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<!DOCTYPE html>
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<title>District Regional Analysis </title>
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<span id="myIntro" class="w3-hide">CEDS | Regional Analysis</span></p>
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<h1 class="w3-xxlarge">Western Arizona Economic Development District</h1>
</header>
<div class="w3-container" style="padding:32px">
<h2>7.0 Regional Analysis</h2>
<h3 id="c71">7.1 Internal & External Forces</h3>
<p>
Economic development is a highly competitive, <em>take no prisoners</em> game. Small, rural communities battle with their neighbors to attract the same businesses or retain those they already have. Counties vie against other counties. Metro areas — both in and outside of Arizona — struggle to pursue the <em>holy grail</em> of high-paying jobs. States court new auto plants or high-tech industries. Finally, as economists are fond of pointing out, today's globalized economy means that Arizona competes with North Carolina, Massachusetts, Washington and China, Europe, India, and Sub-Saharan African nations.
</p>
<p>
Economic development creates winners and losers, with the latter causing anything from economic stagnation to a less desirable quality of life. Observers viewing the economic development process from the 30,000-foot level may praise the virtues of taking a broad, inclusive approach to this demanding set of tasks. But mayors like those in Bisbee, Mesa, Tucson, and Phoenix are expected by their constituents to promote local prosperity and <em>let the other places worry about themselves</em>. To complicate matters even further, there are not enough industries and businesses to go around.
</p>
<p>
But winning is critical. A strong economic base is a springboard to the rising revenues that fund enhanced public safety, housing, education, healthcare, and other ingredients of improved quality of life. Economic development, in short, is essential.
</p>
<p>
For decades, Arizona's economic development efforts have consisted chiefly of cashing in on a relatively low cost of living and lower-cost business operating environment, buoyed by the state's sunshine and scenic vistas — a somewhat passive approach that many nevertheless credit for the state's longtime lead ranking in population and job growth. Until the Great Recession, the Arizona economy had consistently outperformed the national economy in terms of growth, according to research by Elliott D. Pollack & Co., an Arizona-based financial and real estate consulting firm.
</p>
<p>
Although the state's economy was notoriously cyclical, some of the negative impacts of earlier recessions were eased as people continued to move into Arizona and spend money.
</p>
<p>
But when the steep national economic downturn caused population growth to stall, jobs to disappear, and tourists to stay home, the risks of overdependence on growth were harshly revealed. Indeed, Arizona lost some 300,000 jobs from 2008 to 2010, about half of them in construction.
</p>
<p>
<strong>March 2020 Update:</strong>:
</p>
<p>
<a href="https://www.yumacountyaz.gov/home/showpublisheddocument/44294/637340525355370000" target="_blank" rel="noopener">Click here</a> to view <strong>The Yuma County Five-Year Economic Development Plan</strong> (Effective: March 16, 2020)
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h3 id="c72">7.2 Long-Term Goals</h3>
<p>
Rural communities in the District face economic development challenges that include fundamental infrastructure shortcomings (roads, sewers, railroads, and airports), limited workforce skills, and relatively few available buildings. On the other hand, these communities can pitch prospective employers on their quality of life, lower operating costs, a skilled labor force willing to travel long distances to work, and the care and attention that smaller communities often pay to new, highly prized businesses.
</p>
<p>
In many rural communities and counties, the day-to-day responsibilities for economic development rest with a city manager or county administrator who is already juggling other tasks. Tight budgets often preclude hiring a full-time economic development director whose work may not yield dividends for two or three years in the view of elected officials. These communities also may be hamstrung by the lack of an economic development plan, such as a document similar to this Comprehensive Economic Development Strategy (CEDS).
</p>
<p>
The following goals and objectives are centered around core themes that resonate within the state and the District to create a diversified economic development culture.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c721">7.2.1 Job Creation</h5>
<p>
Arizona generates jobs in droves in good times, but too few of these are cutting-edge jobs. In The New Geography of Jobs, the University of California, Berkeley economist Enrico Moretti suggests there are three Americas — one whose cities offer a <q>well-educated labor force and a strong innovation sector,</q> another that is beset by lost jobs and dwindling population with the decline of traditional manufacturing, and a third in the middle whose cities could go either way. If he is correct, it's clear that Arizona's cities cannot afford to be caught standing in place.
</p>
<p>
<strong>Objective:</strong> Manufacturing jobs have traditionally led the way towards higher-pay and better job security in most U.S. communities since the 1950s era of <em>smokestack</em> industries. But today, manufacturing is meeting innovation head-on in creating jobs that did not exist even five years ago. The District must embrace innovation and rethink manufacturing opportunities that are well-suited for the rural economies.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c722">7.2.2 Skilled Workforce</h5>
<p>
A skilled workforce is not only the top priority for many companies that are looking to expand or relocate; they want that skilled workforce to be there five, 10, and more years down the road. This strategy requires a continued commitment to improving the quality of education in Arizona, particularly in the areas of science and math.
</p>
<p>
<strong>Objective:</strong> Lawmakers will need to fund education to the level where that becomes our identity. Arizona will attract industries that require high-quality labor and pay higher-than-average wages. In Yuma County, several programs are underway that are focused on K-12 education. STEM and the Cambridge curriculum have been integrated into the curriculums with a substantial grant from the Helios Foundation.
</p>
<p>
Higher education played a unique role in these programs. Pathways have been created where students will graduate from high school with college credit towards their career objectives. Base industries in this region supporting this program include renewable energy, aerospace, automotive, and, of course, agriculture.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c723">7.2.3 Rural Infrastructure</h5>
<p>
Rural Arizona needs more state help in assessing assets and building infrastructure so that it can be more competitive.
</p>
<p>
<strong>Objective:</strong> The essential infrastructure layer preventing the District from becoming more competitive is access to high-speed Internet - especially in rural communities. A recent (2015) Census Bureau report finds that over 22 percent of Arizonans don't have access to the Internet. Another 4.9 percent have connectivity, but not at home. Men and women were about even in terms of access, while Asians and whites had higher connectivity levels than blacks and Hispanics.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c724">7.2.4 Tax Reform</h5>
<p>
While Arizona's tax system is generally competitive and becoming more so, a heavy reliance on sales taxes motivates communities to pursue retail businesses. The result is often more time spent attracting retail jobs and less time drawing higher-paying ones.
</p>
<p>
<strong>Objective:</strong> Advocate with District local elected officials and state lawmakers to understand the importance of attracting higher-paying job opportunities to diversify the tax base and reduce the reliance on retail jobs.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c725">7.2.5 Strengthen Clusters</h5>
<p>
After years of inattention, Arizona must protect and nurture essential base industries, such as aerospace and aviation, that provide high-paying jobs and help attract similar companies to strengthen clusters.
</p>
<p>
<strong>Objective:</strong> Arizona and the District must continue to diversify its economy by targeting such cutting-edge sectors as bioscience and advanced electronics, while also protecting and expanding such traditionally strong industries like aerospace and aviation (notably the highly promising area of uncrewed aircraft systems.)
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c726">7.2.6 Tourism</h5>
<p>
Arizona's booming tourism sector broke records recently, with visitors spending <strong>$24.4B USD</strong> is 2018 and generating more than <strong>$1B USD</strong> in revenue for the state. In recent years, Arizona has cemented its position as a world-class destination for leisure, recreation, events, conferences, sports, and more. Tourism dollars directly supported 192,300 jobs in Arizona — representing <strong>$7.4B USD</strong> in earnings by Arizona workers. Tax revenues generated by tourism increased 17% over the previous fiscal year (2018) to a record total of <strong>$1.1B USD</strong>. It provides not only entry-level jobs but numerous jobs for suppliers of products and services. And it has a particularly significant impact in rural areas.
</p>
<p>
Visitors rather than residents primarily pay taxes generated by the travel industry. According to a new report from the Arizona Office of Tourism, a record of 45.4 million overnight visitors came to Arizona last year, up from 43.9 million in 2017. On average, they spent $67 million per day, up to eight percent from the previous year's record-breaking visitor spending total. This new money imported into the state and local economy means the tax revenue generated by travel spending is a net benefit to Arizona residents.
</p>
<p>
<strong>Objective:</strong> Advocate with District local elected officials and state lawmakers to understand the importance of tourism on the state and District economy. The impact of tourism spending is relatively more important to Arizona's rural counties than urban counties.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c727">7.2.7 Gross Domestic Product</h5>
<p>
Gross Domestic Product (GDP) is the value-added in production by labor and capital. It is the most comprehensive measure of economic activity. In 2020, the real Gross Domestic Product (GDP) of Arizona amounted to <strong>$320.66B USD</strong>. This is a decrease from the previous year (2019), when the state's GDP amounted to <strong>$323.6B USD</strong>. At $43,546, Arizona's per-capita gross domestic product in 2018 lagged well behind the $65,297 national average.
</p>
<p>
<strong>Objective:</strong> A healthy economy exists when inflation-adjusted gains in GDP are at least 2-to-3 percent per year. Recovering from the Great Recession in terms of GDP are lagging in Arizona and, in particular, in rural counties. The District must advocate with local elected officials and policymakers to attract modern industries and higher-paying jobs to the region to impact increased economic production.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c728">7.2.8 Entrepreneurship</h5>
<p>
Arizona's independent attitude contributes to an entrepreneurial spirit that makes it the national leader in startups. But that attitude also means key elected leaders can be reluctant to fully support the efforts of university researchers and governments pursuing federal and other funding.
</p>
<p>
<strong>Objective:</strong> The District is a hub of entrepreneurial activity, but the actual job creation impact is minimal. Most of the District's <em>solopreneurs</em> are created out of necessity to replace the primary income of one or more members of the household. Entrepreneurship's overall impact is negligible -- if new job creation is not planned for, nor desired. More District entrepreneurs would benefit by investing in higher education opportunities and developing business models that will match growth projections in economic clusters -- instead of focusing on low-revenue service-oriented ventures.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c729">7.2.9 Corporate Leadership</h5>
<p>
Arizona's relative lack of business leadership is compounded by the absence of primary corporate headquarters that typically provide guidance, volunteers, and funding for community projects. Many CEOs are also devoting more of their time to keeping their companies competitive in today's economy, which leaves them with less time for community projects.
</p>
<p>
<strong>Objective:</strong> The best way to attract more high-quality jobs is to continue to diversify Arizona's traditional growth-based economy by nurturing and expanding existing export-based industry strengths and leveraging the incredible intellectual capital within Arizona's university system.
</p>
<p>
Arizona is primed to establish a national reputation for excellence and innovation in existing industries with massive potential while furthering our reputation for fostering entrepreneurship and growing our own. Arizona can become a place known for providing the foundations for consistent business growth – smart workers, market access, intellectual property, and low operating costs. This foundation is where the <em>rubber-meets-the-road</em> with corporate leadership.
</p>
<p>
Southern Arizona has an established corporate base in some key industries – aerospace and defense, bioscience, alternative energy/solar – and a geographic location ideal for managing manufacturing relationships with Mexico and distribution throughout the southwestern United States. Coupled with the University of Arizona, these strengths provide Southern Arizona and the District the assets to flourish.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h5 id="c7210">7.2.10 Community and Private Sector Participation</h5>
<p>
The Arizona Legislature’s 2010 jobs package created a $25 million “deal-closing” fund to provide financing/grants to attract companies.
</p>
<p>
Lawmakers also reduced the corporate income tax rate (from 6.7% to below 4.9% by 2017) and created a <em>Quality Jobs</em> program that provided incentives for creating and retaining high-paying jobs in base industries. Base industries, such as manufacturing, research and development, and high-tech, were targeted because they generate wealth through exports and help create more high-wage jobs. For example, every position in aerospace manufacturing in Arizona is estimated to build two more jobs in other industries. The primary goal of the Quality Jobs tax credit is to encourage business investment and the creation of high-quality employment opportunities in the state. Quality Jobs accomplishes this goal by providing tax credits to employers creating a minimum number of net new quality jobs and making a minimum capital investment in Arizona.</p>
<p>
At the state level, Arizona now is better poised to become more competitive. But economic development also depends on the myriad efforts of cities and towns, counties, chambers of commerce, and regional organizations.
</p>
<p>
At the District level, outreach must be ongoing to discuss with local elected officials, policymakers, and private citizens -- about how best to embrace a unified economic development planning document, such as this CEDS. A culture of <em>reactive</em> economic development policies -- instead of <em>proactive</em> economic development planning is not going to occur overnight.
</p>
<p>
Distributing this CEDS document in electronic format to local elected officials, business leaders, private sector groups; embedding on its website; and creating <em>snapshots</em> of the CEDS to distribute in social media channels are some of the methods that will be used to encourage discussion and long-term implementation of the CEDS.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h3 id="c73">7.3 Regional Economic Development Investments</h3>
<p>
The Defense Contractor Complex (DCC), located at Yuma International Airport, is a state-of-the-art industrial park dedicated to the manufacturing, distribution, repair, and maintenance of the aviation industry. The 120-acre complex has been equipped with the infrastructure and technology needed to provide a center for completing the certain activities required by multiple avionic industry sub-sectors.
</p>
<p>
The San Luis (Arizona) Business Incubator supports the growth of manufacturing and trade-related businesses. According to grantee estimates, the project is expected to create 300 jobs and generate $10 million in private investment. The 20,000-sq.-ft. business incubator was built on a four-acre industrial site in the San Luis Industrial Park. The facility includes 10,000 sq. ft. of shared primary incubator space and 10,000 sq. ft. of single space, which will allow successful businesses to expand within the incubator.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
<hr>
<h3 id="c74">7.4 Workforce Investment Strategies</h3>
<p>
Many of those familiar with Arizona's economic history said that the economic downturn, though extreme, was only temporary. The state would be back.
</p>
<p>
But while every new job is welcome in a fragile recovery, the rejoicing over Arizona's gradual turnaround has been muted. Business and political leaders, economic development officials, and many other Arizonans agree that it is not enough to create jobs; the state must create more quality jobs. They are determined to diversify the economy. Further, champion innovation and target economic sectors with the long-term potential to avoid the past peaks and valleys.
</p>
<p>
Central to achieving these goals is a reliable infrastructure, a highly-skilled workforce — especially in the <strong>STEM</strong> fields (science, technology, engineering, and math) — and expanded trade with Mexico and other parts of the world where most future economic growth is projected to occur. These are long-term strategies, whose benefits might not be seen for years. They also require a broad range of stakeholders working in relatively close alignment. Cooperation is critical.
</p>
<p>
Arizona's overall response was in line with the state's traditional beliefs in the power of free enterprise and the central role of a business-friendly climate that reins in taxes and regulation while using some incentives to entice new firms.
</p>
<p>
Still, many of those looking beyond Arizona's current resurgence warn of long-standing structural problems that stand in the way of building an economy that provides not just jobs, but quality, high-paying jobs that can better withstand the busts that accompany the booms.
</p>
<h6><a href="ceds.html">Return to CEDS</a></h6>
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