence and the availability of credit. If this weren’t enough, the lack of accountability and transparency in the system is further eroding investor confidence, thereby curtailing capital spending and stifling employment.

As the monetarists and fiscal policy makers rush to shore up the banking system, they have, for the most part, missed the mark. Long ago, the highly levered global economy transitioned from a banking-dominated regime to one that hides behind securitized lending. The off-bank balance sheet structures such as SIVs (structured investment vehicles), hedge funds, CDOs (collateralized debt obligations) and the like fueled the explosion in asset prices as they levered up the system exponentially. As we are finding out the hard way, no real underlying economic value was being created, other than prices would surely be higher tomorrow, which reinforced speculative non-productive behaviors.

The false promise that rising prices alone create wealth is being unmasked as the de-levering of credit and speculative excesses unwind. The plea from Congress that banks need to start lending fails to recognize that the highly leveraged off-balance sheet bank, the Shadow Bank, is dead. The credit creation in the Shadow Bank was 30- or 40-to-1, versus 10-to-1 for the banking system most of us are familiar with. It is not that the 10-to-1 folks don’t have problems; it is that they simply do not have the capital to restructure all the 30-to-1 junk that is choking the system.

It’s about the capital
Nouriel Roubini, a highly respected economist and chairman of RGE Monitor’s newsletter, has estimated that the charge-offs and write-downs may reach $3.6 trillion before this cycle bottoms out. Bloomberg Financial, which has been tracking these charge-offs, recently reported that the number has reached $1 trillion, or about one third of Roubini’s best-guess number. In October 2008, the Federal Reserve reported that the U.S. banking system had about $1.4 trillion of capital, hardly enough to deal with the massive write-downs Roubini, Goldman Sachs Group and others see on the horizon.

The obvious simple solution is to figure out how to stop asset prices from declining further. Although this has been attempted over the past many months, the seemingly uncoordinated efforts have failed. The TARP (Troubled Asset Relief Program), which explicitly gave the U.S. Treasury the authority and money to purchase assets with the intent of stabilizing prices, instead saw those monies going into the checking accounts of banks. However well-intentioned the program was, it did little to stem the tide in the deflationary spiral, leaving us deeper in debt and virtually in the same position as when the legislation was enacted.

Price stability
In order to encourage investment and spending, we must first have price stability. Asset prices do not need to rise to get the economy moving, nor should we expect that they must. The value of the enterprise over time will be clear and will be priced accordingly. The benefits of price stability encourage investors to take on risk and give lenders the confidence to lend. Rapidly rising or falling prices merely confound and confuse even the biggest risk takers among us and that, in large measure, is why we see return of principal trumping return on principal.

All is not lost, however, as interest rates are down, mortgage re-financings are up and the stock market has attempted to battle back from some very bad economic news. The first half of 2009 is proving tough going. But we are guardedly optimistic that the second half will show signs of stabilizing, laying an important foundation for recovery in 2010. The stock market has its own twisted personality, but if it can move above the October lows the more optimistic we are that better times are ahead.

american flag, protest

Legal Arizona Workers Act Does Not Cause Expected Upheaval

In 2007, the state of Arizona made its first foray into “immigration reform” when it passed the Legal Arizona Workers Act. However, before the Legal Arizona Workers Act (LAWA) even became effective on Jan. 1, 2008, the Legislature went to work on amending the statute, presumably to “cure” some of the more controversial aspects of the law.

While the fundamental purpose and structure of LAWA has not changed, employers need to be aware of the current version of the law in order to limit the chances of being on the receiving end of an enforcement action. For example, the same legislation that tweaked LAWA also criminalized the act of knowingly accepting identity information from someone who is not actually the person represented in that identity information. Nevertheless, recent trends reported by a researcher from the University of Arizona suggest the enforcement tsunami that was expected to hit the business community is, up to now, little more than a ripple in a pond.

LAWA prohibits employers from “knowingly” or “intentionally” employing any unauthorized alien workers after 2007, and creates stiff penalties for employers who do. Penalties for first violations include mandatory probation for, and possible temporary suspension of, all business licenses issued by the state of Arizona. For a second violation during the probationary period, whether knowing or intentional, employers face permanent revocation of their state-issued licenses — thus effectively preventing the employer from doing business in Arizona. LAWA also requires every Arizona employer to verify new hire work eligibility through the federal government’s E-Verify system. However, LAWA created no “penalty” for failure to use E-Verify. So an employer who becomes the target of an enforcement action will likely be presumed to have “knowingly” hired an undocumented worker if that employer failed to use E-Verify. Evidently, most employers have decided either to roll the dice or they simply don’t recognize a risk. According to Department of Homeland Security data, as of late August 2008, only 5.6 percent of Arizona employers have enrolled in E-Verify.

Non-participation in E-Verify is not an option for contractors and subcontractors of any Arizona governmental entity. The LAWA amendments passed last year require those employers to participate in E-Verify as a condition of their government contract. In fact, any Arizona governmental entity (state or any political subdivision) would be prohibited from awarding a contract if the contractor or subcontractor does not comply with federal immigration laws and E-Verify requirements. LAWA requires government entities to ensure that their contractors comply with those requirements, and to include the following terms in their contracts:

  • Each contractor or subcontractor must warrant their compliance with LAWA’s provisions.
  • A breach of that warranty is to be deemed a material breach of the contract, subject to penalties up to, and including, termination of the contract.
  • The government entity retains the legal right to inspect the papers of the contractor and subcontractor employees who work on the contract in order to ensure compliance with the warranty.

Also, employers seeking to obtain an economic development incentive from a government entity must first register for and participate in E-Verify, and show proof of doing so. LAWA further requires the Attorney General’s office to, on a quarterly basis, request a list of Arizona employers registered with E-Verify from the Department of Homeland Security. The Attorney General must make that list available to the public on its Web site.

So far, enforcement actions against employers have been anemic at best. Judith Gans, manager of the Immigration Policy Program at the University of Arizona’s Udall Center for Studies in Public Policy, prepared a study on the preliminary impact of LAWA on immigration trends and businesses in Arizona. She found that not a single superior court enforcement action was filed during the first year of LAWA’s existence. The number of complaints filed with each county attorney during that period was one or none in nine out of Arizona’s 15 counties. The Pima County attorney reported only five complaints, four of which were declined because they involved individuals hired before 2008. The Maricopa County attorney’s office stated that it does not keep track of the number of reported complaints, and those that are filed reportedly are turned over to the county sheriff for investigation. Notwithstanding a number of high profile “raids” conducted by Maricopa County Sheriff Joe Arpaio in 2008, as reported in the local media at the time, no complaints have resulted in a LAWA enforcement action to date.

Finally, LAWA’s potentially adverse impact on Arizona’s economy has been negligible, or is simply undetectable. According to Gans’ study, the current recession has had a disproportionately adverse impact on business sectors that rely heavily on immigrant labor, such as construction. Therefore, because employment of all workers in those sectors, including immigrant labor, has been hard hit as a result of the current economic meltdown, any “LAWA-effect” has been masked.

angel statue

New Angel Investment Group Targets Women Entrepreneurs

A new angel investment group called the Catalyst Committee is gearing up to invest in local startup companies that focus on consumer goods such as apparel, high-end furniture and cosmetics. Heading up the new committee is Dee Riddell Harris, president of the Arizona Angels, a group of private investors that has been funding startup, technology-based companies in Arizona for nearly a decade.

“The Arizona Angels have rejected a number of applications from women entrepreneurs over the years because their ideas weren’t technology based or have a patent behind them,” Harris says. “So the point of the Catalyst Committee is to be supportive of entrepreneurs, particularly women, who have good ideas, as well as businesses that are not tech-based.”

Harris started building the framework for the Catalyst Committee about nine months ago. The group met for the first time in November 2008 and now has 35 potential women investors from around the state. During the kickoff meeting, the founders of three local startups talked to the group to provide an idea of the type of companies that could eventually apply for funding. High-end fashion designer Debra Davenport talked about the fashion industry in Phoenix, her couture collection, which she launched in November 2007 during Phoenix Fashion Week, and her hopes of one day raising $1.7 million that would allow her to participate in fashion shows around the world. She also showed a number of garments from her couture collection.

“Being able to participate in key fashion shows in Los Angeles, Miami, New York, Paris, Milan and London is a fashion designer’s primary marketing tool,” Davenport says. “But it’s not cheap. It can run anywhere from $30,000 to $100,000 per show when you figure in pattern making, fabrication, manufacturing and all the specialized notions, materials and threads that have to be brought in from places like Paris and Italy.”

Last year, Davenport was able to show her luxury collection during the Mercedes-Benz Fashion Week in Los Angeles. It’s the second largest and most prestigious fashion week in the United States next to New York Fashion Week. Davenport was also the first and only designer to show from Arizona, according to IMG, the production company that puts on the show. Now, Davenport was invited to show her fall collection during the most recent New York Fashion Week.

“I’m hoping that with the significant achievements we’ve been able to accomplish over the last 15 months, we will catch the eye of some savvy investment people who think this is a winning proposition,” Davenport says.

She is planning to launch her first signature fragrance later this year or in early 2010. She also plans to expand her design offerings to shoes, handbags and china patterns. The 50-year-old fashion designer has already completed designs for china patterns, shoes and luxury handbags that will be manufactured in Italy.

Kathie Zeider, senior vice president of Legacy Bank and a member of the Catalyst Committee, says there are many worthwhile businesses in Arizona like Davenport’s that serve women, or are women owned, and poised for high growth of $5 million to $50 million.

“We’re in a service and tech economy, so for Arizona to grow and prosper we need to nurture both sides of the economy,” Zeider says. “Kudos to Dee Harris for seeing this gap in the Arizona marketplace and developing an initiative to fill this need.”

Committee member Connie Jungbluth also believes early-stage investors are critical to the state’s economic vitality. “It’s important to infuse capital into early-stage companies in our community, especially in this economy,” she says. “Women are also big consumers, so overlooking businesses that serve them is not a good idea.”

The Catalyst Committee is still in search of investors to join the group. Its goal is to have 100 investors and to help one local startup company a month. Investors must meet state and federal accreditation standards. Individual investors need an annual income of $200,000 for the current year and the past two years. Couples require an annual income of $300,000 for the current year and last two years. A net worth of $1 million is also acceptable in lieu of the income standard.

Entrepreneurs can submit their applications and business plans to the Catalyst Committee via the Arizona Angels Web site. Harris says entrepreneurs seeking angel investment need to be well prepared when applying for funding; they need a strong business plan with important information aimed at investors.

“Angels are extremely interested in the management team that gives credibility to the firm, so oftentimes they read the first paragraph of a business plan, then skip straight to the management team because it’s so important,” he says. “They also want to know about the company’s marketing and sales strategy and whether the company has some type of competitive advantage.”

www.arizona-angels.org

sushi platter

Sushi Roku Blends Trendy With Traditional For A New Dining Experience

At the heart of the new W Scottsdale, Sushi Roku is taking the dining world by storm. With various locations in the Los Angeles area, as well as one in Las Vegas, this contemporary twist on Japanese cuisine has arrived to make its mark on Arizona territory.

The architecture and decor are a sleek combination of modern design and traditional Japanese accents. The bar area is comprised of concrete and a large, natural tree-root that sits at its base. Dark wood floors, an elliptical sushi bar flanking the dining area, and a dim, candle-lit atmosphere lure you in. No, this is no ordinary sushi place, but rather a total dining experience.

Sushi Roku dishUpon entering the restaurant, staff members enthusiastically greet diners, yelling out “Irasshai!” This warm Japanese welcome was the beginning of the flavorful journey that we were about to embark on. We began the evening with some traditional starters, including edamame, as well as a unique offshoot of the well-known favorite, edamame hummus, served with vegetable wonton chips. The edamame were warm, crisp and salty — just the way I like them. The hummus was also a hit, complemented by the flavor-packed chips. The standout from the appetizers was definitely the Kobe beef skewers. The tender, moist beef was offset by a punch of spice that woke up the taste buds.

Sushi RokuDining in a restaurant with sushi as part of its namesake made our dinner selection a no-brainer. We began with a natural choice for sushi lovers: the oldie but goody, California roll. After sampling a wide array, including caterpillar, softshell crab and salmon sashimi, we were still hungry for more. We decided on the katana roll, and the signature dish was well received; a combination of tuna, yellowtail, spicy tuna and shrimp tempura, it had just the right amount of zest to please. But the pièce de résistance of the sushi selections was the baked lobster roll. Covered in a creamy miso sauce, the roll had a buttery, melt-in-your-mouth taste that was a perfect balance of flavors — not too spicy, not too bland, but just right. Side tempura dishes of eggplant, sweet potato and carrot made eating vegetables a pleasure rather than a chore. Sure they may have been deep fried, but it still counts in my book.

No meal is complete without dessert and to my delight, it didn’t disappoint. Though we enjoyed the frangelico creme brulee, there was a clear winner in my eyes. A chocolate lover at heart, the lava cake was the perfect ending to a satisfying meal.

Sushi Roku can be described as part trendy sushi bar, part elegant dining excursion. All in all, Sushi Roku is a fusion of great tasting Japanese cuisine, sleek design and a hip presentation of meals. As the staff pleasantly says when you leave, “Arigatou!” Thank you! And we will indeed come again.

If you go:
7277 E. Camelback Rd.
Scottsdale
480-870-2121
www.sushiroku.com

Narrow Angle Camera Nasa Mars Mission University of Arizona

Strong Ties To NASA’s Mars Program Fuels Money Into State’s Economy

Millions of miles away and dragging a broken wheel, the Mars rover Spirit illustrates how the stars have aligned for Arizona and its growing position in space research and exploration. Besides the engineering miracle of functioning on just three working wheels, Spirit’s broken fourth appendage is unintentionally digging a trench, unearthing fresh proof the Red Planet once held water and the inklings of life.

Spirit, along with its twin rover, Opportunity, has been operating on the surface of Mars for more than five years, far longer than engineers predicted. In another happy accident, dust devils have routinely cleansed the solar panels of Opportunity, extending its life and its ability to transmit data and images of Mars. That’s something researchers did not expect, or plan for.

“That’s just great engineering — pure and simple,” says Jack Farmer, an Arizona State University professor conducting research in astrobiology within the university’s School of Earth and Space Exploration (SESE). “It’s been a great twist of fate.”

While Spirit and Opportunity might be enjoying a little luck, it isn’t a coincidence that SESE has been quietly blazing a new path for ASU, and in the process elevating the school’s prominence with NASA and a cadre of impressed scientists and researchers.

Kip Hodges came to ASU three years ago to be the founding director of SESE and brought with him an impressive curriculum vitae that includes more than 20 years at the Massachusetts Institute of Technology. In less than three years, ASU’s reputation has risen among its peers, and in the process fostered an academic environment that appeals to some of the nation’s top engineering and research talent. Today, the school continues to conduct groundbreaking experiments and research that merges earth and space sciences with engineering and high-technology processes.

“The vision that has emerged from SESE is one that fuses science and engineering to explore space and the function of our home world, and show us how and where we might evolve in the future,” Hodges says. SESE pairs two already impressive ASU disciplines: geological sciences with astronomy, astrophysics and cosmology.

“Among other things, we look at the fingerprints of ancient time — rocks, ocean sediments — study these and look at how life came to be here and the impact we as humans are having on it,” adds SESE Associate Professor Ariel Anbar, a biogeochemist interested in the evolution of the Earth’s environment. From an economic standpoint, Hodges says that while all the research — the trips to Mars and the search for how we came to be — is key to ASU, it also plays a huge role in the economy of the state and the Southwest. Partnerships to engineer a Mars rover, for instance, can impact several vendors and businesses across many levels. In Arizona, ASU has already worked with Honeywell, for instance, and aerospace and manufacturing titan General Dynamics has built transmitters and transponders to assist in retrieving the data and images from Mars.

The Phoenix Has Landed
Like an asteroid impact, the economic effects of space research extend far and wide. The Arizona Aerospace, Defense and Avionics Industry reports that Arizona ranks eighth in the U.S. in aerospace and defense industry employment and fourth in the employment of full-time workers. Industry figures show these jobs pay more than 52 percent higher than Arizona’s average wage. A recent Battelle study pins aerospace and the related research industries in the Grand Canyon State as one of Arizona’s core competencies. In fact, the state has one of the largest concentrations of telescopes in the world and a legacy of more than 50 missions.

It’s not just the Valley and ASU that reap the rewards of space research and exploration. Scientists, researchers and engineers in Southern Arizona have long played a vital role in the state’s space industry. One of the most visible projects, the Phoenix Mars Mission, put Arizona at the forefront of national media and space research interests.

The Mars Phoenix Lander descended on the Red Planet in May 2008, in full view of a worldwide audience awed by the entire process. The multiagency mission was led by the University of Arizona’s Lunar and Planetary Laboratory, with guidance from NASA’s Jet Propulsion Laboratory. The Phoenix Mars mission was the first to be led by a university, and one that Michael Drake, director of UA’s Lunar and Planetary Laboratory, says is the perfect example of what can be accomplished when a multitude of international agencies, governments and universities work together to accomplish a single goal — successful planetary and space research and all the far-reaching implications here on Earth.

Drake says projects such as the Phoenix Mars mission bring to light the pioneering research and feats of engineering being conducted in Arizona, which pump significant dollars into the state’s economy. “These types of projects have a huge ripple effect,” Drake notes, adding that UA and ASU continue to work hand in-hand to build Arizona’s leading position in space research and exploration. But, he adds, it is an investment that must come with a commitment from state and federal leaders who must realize that money invested today will likely have a significant impact years down the road. Simply put, he adds, it’s an investment in the future of the state, our universities and our economy.

“The business community understands this,” Drake says. “Besides all of the university employees and researchers, we employ a variety of small businesses — mainly in Arizona. We keep the wealth here.”

Mars Money
George Rieke, a regents professor of astronomy and deputy director of the Steward Observatory at UA, says that unlike many universities working with NASA on space missions already in place, UA has had central roles in building and operating the missions, as well as reaping the scientific benefits.

“Perhaps the most dramatic example was the construction of the Mars Phoenix Lander and its operation from a control center in Tucson,” Rieke says. “As a result, our involvement with NASA brings high technology right into our midst, along with the public interest and excitement in the resulting scientific advances. This interest, in turn, will bring interesting, high-paying jobs to us in the form of a broad spectrum of technology-based businesses.”

The impact of space research is significant in Southern Arizona. According to a recent study by the Arizona Arts, Sciences and Technology Academy, astronomy and space-related research injected more than $250 million into the state’s economy during fiscal 2006. In addition, over a 10-year period from 1998 to 2007, NASA awarded UA $444.3 million in research grants and space exploration dollars. Arizona’s clear skies and moderate desert climate continue to drive much of the growth and interest in further space-related endeavors. Besides the effects in Southern Arizona, there has been a steady increase in the monetary impact to ASU from NASA. In 2000, ASU was awarded $9.9 million in NASA grants, nearly $10.1 million in 2005 and $16.8 million in 2008. Since 2000, ASU has been the recipient of more than $121 million from NASA.

Grant money fuels research, engages future scientists and continues ASU’s cutting-edge work. Hodges, likes to point out that grant money isn’t confined to ASU. When new faculty members or researchers come to ASU to work at SESE, they bring their families, buy homes, groceries and contribute in many ways to the economy of the state. Currently, there are 42 faculty and more than 60 research scientists and postdoctoral scholars at SESE, with 97 graduate and 96 undergraduate students.

Hodges says that while the state has rightly invested heavily in the biomedical sector — and recorded some impressive economic advantages and revenue sources such as TGen — many states around the U.S. are competing for some of the same slices of the biomed pie. However, Arizona has the opportunity to be a magnet for space research and exploration.

“The tactical advantage of space science and research is that not many people are playing in that sandbox,” Hodges adds. “There is a great deal to be gained from an investment perspective. The opportunities are fantastic here.”

Future research is also compelling. The upcoming Lunar Reconnaissance Orbiter (LRO) mission is scheduled to launch this spring. LRO is the first spacecraft to be built as part of NASA’s return to the moon, and SESE has been intimately involved in preparations for this mission. One of the orbiter’s seven instruments, the Lunar Reconnaissance Orbiter Camera (LROC), was designed by one of the school’s professors, a project that has brought in nearly $10.4 million from NASA and the Jet Propulsion Laboratory since 2007. The school’s lunar center has also been working with the Johnson Space Center to scan and create an online digital archive of all the original Apollo flight films.

In 2008, SESE was awarded $14 million in NASA grants, which equates to about 10 percent of all grants awarded to ASU, and about 20 percent of grants awarded to the College of Liberal Arts and Sciences, ASU’s largest college. Unlike UA, ASU does not operate any telescopes. Also of note is the fact that $14 million is a hefty sum to be awarded when a mission is not being run.

“This is work force development at its finest,” Hodges says. “We cannot lose out on these opportunities and the momentum we’ve created.” Drake at UA agrees the state has seen significant momentum, but expresses caution and dismay over funding reductions by state lawmakers, who are wrestling with huge budget shortfalls and have identified significant cuts in Arizona’s universities.

“The state Legislature is unwittingly disregarding an enormous amount of money that comes into — and stays in Arizona — from space research and exploration,” he says. “If we can’t compete and keep the people and talent we have, the state is shorting itself of huge economic opportunities. It is very short sighted.”

Sumner Starrfield is a regent professor at SESE and a computational astrophysicist who studies stellar explosions looking for clues on where life originated on Earth. He notes that ASU and UA have made a great deal of progress in attracting and retaining faculty and, in the process, nurturing the next generation of researchers. While the state remains in the throes of a severe budget crisis, officials also contend that further cuts to Arizona’s educational system will put some brakes on the current progress.

“ASU has worked hard to get to where we are today,” Starrfield says. “The grant money generated by the school spreads throughout the economy of Arizona. It is important for us to remember what we are trying to accomplish and how it affects our future.”

Drake notes that while Arizona has made significant inroads with biotechnology job creation and research, space exploration remains an untapped galaxy of economic wealth.

“I always like to say, ‘If a field has a name, it’s too late to get into the game.’ The train has already left the station. That’s where we are at in space research and exploration in Arizona,” he says. “We are pioneering and creating a new economy here. We just need some help to continue to build something great.”

Lunar Reconnaissance Orbiter

A view of the Lunar Reconnaissance Orbiter's instrument bench with both Narrow Angle Camera (NAC) telescopes visible in the center. Photo: University of Arizona

Mars' Arabian Terra NASA photos of space

A false-color image of the dunes on Mars' Arabian Terra from the Thermal Emission Imaging System (THEMIS) on the Mars Odyssey orbiter. Photo: NASA/JPL/ASU

hand sanitizer helps stay healthy at work

Staying Healthy At Work

Stress is present in almost everyone’s lives today, particularly with the cloud of an unstable economy hanging over the country. Not surprisingly, work is one of the top things that cause people stress.

The problem doesn’t end there. Stress can affect more than our mindset and our mood — it can affect our health. The Wellness Council of America reports that 70 percent of workers say job stress causes frequent health problems. The good news is there are many fun ways employers can help their employees beat stress at work and stay healthy.

“Stress can manifest itself in many ways including obsessive (behavior), excessive worrying, making simple mistakes — such as forgetting to write a check in the register — appetite loss, muscle tension, upset stomach and headaches,” says Dr. Paul Berkowitz, a psychiatrist at Banner Desert Medical Center in Mesa.

He adds that stress can also weaken the immune system, putting people at a higher risk for catching the common cold.

Dr. Bob Orford, who specializes in preventive, occupational and aerospace medicine at the Mayo Clinic in Scottsdale, adds that stress can also result in depression, high-blood pressure, sleep deprivation, hypertension and even obesity, because people often eat as a way to relieve stress.

Orford offers many ways employers can help their employees fend off stress and increase productivity in the workplace.

“They should allow several mini-breaks for their employees throughout the day — two or three times an hour — to stand up, stretch or simply walk around,” he says. “Productivity can be increased (as a result of) those mini-breaks. “Exercise is the single best way to relieve stress,” he adds.

Orford suggests that anything an employer can do to encourage employees to exercise can help them reduce their stress.

“They can offer incentives such as a contribution for a health club, which Mayo Clinic does, or distributing pedometers and giving a bonus or discount on a health care premium if they walk a certain number of steps,” he says.

Berkowitz adds that companies should also help their employees balance work and life — thus helping relieve their stress — by working with them in areas such as shift scheduling, if at all possible. He suggests employers can offer the option to come in early or work later hours, depending on the employee’s preference. He also suggests perks such as bringing in a corporate massage therapist or encouraging employees to take a yoga class.

In fact, massages can have overwhelmingly positive results in the workplace. In a study performed by the Touch Research Institute in Miami, massaged subjects showed decreased frontal EEG alpha and beta waves and increased delta activity consistent with enhanced alertness; math problems were completed in significantly less time with significantly fewer errors after the massage; and anxiety, cortisol (the stress hormone) and job-stress levels were lower at the end of a five-week period.

“As more and more is expected of workers during these difficult times, maintaining good health is essential in the workplace. Even the smallest employee incentives make a big difference,” says Tiffany Richards, founder of The Back Rub Company in Phoenix. “These affordable programs — like a 15-minute chair massage — are some of the only things that employees look forward to, especially when everyone is over-stressed and worried.”

The Back Rub Company offers on-site wellness services, including chair massages, fitness classes, “lunch and learn” wellness workshops, guided meditation, hypnotherapy sessions and even healthy cooking classes.

Massage Makers offers corporate chair massages and on-site table massages, as well as the unique Body Mechanics program, which addresses repeated physical problems people suffer as a result of how they sit or stand continually at work. Owner Andrea “Andy” Sobczak believes that massages benefit employees by helping relax their muscles and get blood flowing, and also by providing a mental booster.

“It shows employees that (employers) are invested in them, and it gives employees a sense of value,” she says.

Sobczak adds that the human touch also makes people feel like they are important.“People are deprived of human touch … they need to feel special and taken care of,” she says. “It makes people feel good.”

Yoga is another positive stress reliever that employers can offer their employees. Danielle Price Catalfio started StudiYo of Scottsdale after working in Corporate America and realizing how stressful it can be, particularly in a down economy. She created the T.E.A.M. Yoga workshops, which stands for “the ego aware manager,” to help people “take the ego out of the workplace and see each other outside of their titles as human beings not humans doing.”

Catalfio’s two- to three-hour workshops include three main elements: a series of yoga techniques such as breathing and stretching to help people relax; the physical aspect, which helps people let go of thoughts and simply concentrate on holding yoga poses; and workplace stretches that can be done during mini-breaks. She also incorporates relational activities into the workshop that help build trust and camaraderie among co-workers.

Workplace wellness programs don’t just benefit employees. Statistics show these types of incentives actually have an economic return for employers. A report by the U.S. Surgeon General on Physical Activity and Health states that corporate wellness programs return $1.95 to $3.75 per employee, per dollar spent, and have a cumulative economic benefit of $500 to $700 per worker, per year. In addition, the American Journal of Health Promotions reports that for every $1 spent on wellness, employers can get up to $10 back through fewer medical claims, reduced absenteeism, improved productivity and other factors. Berkowitz says employers should look at workplace wellness incentives “as an investment to offset potential losses.”

Money Crunch

The Credit Crunch Is Leading Many Organizations To Outsource Asset-Intensive Legacy Processes

Market conditions are always a driving force in organizational spending, and the current environment is no exception. But in 2009, in addition to cost reduction, companies are now evaluating whether they can maximize their scarce credit availability by outsourcing capital-intensive IT functions that were traditionally “off limits” to these sorts of exercises or simply not technologically feasible.

Now, leading organizations are addressing not just the effective use of a third party expense platform, but also are evaluating the use of OPA — Other People’s Assets.

As with everything in business, outsourcing moves in cycles. In the early days of enterprise computing, when mainframes and huge computer systems were the only option and the cost to purchase was high, the only model that made sense was to outsource. However, as technology changed and developed — and as credit became more readily available — many organizations spent large amounts of capital to build and manage their IT infrastructure.

IT infrastructure comprises the data center, servers, routers, switches, firewalls and more — all of the components that make up the back end of your e-mail, CRM, ERP, Web sites, Blackberry servers, file servers, print servers, etc. IT infrastructure is core to every organization and it is not cheap, especially when you want to ensure you are doing it right.

Technology is a powerful enabler of these considerations, and nowhere can this more clearly be seen than in industry of outsourced IT infrastructure and hosted IT infrastructure. Technology has developed to a point where now the highest performance infrastructure can be allocated to multiple users. Companies such as VMware and Cisco have pioneered virtualization. This technology now allows hosting to go to the next level. No longer are hosting companies providing low-end servers and storage to their customers. With virtualization hosting, companies are now providing Fortune 100 quality infrastructure. Access to this type of technology can be a game changer, but at a minimum provides end users with the best opportunity to leverage their IT infrastructure.

Hosted infrastructure is very simply utilizing the above mentioned resources that are owned by someone else. There are multiple benefits to hosted infrastructure, including: specialization by your hosting provider (hosting is their core business), access to typically better infrastructure, newer infrastructure, higher performance, etc. And in times like these, perhaps the most relevant benefit is no capital outlay. In a time when capital is scarce, spending on only what you need and not making a major asset investment in infrastructure could be the difference between being buried in debt and fighting to the top of your market.

Emotion is perhaps the most difficult obstacle to overcome when evaluating an outsourcing decision. Wehave already touched on the fact that the job can be done internally. But another emotional aspect is tied to a person’s job, and if something isoutsourced then someone, maybe even the person doing the analysis, might put themselves out of work.Outsourcing has always been associated with people losing their jobs. But in reality, just the opposite istrue. If an organization is using capital to grow instead of building its IT infrastructure, more people will have opportunities and more jobs will be available.

Outsourcing of IT infrastructure and the use of hosted infrastructure are being utilized by nearly every large organization, and it is growing in the small and medium business sector. In the next five years, nearly every organization will benefit from outsourcing, whether it is their Web sites, e-mail, file servers, offsite storage or their entire data center. Organizations are realizing very quickly that it is more efficient to allocate their capital to grow their business than to buy servers and routers.

Spreeman Piano Innovations

Michael Spreeman, Owner Of Spreeman Piano Innovations

Michael Spreeman
Spreeman Piano Innovations
Title: Owner | Est.: 2004
www.spreemanpianoinnovations.com

From an early age, Michael Spreeman knew he was meant to work with pianos. Beginning at age 18, he experienced nearly every aspect of the industry — from servicing pianos for recording studios and artists, to technical consulting, to working as a high-end piano re-builder.

That young mindset has now come full circle with the establishment of Spreeman Piano Innovations. The company offers two models of pianos, a 7-foot-3-inch piano and a 9-foot concert grand piano. Each piano is custom built based on the client’s preferences, requiring an average of 5,000 hours of labor.
Creating a business within an industry with long-standing brand loyalty was a difficult task, but for Spreeman, it was a no-brainer.
“There is always a market for exclusive, high-quality product,” Spreeman says.

It all began when world-class pianist and composer Bob Ravenscroft asked Spreeman to redesign a piano for him. After receiving positive feedback from Ravenscroft, Spreeman went ahead with his dream of launching his own custom high-end piano building business. A five-year process of designing the ultimate piano — taking conventional technology and amplifying it — eventually resulted in the Ravenscroft 9-foot model.

The pianos are built with the finest materials, including flawless exterior cabinetry and cast iron frames that hail from one of the oldest manufacturing operations in Germany. The soundboard wood used in some of the pianos is sourced from the same forest used to create the famous Stradivarius violins. After finalizing the design for the pianos, Spreeman and his team showcased it to others in the industry. “Concerts and venues have given our pianos recognition as (a) high-end performance instrument, acceptance and support from the technical community, and has helped to secure our position in the market with other high-end manufacturers,”Spreeman says.

The transition from turning his passion into a successful business hasn’t beenan easy one, but it’s a journey that Spreeman has been more than happy to take. Instead of trying to do everything on his own, he has learned to seek assistance and advice fromthe business community. “By expanding my thinking to more of a ‘team’ or ‘collaborative effort’ approach, I have been able to assemble a core team whose skill sets are complementary,” Spreeman says.

The company employs Spreeman’s son, Andrew; Stephanie, the receptionist; and Robert Springer, who utilizes his high-tech skills to optimize the performance of the piano’s mechanical action. “As with any artist, I constantly seek out opportunities to further the knowledge base for my craft and interface with other successful business associates and artists,” Spreeman says. “Ultimately though, I’m just a guy with a dream, who is willing to take a risk and do whatever is necessary to fulfill it.”

Keith Maio President and CEO National Bank of Arizona

CEO Series: Keith Maio President and CEO National Bank of Arizona

Keith Maio
President and CEO
National Bank of Arizona

Assess the current state of the banking industry in Arizona.
It looks pretty tough. The economic environment is difficult. What we deal with in Arizona is that we have a real estate-dominant economy, so many of the local banks are heavy in real estate lending. And — as we all know and see and live in our homes every day — assessed values and real estate valuations have declined dramatically, and that puts pressure on banks. That’s starting to trickle through to the consumer segment and small business segment. Everybody is feeling impacted. That being said, I would tell you that the banks in Arizona, the vast majority, are highly capitalized. So they’ve got the capital base to weather the storm.

In terms of the storm, are you seeing any light at the end of the tunnel?
I haven’t seen the light yet. I know it’s there, but I haven’t seen it yet.

How has the turmoil at the nation’s largest banks affected Arizona-chartered banks?
I think it’s a little bit anecdotal in nature. Some of the problems that the big banks feel are not felt directly by the more local, Arizona banks. Local banks tend to be a little higher capitalized, which is a good thing, and their exposures are more direct-lending exposures versus securities investments and off-balance sheet vehicles.

At the end of the day it’s all about credit contraction, so it impacts people different ways. But the local banks are more direct lenders, so it’s what happens directly in their market.

Do you think that’s a positive thing?
I think it’s a positive thing, other than the fact that we have been impacted so badly in Arizona relative to the rest of the country. So that makes it tougher. But at least when you have direct exposures, you are able to assess on an individual basis what that exposure is.

We are hearing more about the role off-bank balance sheet structures have had in the sharp decline in capitalization among the larger national banks. What type of exposure to such off-bank balance sheet structures do local banks have?
Local banks don’t have much exposure there, and what it allows those banks to do is to assess their risk on a transaction-by-transaction basis, rather than market valuations on pools of securities. So it’s a little easier to assess their risk. Local banks have a little bit more capital to weather the storm, but their exposures on the lending side tend to be a little bit greater than the large national banks.

What challenges and opportunities does the current financial crisis hold for local banks in general, and National Bank of Arizona in particular?
Having been through this before, I think there is an opportunity — and as a CEO you’ve got to always look at the long run, not just the short run. You need to manage what we’re all in the middle of today, but you need to keep an eye on the long run. In getting through this, these tough times actually make people and good organizations better. You’ll learn, ‘What could I have done better before,’ and people who want to improve will improve.

Organizations that can improve end up much better off in the long run. And generally, anytime you have a market disruption — which this is — there’s turmoil in the market and there’s disruption. However, over the long run it presents market-share opportunities to banks. I think that’s an opportunity a lot of us have in the long run — to resettle what the market shares look like at the end of this. For the survivors, it’s a very good thing.

At the end of the day it’s all about credit contraction, so it impacts people different ways. But the local banks are more direct lenders, so it’s what happens directly in their market.

Do you think that’s a positive thing?
I think it’s a positive thing, other than the fact that we have been impacted so badly in Arizona relative to the rest of the country. So that makes it tougher. But at least when you have direct exposures, you are able to assess on an individual basis what that exposure is.


We are hearing more about the role off-bank balance sheet structures have had in the sharp decline in capitalization among the larger national banks. What type of exposure to such off-bank balance sheet structures do local banks have?

Local banks don’t have much exposure there, and what it allows those banks to do is to assess their risk on a transaction-by-transaction basis, rather than market valuations on pools of securities. So it’s a little easier to assess their risk. Local banks have a little bit more capital to weather the storm, but their exposures on the lending side tend to be a little bit greater than the large national banks.

What challenges and opportunities does the current financial crisis hold for local banks in general, andNational Bank of Arizona in particular?
Having been through this before, I think there is an opportunity — and as a CEO you’ve got to always look at the long run, not just the short run. You need to manage what we’re all in the middle of today, but you need to keep an eye on the long run. In getting through this, these tough times actually make people and good organizations better. You’ll learn, ‘What could I have done better before,’ and people who want to improve will improve.

Organizations that can improve end up much better off in the long run. And generally, anytime you have a market disruption — which this is — there’s turmoil in the market and there’s disruption. However, over the long run it presents market-share opportunities to banks. I think that’s an opportunity a lot of us have in the long run — to resettle what the market shares look like at the end of this. For the survivors, it’s a very good thing.

    Vital Stats





  • Executive vice president, Zions Bancorporation, parent company of National Bank of Arizona
  • Joined National Bank of Arizona in 1992
  • Has served as president since 2001; appointed CEO in 2005
  • Current chairman, Arizona Bankers Association board of directors
  • Bachelor of Arts, University of New Mexico; graduate, Pacific Coast School of Banking