Business leaders: State government needs to drive global competition
Published: December 2, 2010 at 3:12 pm
The state government will have to play a critical role if Arizona businesses are to become global competitors, business leaders said at conference Wednesday.
But the state’s currents attempts to increase global trade and investment are hampered by a lack of a unified vision for the state, a weak public educational system and a low regard for international business and trade, according to a survey of the leaders.
“The jury is very much still out on whether Arizona can pull together. We just don’t have a history of that,” said Douglas Griffen, director of Advanced Strategy Center at Pinnacle Peak. “But this is still a young state and we have the chance to make that happen.”
As part of the Global Arizona 100 conference in Phoenix, hosted by Arizona State University’s Morrison Institute for Public Policy, Griffen conducted seven pre-conference, online sessions in which roughly 70 participants from the public and private sectors brainstormed ways that the state could improve its competitive edge.
In addition to their beliefs about the shortcomings of state schools, vision and the image of trade, Arizona has other things going against it as a global player. The state’s economy currently relies heavily on service and tourism industries, which cannot be exported.
Arizona needs to foster better public-private relationships, improve its public educational system and better put a greater emphasis on exports if it wants to become more competitive, the business leaders said.
“There’s a sense that nothing’s going to happen unless we can get people in a collaborative mode,” Griffen said.
Arizona has been struggling with its global role in recent years. The state’s biggest trading partner is Mexico, which received more than 32 percent of the state’s export activity in 2009, but that trade has fallen in the past year, according to U.S. Census Bureau.
In 2009, Arizona exported roughly $4.54 billion in goods to Mexico, down from $5.91 billion in 2008, a 23 percent drop. Arizona’s trade with other top export markets like Canada, China and United Kingdom also fell in 2009.
But Arizona can nurture its unique strengths, including a strategic location near Mexico and California, steady sunshine that can translate into an energy resource and a growing set of research institutions, local business leaders concluded.
One business that is already capitalizing on Arizona’s sunshine is Tempe-based First Solar, which went public company in 2006 at $22 a share and which closed Wednesday at $126.74 per share. The company has manufacturing plants in Germany, Malaysia and another under construction in France, said First Solar President Bruce Sohn, who participated in a panel discussion at Wednesday’s conference.
First Solar has been aggressively looking to expand its global footprint and the state should encourage its overall solar industry to do likewise, Sohn said.
“There’s an industrial need and value for our sunshine,” Sohn said. “Arizona can actively be an exporter of energy. Much like the Middle East is an exporter of liquid energy, we can be an exporter of solar energy.”
As First Solar has been setting up shop abroad, Tucson-based Paragon Space Development has been working on strengthening its local operations by, for example, recruiting engineers from outside the state.
“We have to remember we have an awful lot of businesses in Arizona,” said Paragon co-founder Jayne Poynter. Paragon develops life support systems for the aerospace industry.
Poynter called for more public-private partnerships.
“Fast-track grants, research and development credits … these are good, solid products that Arizona gives to small businesses that are incredibly important. More of that, more of that,” she said.
Also, Arizona should develop more incentives to attract foreign firms to set up shop in locally, said Clyde Prestowitz, founder and president of the Economic Strategy Institute in Washington, D.C., and a morning speaker.
“Are there companies in Brazil that we would like to have in Arizona, and what can we do to entice them?” Prestowitz asked. “It doesn’t have to be big money. It can be seed money or access to universities.
“We need to educate state officials that we have a problem, and its not just a problem of a burst bubble,” he said.
Arizona’s top export markets in 2009 in percentage of total export activity:
• Mexico: 32.4 percent, or $4.55 billion
• Canada: 12.6 percent, or $1.76 billion
• China: 5.9 percent, or $822 million
• United Kingdom: 4.3 percent, or $597 million
• Germany: 4.2 percent, or $587 million
• Japan: 3.8 percent, or $526 million
• Singapore: 3.7 percent, or $524 million
Source: U.S. Census Bureau, Foreign Trade Database
Arizona’s top exported goods in 2009:
• Civilian aircraft, engines, parts: $1.9 billion
• Processors and controllers, circuits: $897 million
• Bombs, grenades, torpedoes, and other ammunition: $406 million
• Parts for automatic data-processing machines: $276 million
Source: U.S. Census Bureau, Foreign Trade Database