Shaping Up for Business in 2018?

What can business expect in the coming year?
by RaeAnne Marsh

Among business’s top five concerns are labor, capital and customers. Top of the list is qualified workers — therefore, says nationally recognized W. P. Carey School of Business economics professor Lee McPheters, “the education system is important.” He believes cutbacks in education funding could impact the workforce. Arizona is rightly proud of its universities, but the number of graduates they produce is offset by the number of people moving here without a college degree, according to the American Communities Survey.

The West in general, and Phoenix in particular, tends to attract college graduates, but Arizona’s climate and lifestyle make it a magnet for population generally. This may seem to bode well for the “customers” aspect of business needs, as JPMorgan Chase chief economist Anthony Chan explains that the U.S. equity market’s record-breaking year in 2017 was a catalyst that allowed people to “live their dream,” including retiring and moving here. But Dr. McPheters notes that, with Arizona’s per capita personal income 80 percent of the national average, the purchasing power is not as strong.

Venture capital also lags behind Colorado and California, he observes.

Dr. McPheters expects to see slower job growth in 2018, as numbers trend to a sustainable “new normal” for the state and Phoenix. He points out that manufacturing here, for instance — one of the major focus areas for economic development — is more tech-oriented and therefore not one to generate big employment growth.

Noting that seven of the top 10 states for job growth are in the West, Dr. McPheters sees Arizona being in the lower half of that top 10. We are No. 1 in the country for financial services and — despite industry fears over the minimum wage increase last January — No. 1 also in food services. Other strong drivers of job growth are trucking and healthcare, the latter not only being one of the largest employment categories but consisting of tremendous diversity, with annual job income ranging from $25,000 to $250,000.

To zero in more specifically on the Greater Phoenix area, In Business Magazine asked leaders of economic development and business organizations to discuss what they see ahead for business in 2018. (In Business Magazine also reached out to the top organizations whose mission is to help develop the leaders who create the positive community and business environment. Their responses are presented in Feedback.)

The Dynamics of Greater Phoenix

Chris Camacho
President and CEO
Greater Phoenix Economic Council

What is on the radar to build business in the Greater Phoenix area?

This spring, the Economic Innovation Group released a report, Dynamism in Retreat, that provided in-depth analysis of how dynamic metropolitan regions are in relation to the commercialization of new ideas and business models. Fortunately, the report lists metro Phoenix 11th on the list of the 20 metro areas with the highest average startup rates during the recovery.

Industry leaders such as Intel and Honeywell have had decades of presence in the market, but new ideas are forming, leading to spinoffs that are developing new technologies. Across the Valley, whether it is taking place at co-working spaces or maker spaces, or even at meet-ups, people are getting together and sharing ideas on how to spur innovation and develop new ideas — and new companies.

That activity is a large part of what makes this market so attractive. A robust entrepreneurial ecosystem in place that supports business formation in high-value industries. Through coalitions such as #yesPHX, people have availed themselves to provide resources to entrepreneurs and startups, ranging from mentorship to capital, helping reduce the mortality rate of emerging businesses.

At the Greater Phoenix Economic Council, our mission is to market the region as a destination for business growth and success on behalf of our 22 member communities and Maricopa County, and the more than 160 private-sector stakeholders, but also to enhance the competitiveness of the Greater Phoenix region.

Earlier this year GPEC launched a new campaign called The Connected Place, that served to create an industry awareness around the Internet of Things and sensor-enabled technology industry activity in the market. From autonomous vehicles to wearable devices, and industry automation to cybersecurity, companies in Greater Phoenix are testing and deploying innovative technologies that are changing the way we live and do business.

What is your one pie-in-the-sky wish for 2018 from the standpoint of  economic development that fosters business growth?

Although in its early stages of development, talks have begun on launching a coordinated intentional plan for Greater Phoenix to become a place where smart infrastructure is deployed within our communities. Technologies such as installing LED lights with sensor applications that detect when a light is out, thus notifying the right department within a city, or sensors that detect water leaks, preventing major waterline breaks and costly road repairs, are examples of how cities can use smart technologies.

The application of such technologies in not just one community but across the entire region is the first step in promoting Greater phoenix as America’s first “smart region.” This infrastructure is forward thinking and innovative, as are the business and civic leaders across the region who are engaged in this conversation.

Metro Phoenix has a strong foundation for supporting business growth and expansion, the type of business environment that keeps the region on the map as a place where businesses can go to scale. Efforts to continue to build upon that foundation make it possible to work on higher-impact strategies that will differentiate the market, making it stand out even more to companies looking to expand.


Glenn Hamer
President and CEO
Arizona Chamber of Commerce and Industry 

What is on the radar to build business in the Greater Phoenix area?

Federal efforts such as tax reform and a modernization of the North American Free Trade Agreement are poised to positively impact Arizona and its business and economic climate.

In the last several years, Arizona has made a number of targeted changes to its tax system that have strengthened the state’s overall competitiveness. Anticipating passage of a final tax reform package by Congress, Arizona stands to become even more competitive in the race to attract business and grow jobs. National tax reform paired with a NAFTA better aligned with today’s economy sets Arizona up to be a leading state for business growth.

Our state policy leaders — Governor Doug Ducey, members of the Legislature, mayors — are united in their belief that this vital trade agreement must be preserved. As a border state, we are already a top trading partner with Mexico, and bringing NAFTA into the 21st century will open the door for additional export-oriented jobs.

Locally, Arizona has emerged as a training ground for autonomous vehicle development — standing in stark contrast to neighboring states that proved unfriendly to this emerging technology. Rolling back regulations to welcome research and development for new disruptive industries is standard operating procedure in Arizona. This approach has sent a signal that Arizona is innovative and has a regulatory environment to match. We anticipate this reputation will be attractive to other innovators looking for the best possible place to grow and invest.

What is your one pie-in-the-sky wish for 2018 from the standpoint of economic development that fosters business growth? 

Water is economic development. It’s essential to our state’s ability to continue to grow and prosper, so it’s rightly top of mind for business and policy leaders.

We are supportive of Governor Ducey’s efforts to bring public and private stakeholders together to ensure Arizona’s water security, including reliable access to Colorado River water and securing Lake Mead water levels for the future.

I’m confident that, with the governor’s leadership and the input of committed legislative and business community stakeholders, Arizona will wisely update its water laws in 2018 to provide the certainty necessary to continue our economic growth.


Sintra Hoffman
President and CEO

What is on the radar to build business in the Greater Phoenix area? 

One of Arizona’s key advantages is our geographical location and proximity to California and ports of entry to the United States. Specifically, the West Valley is perfectly positioned to reap the benefits of business relocation from California due to a strong transportation network in this region. Infrastructure creates the spine for economic development, and key investments in technology, water and energy have prepared the West Valley for not just one smart city but a collection of smart cities adding up to 3,000 square miles west of I-17. Forty-three percent of the growth over the next 25 years will occur in the West Valley, and, for this reason, business and political leaders must pay keen attention to the opportunities in this area.

This region, and specifically the West Valley, has an incredible talent pool that rivals our competitors across the country. We are fortunate to have the right mix of great weather and quality-of-life amenities that continue to attract and grow our resident base, i.e. our workforce talent. The West Valley is a region that is growing younger at rapid pace. Unfortunately, there’s a perception that this region is a retirement community. The reality is, the West Valley’s population includes 1.6 million residents with 62 percent being workforce age. This changing statistic has encouraged great communication and coordination between business and education. Over the past two years, WESTMARC has been facilitating key connections and conversations to ensure West Valley talent fits the needs of our targeted industries. Fortunately, we have experienced an education community that shares the vision of graduating students in high-demand areas who are immediately employable. In other words, programming is increasingly geared toward meeting the specific needs of existing and emerging businesses.

Today, the West Valley is fortunate to have a strong, talented workforce in healthcare, manufacturing and advanced business skills. Thirty-seven percent of healthcare workers in Maricopa County live in the West Valley! Similarly, thirty-four percent of the advanced business (finance; insurance) workforce lives in the West Valley, while only 12 percent of these jobs are currently located here. Translation: Companies locating here have a tremendous benefit with a strong, talented workforce, ready to work close to home!

Other key industries are manufacturing, information technology and aerospace. Again, California’s regulatory environment, infrastructure investments and Luke Air Force Base all within this region is the is the right mix to support economic growth in the West Valley.

What is your one pie-in-the-sky wish for 2018 from the standpoint of economic development that fosters business growth?

When you ask for a pie-in-the-sky wish, I think “limitless!” I’m sure many of my professional colleagues will agree that increased investments to strengthen the workforce talent pipeline and, therefore, Arizona’s competitiveness is the No. 1 wish for 2018 and beyond. We hear loud and clear that a strong education system is near the top of the list for businesses when considering new locations. As our elected leaders work toward a variety of funding solutions at the K-12 level, the business community also plays an important role in developing the overall pipeline.

Constructive connections and dialog between business and education is key in providing internship programs, focused job training and on-the-job mentoring. Through this dialogue, specific programming in post-secondary and Career Technical Education schools increasingly lead to graduating students who are employable within targeted industries. In 2017, WESTMARC facilitated several round-table discussions with healthcare recruiters and education partners. As a result of these discussions, we were able to identify the growing need for experienced surgical techs in our hospitals. So, how do you graduate an experienced surgical tech? You provide internship opportunities to students while in school, then start them alongside experienced surgical techs. On-the-job mentoring is key to success.

It’s no secret that most of our key industries are experiencing shortages in talent. But the foundational industry has been hit hardest — the teachers. I applaud the variety of efforts and conversations toward a solution, and my wish is that a combination of these efforts will move the needle in a positive direction in 2018!


Terri Kimble
President and CEO
Chandler Chamber of Commerce

East Valley Chambers of Commerce Alliance

What is on the radar to build business in the Greater Phoenix area? 

The East Valley, and Chandler in particular, are heavily focused on technology right now. We are attracting the high-tech and financial companies, and even autonomous vehicles are touching many East Valley companies. As a state, we have made it possible for many autonomous vehicle companies to set up shop and that has ushered in a boom of sorts.

Technology initiates communication and the ability to connect. The Chandler Chamber performs routine business retention visits with our top 100 companies to better gage the current business climate. The better government, business and community connect with each other promotes critically important feedback for growth, development and expansion. Optima Tax Relief out of California just chose to expand to Chandler, due to its strong workforce and low operating costs.

Also, surprisingly, education. The Chandler Unified School District is one of the top districts in the state. This is incredibly important when companies are looking to relocate because they want value for their employees.

What is your one pie-in-the-sky wish for 2018 from the standpoint of economic development that fosters business growth? 

Chandler has discovered how to use changes in the economic climate to spur renewal and innovative thinking. This has taken shape with repurposing property and knowing how to sell the city itself. Right now, the City of Chandler is working on the northern part of Arizona Avenue and other pockets. Changes with these sorts of projects may include, to name just a few, rezoning, reactivation of a vacant building or changing a shopping center to mixed-use.

Recently, we have seen many companies relocate to Chandler. Rogers Corp relocated its headquarters here. And established companies like Orbital ATK, Intel and Microchip have expanded of already-existing divisions.


Sandra Watson
President and CEO
Arizona Commerce Authority

What is on the radar to build business in the Greater Phoenix area? 

Arizona continues to be in the national spotlight for our strong economic development momentum. This is not only a result of our success in attracting businesses from outside the state — notably, from California — but also due to the growth of our existing businesses and entrepreneurial activity. In fact, research shows that 80 percent of new jobs come from the growth of businesses already within the community.

Aerospace and defense, bioscience and healthcare, business and financial services, technology and innovation, and manufacturing — industry sectors critical to maintaining the diversity of our state economy and which the Arizona Commerce Authority primarily focuses on developing — all continue to add jobs. In fact, growth from 2012 to 2016 has been impressive, according to industry data from EMSI. In the business and financial services industry, for instance, insurers alone have added more than 13,000 jobs statewide since 2012, a growth rate of 38 percent. Other particularly bright spots include cybersecurity, banking and investment firms and business support services. Some of the growing Arizona employers in this sector are Bank of the West, Kudelski, Upgrade, Northern Trust, Silicon Valley Bank, USAA, and Quicken Loans. And businesses in the data processing and hosting services industry grew by nearly 70 percent in our state from 2012 to 2016. Apple, GoDaddy and CyrusOne are among the companies that have added Arizona jobs in this industry.

In a very positive indicator of Arizona’s economic strength, our unemployment rate has declined to 4.5 percent, the lowest it has been since 2007, according to figures from the Arizona Office of Economic Opportunity. Measures of personal income, employment, Gross State Product and population are all growing as we head into 2018.

The ACA will continue to focus on supporting and developing existing Arizona businesses. Our comprehensive suite of programs is available to businesses of all sizes.

During the last legislative session, the Angel Tax Credit Program was reauthorized. This will allow for a credit of up to 35 percent for qualified angel investments in companies certified by the ACA. This program is essential in supporting the continued growth of Arizona’s innovation ecosystem.

In partnership with the Greater Phoenix Chamber of Commerce, the City of Phoenix and Maricopa County, the ACA will also continue to support business expansion through our Phoenix Forward initiative. This effort, launched in 2015, is designed to strengthen our region’s overall competitiveness by connecting businesses to resources, gathering industry intelligence, influencing public policy and promoting the Greater Phoenix region as the economic hub of the Southwest.

The ACA’s RevAZ program, which serves as Arizona’s Manufacturing Extension Partnership, provides assistance to help small and medium-sized Arizona businesses maximize their success. RevAZ provides customized operational and business solutions, as well as concrete advice and training.

In addition, the ACA’s recently launched five-year business plan places a strong emphasis on developing emerging technologies in our state. The plan, titled “Leveraging Next-Gen Tech Trends to Grow Arizona’s Economy,” outlines an economic development strategy focused on 10 technology trend areas. Arizona has established a global leadership position in the autonomous vehicles sector, and we are also recognized for our strengths in cybersecurity, the Internet of Things, renewable energy, freshwater science, agricultural technology, education technology, personalized medicine, telemedicine, nanosatellites and smart materials. As these trends evolve into the industries of the future, not only will existing businesses have new opportunities, new businesses and business models will be created.

What is your one pie-in-the-sky wish for 2018 from the standpoint of economic development that fosters business growth?

Fortunately, I don’t have to wish for something that will greatly enhance business growth in the coming year, because we already have it. Arizona has worked to create one of the most business-friendly climates not just in the United States, but anywhere in the world, and we offer an incredible value proposition to businesses.

Since taking office, Governor Ducey has demonstrated a steadfast commitment to making Arizona the best state for business. That commitment can be seen in policies that keep government out of the way of business growth and innovation. Many outdated or unnecessary regulations have been removed thanks to the Regulation Rollback initiative, and Arizona is embracing innovation through legislation and executive action that supports the sharing economy and autonomous vehicles.

In addition, Arizona has kept our tax structure competitive and our operating costs remain low, which are key factors in helping businesses scale rapidly here. And, of course, as businesses scale, the No. 1 thing they need to support that growth is talent. Arizona offers an abundant talent pool, fed by our world-class public and private universities and community colleges, with the skills ready to meet the needs of employers. When industry-leading companies like Intel, Orbital ATK, ADP, Raytheon and others announce thousands of new jobs in Arizona, it clearly demonstrates the quality and availability of our talent.

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