Tag Archives: arizona department of commerce

Deco Communities

Deco Communities Acquires Sunshine Terrace Apts. for $4M

Scottsdale-based real estate development and investment company Deco Communities has expanded its Arizona portfolio once again with the acquisition of Sunshine Terrace Apartments in Phoenix. The 75-unit property was purchased for $4M on Nov. 19.  Sunshine Terrace joins Deco Communities expansive real estate portfolio that spans  Arizona and Nevada.

Located at 5615 N. 7th Street in Phoenix, across the street from the FOX Restaurant Concepts compound housing The Yard and Little Cleo’s Seafood Legend, Sunshine Terrace is located in one of the hottest up and coming neighborhoods in North Central Phoenix.

“The 7th Street corridor is one of the most vibrant areas of Phoenix and we are pleased to expand our holdings in the neighborhood,” said Rob Lyles, Partner for Deco Communities.

Tempe Rendering - PR 9-9-13

Liberty Center at Rio Salado Ready for Construction

Bulldozers and backhoes are in motion at Liberty Center at Rio Salado, the new sustainable mixed-use business park under development by Liberty Property Trust in Tempe at Priest Road and Rio Salado Parkway. The company is readying the location for construction with the recent approval of its site plan by the City of Tempe.

“Rising demand for larger, contiguous spaces is the catalyst for our quick start,” said John DiVall, senior vice president and city manager for Liberty’s Arizona region. “We have submitted plans for our first office building to the City and anticipate starting development of both that building and the main entrance to the park in the fourth quarter. Interest from current and prospective tenants is growing quickly, so we’re eager to begin to bring the vision of this park to life.”

In 2012, Liberty Property Trust was selected by the City of Tempe as the developer for the 100 acre site located at Priest Road and Rio Salado Parkway. Liberty Center at Rio Salado is centrally located in the heart of the Phoenix Metropolitan Area, offers unparalleled visibility from Arizona Route 143 and Red Mountain Loop 202, and is within minutes of Sky Harbor International Airport. The location is less than five miles from the company’s fully leased 1.2 million square foot business park Liberty Cotton Center. In addition to office, flex and industrial space, DiVall notes that the plans call for hotel, restaurant and retail locations.

“When complete, Liberty Center at Rio Salado will be a fully-visioned complex that will benefit tenants, employees and the City, and add valuable resources to the surrounding community,” he added. 

At build-out, Liberty Center at Rio Salado will feature more than one million square feet of space, and all buildings developed by Liberty Property Trust at the park will be designed to meet LEED certification with a focus on energy efficiency.

Wespac Construction will manage the earthwork on the site and RSP Architects is handling the land planning. Development work bids are still being processed.

Arizona Commerce Authority, AZRE Magazine November/December 2011

Arizona Commerce Authority Celebrates Its 1st Anniversary

With the Arizona Commerce Authority celebrating its 1st year, jobs remain the focus as the state’s CRE industry reaps the benefits.

Arizona Commerce Authority, AZRE Magazine November/December 2011In August, Tempe-based First Solar purchased 635 acres in Pinal County for $9.8M and announced plans to build a generating station on the property.

The rapidly expanding, clean-energy company is still constructing its solar module manufacturing plant in Mesa, expected to be up and running by mid-2012 with as many as 600 new, high-paying jobs.

The company also is building generating stations in Gila Bend and Yuma. In January, Power-One opened its first North American manufacturing facility in Phoenix. The California-based company, which makes inverters to convert renewable energy to usable energy, said it will employ as many as 350 people at build-out.

At Power-One’s grand opening ceremonies, Gov. Jan Brewer credited  the Arizona Commerce Authority for the big win and for wielding CEO clout and corporate incentives in making Arizona a hot spot for solar companies looking to expand or relocate.

“I have been consistently focused on ensuring Arizona is a magnet for business relocation, capital investment and a catalyst for the creation of new business and new jobs. And, with the work of my Arizona Commerce Authority, we’re seeing tremendous results in the solar space,” Brewer said at the time.

A year after the Arizona Department of Commerce, a government agency, morphed into the Arizona Commerce Authority, a public-private partnership led by a board of directors filled with many of the state’s top business leaders, six solar companies boasting a combined 1,700 new jobs have announced plans to expand or move to Arizona, says Bennett Curry, who has been piloting the organization’s business attraction efforts since it launched.

Besides growth in the renewable energy sector, diverse companies are finding Arizona attractive. They include:

  • Amazon, which recently announced plans to add another 1.2 MSF of warehousing space and 200 jobs to its existing Arizona enterprises;
  • Able Engineering, which hopes to expand into new manufacturing facilities in Mesa, eventually more than doubling its 230-employee roster within a few years of the expansion;
  • Ventana Medical Systems, which is expanding and adding another 500 jobs in Oro Valley.

Best is yet to come

Arizona Commerce Authority, AZRE Magazine November/December 2011Arizona Commerce Authority counts new jobs, not the square footage to house them, so it’s difficult to estimate the new office, manufacturing and warehousing space represented by the business growth, Curry says.

But while Arizona Commerce Authority’s mission is to generate jobs, Arizona’s commercial real estate industry is a big beneficiary of the growth, adds Mike Haenel, executive vice president Industrial Division at Cassidy Turley/BRE Commercial.

“Job growth creates absorption, construction and new development opportunities for the state’s commercial real estate industry,” Haenel said.

Arizona Commerce Authority has assisted companies such as Amazon, First Solar, Suntech and others with expansions and relocations, he says, but possibly even more important is the organization’s impact convincing local legislators and other Arizonans about the importance of proffering tax breaks and other enticements to snag coveted business.

He credits the prestige of the corporate leaders backing the group with influencing passage of the Arizona competitiveness package. And their combined weightiness as enticing to national business leaders looking for relocation options.

“Even though the Arizona Commerce Authority has only been in existence for one year, and the fact that we are in a slow recovery cycle, the Arizona Commerce Authority has  been instrumental in educating the business community and those businesses looking to relocate that Arizona has the incentives available for quality job growth,” Haenel says. “We’re still in a tough economy and having Arizona Commerce Authority can only help the state with job attraction.”

Sundt Construction chairman Doug Pruitt, an Arizona Commerce Authority board member, says the organization has logged some early successes.“Working with Arizona Commerce Authority partners, there has been a
massive reduction in vacant space,” he says.  But Pruitt says the biggest bang-for-the-buck is still to come as the organization spent much of its first year laying groundwork.

“Arizona Commerce Authority’s active projects are up 38 percent over a year ago,” Pruitt says. “One of our short-term plans includes aggressive recruitment of California-based firms within our targeted business sectors.”And the vision doesn’t stop at the Pacific Ocean. “Not only are we working to promote the state nationwide, we are taking the message that Arizona is the best place to do business to a global audience,” he says.

DMB Associates chairman Drew Brown, also an Arizona Commerce Authority board member, says each successful recruitment breeds more business. And as the expansions and relocations pile up, a boom in the state’s commercial real estate industry will be a welcome by-product.

“I think Arizona Commerce Authority’s function of attracting high-quality export jobs will be a big shot in the arm for the local economy,” he says. “The multiplier effect will encourage other new jobs.”

As more businesses come to the state, they will fill up vacant residential and commercial real estate, generating demand for new construction and development and the new jobs associated with that. “It’s out there. It will happen,” he says.

Building lasting relationships

Arizona Commerce Authority, AZRE Magazine November/December 2011Brown, like other Arizona Commerce Authority leaders, says the organization can’t take most of the credit for attracting the impressive influx of new business during its first year.

Arizona Commerce Authority has been forging important strategic relationships with key economic development groups such as Greater Phoenix Economic Council (GPEC) and Tucson Regional Economic Opportunities (TREO) to marshal joint clout, Brown says.

“We are working with the Arizona Commerce Authority on several active projects,” says Laura Shaw, TREO’s senior vice president for Marketing and Communications. “While the authority is still very new and thus getting its legs, so to speak, we have formed a close partnership and have many opportunities moving forward.”

And the Arizona Commerce Authority’s Curry says the new competitiveness package passed early this year opened a lot of doors for Arizona Commerce Authority to pitch the state’s wares.

“Before our toolbox didn’t have a lot of tools,” Curry says. “Now Arizona is ranked high among Western states.”

During a recent trade conference in San Francisco with international companies looking for a U.S. presence, the organization landed 19 meetings with interested prospects, and three are actively pursuing a possible Arizona relocation, he says.

Pruitt adds the Arizona Commerce Authority still faces hurdles — the uncertain global economy and Arizona’s somewhat tarnished reputation regarding school funding, immigration, gun laws and other issues. But he is optimistic.

“Some 300,000 of our residents have lost jobs since the recession began,” Pruitt says. “We realize that people are counting on us to do our job. The Arizona Commerce Authority takes this duty seriously and is focused on a single task — getting businesses to invest in Arizona to create jobs.”

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AZRE Magazine November/December 2011

Arizona Commerce Authority - AZ Business Magazine September/October 2011

Arizona Commerce Authority Aims To Bolster The Business Environment

The new kid on Arizona’s economic development scene is poised to shake things up. The Arizona Commerce Authority (ACA), a public/private entity, is not merely a name change, a rebranding of the Arizona Department of Commerce that over the years received its share of praise and an increasing level of criticism. And it’s not just a committee of top-shelf business leaders.

“It’s more than that,” says Don Cardon, president and CEO of the Arizona Commerce Authority. “It’s really a call to arms.”

Created by Gov. Jan Brewer through an executive order a year ago, and formally established by the Arizona Legislature early this year, the Arizona Commerce Authority is the cornerstone of the Arizona Competitiveness Package, a mix of tax benefits and incentives targeting quality job growth. The Arizona Commerce Authority’s leadership board consists of 17 of Arizona’s top CEOs who provide oversight and valuable input, with House Speaker Andy Tobin and Senate President Russell Pearce as ex officio members. Brewer chairs the Arizona Commerce Authority, and sports entrepreneur Jerry Colangelo serves as co-chairman.

The state’s university president, chair of the Rural Business Advisory Council and other committee chairs round out the balance of the 31-member ACA board.

The leadership board’s focus is on growing and diversifying Arizona’s economy and creating quality jobs throughout the state. The ACA works closely with such key partners as the Science Foundation Arizona, the three state universities, regional economic development groups and local communities.

The ACA is targeting these key base industries — aerospace and defense, renewable energy, science-technology, and small business and entrepreneurship. It is funded through existing payroll withholdings under an annual operating budget of $10 million, plus a so-called deal-closing fund of $25 million, some of which will be allocated for job training.

Michael Manson, an ACA board member and founder/executive chairman of Motor Excellence in Flagstaff, says he thinks the quasi-public agency will produce results for a number of reasons.

“By involving business leaders as we have and funding it by government we are removing some of the politics, enabling more performance and quicker response to commercial opportunities,” says Manson, who also founded PETsMART. “The pendulum swung a little far before the recession toward government regulations, but we need to get back to being more oriented toward entrepreneurial commercial opportunities.”

Mary Peters, president of Mary E. Peters Consulting Group, says the ACA draws from the successful endeavors of other states.

“We now have a mindset that Arizona is open for business,” says Peters, a former federal highway administrator with the U.S. Department of Transportation and former director of the Arizona Department of Transportation. “We’ll do what we can, especially in the aerospace and defense industries. If we’re not out there working to bring them to Arizona, other states will.”

Under the deal-closing Arizona Competes Fund, a company will need to achieve certain performance measures including average employees’ wages above the county’s average wage, health insurance coverage minimums and other requirements similar to the state’s existing job-training program. Backers say the fund will spur investment in projects in the targeted industries.

It replaced the inactive Commerce and Economic Development Council deal-closing fund, is controlled by CEO Cardon, and puts Arizona among the top one-third of states with aggressive economic development programs, supporters say.

Funds provided to growth projects must result in a net benefit to the state, consistent with the Arizona Constitution’s gift clause. In addition, an economic impact analysis by an independent third party will be conducted on all projects to determine potential return on investment benefits to the state. Furthermore, funding will be awarded with contractual provisions for performance and “claw-back” of funds for non-performing projects.

The Competitiveness Package extends the existing job-training program, a reimbursable grant program for job-specific training plans for employers creating new jobs or increasing the skill and wage levels of current employees.

Arizona’s Enterprise Zone Program is replaced with a new Quality Jobs Tax Credit for new job creation statewide. This tax credit is performance based on net new job creation and capital investment with specific eligibility qualifications for urban and rural businesses.

The tax credit for each new quality job created is $3,000 per year for three years and is limited to 400 new jobs per employer, per year. The program is capped at 10,000 new jobs per year. Experts say the program will increase Arizona’s competitiveness ranking to No. 3 from No. 9 in the Mountain West.

On the tax side of the equation, the electable sales factor for multistate corporations increases to 100 percent from 80 percent in equal increments from 2014 to 2017. A corporation that conducts business both in-state and out-of-state must apportion its income from business activity based on the ratio of property, payroll and sales in

Arizona compared to the corporation’s property, payroll and sales everywhere.

The corporate income tax rate is reduced by 30 percent to 4.9 percent from 6.97 percent in equal increments from 2014 to 2017. The change is expected to improve Arizona’s national ranking from 24th to No. 5, and from No. 6 to No. 3 in the Mountain West.

Arizona Commerce Authority

Under personal property, depreciation schedules are further enhanced for prospective acquisitions of commercial personal property on or after 2012.
Colangelo, partner of JDM Partners, explains his determination in agreeing to serve as co-chairman of the Arizona Commerce Authority.

“We will eliminate all distractions in pursuit of the ultimate goal — restoring economic vitality and stability to our state,” says Colangelo, former top executive of the Phoenix Suns and Arizona Diamondbacks. “Our new structure automatically eliminates the agency’s culture of entitlement and political sloth, and we have introduced what I believe to be a ferocious approach to both retaining and attracting business for the benefit of Arizonans, their families and our children.”

For more information about the Arizona Commerce Authority visit www.azcommerce.com.

BIG Green Expo & Conference 2011

Speaker: G Street Speakers ~ BIG Green Expo & Conference 2011

The Energy Code Workshop by G Street

G Street’s workshop is an introduction to “The Energy Code Workshop,” an innovative program initiated through coordinated efforts by the Department of Energy and the Arizona Department of Commerce. This powerful program furthers awareness and assists building professionals in improving performance buildings as guided by the IECC.

This information will help you keep pace with the rapidly changing business environment and the energy efficient initiatives that are transforming our communities.

Visit The Energy Code Workshop booth at the BIG Green Conference to register for future full-day sessions.


Topic: An Introduction to “The Energy Code Workshop”: A program that furthers awareness and assists building professionals in improving performance buildings as guided by the IECC.

Conference Speaker
Friday, April 15, 2011
Room 156

9:00 a.m. – 10 a.m.
Speaker: Harvey Bryan

 

BIG Green Conference 2011


BIG Green Expo
Friday & Saturday
April 15th & 16th 2011
9 a.m. – 4 p.m.



Sponsors:

Arizona Commerce Authority

Arizona Commerce Authority Is Tasked With Re-Invigorating The State’s Economy

As Arizona enters 2011, unemployment continues at about 9.5 percent, and according to one national ranking of commercial real estate site selectors, Arizona’s reputation as a business-friendly state continues to slide. That’s where the newly formed Arizona Commerce Authority comes in.

“It’s not about re-branding, and it’s not about a committee,” says Don Cardon, ACA president and CEO. “This is about a plan that has the governor involved. We want to significantly advance Arizona’s economic future into a pronounced global competitive position.

“This is not about politics or any industry in particular. It is how we distinguish Arizona within a global market,” Cardon adds. “The competitive nature of global markets requires the state’s absolute focus and collaboration with private-sector partners to achieve growth and diversification of the economy.”

Gov. Jan Brewer took steps to accelerate the ACA’s mandate at the board’s second meeting. Besides officially naming Cardon head of the ACA, Brewer vowed to work with the state legislature to finish “re-creating the authority as a streamlined, modern organization that unleashes the most innovative minds in the business community.”

In outlining some of the details of her economic development plan for Arizona, Brewer touched on three items:

• Creating a “deal-closing fund’’ for the government to provide cash to companies willing to expand or relocate here.

• Expanding the tax credits available to corporations that conduct research and development in Arizona.

• Eliminating capital gains for investments made in small businesses.

Putting Cardon in charge of the ACA is the first step in implementing that plan. He will lead the organization, which will focus on attracting new businesses and retaining existing businesses that create more high-wage, quality jobs.

“My intention was to return to the private sector. However, Governor Brewer and Mr. (Jerry) Colangelo convinced me this is the most critical time for Arizona,” Cardon says. “Since the Governor has allowed me to assist her in designing the road map we are pursuing, I realized this was a unique time in life where my continued involvement may be best concerning all the ACA is aggressively endeavoring to achieve.”

“Don Cardon’s work with me in restructuring and revitalizing the new Commerce Authority has been groundbreaking,” Brewer says. “His credibility in the arena of business and industry is essential to our success in advancing Arizona’s economy.”

In an executive order last summer, Gov. Jan Brewer established the 35-member, statewide ACA to replace the Arizona Department of Commerce. The ACA is led by a private-sector board that will work to align diverse assets and opportunities within the state in order to compete economically in both domestic and international markets to create high-quality jobs for Arizona residents.

In picking a board vice chairman, Brewer reached out to one of the Valley’s most successful and visible businessmen, Jerry Colangelo. Under Brewer, Cardon and Colangelo, the ACA will have a focused approach to four core areas on which to advance the state.

The ACA will work on improving the state’s infrastructure and climate to retain, attract and grow high-tech and innovative companies. The focus will be on aerospace and defense, science and technology, solar and renewable energy, and small business and entrepreneurship.

At the board meeting, committee reports detailed sustainable strategies that will help Arizona compete globally.

• Focus on science, technology, engineering and math in K-12 education.

• Focus on the innovation cycle to grow knowledge-based businesses.

• Develop toolbox and retain policy enablers for capital intensive industries to encourage high-wage employers to invest in Arizona.

• Make positive changes to Arizona’s regulatory environment.

• Foster collaboration that enables development of Arizona’s small-business community within the industry sectors.

• Enhance the ACA’s industry sectors by establishing the leadership required to connect all stakeholders, companies, universities, private-public partnerships and other organizations.

“During one of the most challenging economic conditions in our nation’s history, we are fighting for the health and future of our families and this state,” Colangelo says. “It’s also about business retention … to put everyone in the position where they can be successful. Let the people who know how to do these things take charge.”

Adds Joe Snell, president and CEO of Tucson Regional Economic Opportunities (TREO): “The ACA needs to work with the state Legislature to ensure that we have the tools and programs needed to compete with other states. Arizona desperately needs a competitive jobs bill that must address incentives.”

Creating jobs and attracting new businesses are at the top of the ACA’s list. While there are projections that Arizona will add more than 400,000 jobs by 2018, about 300,000 will be needed just to make up for those lost since the recession began in December 2007. Not helping matters is the state’s murky business climate.

The Pollina Corporate Top 10 Pro-Business States for 2010 ranks Arizona the 27th friendliest state for business. Arizona was a Top 25 state in 2004 (15th), 2005 (20th) and 2006 (25th). It dropped from the Top 25 in 2007.

In Site Selection magazine’s poll of state business climates, however, Arizona climbed to No. 17. Two major announcements at the end of 2010 helped buoy that ranking: pharmaceutical giant Roche Group’s expanded operation at Oro Valley-based Ventana Medical Systems (500 new jobs in biomedical research) and Intel Corporation’s announcement that it was upgrading and adding jobs at its facility in Chandler.

“The ACA brings a much-needed public/private partnership to lead the state in these difficult economic times,” says Don Keuth, president of the Phoenix Community Alliance. “They can address those issues that make Arizona less competitive and create strategic solutions to allow us to compete. And, they can focus on growing those industry clusters where we have a competitive edge.”

The renewable energy bill passed by the Legislature in 2009 demonstrates that economic development programs can immediately impact an industry cluster.

Case in point: Arizona is leading the country in the creation of new solar jobs. Recent examples include Rioglass Solar, a Spanish company, building a $50 million reflector manufacturing plant in Surprise; and China-based Suntech selecting Goodyear for its first manufacturing plant outside of that country.

“We need a broad vision to accept that new rules and new tools will be needed,” says board member Mo Stein, principal and senior vice president of HKS Architects, whose company designed the Valley’s newest spring training facility, Salt River Fields at Talking Stick. “It is no longer business as usual; not the same questions and certainly not the same answers.”

For more information about the Arizona Commerce Authority, visit azcommerce.com.

Arizona Commerce Authority

Cardon Named CEO, President Of State’s New Commerce Authority

Don Cardon today was officially named CEO and President of the newly formed Arizona Commerce Authority by Gov. Jan Brewer at the ACA board meeting at the Arizona Capitol.

Brewer named Cardon Director of the Arizona Department of Commerce in May 2009. On June 29, 2010, Brewer issued an Executive Order establishing the ACA and transitioning out the Department of Commerce. Cardon was on the committee to select the new head of the ACA. The committee looked no further than its backyard.

The 35-member, private sector ACA will work to align diverse assets and opportunities within the state to compete economically in both domestic and international markets to create high-quality jobs for the Arizona residents.

Cardon’s experience as an economic developer is vast. He worked in a rural Washington state community attracting international companies engaged in high-tech manufacturing, electronics and energy; he is a former entrepreneur, serving as President and CEO of Cardon Development Group, creating low-income housing tax credit projects throughout Arizona.

Cardon also helped initiate the formation of Phoenix Future, assembling business, political and financial leaders to create CityScape, a mixed-use development in downtown Phoenix. Cardon is experienced in financial planning, zoning activities, marketing and partnership development.

Arizona Commerce Authority - AZRE Magazine November/December 2010

Arizona Commerce Authority: Team Effort in Arizona CRE

If there’s one person who can help give Arizona the home-field advantage when it comes to attracting new businesses, new jobs and making the state more competitive in the global market, it’s Jerry Colangelo, the vice chairman of the Arizona Commerce Authority.

Perhaps that’s why Gov. Jan Brewer picked the Valley businessman as vice chairman of the newly formed Arizona Commerce Authority, a private sector board that will replace the Arizona Department of Commerce. The 35-member board includes a diverse group of business and educational leaders from across the state.

No matter what you’re in, it takes teams and people to win,” Colangelo said. “It’s true in every walk of life. Look at the disconnect that has existed in our state for such a long time, with the Legislature, with the business community, the lack of a game plan. Everyone has to be on the same page. And so the good news is this: There’s only one way to go. There is plenty of space here for us to be very, very successful.”

There definitely is room to grow when it comes to business attraction in Arizona.
According to Department of Commerce statistics, 47 companies located or expanded in Arizona in 2007, bringing a capital investment of $1.6B, almost 10,000 new jobs and an annual payroll of $483M. Then the recession hit and in just two years those figures took a nose dive: 24 companies located or expanded in Arizona with a capital investment of $255M, 2,649 jobs and a $124.6M payroll.

“When I became governor, I promised to get Arizona back on track by creating quality jobs, attracting high-growth industries, and advancing our competitive position in the global economy,” Brewer said. “With this board, I have now delivered a model to advance Arizona.”

Arizona Commerce Authority: Addressing the Industry’s Needs

How that model will advance Arizona is a question those in commercial real estate are asking. To its credit, the Arizona Commerce Authority includes several board members with direct business ties to the industry.

They are: Drew Brown, chairman of the board, DMB Associates; Peter Herder, chairman of the board and CEO, Herder Commercial Development; Mike Ingram, CEO and president, El Dorado Holdings; Doug Pruitt, chairman and CEO, Sundt Construction; and Mo Stein, principal and senior vice president, HKS Architects.

How do those in the industry envision an entity such as the Arizona Commerce Authority boosting a sagging commercial real estate market in Arizona?

“I look for the Arizona Commerce Authority to create a business model for all aspects of development in the state,” Stein said. “The authority will allow leverage of both public and private strengths that go beyond individual projects to opportunities that impact large segments of our communities and industries throughout the state.”

Mike Haenel, executive vice president, Industrial Division at Cassidy Turley BRE Commercial, noted: “I would like the Arizona Commerce Authority to communicate to the State Legislature exactly what it would take to relocate a company to Arizona. Thanks to a sophisticated local commercial real estate development industry, we have well-located and functional real estate available. Given the current economic conditions, pricing is extremely attractive, which translates into a perfect time to rent and or buy real estate in Arizona. The Arizona Commerce Authority needs to figure out what our state government should do to be competitive in attracting and retaining companies.”

Jim Gibson, senior associate in real estate at Squire, Sanders & Dempsey adds: “There has always been a long-standing partnership between economic development and the commercial real estate industry. Because of its role attracting new businesses to the state, I suspect that the Arizona Commerce Authority will be a tremendous resource for lead generation to brokers, developers and others in the industry. In addition, because of the Arizona Commerce Authority’s make-up of leaders in the private sector, it seems well-positioned by having both the business savvy to understand the wants and needs of companies looking to expand or relocate to Arizona, as well as having established relationships in the real estate industry to help each company assemble the right team depending on its particular real estate needs.”

Brewer made sure the new Arizona Commerce Authority is a statewide endeavor. While most board members are from the Metro Phoenix area, there also are four board members from Tucson, two from Flagstaff, and one each from Prescott and Yuma.

By creating a more competitive landscape and making economic development a higher priority, commercial real estate opportunities and transactions will result,” said Joe Snell, president and CEO of Tucson Regional Economic Opportunities (TREO). “The ability for the authority to assist groups like TREO in attracting and expanding primary jobs will result in significantly more commercial opportunities downstream.”

Listening to the Industry’s Concerns

While those involved are excited over the prospects of what the Arizona Commerce Authority may be able to achieve, there also is guarded optimism. Mark Singerman, regional director of Rockefeller Group Development Corp., said that just to stay even with what most other states offer, Arizona needs to become more competitive in attracting businesses to relocate here. He cites SB 1403, a bill giving special tax breaks and incentives to the solar energy industry.

Within several months of that incentive for renewable energy companies becoming law, there were at least a dozen solar companies looking to locate here,” Singerman said. “This type of incentive program needs to be expanded to all desirable industries.”

Up until 2006, Singerman said, Arizona became complacent about attracting residents and businesses. By virtue of being in close proximity to high-cost California, the state enjoyed steady growth with little effort.

“We now have to up our game to stay even with other states,” Singerman said. “If we have competitive economic incentive programs similar to what other states offer, our total package will be hard to beat when companies do their comparisons. But we are not there yet.”

Added Tim Lawless, president of NAIOP-AZ, adds: “While strategically targeting specific industry sectors like aerospace in the hopes of further diversifying our state’s economy is laudable, it is very unclear what the Arizona Commerce Authority can or will do to assist the vast number of firms that are already in the state, especially with their very limited budget. We need to keep in mind that we have more than 350,000 firms in our state and we need policies that will create an environment for them to survive and add jobs.

This can only happen should the Commerce Authority advocate for broad-based tax reform, rather than exclusively relying on esoteric tax breaks that create winners and losers,” Lawless continued. “Cake and ice cream tax breaks for industries like solar are fine, but only after a more substantial and well-balanced economic development diet is put on the table for all firms.”

For the Arizona Commerce Authority to make the state more competitive in business attraction, Lawless said Arizona needs to lower overall commercial property tax burdens, which are among the highest in the U.S.; create a significant deal-closing fund (non-tax benefit related) to land large employers that leverage the highest paying jobs; and lower corporate income tax rates that would put the state in a better position to compete with other Western states.

Arizona’s political climate could be another stumbling block in attracting new businesses, said Marty Alvarez Sr., CEO of Sun Eagle Corp.

“Part of the problem is the perception throughout the country that Arizona is a racist state with no upside for their companies to move here,” Alvarez said. “The Hispanic business community needs to be part of the marketing effort to dissuade the thought that our state is in political turmoil. This is the time to bring national and international firms to Arizona.
The collaboration led by the ACA needs political, social and business direction from the Hispanic business community in order to create a positive atmosphere for incoming companies,” he added. “The idea and implementation of the ACA is not only good but is a necessary solution for the future economic well being of our state. The leaders chosen to enact this organization and jumpstart the dialogue must be a public-private partnership.”

AZRE Magazine November/December 2010

Apache Longbow

Boeing’s Mesa Operations Land Major Defense Contract

Arizona is on the receiving end of a multimillion-dollar defense contract.

The Boeing Company announced that it has received a $247 million contract to begin initial production of the U.S. Army’s AH-64D Apache Block III helicopter, the most advanced multi-role combat helicopter in the world. The helicopters will be assembled, flight-tested and delivered from the Boeing Global Strike facility in Mesa.

Boeing's Apache Longbow

The new agreement covers the production costs of eight Apache Block III helicopters. However, a memorandum signed by the Department of Defense on Oct. 7 authorized the program to eventually produce 51 aircraft during the initial phase.

“Since the early 1980s, Boeing has successfully produced helicopters and developed new technologies in Arizona,” said Tony Ham, Boeing Mesa site leader, in a press release. “With the recently announced contract award for Apache Block III production, and additional work on other programs, our company leaders anticipate a continued and growing relationship with the people and industry within the state.”

Word of the Boeing contract comes days before the newly formed Arizona Commerce Authority hosts Aviation Week’s Aerospace and Defense Supply Chain Conference Nov. 1-3 at the Arizona Biltmore.

According to the Arizona Commerce Authority, the aerospace and defense industries form one of the largest sectors in Arizona’s economy, generating $8.8 billion in gross state product and providing more than 93,800 jobs.

“Arizona is renowned for its strength and rich history in aviation and aerospace,” said Rob Morton of the Arizona Commerce Authority, in a press release. “The state’s affordable business costs, relatively low taxes, and competitive regulations have made it home to many of the aerospace and defense industry’s top companies.”

The Arizona Commerce Authority, formerly the Arizona Department of Commerce, is a public-private entity working to attract businesses to the state and encourage the expansion of companies already here. The agency maintains foreign trade offices in Asia, Europe and Mexico.

Cubicle

Jobs Grow Modestly; State’s Unemployment Rate Is Unchanged

The state added 16,000 jobs in September, mostly due to the start of the new school year. Despite the modest gains, the Arizona Department of Commerce reported today that the state’s unemployment rate remains at 9.7 percent


Sept. 2010Aug. 2010Sept. 2009
United States9.6%9.6%9.8%
Arizona9.7%9.7%9.4%

Year-over-year, total non-farm employment was up 0.5 percent last month. August’s year-over-year numbers were revised from a loss of 0.1 percent in total non-farm employment to a gain of 0.3 percent. The August gains broke a 30-month streak of over-the-year job losses for the state.

For the month, the state’s employment gain of 0.7 percent were below the 10-year average, but was better than the previous two years, when the economy generated job growth of 0.2 percent in September 2008 and 0.5 percent in September 2009. The private sector had an anemic net gain of 700 jobs last month. However, for the past three Septembers, the private sector has lost jobs.


Sept. 2010Aug. 2010Sept. 2009
Overall2,403.82,387.82,392.1
Monthly % Change0.7%1.6%0.5%
Annual % Change0.5%0.3%-8%



Over the month, six sectors gained jobs and five lost jobs. The sector that had the most gains for the month was government, with 15,300. But those jobs came primarily from local and state education, with losses in the federal government offsetting some of the gains.


Professional and business services added 2,900 jobs; financial activities gained 1,700; educational and health services rose by 1,200; natural resources and mining generated 200 jobs; and construction also saw job gains of 200 in September

The professional and business services sector boasts the highest over-the-year job gains with 13,800. Over the year, trade, transportation and utilities was up 10,100 jobs; educational and health services gained 8,800; leisure and hospitality had a 1,500-job gain; and natural resources and mining generated 1,200 positions.

Over-the year losses were recorded with government (-7,300); construction (-6,100); other services (-4,000); financial activities (-2,500); information (-2,000); and manufacturing (-1,800).

The unemployment rates in the state’s largest metro areas mostly held steady or dropped slightly in September.


Sept. 2010Aug. 2010Sept.2009
Phoenix Metro8.7%8.8%8.8%
Tucson Metro8.6%8.7%8.6%
Yuma Metro23.9%23.7%21%
Flagstaff Metro8%8%8.2%
Prescott Metro10.1%10.2%9.9%
LHC-Kingman Metro10.8%10.9%10.8%

Projections

Fewer Jobs Will Be Lost This Year, But Growth Will Remain Slow In 2011

In an updated forecast released today, the Arizona Department of Commerce Forecast reports that the state’s nonfarm job losses for 2010 have been revised downwardly. The department now forecasts that the state’s economy will lose 25,700 jobs this year, as opposed to the 50,400 originally forecast. However, the department also revised its forecast on how many nonfarm jobs Arizona’s economy will create in 2011, from 23,100 to 16,500. The fact that Arizona will be losing fewer jobs this year is being attributed to:

  • Federal government economic stimulus program spending that began in 2009.
  • Continued employment growth in the education and health services sector.
  • Improved job growth in the professional and business services; trade, transportation, and utilities; leisure and hospitality; and natural resources and mining sectors.
  • Stronger than anticipated global economic growth.


The downward revision in 2011’s job growth rate is being attributed to:

  • Tepid growth in the private sector due to sluggish business and consumer spending.
  • Large state and local government budget deficits.
  • A slowdown in population growth.
  • Limited consumer and small business lending by banks.


Gains in five sectors and losses in six sectors are expected over the two-year period (2009 to 2011). The major sectors in the Arizona economy where job gains are forecast include: educational and health services; professional and business services; trade, transportation and utilities; leisure and hospitality; and natural resources and mining. Sectors with projected job losses during the same time period include: government; construction; financial activities; information; manufacturing; and other services.

Arizona Sector Employment
Average Annual Over-the-Year Change


2009

2010

2011

Total Nonfarm

-7.3%

-1.1%

0.7%

Manufacturing

-11.6

-3.0%

1.3%

Natural Resources/Mining

-17.8%

1.8%

12.3%

Construction

-30.8%

-11.8%

1.8%

Trade, Trans. & Utilities

-7.1%

0.6%

0.6%

Information

-6.4%

-6.4%

-2.9%

Financial Activities

-5.0%

-3.2%

-1.6%

Professional & Business Svcs

-10.4%

-0.3%

2.8%

Educational & Health Svcs

2.7%

2.6%

1.8%

Leisure & Hospitality

-5.2%

0.4%

0.8%

Other Services

-6.6%

-2.1%

2.0%

Government

-2.2%

-1.8%

-1.9%


Total Nonfarm Employment
Annual Average Growth Rate

2009

2010

2011

Arizona

-7.3%

-1.1%

0.7%

Phoenix MSA

-7.9%

-1.0%

0.8%

Tucson MSA

-5.1%

-1.1%

0.4%

Rest of State

-6.4%

-1.1%

0.6%

87813512

Arizona’s Unemployment Rate Climbs In August

Despite some gains in the governmental sector, the state’s unemployment rate for August rose one-tenth of a percent to 9.7 percent as private sector hiring was flat, according to the Arizona Department of Commerce. Usually, Arizona’s economy generates jobs in August, but last month only 28,000 jobs were created. That was still better than August of 2009.

Most of the seasonal job gains were the result of local schools bringing on 26,000 positions for the start of the academic year. State education added 7,000 jobs, with losses in other government agencies offsetting some of the gains.

The private sector posted gains in five sectors and losses in five sectors for a net decline of 800 jobs. Of the state’s 11 industry sectors, government posted the largest job gains at 29,000. Educational and health services followed government, adding 3,000 jobs. Construction continued to add jobs in August, generating 1,900 and giving the industry a net gain through the first eight months of the year.

The Commerce Department reports that, “Construction employment trends in 2010 indicate stabilization in the industry after 28 months of continuous losses.”

Other sectors creating jobs in August were: professional and business services (1,800); trade, transportation and utilities (1,100); and natural resources and mining (100). The sectors that lost jobs last month were: information (500); financial activities (800); manufacturing (1,400); and other services (2,000).

Leisure and hospitality lost 4,000 jobs last month, which the Commerce Department called “unusual.” With the winter tourism season generally starting after Labor Day, hotels and resorts in the state traditionally tend to ramp up hiring in August.

Year-over-year, the jobless situation in Arizona continues to show improvement. Total nonfarm employment last month was down 0.1 percent. In August 2009, it was down 8.3 percent. Compared to August of last year, four sectors registered year-over-year job gains last month. The professional and business services sector was up 8,200 jobs; trade, transportation and utilities was up 7,700 jobs; educational and health services had a gain of 7,100 jobs: and natural resources and mining posted gains of 1,000.

Around the state, only the Phoenix and Tucson metro areas held steady with their unemployment rates. Other major metro areas in the state posted increases in joblessness. Here’s a look at unemployment around the state:

Phoenix Metro: 8.8%
Tucson Metro: 8.7%
Yuma Metro:    23.7%
Flagstaff Metro:   8.0%
Prescott Metro:   10.2%
LHC-Kingman Metro: 10.9%

2 wind turbine with solar panels in front of a blue cloudy sky

Can Green Save The Day? Leaders Across The Valley And State Are Betting That Sustainability Will Help Lead To Economic Stability

Search for the word “sustainability” on Google and you’ll end up with nearly 25 million hits. But what does sustainability mean to Arizona, especially as the state’s economy crawls out of the crater left behind by the recession?

“The word sustainability and the word green means different things to different people — it’s more than just environmental technologies … The real question is how is the concept of sustainability affecting businesses at large. Because sustainability is a business issue,” said Rob Melnick, executive dean of the Global Institute of Sustainability/School of Sustainability at Arizona State University.

Though 2009 proved to be a difficult year economically, it was a landmark year for the green industry in the Grand Canyon State.

In October 2009, Clean Edge Inc., a research and publishing firm devoted to the clean-tech sector, listed Phoenix in the top 15 U.S. metro areas for clean-tech job activity. Phoenix was in the company of established cities in the industry such as San Francisco, Oakland and San Jose, Calif., as well as Denver, Boulder and Greeley, Colo.

A month later, Gov. Jan Brewer signed Senate Bill 1403 into law, creating the Renewable Energy Incentive Program, which provides refundable tax credits and property tax reductions for manufacturers.

“That sent a resounding alert to the industry that Arizona was serious about becoming a global leader in the renewable energy sectors,” said David Drennon, spokesperson for the Arizona Department of Commerce. “The result has been a solid response in companies — particularly in the solar industry — to consider establishing operations in Arizona. It means investment in our state and jobs for Arizonans.”

In her State of the State address in January, Brewer reinforced her belief that the sustanability industry will have a positive effect on the state’s economic recovery.

“We celebrate significant progress in establishing our foothold in the solar industry, and in advancing our competitive position in the national and global economy,” she said. “Our goal is to land the top solar manufacturers in the world and we are well on our way.”

School of Sustainability building at ASU
The School of Sustainability at Arizona State University has done much to advance the state’s reputation in the global green industry.

And on the federal level, President Barack Obama in January unveiled $2.3 billion in Recovery Act Advanced Energy Manufacturing tax credits for clean energy manufacturing projects across the United States. Companies with plans to build in Arizona requested nearly $30 million in tax credits. In a release announcing the funds, Obama stated, “Building a robust clean-energy sector is how we will create the jobs of the future. (The credits) will help close the clean-energy gap that has grown between America and other nations, while creating good jobs, reducing our carbon emissions and increasing our energy security.”

Slow Beginnings
Although the Renewable Energy Incentive Program signaled the state’s shift toward a valid future in the green sector, Arizona still has a way to go before catching up to other states.

A new study by the nonprofit research group Next 10 found that between 1995 and 2008, California had a 2.4 percent annual growth rate in its core green-economy employment. The study also found that although total jobs in California decreased 1 percent between January 2007 and January 2008, green jobs increased 5 percent.

“The state has to make some strategic investments,” Melnick said. “It’s got to be creative about regulation, work force development, finance and marketing itself. Right now, no one is saying Arizona is the green job capital of the world. We really could have been the solar capital of the world 20 years ago. We were growing so fast and so rich, but now we need it.”

Barry Broome, president and CEO of the Greater Phoenix Economic Council (GPEC) echoes these sentiments.

“It’s a very policy-specific industry,” Broome said. “We have to think critically about energy policy, planning and community economic development.”

Now more than ever, Arizona needs to take the right steps in securing the industry as a valuable economic engine.

Green Jobs
The burgeoning sustainability industry is growing green jobs, bringing the prospect of much-needed employment to the state.

Brewer recently announced that one of the world’s largest solar-cell manufacturers, China-based Suntech Power Holdings, will bring its U.S. headquarters to the West Valley this year. Suntech, a multibillion-dollar corporation that makes photovoltaic solar cells and solar electric systems, will potentially be one of the first companies eligible for the Renewable Energy Incentive Program.

“We did quite an extensive search around the country,” said Steven Chan, chief strategy officer of Suntech Power Holdings. “(Arizona) had a combination of a strong potential market, very supportive policies and incentives, and very good educational institutions.”

The plant is set to open in Goodyear and is expected to begin production in the third quarter of this year, with an initial production capacity of 30 megawatts. The 80,000 to 100,000-square-foot plant will be designed with growth in mind, due to the anticipated expansion of the U.S. solar market.

Suntech announced it is expecting up to 150 jobs for the company’s first phase — 75 at launch, with the potential to double within the year. The plant will have a variety of jobs that will be focused mostly on manufacturing and operations.

“We’re looking forward to building a long-term base for Suntech in Arizona. We feel that both in Arizona and across the U.S. there is a promising future for a green work force,” Chan said.

Another manufacturer also has announced plans for an Arizona presence — and it comes from an unlikely source. Tower Automotive, a producer of structural metal components for the automobile industry, plans to invest $50 million in an Arizona plant. The decline of the U.S. auto industry hurt the company and spurred it to diversify its product line. The plant will manufacture mirror assemblies for solar-power systems and will employ about 200 people.

hr_industry_leader

2009 HR Industry Leader Of The Year Honoree

Patrick BurkhartName: Patrick Burkhart
Title: Assistant Director
Company: Maricopa County Human Services Department/ Maricopa Workforce Connections

Years with city: 3.5
Years in current position: 2.5
Entity Established: 1998
Employees in AZ: 71
Employees in HR dept.: 4
www.maricopaworkforceconnection.com

Words such as “tirelessly” and “diligently” are used to describe the work ethic of Patrick Burkhart as he collaborates with Maricopa Workforce Connections (MWC) to help people find jobs and assist local businesses seeking qualified employees to hire.

Burkhart is assistant director of the Maricopa County Human Services Department, and MWC is a department division.

MWC offers comprehensive recruitment and talent-acquisition services to businesses, organizations and associations located in Maricopa County and outside the city of Phoenix. Its services are particularly important in today’s recessionary times, as it researches labor market trends and helps job seekers identify their transferable skills. MWC also helps individuals refine their employment search to ensure they are applying for the right jobs using appropriate information and job-hunting techniques. MWC is funded by a federal grant under the Workforce Investment Act of 1998, and offers its services for free to both businesses and people.

Building relationships is Burkhart’s forte. He establishes rapport with community partners, business leaders and others who may be beneficial to MWC’s clients. He oversees MWC operations and is always looking for opportunities to leverage support and improve efficiency. For example, Burkhart tapped the expertise of another agency to streamline MWC’s processes, reduce waste and alleviate staff stress caused by the increasing number of job-seeking clients requesting assistance at the county’s career centers.

Burkhart also took the initiative to bridge gaps between MWC and other work force development agencies in the region to form the Maricopa County Human Capital Collaborative. The collaborative applies for grant funding to enhance the efforts of local work force agencies and bring additional resources to the area.

Because MWC is federally funded and resources are directed to businesses and individuals, money is not available to pay for memberships in various organizations. Instead, Burkhart and his team work closely with chambers of commerce, the Greater Phoenix Economic Council, the Arizona State Council of the Society for Human Resource Management and the Governor’s Council On Workforce Policy at the Arizona Department of Commerce. Burkhart also works with dozens of public and private organizations that either provide services to the community or have a stake in MWC through positions on its youth council and board of directors.

MWC offers an array of business services, employer services, employed-worker training, on-the-job training, recruitment services, youth services and job fairs. MWC also informs businesses on an array of employment and training-related tax incentives. These incentives include state corporate income tax credits for the creation of new jobs at companies with less than 10 percent retail, a 40 to 60 percent reduction of property taxes for five years at small manufacturing companies, federal work opportunity tax credits and federal welfare-to-work tax credits.

MWC also offers assistance to companies that are downsizing and helps displaced employees with their transition to new employment. Services include information on unemployment insurance, career and job fairs, access to job postings, and workshops on job-search skills, resume writing, interviewing, personal finances and budgeting.

Michael Bidwill Arizona Cardinals

Q&A: Michael Bidwill, President, Arizona Cardinals

During these difficult economic times, how vital is an organization such as the Greater Phoenix Economic Council (GPEC) to the local economy?
GPEC is vitally important because it is the only regional organization focused exclusively on bringing new business to Greater Phoenix. Because GPEC works closely with companies considering expansion to the region, they know what companies need to make business decisions and gain insight into what steps the state can take to better compete with our Mountain West competitor states.

What can the Valley do to better position itself to succeed once the recession is over?
Diversify our economy and work with public sector leaders to create sensible, new programs that bring high-wage industries to Arizona. During the last decade of the real estate explosion, Arizona was one of the leading job-producing states. Over the last two years, we have fallen to 49th in terms of new job creation. Business as usual will not work. Now is the time to change our metrics and compete for other industries to migrate to Arizona.

Arizona and Greater Phoenix routinely lose projects to less desirable locations because of aggressive relocation programs in other states. GPEC has developed modest, fiscally responsible programs, such as the Quality Jobs Through Renewable Industries program, for the Arizona Legislature to consider. GPEC has vetted these programs with decision-makers in the renewable energy industry. Senior executives within these industries have told us this program would put Arizona in a more competitive position to win projects. GPEC also had Elliott D. Pollack and Company conduct a third-party review of our program to confirm its fiscal impact.

We need to immediately work with the state to develop and implement new programs that make our region more competitive.

What are some of the initiatives and goals you have planned this year for GPEC, and how will you go about achieving those goals?
In addition to solar and renewable energy, GPEC has three other strategies that we feel are meaningful generators of new business. We continue to work aggressively on a foreign direct investment program, as the United States is still an attractive environment to invest in for international companies. Next, in working with many of our public sector leaders, we are actively seeking to locate companies to Greater Phoenix from neighboring states with higher operating costs of doing business. Lastly, health care in Arizona is an untapped resource. In fact, Arizonans routinely seek health care outside of the state valued at hundreds of millions of dollars. We need to work with the health care industry to determine the needs not currently being met in Arizona and look to those opportunities for economic growth.

How did you first become involved in GPEC and how have your own professional experiences prepared you for your current role?
The Arizona Cardinals have long been stakeholders of GPEC, as we believed in its important work. I had no personal involvement until Glendale Mayor Elaine Scruggs asked me to serve on the GPEC board three years ago. I was honored to join and realized quickly how critical this organization is to helping our local economy grow, especially during this downturn and with the state’s budget cuts to the Arizona Department of Commerce.

You’ve seen first hand how important professional sports are to the local and regional economy. How can the Valley capitalize more on that in the future?
Sports are important to Arizona and we need to support what we have now. But, again, we need to focus on diversifying our economy. Like a personal stock portfolio, we cannot become “over-weighted” in any single sector. We have all the teams we need, but it will be important to attract events with significant economic impacts and exposure like the Super Bowl in the future. Our regional success will depend largely on creating a diverse and vibrant economy around many new industries and we can’t look to real estate or sports to take us out of this downturn.

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

small business open sign - AZ Business Magazine April 2008

Small Business Is Big Business In Arizona

There’s really no need for small business owners to feel like they have to go it alone in Arizona, not with the variety of programs, organizations and resources available to provide help.

There are obvious places to start. The Arizona Department of Commerce has an online resource center that is filled with links and information. Be sure to download the free resource guide. Also, go to the U.S. Small Business Administration’s Arizona District Office Web site to find out about the many resources, services and tools available there.

The Arizona Small Business Association is an organization that serves as an advocate for small businesses and is dedicated to helping them grow. There is a modest $125 annual membership fee that provides access to various services, networking opportunities and value-added programs such as a group health care plan. A worker’s compensation program, in association with SCF Arizona, may lead to bonus dividends based on the safety success of association members.

“Small business is big business in Arizona and small businesses need to understand how to partner, how to connect, how to access resources in a cooperative mode,” says Joan Koerber-Walker, ASBA’s chief executive officer. “And that’s what ASBA gives them.”

The SCORE Association is well-represented in Arizona with chapters across the state. Successful retired executives and business owners provide free one-on-one counseling and stage low-cost seminars that deal with virtually all issues, including raising capital. In fact, according to Chet Ross, chairman of SCORE’s Phoenix chapter, a team of counselors will actually visit a client’s place of business.

Another place to turn for answers is the Arizona Small Business Development Center Network, a partnership between community college districts and the SBA. The AZSBDC offers free business counseling, workshops, programs, and help with technology development and commercialization.

These resources are in place to help businesses of all types, so take advantage of their offerings throughout the start-up process and beyond.

For more information visit the following websites:

sba.gov/localresources/district/az
asba.com
azsbdc.net

Job Hunting with Jobing.com - AZ Business Magazine February 2008

Good Job Hunting

For Jobing.com, it’s the people, not the technology, that makes the difference.

 

At Jobing.com, The Wall says it all. Scrawled on walls that wrap around a busy office and down a hallway are comments from countless clients, partners, association groups and government friends expressing their appreciation for a job well done. Aaron Matos, the 35-year-old brains behind the fast-growing Jobing.com, says The Wall just kind of happened.

“It originally was just images and our mission statement and some things we wanted internally,” Matos says. “One day a client came in and wanted to write on the wall. He signed a little note — and suddenly it caught on.”

Launched in Phoenix in 2000, Jobing.com was named to the Inc. Magazine 2007 list of the 500 fastest growing privately owned companies in the country for the third consecutive year. It also received an Economic Engines of Arizona Award last year from Arizona Business Magazine.

Jobing.com serves 18 markets in eight states, including Colorado, New Mexico, Texas, Florida, California, Nevada and Wisconsin, matching local residents with local jobs. Nationally, Jobing.com counts 35,000 employers among its clients, gets 3 million hits a month from job seekers, and provides leads for 80,000 different types of jobs, spokesman Joe Cockrell says.

In the Phoenix area, health care related jobs make up a large part of the firm’s business. It’s free for job-seekers; employers pay a fee to advertise based on a variety of factors.
“Prior to starting Jobing,” Matos says, “I was in human resources for 10 years. It became clear to me that what really helps drive a business is recruiting the right talent. You could never train the wrong person to do the right job.”

A native Arizonan, Matos worked full time in HR-related jobs while attending Glendale Community College and Arizona State University West, earning a bachelor’s degree. He holds a master’s in business administration from Northwestern University.

“I found early on most people didn’t love their jobs,” he says. “It was clear to me that when people loved what they did, they performed better and were passionate about their lives.”
Sports sponsorships with the Phoenix Suns and Arizona Diamondbacks led Matos to explore opportunities with the Phoenix Coyotes hockey team.

“We decided to think big,” he says, referring to a 10-year naming rights deal for the Glendale arena that houses the Coyotes and is considered a first-rate concert venue.
“We felt it would catapult our brand and the awareness of the company,” he says, but declines to disclose how much the deal cost.

Ironically, when Jobing.com holds a job fair in the Phoenix area, Jobing.com Arena is too small. Held in the adjacent University of Phoenix Stadium, the fairs typically attract more than 300 employers and 7,000 to 10,000 job seekers in a day, he says.

Another marketing tool is the fleet of some 160 multicolored small vans that Matos calls “moving billboards — they get Jobing’s name out into the community.”

Every employee gets one and the company reimburses them for the monthly payments, plus pays for gas, but not insurance.

Matos was interested in computers at an early age.

“I’ve always been a computer guy,” he says, “but the passion behind this business is on the human resources side, not the technology side.”

Matos came up with the idea for Jobing.com while working for a publisher of niche newspapers. Today, his company is the fifth largest of its kind in the country. His goal is to cut into the market share of his two biggest competitors, Monster and Career Builder, and to tap into help-wanted ads that newspapers are losing.

The reason for the growth of the industry, he says, is that advertising online is more cost-effective and it’s easier to reach a targeted audience.

Kent Ennis, deputy director of the Arizona Department of Commerce, sees Jobing.com as a perfect fit for the state agency.

“Commerce tries to recruit businesses to the state, which includes new jobs, and Jobing.com recruits the work force,” he says.

Matos doesn’t consider Jobing a tech company, even though the connection between employers and job seekers is via the Internet.

“We consider ourselves much more of a services media company, serving HR professionals and job seekers,” he says.

Ron Schott, executive director of the Arizona Technology Council, says Jobing.com combines the human element with technology, using a state-of-the-art computer system. Job hunting on the Internet is the wave of the 21st century, Schott says, “until a newer wave comes along.”

Jobing.com is riding the current wave.

“It’s a great company and it’s great that we have them headquartered in Arizona,” Schott says.

Matos, reflecting on the growth of Jobing.com, says, “When I look at what we’ve done, maybe we’ve only finished chapter one of a really long book.”

Visit jobing.com for more information.

 

Arizona Business Magazine February 2008

Winery

Wineries Win Battle At Capital

Southeastern Arizona:
The Border Report

Significant business developments promise to fortify the economies of Arizona’s southern half

By Peter O’Dowd

After battle waged at the Capitol, local wineries still in the game. Poised to enter the State Legislature with a litigious flurry, Arizona wine growers dug in for a fight of David and Goliath proportions. When the dust settled and the vote was cast, the underdog had defeated a lobbying giant, leaving an unencumbered path for the future of the state’s wine industry.

border_reportThe history of Arizona wine law is tangled in a bevy of U.S. Supreme Court cases and litigation in states that were previously consumed with distributing regulations. In a nutshell, with the approval of Senate Bill 1276 last May, Arizona wineries reaffirmed the right to self-distribute to restaurants and retailers. Smaller wine growers also secured the privilege to bypass wholesalers and ship directly to consumers via telephone, mail and Internet sales, or set up satellite tasting rooms and retail outfits away from their remote locales. These steps, which wine growers say are essential to their survival, were not allowed under previous legislation.

“You have to understand how dominate the wholesale part of the liquor industry has been for years from a policy standpoint,” says Rod Keeling, president of the Arizona Wine Growers Association and owner of Keeling-Schaefer Vineyards in Pearce, Ariz. “They were in total disbelief that a bunch of guys with dirt under their fingernails could come up here and convince the legislature that they ought to do something for us instead of something for them. I’m still not sure they know what hit them.”

Keeling and his colleagues feared wholesalers would convince lawmakers to revert back to a three-tier system that mandated even small wine makers sell to wholesalers who would then distribute to retailers, and ultimately, consumers. Keeling says an 11th-hour compromise between the groups was preferable to the lawsuit his organization would have brought if boutique growers were forced under the three-tier system. “That would have been death,” he explains.
So, instead of a deathblow, Arizona vineyards are in a position to expand. Kent Callaghan, who has received international attention for his varietals crafted 30 miles from the Mexican border, says offsite retail presence gives growers more options to stay in business. “Certainly you’ll see an increase in quality and quantity,” says Callaghan, who claims improvements are already brewing. “Nobody associated Oregon or Washington as a wine growing area 30 years ago. It took a while for the state’s wine to catch on with its residents. The same thing is happening here where people have stopped immediately acting negatively toward Arizona wine.”

Keeling agrees, but doesn’t shy away from past shortcomings. Five years ago he could only stomach two Arizona labels. Now he drinks six or seven. “We’ve added a lot of quality producers,” he says. “They are smarter, more committed to quality, not using the tourism model; it’s not being sold as a novelty but on its own merits. Kent Callaghan deserves all the credit for that.”

For years, Keeling says the state was stuck at eight or nine wine growers, but in the last two years that number has swelled to 22. What used to be a state of 12 or 13 vineyards is now the home to 32. Perhaps most telling are the production numbers: 15,000 annual gallons four years ago compared to 47,000 gallons today.

Indeed, the gears may already be moving and some predict Willcox will become the state’s vineyard epicenter. Amid favorable water and weather conditions in Cochise County, experienced wine grower Dick Erath bought 200 acres close to town. As these seasoned experts employ Arizona’s nascent vineyards, the relatively small knowledge base grows, techniques improve and the industry blossoms.
Of course, favorable legislation doesn’t hurt either.

Nogales
Extra Lanes Slash 4-hour Border Wait
Nogales, Ariz.—Port Authority officials here anticipated a July completion of two additional commerce lanes linking Mexican and U.S. boundaries that would reduce agonizing wait times at the border. The $4.3 million expansion brings to four the number of lanes motorists and commercial trucks use to cross the border. Terry Shannon, chairman of the Greater Nogales-Santa Cruz County Port Authority, says the Mariposa Port of Entry can process 300 trailers effectively per day, but in reality 1,400 trailers line up daily on either side of the border. The glut creates an average wait of four hours. This is the first step in a larger plan to reconfigure the port. $9.8 million is secured in the 2007 presidential budget for a port with capacity for 3,000 trucks per day.

Tucson
SlimFast Site to Can Beans, Not Shakes

Tucson, Ariz.—The former SlimFast manufacturing building in Tucson has been vacant for nearly two years, but plans are under way to fill the 440,000-square-foot plant with food of a different fare. Arizona Canning Company LLC, of Mexico, announced in June the building would house its U.S. headquarters, bringing 200 employees to the region in the next three years. The majority of the recruits will be from the Tucson area. By summer 2007, Arizona Canning Company plans to buy raw material from U.S.-based suppliers, receive it in Tucson, process and sell the plant’s output to U.S. markets across the country. “This will be a huge win for Tucson,” notes Joe Snell, TREO President & CEO.

www.lacostena.com.mx

Bowie
Gasified Coal Emits a Fresh Breath

Bowie, Ariz.—Developers of the 600-megawatt Bowie Power Station announced the electric generation facility planned for Southeastern Arizona will now incorporate environmentally sensitive coal technology. The project will gasify coal before combustion for cost-effective generation while protecting the environment, creating local jobs and economic growth. Developers say the project will lessen Arizona’s dependence on natural gas for electric generation. “This is unlike a conventional coal plant where its pulverized and burned,” says spokesman Ian Caulkins. “In this case, mercury, sulfur and other contaminants are removed prior to combustion.” Bowie is expected to outperform the efficiency and emissions of existing coal power plants, which will make it one of the cleanest coal plants in the world. The Arizona Corporation Commission has already granted a certificate. All remaining regulatory requirements will be completed by 2007 and construction will then begin as soon as possible with commercial operation expected in 2012.

www.bowiepower.com

AZ Business MagazineSuperior
Broadband a Boon to Local Businesses

Superior, Ariz.—Until recently, sending large files over the Internet was an exercise in patience for business owners in Superior. But a gift from the Arizona Department of Commerce will funnel in $35,000, bringing high-speed broadband infrastructure and the potential for hundreds of new jobs.
Superior businesses were hindered with limited dial-up connections, which severely limited communications, ordering products online and carrying out tasks as simple as e-mailing digital photos. “Our business has suffered as a result of our inability to access reliable infrastructure,” says Rozlyn Lipsey, a Superior business owner. Several local businesses have provided $1,000 matches to fund the project. The town has dedicated $25,000 and applied for an additional $270,000 from the federal government to enhance the initiative. An award announcement will be made this fall. Officials expect the improved connectivity will allow business the chance to grow, facilitating 300 full-time jobs.

www.azcommerce.com

Arizona Business Magazine Aug/Sept 2006

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