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Arizona Report: Life Sciences and High-Tech Equal Stable and Steady Growth

Web Exclusive/Feb 09
Describing the nation's economy as "in a free fall," Marshall J. Vest, economist at the Eller College of Management at the University of Arizona in Tucson, says that Arizona's economy is poised to feel recovery probably by year's end. During the recession of the mid-1970s to early 1980s, he says, "unemployment rates reached 13 percent; but today, unemployment in Arizona is about 6.7 percent, and is not expected to exceed 10 percent by the end of 2009." He says many industries are anxiously anticipating a boost from federal government's economic stimulus plan - "a huge amount of stimulus that hopefully will encourage the economy to come back pretty strong."

Arizona's most stable sectors include healthcare, high technology industries, defense and defense electronics, biotechnology and hospitality and leisure.

In the biosciences, Catapult Bio, a nonprofit accelerator dedicated to the advancement of late-stage research and formation of new biotech companies, officially launched in January 2009. The concept is based on the Translational Genomic Research Institute's TGen Accelerators, LLC (TGen Accel). Initial funding stems from a grant of up to $14 million over five years by Abraxis BioScience, a Los Angeles-based bioscience company. Patrick Soon-Shiong, M.D., Abraxis BioScience's CEO, credits Arizona with "promise and potential" as an emerging bioscience center that can seed new ventures and attract capital.  

In health sciences, Cancer Treatment Centers of America (CTCA) opened in Goodyear, west of Phoenix, on December 29, 2008. David Veillette, CTCA's president and CEO, says that the Arizona location fulfilled "our extensive need to be a transport-destination hospital. We needed an `easy-use' airport to get our cancer patients here easily." He adds, "The labor environment is very good, providing quality, skilled workers, from physicians to housekeepers, and work force development organizations and universities that will help grow the future work force."

High-tech activity is buzzing at Intel Labs, which employs more than 10,000 people in Arizona. An investment of $3 billion over a two-year period at the facility in Chandler will help to deploy the 32-nanometer manufacturing technology needed to produce faster, smaller chips that consume less energy. Intel CEO Paul Otellini said, in announcing the decision to expand at that location, that the firm's continued investment during the economic downturn is predicated on forward-looking investments.

Exports are also positive, according to Jaye O'Donnell, senior director of marketing and business attraction for the Arizona Department of Commerce, who says Canada and Mexico are long-term top trading partners, and Taiwan and China "have grown remarkably." Exports of Arizona-made products rose 7.6 percent in the third quarter of 2008 over the previous year, according to the U.S. Department of Commerce.

Arizona is also "one of the few states that that has enacted special legislation that makes businesses located in a Foreign-Trade Zone or sub-zone eligible for an 80 percent reduction in state real and personal property taxes," says  O'Donnell, adding that workers compensation and unemployment insurance rates (payroll taxes) are lower than any state in the west and southwest, "creating a better pro forma business case for Arizona."

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