“Arizona and Greater Phoenix’s emergence as a top national market has coincided with the growth of its international trade,” states Chris Camacho, president and CEO of Greater Phoenix Economic Council. He notes that, from 2012–2022, Arizona’s world trade increased by more than 60%, which was well above the national average of about 39% and was part of a surge in recent years, as Arizona’s $60.4 billion in world trade in 2022 was a 16% increase from the year prior.
Camacho points out that this growth is leading to a more robust economy that impacts a large swath of sectors — most notably semiconductor and advanced manufacturing from the APAC region. In fact, he says, “International trade has played a key role in the diversification of the Arizona economy.” And he’s found the state’s proximity to Mexico has put Arizona in a prominent position related to the United States-Mexico-Canada Agreement, as we deal frequently with both countries.
Glenn Williamson, CEO and founder of the Canada Arizona Business Council, describes Arizona’s position as “unique” as it benefits from converging trends: as issues around the world are making [other] locations less desirable, North America is becoming vogue again. “Within North America, certain states like Arizona are finding themselves in a turbocharged economic development mode — which is testing the state to see if it has a government that can stretch the natural resources, and infrastructure to accommodate all this growth.” He believes this is an opportunity for Arizona. “Business will continue to come if we can handle it,” he says, “and Canada and Mexico are supportive of all this Arizona growth.”
To that point, Marco Lopez Jr., CEO of Intermestic Partners and a founding partner of SkyBridge Arizona, feels it’s important that Arizona’s trade strategy focus on ease of business. Crucial aspects are facilitating cross-border transactions by upgrading infrastructure, introducing business incentives and minimizing regulatory hassles.
Lopez points to supply-chain diversification as one of the profound benefits of cross-border business. He notes the impact of supply-chain diversification is to reduce risks by ensuring uninterrupted access to necessary resources — and the recent COVID-19 pandemic was an eye-opener for many of the havoc that can ensue from supply-chain disruption. Other benefits he cites are resilience against market fluctuations, which mitigates vulnerability to global economic shifts; market expansion by enabling growth in sales and profitability; enhanced competition, which drives improvements in products and services; cost reduction through economies of scale, competitive labor pricing and raw material access; and boosting innovation — facilitated by collaborative efforts and idea exchange between borders.
At the consumer level, Camacho points out that trade and investment policies save the average Arizona family thousands of dollars per year through lower prices and increased specialization. Cross-border business also, he notes, “opens doors to building relationships with international companies who can then expand into the market, further easing the supply chain, creating jobs for Arizonans, and building opportunities for cultural engagement and advancing the melting pot that is the United States.”
Key Business Sectors
In terms of logistics, Lopez points out Arizona’s strategic location makes it a pivotal distribution center for US-Mexico trade. In manufacturing for instance, he says, “Renowned companies like General Motors, Honeywell and Intel capitalize on Arizona’s close ties with Mexico for cost-effective labor and market proximity.”
In fact, Camacho says, “Arizona specializes in exports for computer and electronics equipment and aerospace and defense parts. Computer and electronics is driven by long-term investments of major semiconductor players like Intel and NXP, and it will continue to grow as TSMC and its related suppliers launch. Aerospace and defense parts has been a cornerstone for the state economy since the mid-1900s, and with the presence of companies including Honeywell, Boeing, Northrop Grumman and Lockheed Martin today, production and exports won’t slow down.”
Williamson believes semiconductors and overall manufacturing — including mining and the advanced manufacturing that comes with that — is key to controlling North America’s destiny as well as Mining and the advanced manufacturing that comes with that. “America needs to get back to making things, and not just technology,” he says, adding that we need to pay attention to industries like infrastructure, water, transportation, communication and building.
Services are important exports as well as manufactured material goods, says Lopez. “Arizona’s export services, including tourism, healthcare and technology, are in high demand in Mexico, offering businesses a competitive edge.”
Growth and Employment
“Arizona has created a very favorable business climate that has induced the expansion of many international companies,” Camacho says. He notes this bolsters our trade and position for foreign direct investment, as well as better positions us on the supply chain to expedite processes for companies operating locally.
And in terms of job creation, Camacho points to 830,000 jobs in Arizona that are supported by international trade — “and that is growing with the expansions of companies like TSMC and LG Energy Solutions,” he says. “About a quarter of the companies that GPEC is actively engaged with are international companies, the highest number the organization has ever seen.” According to Camacho, more than one in five jobs in Arizona depend on international trade, and trade-related employment grew three times faster than total employment in the years 1992 to 2019.
Specific to our relations with Mexico, Lopez cites Arizona’s automotive sector, which relies heavily on Mexico for components, as a significant employment generator. Additionally, he says, “Initiatives like SkyBridge Arizona have channeled over $1 billion in foreign investments.” And there’s the economic boost from the state’s exports to Mexico having surged more than 50% in the past half-decade.
Trade with Our Near Neighbors
“What we like to call Project North America is the Canada-Mexico-USA trading bloc,” Williamson says. He sees it as a safe haven for the three countries but believes more work needs to go into the relationship from the governments. “The private sector is doing a great job,” he says, noting that having three countries geographically right beside each other is very beneficial as each brings a different piece of the puzzle to the table: Canada brings 40 million consumers and real investment money as well as natural resources and talent, Mexico brings young talent and natural resources, and America is the ultimate consumer as manufacturing starts to shift globally. “Mexico is a prime location to service America,” Williamson says. “It is really up to the three countries to do more vertically and slightly less horizontally around the world.”
Williamson describes foreign direct investment as the biggest part of the Canada-Arizona relationship and says trade stays roughly the same year over year. While admitting “we do not do a good job of counting inbound investment from Canada into Arizona,” he says it’s there in a big way on all fronts. “Hundreds of billions of dollars have been injected into the Arizona economy over the years from Canada.”
Across the Arizona-Mexico border, numbers are more available. Calling Mexico Arizona’s most important trade partner, Camacho — who, in addition to heading GPEC, serves as a vice president of the Arizona-Mexico Commission — says, “There was close to $20-billion-worth of imports and exports between the two in 2022, which equates to almost a third of Arizona foreign trade and an increase of 12.1% since 2021.” he says. He believes this relationship puts Arizona in an important position related to the United States-Mexico-Canada Agreement, and says the Arizona-Mexico Commission “will work to drive forward trade and economic prosperity for both parties.”
Furthermore, Camacho notes that Arizona, as a border state, has a unique advantage offered to very few in the U.S. Having direct access to Mexico’s economy enables us to “play a role in larger trade activity not only into the state but the rest of the U.S.”
Arguably the best example is the joint U.S.-Mexico Customs inspections facility at Skybridge at Phoenix-Mesa Gateway Airport, the only such station in the United States. With this station, companies can expedite the process in Greater Phoenix, the results of which, Camacho says, will be a heavy economic boon for the region and state.
By streamlining the customs process, Lopez explains, SkyBridge Arizona expedites the movement of goods, especially between the U.S. and Mexico. “This initiative has not only created numerous jobs in the state but spurred infrastructure development, particularly around the Phoenix-Mesa Gateway Airport,” he notes. “Furthermore, SkyBridge attracts foreign investment by simplifying trade operations and diversifies Arizona’s economy, making it more resilient and positioning the state as a pivotal player in the global trade arena.”
Historic agreements signed with United States Customs and Border Protection, Mexico’s Administracion General de Aduanas and Phoenix-Mesa Gateway Airport created America’s first and only inland international air logistics and processing hub with Mexico. The project made headlines when it was announced in 2018. It is expected to create 17,000 direct and indirect jobs once it is in full operation and increase cargo flights out of Phoenix-Mesa Gateway Airport by 2,000 a year, eventually reaching 10,000 by 2036. The service enables e-commerce companies, manufacturers and other commercial interests conducting business in Mexico and throughout Latin America to more efficiently and cost-effectively transport goods between countries, while ensuring proper inspections and safety controls.
“SkyBridge has a variety of incentives for companies existing in or considering Greater Phoenix,” Camacho says. These include being in Military Reuse, Foreign Trade and Opportunity zones, being HubZone-eligible, the on-site Expedited Customs’ Unified Cargo Processing Program, a transaction privilege tax, and job tax credits for new net jobs for qualifying companies. “All this, with expedited movement and clearance of goods not only to Mexico but to the rest of Latin America, has made Greater Phoenix and the Mesa-Gateway Airport area a prime location for companies seeking trade with Central and South Americas,” he notes.
Camacho also points out that nearshoring has allowed companies throughout Arizona to get a leg up on competition, observing that the proximity of the supply chain to Arizona not only gives our companies a competitive advantage compared to those in other markets around the U.S. but also quickens production timelines.
As for direct trade, Camacho explains there are many branches in play that affect job creation and hiring in Arizona: “Mexican-owned businesses in the state are major employers, and immigrants serve as key employment as companies continue to seek additional workers to maintain demand. Industries such as advanced manufacturing are impacted by manufacturing-related importation from Mexico, indirectly creating countless more jobs that build up our economy and the market.”
Additionally, Camacho notes multiple industries are largely affected by imports from Mexico. One of the most important is agriculture, of which the state imported more than $3-million-worth in 2022. Says Camacho, “That directly impacts food consumption and consumer spending, as imported goods help to keep prices down while increasing options for food and other products. In total, trade and investment policies save the average Arizona family thousands of dollars per year.”
In addition to agriculture, Camacho shares, manufacturing from Mexico plays a large role in the broader Arizona manufacturing ecosystem, as almost $3 billion worth of electrical equipment, appliances and components along with computer and electronic products were imported in 2022. “Through these manufacturing-related imports, there’s a ripple effect to advanced manufacturing and other industries that reap the benefits of the good relationship between Arizona and Mexico.”
Lopez believes Arizona has the potential to do more to capitalize on its proximity to Mexico. “The state has a lot to offer businesses, but it needs to make it easier for them to do business across borders.” This could include improving its infrastructure, providing more incentives for businesses, and working to reduce the regulatory burden. He recommends Arizona’s trade strategy includes being proactive, mirroring the efforts of states like California and Texas by sending its elite business and governmental delegates to broker deals with Mexico. “Filling this leadership void is imperative,” he says. “Otherwise, Arizona risks missing out on significant opportunities that other states might seize.”
He emphasizes the need for Arizona to be intentional about its trade strategy with Mexico. In addition to going beyond a reliance on agriculture as its strongest import from Mexico and diversifying its trade focus on exporting and importing services and technology, Lopez says, “Arizona must target other states in Mexico, such as Nuevo Leon, the Bajio region and Mexico City, which are major economic hubs.
“Finally, he adds, “Arizona needs to have sophisticated leadership in place to pursue deals with Mexico.” It’s important that the state regularly send its top business and government brass to negotiate deals — just as, he points out, California and Texas constantly do. “If the void of leadership continues to exist, and it does, other states will, regrettably, continue to win large opportunities for their businesses, workers and families.”
Phoenix and the World
While this article focuses on Arizona’s North American trading partners, countries from all over the globe maintain consulates in Phoenix. Keeping in mind that, traditionally, the principal role of a consulate is to promote trade by assisting companies to invest and to import and export goods and services both inwardly to their home country and outward to their host country, it’s worth noting that Phoenix hosts consulates from 34 countries: Belgium, Brazil, Chile, Czech Republic, Denmark, Ecuador, El Salvador, Estonia, Finland, France, Germany, Guatemala, Iceland, Italy, Japan, Lebanon, Lithuania, Malta, Mexico, Namibia, Netherlands, Norway, Palau, Peru, Poland, Portugal, Romania, Seychelles, Spain, Sri Lanka, Sweden, Switzerland, Ukraine and United Kingdom.
“Greater Phoenix is entering a new frontier in which the economy will be more driven by international business than ever,” says Camacho, “and we’re excited to see how that affects jobs and industries at home as well as exports to and relations with other countries.”
Movement of Goods – DSV at Phoenix-Mesa Gateway Airport
Providing a service that’s central to trade — domestic as well as international — is DSV Global Transport and Logistics, the world’s third-largest global transport and logistics company. For DSV’s Inventory Management Solutions division, Arizona has emerged as a strategic location, as the state plays a crucial role in meeting the growing demand for efficient semiconductor-industry inventory management.
Matt Ritchie, Inventory Management Solutions division president at DSV, points to the 1.7-million-square-foot warehouse to be completed in 2025 and the first regularly scheduled air cargo charter in the area in the Phoenix-Mesa-Gateway Airport hangar that has been operating now for a few months as the specific DSV investments in Arizona are. “In the case of our Phoenix-Mesa Gateway facility, we are delivering supply chain needs more timely and cost effectively by bypassing standard trade routes such as LAX and SFO,” he says, noting lessons learned in the pandemic that these ports of entry can create bottlenecks in the supply chain and be expensive during peak demands due to high supply chain dependency.
“In a place like Arizona, where accelerated growth in high-tech and semiconductor are in process, speed and agility are important for not only the local economic growth but, additionally, the U.S. government has strong interest in ‘semiconductor central’ success in Arizona. These chips are one of the more important commodities for the future, and DSV enabling that success is a key strategic initiative,” Ritchie says.
Ritchie points to the importance of onshoring and nearshoring initiatives in supply chain in regard to the U.S., Mexico and other southern border countries for international trade due to the geopolitical issues in Asia, where, he notes, much of the technology supply chain is dependent. “Our customers are moving manufacturing and operations to places like Mexico to diversify their supply-chain risks and this trend will continue to accelerate as long as there is risk, specifically in Taiwan and China. Naturally, Arizona is a good location to facilitate this trade with Mexico and other countries south of the U.S. border.”
Of course, for DSV, this ultimately adds more value to the customer, shareholders and the overall U.S. market. “When you diversify supply-chain risk while finding ways to reduce costs long term, you are creating a winning strategy,” Ritchie says, adding that, significantly, “This translates to economic growth — and Arizona is in a unique position to change many global industries for future technology advancement.”
Another factor that Ritchie says attracts DSV’s investments to drive economic growth in Arizona with the international trade component is the overall growth culture in Arizona, working with organizations such as the Arizona Commerce Authority and the Greater Phoenix Economic Council along with the local governments, universities and leadership who are putting their resources and strategies in attracting future growth businesses to Arizona. “This includes both domestic and international businesses in important technology manufacturing sectors such as electric vehicle, semiconductor, bioscience, cleantech, aerospace, et cetera.”
Semiconductor has emerged as one of the key sectors Arizona is focused on, and DSV likewise, according to Ritchie. “Chips have become a true commodity now that is essential for everyday life, and demand forecasts require roughly six times more chips by 2030 than are produced today,” Ritchie says, noting that Arizona will have two of the largest semiconductor factories in the world, with Intel and TSMC when these projects are complete, as it transitions to “semiconductor central.” He credits Arizona, collectively, as a true visionary state for the future due to its efforts to attract the most innovative sectors for the future, among them electric vehicle, semiconductor, bioscience, cleantech and aerospace.
Calling Arizona a “prioritized focus” for DSV IMS, Ritchie says, “We hope to drive that innovation to optimize supply chains with other unique solutions such as supply chain finance, system automation, machine learning and AI to these manufacturing customers in Arizona to allow them to focus their capital and resources on R&D and building capacity while we help them achieve uninterrupted revenue operations.”