Feedback: August 2012

by Anna Flaaten | Dennis Hoffman, Ph.D. | Glenn Williamson

Question: In light of the economic upheaval in recent years, what changes or successes have you seen in global commerce as it relates to Arizona businesses?

Anna Flaaten
Senior International Trade Specialist
U.S. Commercial Service Arizona
Sector: Government

Arizona exporters are seeing a lot of movement in worldwide export sales. Our data shows Arizona merchandise exports increased 12 percent in 2011 compared to 2010, growing from $15.6 billion to $17.5 billion. Our office has also seen an uptick in the number of smaller firms and entrepreneurs looking to make new sales abroad, helping to advance this Administration’s National Export Initiative that is on pace to double U.S. exports by the end of 2014. Eighty-five percent of world economic growth over the next five years will take place outside of the United States. As the U.S. economy builds momentum, we must continue to equip businesses in Arizona with all the necessary tools to increase exports that support thousands of high-paying jobs here in the Valley.

Arizona’s 2011 merchandise export sales increased to many top destinations, including Japan (up 34 percent), Malaysia (21 percent), the United Kingdom (20 percent), Germany (16 percent) and Mexico (14 percent). Key merchandise export categories include computer and electronic products, transportation equipment, machinery manufactures, agricultural products, and minerals and ores.

Anna Flaaten is a senior international trade specialist with the U.S. Commercial Service, part of the U.S. Department of Commerce. Based in Scottsdale, Ariz., she is part of a network of local field offices located throughout the U.S. and the world that assist U.S. companies to export their products and services overseas. She also serves on the board of the Organization for Women in International Trade’s local Phoenix chapter.

Dennis Hoffman, Ph.D.
L. William Seidman Research Institute at W. P. Carey School of Business at Arizona State University
Sector: Education

Before the Great Recession, when 50,000 to 100,000 people moved here from other parts of the country each year, we thought the growth would continue forever. Much of the business was based on population momentum, and we didn’t necessarily need a global strategy. However, as in-migration slowed to a trickle, it became more obvious we should focus on bringing in businesses, such as Intel, that produce products for export to anywhere on the planet. This drives dollars into the pockets of Arizona workers.

The governor and Arizona Commerce Authority have recognized this. The governor’s recent trip to Europe is a manifestation of the new imperative to more prominently position Arizona in the global economy. She is correct to focus on Arizona’s strengths in IT, electronics manufacturing and, potentially, solar industries. These are global businesses that come to Arizona to employ our productive workers, not just to sell products to a growing local population. Also, showcasing our research universities, our productive work force and our pro-business tax and regulatory environment is the right strategy.

Professor Dennis L. Hoffman, director of the L. William Seidman Research Institute, served as a visiting research scholar at the Federal Reserve Bank of St. Louis in 1996 and was named the Arizona Professor of the Year by the Carnegie Foundation in 1997. His sponsored project efforts include construction and maintenance of the tax-revenue forecasting model used by the Executive Budget Office of the State of Arizona since 1982.

Glenn Williamson
Nest Ventures, L.L.C.
Sector: Financial

In life, “change” is one of the few constants, and in this case Arizona’s housing problems have become part of its reinvention and possible future success. By hitting the bottom so hard, we also hit the international media and gave huge exposure globally to the cost advantage for foreign direct investment opportunities in Arizona. (All you have to do is look at the Canadian market, who invested some $6 billion in the state in 2011.)

The recent and ongoing recession has also forced Arizona’s companies to become more efficient and therefore globally competitive, and, with a shrinking domestic market, has made them to look to a global export market for opportunities. Considering only 1 percent of U.S. companies export, this is a good trend to encourage because it will bring more outside capital into Arizona.

Bottom line, the recession has made Arizona relevant cost-wise, and the recession has made Arizona companies more efficient, and the recession has forced Arizona companies to augment their domestic sales by selling internationally.

Glenn Williamson is CEO of Nest Ventures, L.L.C., a private equity firm with offices in Montreal and Phoenix, and is founder and CEO of the Canada Arizona Business Council, a private sector group sanctioned by the Canadian Government and the State of Arizona to work on increasing bilateral trade and foreign direct investment between Canada and Arizona. Other responsibilities include executive chairman of the board and CFO of aerospace firm Kinetx and chairman of water utility EPCOR Water USA.


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