Sendoso is adding nearly 1,000 jobs to its established workforce here as it relocates its corporate headquarters from San Francisco to Phoenix’s historic neighborhood The Grove.
Taiwan Semiconductor Manufacturing Company expects to create 10,000 high-paying high-tech jobs at the two fabrication facilities it is building in north Phoenix, including 4,500 direct TSMC jobs. This is in addition to the more than 10,000 construction workers who helped with construction of the site so far.
KORE Power plans to employ more than 3,000 full-time personnel at the lithium-ion battery manufacturing facility it is building in Buckeye, not to mention the estimated 3,400 workers during peak construction. The facility is expected to generate upwards of an estimated 10,000 direct and indirect jobs when it begins production this year.
Williams-Sonoma, Inc., through its new fulfillment and distribution center in Glendale, will be creating more than 2,400 jobs by 2027.
In addition to these eye-catching numbers from recent headline stories around Metro Phoenix is the strong job creation going on as smaller companies set up shop here and existing companies expand.
What’s the Attraction?
“Historically, Greater Phoenix’s job growth has been driven as a low-cost alternative to more expensive coastal markets, but that is evolving. Today it is the search for a better lifestyle and affordability that makes Metro Phoenix attractive to national users,” says Paul Komadina, senior managing director for CBRE. “Additionally, Phoenix has benefited from two massive industry drivers: semiconductor company growth and autonomous driving. This has driven growth for higher-wage jobs more than in previous cycles.”
To fill those jobs, Komadina observes that top talent can be found at ASU, the largest single-campus public university in the nation, where nearly 30,000 students are in STEM programs. “Additionally, Phoenix is a hotbed for learning innovation, with institutions like Arizona State University, Grand Canyon University and the University of Phoenix leveraging technology and industry partnerships to drive workforce development.”
Sandra Watson, president and CEO of the Arizona Commerce Authority, puts it even more emphatically: “The talent pool in Arizona is unmatched and is leading the country in talent attraction.” She cites the Talent Attraction Scorecard released by Lightcast, a global leader in labor market analytics, in which Maricopa County was ranked No. 1 (for the fifth time in the last six years) and Arizona as a whole was ranked in the top five for talent attraction ability. Crediting Arizona’s universities and community colleges with helping the talent pool continue to grow, she notes their workforce training programs in manufacturing, technology, automotive, aviation and more are providing hands-on training to students to prepare them to enter the workforce.
Rendering of Sendoso new building. Courtesy of Prologis.
Other factors include Arizona’s streamlined regulatory environment and simplified tax system, which put businesses first, says Komadina. “Arizona emphasizes operational affordability and innovation, as demonstrated by its regulatory sandbox programs for fintech and proptech startups, support for the testing of autonomous vehicle technology, and state tax incentives that promote high-wage job creation and capital investment. With some of the nation’s lowest corporate and individual income tax rates, the cost of doing business is attractive.”
Staffing companies, who see the landscape from a different perspective, describe the situation similarly. Says Sheri Perkins, SPHR, regional vice president of growth at EmployBridge, the nation’s largest industrial staffing company, says, “Arizona attracts many employers due to a lower cost of living, unlimited talent pool, incredible weather, low unemployment, and the wages in Arizona are significantly less inflated than in most major cities today.” She notes, also, the abundance of land surrounding all cities in Arizona, which allows for quick growth and expansion. “Finally, Arizona, under the direction of our Governor and the Arizona Commerce Authority, have worked diligently to develop employer-friendly environment by providing tax incentives, business credits and limited regulations unlike other states.”
A spokesperson for Partners Personnel, ranked by SIA as the No. 1 fastest-growing industrial staffing firm for 2022 and No. 4 as the fastest-growing staffing firm in the United States, says Phoenix has been an attraction for distribution centers and manufacturers for several years now, as many companies have decided to move their businesses to the Phoenix market for larger, more affordable warehouses and facilities. “We’ve seen the West Phoenix market take off in the distribution and manufacturing industries and the East Valley expand in aerospace, semiconductors and, most recently, in the automobile industry with electric vehicles. Phoenix has become attractive to corporations because of its location between California’s ports, the Southwestern United States and Mexico.”
Explains Chris Camacho, president and CEO of Greater Phoenix Economic Council, “We’re in an economic era where employers and employees are attracted to regions with a real sense of place. They are looking for markets that offer an elevated quality of life, and Greater Phoenix can match those expectations.” Observing that decades of regulatory policy and long-standing public-private partnerships have created a pro-business environment and workforce to support expanding and relocating companies, he says those factors combined with lifestyle have “made this market one of the most attractive places to launch and scale a business.”
Employment Spectrum
Noting that Arizona is becoming the electric car capital for the United States, EmployBridge’s Perkins names Lucid Motors as one of the most important companies for job creation. “We are seeing the growth of companies that support their initiative, such as Tier 1-4 vendors.” Additionally, she says, “the semiconductor industry is becoming the hub of the manufacturing sector in Phoenix and surrounding areas.”
And Partners Personnel is finding job seekers are attracted to the Valley thanks to the growth of new businesses coming into the Valley as well as the expansion of existing businesses. Company spokesperson says manufacturing, production and assembly (semiconductor, electric vehicles, packaging solutions, fiber solutions, medical supply and dental instruments, plastic injection molding, aerospace, food manufacturing and production) and distribution, logistics and warehousing have been creating an abundance of jobs with competitive wages.
Rendering of Taiwan Semiconductor Manufacturing Company’s new building. Courtesy of Taiwan Semiconductor Manufacturing Company
“The ACA’s goal is to attract companies that commit to creating high-paying, skilled jobs,” says Watson. While a majority of the projected new jobs are in manufacturing, she is seeing more jobs in technology as well as rapid growth in semiconductors, electric vehicles, batteries, biotech, aerospace and defense and more.
And as Komadina points out, the ancillary jobs that semiconductor companies have brought to Phoenix have immense impacts on industrial and office-using employers. “The high-wage jobs within user groups of Blue Origin and GI Partners, along with the relocation of the headquarters of Align and Lifestance, will broadly impact our market.”
Semiconductor manufacturing looms large in most of these assessments. So, let’s look at the semiconductor business here.
In this issue’s Guest Editor letter, Camacho mentions what a high-profile event was the recent opening ceremony on December 6 for the Taiwan Semiconductor Manufacturing Company’s fabrication facility in north Phoenix. Senator Mark Kelly, speaking at the event, noted the significance of the project: “Only 10% of the world’s microchips and 0% of the best microchips are made in U.S. Today, that is changing. TSMC manufactures the most advanced microchips in the world.” In terms of job creation: “This will create tens of thousands of high-paying jobs, many of which will not need a four-year degree.” It will be possible to raise a family as a semiconductor manufacturing technician, he concluded.
Which was, in fact, the point that President Biden was making when he told the assembled audience, “Thousands of Arizonans will be able to look their child in the eye and say, ‘Honey, it’s going to be okay.’”
While the ceremony celebrated the “First Tool-In” at the facility, TSMC also announced its intention to build a second facility. The two, said TSMC Chairman Mark Liu, “will create 13,000 high-paying, high-tech jobs” — plus attracting “about 40 supply companies to open nearby, creating thousands more local jobs.”
The ripple effect on our economy goes beyond the sector itself. President Biden called out one example as he related the story of Paul Sarzoza, who grew up picking seasonal produce here in Arizona. “His parents believed in education, so Paul went to college to study business. He launched a cleaning business. Now it has over 100 employees, and this company — TSMC — is their biggest customer. And now that they are expanding here in Phoenix, Paul will be hiring a lot more workers.”
The TSMC account has allowed Sarzoza’s multi-million-dollar custodial business, Verde Clean, to hire more employees and expand its leadership and management teams — and Sarzoza has committed to starting a custodial apprenticeship/MIT program with Maricopa County Community Colleges and TSMC.
TSMC is the shiny new asset in our community, which that company’s chairman called the “Silicon Desert.” One of the companies that helped create this fertile tech environment is Intel.
“Intel is so proud to say that we have invested and innovated in Arizona for more than 40 years,” says Liz Shipley, public affairs director at Intel Arizona. “We’ve invested significant time and resources to help make Arizona an outstanding location to develop and manufacture semiconductors, from education and workforce development, to supply chain, and more.” In September 2021, Intel broke ground on two new leading-edge semiconductor factories, an investment of more than $20 billion that will create 3,000 high-tech, high-wage Intel jobs, 3,000 construction jobs, and support an estimated 15,000 additional jobs in Arizona. “We are expanding in Arizona because of our long track record of success, along with this ecosystem of innovation we have helped develop.”
To support the growth of its Arizona operations, Intel works closely with schools, community colleges and universities to help build inclusive pathways into semiconductor manufacturing. “We invest significant resources to attract, develop, recognize and reward the people who keep Intel at the forefront of innovation and make Intel an employer of choice,” Shipley says, noting, “We strive to provide pay, benefits and services that help meet the varying needs of our employees, and we are committed to staying competitive to attract and retain the people who make our success possible.”
An important initiative in that regard was announced in early 2022 with the First Lady of the United States Dr. Jill Biden. Quick Start, a workforce development program with Maricopa County Community Colleges, is a joint initiative spearheaded by Intel’s technology development and manufacturing organizations. The accelerated two-week course prepares students for a rewarding career as a semiconductor technician with hands-on learning from industry-experienced Intel employees as instructors. Shipley reports that it is currently offered at three community colleges in the Phoenix metropolitan area and close to two hundred people have already completed the program, with many securing opportunities at Intel and other companies in the semiconductor industry.
Where’s the Growth?
Komadina notes that, given the higher wage profile of job growth, the lion’s share of office-use growth is in areas with proximity to higher-income neighborhoods, access to dining and other amenities, and available trophy office space.
And Partners Personnel reports seeing more manufacturing facilities and distribution centers being built, as well as companies moving into the West Valley, North Phoenix, and the East Valley as far as Casa Grande (as well as Tucson and Nogales), because many companies have decided to move their businesses to the Phoenix market for larger, more affordable warehouses and facilities.
Breaking it down a bit more, Camacho describes three tiers of growth in Greater Phoenix: Urban, catalyst-driven and new frontier. “We are seeing tremendous growth inside Loop 101 near central business districts, related to population bases in urban settings like Central Phoenix, Tempe, Scottsdale and Glendale. There are catalyst assets driving growth, like the Phoenix-Mesa Gateway Airport in Mesa, anchored by transportation nodes; and Deer Valley, driven by TSMC expansion and the growing semiconductor ecosystem; along with a similar boom in the Southeast Valley spurred on by Intel. And there are several new frontier markets that are expanding quickly, like Queen Creek, Surprise and Buckeye.” Additionally, he notes there is ancillary activity from the TSMC expansion around Deer Valley stretching down to Casa Grande, Howard Hughes recently made a 100,000-home investment for Arizona’s largest master-planned community in Buckeye, and LG Energy is investing $1.4 billion to build its first-ever North American cylindrical-type battery facility in Queen Creek.
Rendering of KORE Power’s new building. Courtesy of KORE Power
Other important companies for job creation across the Valley that have recently located or expanded here include Shellpoint Mortgage in Tempe, Optum RX in Mesa, Honeywell in Chandler, Kohler in Casa Grande, and Gulfstream in Mesa. “These are large, global companies creating new jobs for residents throughout Greater Phoenix,” Camacho says.
Says Watson, “We’re seeing announcements across Arizona — from ZenniHome in Page, FrameTec in Camp Verde, Procter & Gamble in Coolidge, Nucor in Kingman, Nestle in Glendale, Kohler in Casa Grande, to American Battery Factory in Tucson and PowerPhotonic in Sahuarita. The state’s economic momentum shows no signs of slowing down.”
Looking to the Future
“We knew that TSMC’s project would be transformational for our state, and that’s even more evident today,” said Governor Doug Ducey at TSMC’s opening ceremony. TSMC’s $40 billion investment (the largest foreign direct investment in Arizona history) includes an employment impact in creating 4,500 direct high-tech, high-wage jobs, more than 21,000 construction jobs and more than 13,000 jobs at supplier companies.
For the immediate future, Arizona Commerce Authority’s goals for Fiscal Year 2023 include leading efforts to create 20,000 projected jobs (combined total for attraction and expansion) with a focus on high-wage target industries and attracting $4 billion (also combined total for expansion and attraction) in capital investment by ACA clients. (ACA reports that in Fiscal Year 2022 — July 2021–June 2022 — it led efforts to create a record 24,186 projected new jobs and attracted $10.75 billion in capital investment.)
Image of Williams-Sonoma fulfillment and distribution center at The Cubes. Courtesy of CRG
And Camacho notes, “Our job is to bring high-wage, high-value jobs to the Valley, the most significant of which require post-secondary education — but we are also focused on bringing equitable projects to Greater Phoenix to ensure that there are jobs available for all our citizens, regardless of educational levels. That is why GPEC puts such a large emphasis on fostering partnerships with Greater Phoenix technical education, community colleges and even high schools to prepare for the next generation workforce. This growing workforce is rising to meet the demands of a diversified economy with significant employment gains in the financing, technology and manufacturing industries.”
Job creation in Metro Phoenix impacts far more than our local economy.
As noted earlier in this article, the construction of TSMC Arizona has also driven local investment from leading semiconductor suppliers. TSMC has more than 40 suppliers taking steps to establish operations near its roughly 1000-acre semiconductor complex in Phoenix to provide TSMC Arizona with ongoing support and collaboration. Among them are companies that make materials and components which are required in semiconductor fab operations. Some are starting their first U.S. operations in Arizona and others are expanding their local operations. They bring new strengths to the U.S. semiconductor supply chain and will contribute greatly to ramping up leading-edge chip manufacturing.
As one of TSMC’s leading fabs, TSMC Arizona will play a vital role in onshoring semiconductor manufacturing, strengthening national economic competitiveness. When complete, TSMC Arizona’s 1st fab (N4 process) will be the most advanced semiconductor process technology in the United States, which will enable U.S. leadership in the 5G and artificial intelligence era for decades. Then, 3nm production will follow when the second fab comes online.
U.S. Commerce Secretary Gina Raimondo addressed this broader impact in her remarks at the TSMC event: “It was a national economic and national security vulnerability that we [the U.S.] didn’t manufacture sophisticated, leading-edge chips.”
And Tim Cook, CEO of Apple – which, he says, works “with TSMC to manufacture the chips that help power our products all over the world – shared this optimistic view:
“As I look around this facility, I’m reminded of a great engineer and physicist who once wrote, ‘The future cannot be predicted, but futures can be invented.’ [Nobel laureate Dennis Gabor, in 1963] Those words feel like a fitting mantra for our current moment — one where the unpredictability of the future is surpassed only by the opportunity we have to shape it. … This is an incredibly significant moment. It’s the chance for the United States to usher in a new era in advanced manufacturing. It’s the chance to create high-tech American jobs — the jobs of the future — the jobs that could define our future.”
As Governor Ducey said at the TSMC opening ceremony, “Semiconductor chips made here will drive the engines of growth far beyond northern edge of Phoenix.”
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