Tag Archives: Arizona Chamber of Commerce & Industry

manufacturing sector expanded

Brewer OKs tax cut law for manufacturers

Arizona Gov. Jan Brewer on Friday signed into law a bill that eliminates sales taxes on electricity and natural gas purchased by manufacturers and mining smelters, a move she said was needed to make the state more attractive to large businesses.

Brewer signed Senate Bill 1413 at a Capitol ceremony attended by a couple of dozen business leaders, calling it “another smart tax reform that will bolster job creation in Arizona and our competitive edge.”

The tax cut is expected to cost the state general fund at least $17 million a year. Brewer also vetoed money in the state budget designed to help counties make up for the losses, saying their loss was small and would set a bad precedent.

“Since becoming governor, my cornerstone priority has been to make Arizona as attractive as possible for new and expanding businesses, particularly for our manufacturing industry, which generates quality jobs and high-wage salaries,” Brewer said. “I want Arizona to be No. 1 and be the pro-business state in the nation and we have worked relentlessly to accomplish that.”

Later in the day, Brewer also signed a law providing a $5 million tax credit many say is aimed directly at Apple Inc. Senate Bill 1484 grants the tax credit to a company that installs at least $300 million in renewable power capacity to supply its own plant.

The governor touted other tax cuts, regulatory reform and business-friendly policies that she has championed since she took office in 2009. Those tax cuts have affected the state’s revenue, but she said they are important to growing the economy.

“When we bring in these new businesses it drives our economy, they bring in construction jobs, they bring in employees, they bring in money into the state,” she said. “So in the end, everybody’s ship rises.”

Brewer called for the elimination of the tax in her State of the State address in January, saying it was needed to make Arizona more competitive and draw new manufacturing to the state.

The bill received bipartisan support in both legislative chambers, although one conservative Republican in the House of Representatives dissented when it came up for a vote earlier this week.

Rep. Brenda Barton, R-Payson, says the bill places a burden on rural counties that rely on that tax base. She and other rural lawmakers managed to get $1.3 million in the budget to make up for the cuts, but Brewer vetoed that money Friday afternoon.

“I am getting to the point that a lot of these special legislation bills that we are promoting are harming the state of Arizona, and they are harming our rural counties and our rural cities, and I don’t believe we are doing a very good job of doing what’s right for the right reasons,” Barton said during debate earlier in the week. She didn’t immediately return calls seeking comment.

Others defended the bill.

“I think anytime we can support small businesses and reduce their taxes and large businesses and reduce their taxes, and allow them to reinvest in their business and reinvest in the communities and reinvest in their employees, I think we need to be looking for opportunities to do this,” Rep. David Livingston, R-Peoria, said.

Steve Macias, chairman of the Arizona Manufacturer’s Council and the operator of a machine shop that will get a small direct benefit from the tax cut, said it could bring in more manufacturing.

“Seventy percent, 80 percent of the business we do is right here in Arizona,” Macias said of his operation. “And almost all of that is to larger manufacturers, the General Dynamics of the world, the guys who make equipment for the solar industry. So when they attract those guys, I get excited because to me those are all potential customers.”

Glenn Hamer, president of the Arizona Chamber of Commerce & Industry, said 38 other states do not tax electricity use by manufacturers and cutting the tax will help the state.

“These are jobs that pay more than the median wage. They’re jobs that every other state competes for, and we’ve done something significant to make Arizona more competitive today,” Hamer said.

The tax credit bill drew the ire of conservative House Republicans, who said say the bill is unfairly tailored to benefit Apple’s planned Mesa sapphire glass manufacturing plant and picked winners and losers among the state’s industries.

Apple said in November it will open the plant and eventually employ 700 workers to provide material for its iPhone 5 cameras and fingerprint reading sensors.

The tax credit could also be claimed by other companies that build similar facilities. Tesla Motors Inc. is currently looking for a battery plant site and often mentioned as a possible candidate.

“We as conservatives have got to step away from this crony capitalist style of development,” Rep. Adam Kwasman, R-Oro Valley, said during debate on the bill Tuesday. “We cannot afford to pick winners and losers in industry. We believe in low taxes for everybody. We believe in simple rules for everybody.”

But the bill sponsor defended it, saying it was a small amount of money to help establish a large manufacturing operation. The Arizona Commerce Authority helped seal the deal with other incentives.

“I believe that they did the right thing to bring Apple here,” Sen. Bob Worsley, R-Mesa, carried the Apple bill, saying he did it because the Arizona Commerce Authority had made a commitment to the company as part of the deal to draw them here. “And the dollars are very small in the whole scheme of things with Apple being in the Valley. They could have gone to Texas, they could have gone other places and we wanted them here. It’s a good decision.”

immigration

Visa reform needed to move country forward

And so it begins. After six years since the last substantive debates over immigration reform, the Senate Judiciary Committee last week began hearings on the Border Security, Economic Opportunity and Immigration Modernization Act, the title of the legislation borne out of the months-long work of the bipartisan Gang of Eight, which includes Arizona Sens. John McCain and Jeff Flake.

The bill is a needed recognition that we need to boost border security in certain areas, including southeast Arizona, and find a realistic and humane way to deal with the estimated 11 million individuals who are not in the country legally.

But the bill also offers desperately needed visa reforms at both the high-skilled and low-skilled ends of America’s economy. The bill fills the shortage of high skilled workers by increasing the H1-B visa cap that fits our 21st century economy. As Brad Smith, general counsel and executive vice president for Microsoft, testified at last week’s hearing, “The current system does not meet the needs of today’s economy, and it must be reformed to enable ongoing innovation and economic growth.”

The bill:
Removes the numerical cap on green cards for researchers, scientists, PhDs and certain physicians;
Allocates 40 percent of employment-based visas to advanced degree-holders in critical areas and to individuals who have earned advanced degrees in the sciences from a U.S. university;
Increases to 40 percent the percentage of visas for skilled workers;
Creates a startup visa for foreign entrepreneurs who seek to emigrate to the United States to startup their own companies; and
Raises to 110,000 the cap on H-1B visas from the current 65,000, with the ability to go as high as 180,000.
Tech groups are enthused with the bill, with Facebook CEO Mark Zuckerberg leading the charge for its passage with the formation of a nonprofit advocacy group called FWD.us. The group has a broad coalition of industry leaders, including the Arizona Chamber, who believe the time is now for developing an immigration system that meets both our security and economic needs.

When it comes to high-skilled workers the numbers say it all. Fifty seven percent of engineering graduate students are immigrants, and if the immigration system is left unchanged many of these students will be forced to leave the U.S., taking their knowledge and expertise with them to other countries.

In a country in need of entrepreneurial leaders, immigrants are unmatched; 40 percent of Fortune 500 companies were founded by immigrants or their children. The ethos of America has been to bring the best and brightest from around the world, and the Senate’s bill does just that.

U.S. Rep. Paul Ryan, someone who will play a key role in advancing a reform package through the House, has wisely framed the debate in economic terms, telling The Wall Street Journal, “We believe in pro-growth economics. We believe in entrepreneurialism. Well, that’s immigration.”

If Arizona plays its cards rights and capitalizes on the knowhow of the Arizona Commerce Authority, our state can leverage a revamped high-tech visa system and our welcoming business climate to make Arizona an innovation capital rivaling anywhere on earth.

Gang of Eight member Sen. Marco Rubio has called the bill a “starting point.” Considering that the package aggressively improves the country’s high tech talent pool, I’d call it a heck of a good start.

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry. The Arizona Chamber of Commerce and Industry is committed to advancing Arizona’s competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans.

manufacturing

Regulations knock out production

Picture the slow motion shots of Rocky Balboa getting pummeled by Apollo Creed in the first of that eponymous series of boxing movies and you get the sense of what the economy — manufacturing and otherwise — is up against with regard to federal regulations.

In the course of one day last week, I interacted with people from three completely disparate industries, and the first item on the table of each casual discussion was what the new cost and time commitments would be to meet new federal government regulations.

First up was a customer meeting with a company that supports the oil and gas industry to discuss new traceability requirements put into place since the Gulf oil spill. While we can all agree the BP spill was a horrendous accident, the pendulum appears to have swung way too far the other way as the paperwork requirements for simple machined parts mean we now have to generate a half inch stack of documents that will add 20-25 percent to the cost of the part, which of course the customer does not want to pay, but is required by the government to have.

The second item of the day was a lunch meeting with a health care executive for a charitable event. We quickly became engrossed in the unseen paperwork costs associated with the Affordable Care Act. Their belief is that the added time, money, processes and people added to the system in order to comply with the regulations of the ACA will cause health care rates to jump significantly over the next 3-5 years as it is implemented, based purely on paperwork and systems – not healthcare – needs.

The last event of the day was attending an aerospace and defense supply management conference and dinner. In addition to the obvious talk of defense budgets and sequestration, the supply chain issue of the day was figuring out what to do about the new SEC rule requiring disclosure on the use of conflict minerals. As part of Dodd-Frank, this rule lays out a whole series of regulations on what to do and what must be filed if you used, did not use, knew, did not know, bought, contracted, processed, thought of, or looked at pictures of conflict minerals. Depending on your answer, independent audits may be required. So we’re now faced with not only the prospect of defense budgets being cut, potentially significantly, but now aerospace and defense companies are being asked to add another layer of non-value added work to the process.

Taken individually, each and every one of these mandates or regulations is certainly well meaning and in some cases needed. But when viewed from a cruising altitude, the totality of the regulations to the economy as a whole is stifling, which is especially troubling since we seem to always be a couple of tenths of a percentage point from teetering back into a recession.

As the new House and Senate is seated in DC, they must take stock of not only what effect each rule and regulation has on their particular hot point or constituency, but what it does to the economy as a whole and then truly question if yet another regulation is needed. Hopefully the ending to this movie is more like Rocky II. (Spoiler…Rocky wins.)

Steve Macias is the president of Pivot Manufacturing and the chairman of the Arizona Manufacturers Council. The Arizona Manufacturers Council within the Arizona Chamber of Commerce and Industry is the state affiliate of the National Association of Manufacturers (NAM). For more on manufacturing and NAM, visit http://www.nam.org/.

SkySong_Exterior_001new

9 Arizona Inc. 500 Companies to Speak at SkySong Luncheon

The nine Arizona-based Inc. 500 companies will speak to the business community at an educational luncheon event on Thursday, October 18th from 11:30 a.m. to 2 p.m. at SkySong, the ASU Scottsdale Innovation Center. These ‘best of Arizona’ company leaders will share insights on their remarkable economic success during challenging economic times.

These 9 local companies were recognized in the September issue of Inc. magazine that highlights the nation’s 500 fastest-growing companies. They hope that executives of other companies in Arizona can learn from their experience and growth techniques.

In aggregate, these nine Arizona companies increased revenues by 1,785 percen, from $4.8 million in 2008 to $90.4 million in 2011. This reflects a 166 percent annual compounded growth rate over this three-year period. What makes this even more remarkable is that this growth was achieved during
severe recessionary economic times as reflected by GDP growth of only 6.1 percent from 2008 to 2011. These companies grew almost 300 times faster than the US economy during this period.

The October 18th lunch event is titled “Arizona Inc. 500: Nine Ways to Grow” and will feature key executives from these nine companies discussing what has worked to achieve their growth.

This special business event will have three moderators: Glenn Hamer, CEO at Arizona Chamber of Commerce & Industry; Hank Marshall, Senior Vice President at Arizona Commerce Authority; and Doug Bruhnke, CEO at Growth Nation. Scottsdale Mayor Jim Lane will kick off the event. Five of the nine companies are based in Scottsdale. The presentations by company leaders will cover a range of corporate growth and business strategy topics in a panel format.

Arizona’s Inc. 500 Companies: The Joint (national chiropractic clinic franchise); GlobalMed (real-time healthcare delivery systems for telemedicine); Loan Resolution (assists banks in fixing bad loans and selling property); Blue Global Media (operates affiliate Performance Marketing Network); Digital Video Networks (interactive city-directory kiosks and audio video systems); MYTEK Network Solutions (IT services, analytics and help desk support); American Group (freight-shipping services for small and midsized businesses); DreamBrands (natural healthy anti-aging products for 40+ target market); and Citywide Restoration (restores damaged properties and offers related services).

Interested attendees can register by signing up here: http://arizonainc500.eventbrite.com/.