Arizona has the distinction of being the only state in the nation within a day’s drive of some of the world’s biggest and dynamic markets, including California, Texas and Mexico.
That is a game-changing advantage in the globally-competitive world of job creation and business expansion. Picture this: A truck departing from Phoenix, Flagstaff or Tucson, or from points east and west of that corridor, is capable of reaching 65 million people in a day’s drive. Yes, 65 million people. Southern California alone is an easily accessible market of 23.3 million people for Arizona.
As history has proven, geography can be destiny.
With its unique geographic position, the Grand Canyon State has a leg up when it comes to trade, investment and economic development for companies looking to enter and expand in markets on the West Coast, the Southwest and Mexico. All of this makes Arizona ripe for developing more tradable goods and export-focused businesses.
Many take the short-sighted view that neighboring states or countries are adversaries. Arizona, however, is taking a long-term approach that focuses more on collaboration than a tug-of-war mentality. Top business leaders understand that the region as a whole benefits when more innovators and entrepreneurs bring their talents there.
The Arizona Commerce Authority, a public-private partnership that leads economic development in Arizona by recruiting and growing businesses to create new jobs, also maintains two California offices. The goal is that businesses in both states will expand operations and enhance cross-border relationships.
Watson touts Arizona’s growing talent pool and the fact that the state ranks near the top on nearly every measurement critical to business success, including tax and regulatory reform and quality of life.
“That is a huge built-in advantage,” said Sandra Watson, President and CEO of the Arizona Commerce Authority. “Our cost of doing business is significantly lower than what it is in California.”
Arizona and Mexico have also embarked on a business relationship that comes with a bevy of benefits for each side.
In 2014, the Arizona State Trade and Investment Office in Mexico City was opened in Mexico City to increase trade relations. The office is led by the Arizona Commerce Authority, in partnership with the City of Phoenix and stakeholders across the state. Mexico represented approximately $14 billion in trade in the previous year – split nearly evenly between imports and exports. The office represents a continuation of the state’s ongoing economic-development efforts in Mexico. Arizona has an existing trade office in Hermosillo, Sonora.
Arizona’s proximity to California’s tech community is paying dividends. In 2014, an elite group of Bay Area companies helped grow Arizona’s innovation ecosystem. Silicon Valley Bank (SVB) also continued its expansion into Arizona. The bank committed to lend or invest at least $100M to technology and life science companies based in Arizona over a five-year time frame.
Officials at the Santa Clara-based bank boasted about Arizona’s “momentum” in the innovation space.
Last year, Zenefits, a cloud-based human resources technology company, announced plans to create over 1,300 new full-time jobs over the next three years. It opened a nearly 100,000-square-foot office in downtown Scottsdale. Zenefits CEO and Co-founder Parker Conrad said that greater Phoenix “has a talented workforce and an expanding tech community.”
Another Arizona advantage: It’s less than a two-hour flight to the Bay Area, and there are plenty of flights every day. That’s a big plus for a tech company considering new markets for expansion.
The business climate is appealing, too. Many companies cite the ease of obtaining the necessary permits to open new office space and the price of that office space. Another enticing factor is the large pool of career-ready, well-educated graduates from public universities such as Arizona State University, University of Arizona and Northern Arizona University, as well as private institutions such as Grand Canyon University and University of Phoenix.
With a population of over 6.5 million people and a projected growth to over 10 million by 2040, Arizona’s high-quality talent pool will only continue its rapid expansion. Those numbers make Arizona an attractive consumer market in addition to a great production base.
Orion Health, a population health management company that provides solutions to large healthcare companies, expanded into Scottsdale, Arizona. David Bennett, Orion’s executive vice president of healthier populations, said many factors contributed to its expansion, including local tech clusters, a growing number of tech start-ups, availability of talent from nearby world-class universities and an amazing quality of life. Orion’s North American headquarters are in southern California.
“Many technology and biomedical companies are looking to relocate or expand in the state (Arizona),” Bennett said. “Research shows that the technology-driven leasing in the Phoenix area has doubled since 2012. We are hearing more and more about Arizona-based, high-tech startups and local tech clusters disrupting the healthcare and tech industries.”
And Bennett added that Arizona’s cities are “transforming into dynamic hubs.”
“Workforce can now benefit from trendy lofts, burgeoning nightlife and a dynamic art scene,” he said. “Orion Health is leveraging this access to knowledge capital, technology expertise and pool of qualified workers to enhance its operations and research and development to support its clients.”
While California contributes its tech brainpower and enables Arizona to employ more graduates, Mexico’s economic relationship with the Grand Canyon State is powered by mutually-beneficial trade.
Mexico is fast becoming a major international business player. With a population of about 122 million, it’s a growing world market that is on a path to become the world’s fifth-largest economy by 2050. Arizona already is one of Mexico’s top U.S. trade partners. More than forty percent of all Arizona’s foreign trade is with Mexico. Arizona Governor Doug Ducey recently cited a 22 percent year-over-year growth (to $8.6 billion) in Arizona exports to Mexico in 2014. More than forty percent of all Arizona’s foreign trade is with Mexico.
The blossoming Arizona-Mexico working relationship is also benefiting from some high-dollar, star power.
Mexican telecom mogul Carlos Slim – one of the world’s richest men with an estimated net worth of $74.6 billion – was in Phoenix last year extolling the potential power of this partnership. In an event sponsored by a local business publication, Slim said, the trade relationship is just beginning to hit its stride. Many in the packed crowd left the room saying they felt energized by Slim’s words.
Governor Ducey, who also spoke at the event, said Arizona is growing its footprint in Mexico. “We value Mexico and are open for business with our neighbor,” he told the crowd of more than 500 Arizona business and political leaders.
Ducey pointed to Arizona’s Mexico City trade office as an indicator of the state’s commitment. With its new office in Mexico City, Arizona can increase its share of commerce with Mexico for the future, while creating a platform for businesses in both countries to quickly expand their trade and investment opportunities across borders.
Part of the mission for the Arizona Commerce Authority (ACA) is working with small- to medium-sized companies to help them find export opportunities. Think of it as export matchmaking. Arizona is one of a small group of states that has seen annual export growth since the great recession. In fact, exports have increased each and every year since the recession took a positive turn in 2009.
These successes do not happen by accident. The ACA has more than 240 Arizona small businesses enrolled in AZ STEP – a program that is helping companies export into over eighty different countries. Among some of the successes of companies selling into Mexico are a Tucson-based, woman-owned metal finishing company, a Phoenix-based aluminum pallet company and a Tempe-based calibration equipment company.
The leader of Arizona’s largest Chamber of Commerce is a big believer in the long-term benefits of the Arizona-Mexico partnership. Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce, has taken many trips to Mexico over the past decade where he’s witnessed the positive change first hand.
“The relationship between Arizona and Mexico is getting stronger every year,” Sanders said. “All of these positive statistics show that trade with Mexico is booming, and it will continue to grow. It’s an economy that’s growing, both in terms of economic productivity but it’s also growing in terms of a consumer society. Arizona is tapping into that phenomenon.”
Commerce Authority officials said that at an April 2015 aerospace and defense show in Mexico, representatives from the aerospace industry in Mexico were impressed that Arizona was home to 1,200 or so aerospace companies. Mexico, for its part, has its share of dynamic aerospace clusters as well.
That makes for some possible future synergy, and Arizona is ready to help fill in the gaps in the supply chain for Mexico companies.
Those at the aerospace and defense show were thrilled that Arizona attended the show and the opening of the new trade office in Mexico City. The message was clear: Arizona is open for business in Mexico and anywhere else there are opportunities.
Arizona Commerce Authority President and CEO Sandra Watson said it’s much more than business sectors and geographic proximity that binds Arizona and Mexico.
“We have a strong historical bond with Mexico, a strong cultural bond,” Watson said. “I know Mexico sees it that way as well. There are natural, historical and cultural forces in play and, obviously, a shared border and capabilities. Our expansion economy gives us a huge boost for the future.”
Visit http://www.expansionsolutionsmagazine.com/arizona_ed for local economic development office directory listings