< Previouswas joined at the announcement by Glendale Vice Mayor and Valley Metro Board Chair Lauren Tolmachoff.“Having additional travel options enhances quality of life for current and future generations, and creates greater independence for seniors and people with disabilities,” said Tolmachoff. Valley Metro was to begin using the self-driving vehicle technology for first- and last-mile transit trips by late summer.“This is the first partnership between a public transit system and a private autonomous vehicle company that will provide a mobility service outside of a controlled environment,” said Scott Smith, Valley Metro CEO and former mayor of Mesa. “Think of it as the start of mobility on demand or mobility as a service.”How Businesses BenefitValley Metro was founded in 1985 as a regional replacement for bus systems operated by individual municipalities. It consists today of a bus system for Phoenix, bus and paratransit services for areas outside Phoenix, a van pool service with more than 400 vans and Valley Metro Rail, and a 26-mile light rail system serving Mesa, Phoenix and Tempe. “We serve about 70 million riders annually,” says Smith. How do businesses in the Valley benefit?“The van pool service is for “For employers wanting to offer employees transit options, there is virtually nowhere you can go in the Valley where there isn’t a viable transit option.”— Scott Smith, CEO, Valley Metro, and former mayor of Mesa38 G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC EG R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC E 39employers and employee groups,” says Smith. “We provide the van and they provide the drivers and the riders. We buy the vans, mostly with federal grant money; they’re branded Valley Metro and then made available to groups of commuters. We pay for maintenance and insurance on the vans, and the users pay a monthly fee to use them. The vans pay for themselves. What the employees pay per month is much cheaper than driving their own cars.” Salt River Project and Intel are among the large companies in the Valley taking advantage of Valley Metro’s van pools. Ride services Uber and Lyft aren’t yet affecting ridership numbers noticeably, says Smith. “But we’re looking to partner with ride-sharing services to expand our reach, such as our recent agreement with Waymo,” he notes. “We’re the first metro in the country to explore ways to use autonomous vehicles to bring people from their homes or workplaces to a bus stop or rail station.”Will the Valley’s foray into autonomous vehicle technology catch the attention of corporate facility location planners?“As Mayor of Mesa for six years, I talked to a lot of site selectors and a lot of companies,” says Smith. “Transit is always on the list — it’s always mentioned as being one of the top three factors, but it’s hard to say how much it really factors in. It’s becoming more and more important. In Phoenix, people have options — light rail, bus. New companies and existing companies are starting to cluster along the transit line, in Tempe and Phoenix — even in Mesa they’re starting to look at it, and light rail has been there only three years.”Smith says Phoenix and other areas have taxes dedicated to transportation, which he finds to be “more unique than I thought.” Regionally, that includes a half-cent sales tax that goes one-third to transit, two-thirds to local streets and freeways to expand our bus system and the light rail line.“There’s no doubt Phoenix is a post-World War II, automobile-centric city, like other Western cities,” adds Smith. “But it does have viable options. For employers wanting to offer employees transit options, there is virtually nowhere you can go in the Valley where there isn’t a viable transit option. Thanks to the taxes, those options will be relevant well into the future.” Valley Metro Rail serves about 70Mriders annually.P L A N N IN G A H E A DYears of planning and a progressive approach to water management have set Greater Phoenix up to support its growing population.by M AR K AR E N Dater management is a challenge in Arizona — it’s a desert, after all. Water rights litigation, specifically a lawsuit known as the Gila Adjudication, has been going on for more than four decades, mainly due to differences between how surface water and ground water are treated under Arizona law. It’s a good thing, therefore, that those in charge of water management in the Greater Phoenix region are so good at what they do. Since 2014, that group has included the Kyl Center for Water Policy at Arizona State University’s Morrison Institute, in Tempe. Among other initiatives, it has documented a potential imbalance between projected demands and water availability in the next few decades and convened meetings of water experts to develop short-term, medium-term and long-term priorities for solving that imbalance.More recently, the center produced a report in March 2018 called “The Price of Uncertainty.” It outlines, in layman’s terms, the scope of the Gila Adjudication challenge; Arizona Supreme Court directives to the Arizona Department of Water Resources; and results of a survey of economic developers, site consultants and development professionals. Knowing what’s WWateringThe Futureon their minds goes a long way to assuring potential capital investors in the state that the water-certainty challenge is being met.Key survey findings include these:• A majority of respondents agree that investors have become more concerned about water in the last few years — for some, it has always been a top concern.• Water rights are very tricky for developers seeking to profit from the sale of land they buy or develop, given likely delays in sorting out those rights.• Site consultants are of mixed opinions where heavy water-using facilities are concerned: On one hand it makes no sense to locate such a plant in Arizona; on the other, it can deliver a logistics advantage. • Real or perceived water-supply problems tend to eliminate locations from most consultants’ lists.• Areas and companies today are very sophisticated when it comes to water supply management and the eventual resolution of the Gila Adjudication.Supply and Demand“The recognition that we will need more water in the future is not something that should cause alarm, but rather show people that Arizona is continuing to do what it has done really well, which is foresee the need for more water supply or figure out a different allocation of current supplies,” says Sarah Porter, director of the Kyl Center for Water Policy. “We will always have water challenges in Arizona, because that is our scarce resource. But the Phoenix area is in good shape.”The metro area’s water supply is about one-third from reservoirs that hold Colorado River reserves, says Porter, and discussions are ongoing concerning how to manage any reductions in that amount. “What 40 G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC Emakes Phoenix more water-resilient than some other places is that we have not only the Colorado River supply, which is delivered by the Central Arizona Project, but we also have the Salt River Project system, which is the Salt and Verde Rivers and another third of our water. Then we have a cap-and-trade system for groundwater [part of the Ground Water Management Act of 1980], where our long-term goal is to reach safe yield, so we don’t take out any more water than is recharged. Groundwater is about another third of our supply. Drawing from diverse supplies gives us more robustness.” Porter says Arizona has been actively recharging aquifers “for a long time.”Such measures give water management authorities — and businesses — certainty, says Porter. “When businesses move in and are working with a water provider or the Department of Water Resources, they can be assured of the water supplies they will need.” Local developers in particular are very familiar with water management measures and supplies, notes Porter, referring to “The Price of Uncertainty” survey. “I was impressed with the site selectors’ familiarity with the water supplies of Phoenix and Tucson,” she adds. “They get to know these areas very well. But they indicated that places sometimes rule themselves out before anyone really knows — not that Phoenix does, but if there are questions about water, places can eliminate themselves.“Sometimes optics are the issue,” Porter adds. “If you’re a heavy user of water and you don’t need to be in Phoenix, you might not go there.Last One in…“The consultants who facilitate project investment in the area — or don’t — rely on the local and regional economic developers, water suppliers, municipalities and utilities for picking the best location in the region for siting a facility,” Porter continues. Greater Phoenix suburb Chandler requires heavy water using facilities to supply their own water unless the facility is consistent with the city’s long-range growth strategy. “That’s unique in terms of a city doing something so rigorous in the areas of water and growth. They have a more limited supply than other cities in the area.”By the same token, says Porter, “municipalities realize that some businesses will be high water users, and we need them. We need food processing. We need data centers. A lot of factors go into siting a business. If the variables dictate it should be in Phoenix, then we need to have that happen. Intel in Chandler is a large user of water, but it’s also a huge producer in terms of bringing dollars into the economy. These businesses that are heavy users of water are, for the most part, exemplary at water conservation and reuse, and Intel is at the head of the pack. Heavy water users are embracing efficiencies and understanding that they need to be leaders in that area.” G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC E 41“We will always have water challenges in Arizona, because that is our scarce resource. But the Phoenix area is in good shape.”— Sarah Porter, Director, Kyl Center for Water Policy, Morrison Institute, Arizona State University42 G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC E42G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC Ehere may be better reasons for economic developers to pursue tech-sector growth, but this one is hard to top:The 2017 CompTIA Cyberstates Report showed that the average tech wage of almost $98,000 was nearly double the $49,500 average annual salary of the Phoenix metro region, and $20,000 more than the average tech wage across the entire state.Is that stopping the industry from creating more jobs? Hardly. Computing power and brainpower are a powerful one-two punch.The Arizona Technology Council Industry Impact Report released in June 2018 revealed 1.38 percent employment growth in the sector, second in the Southwest and ahead of California. The report also showed a growing technology workforce of 168,211 jobs, “more than 8,000 technology companies operating in the state, a pattern of innovation and an engagement of diverse stakeholders.” Recent council initiatives have included the recapitalization of the Angel Investment Tax Credit, the extension and continued expansion of the R&D Tax Credit program until 2021, and the opposition to laws that may prohibit members’ employees — local and foreign — from working safely in Arizona.Among other highlights:• Arizona’s technology industry contributed more than $32.5 million in total taxes in 2016.• There are 2,156 startups in Arizona listed on AngelList.• The average Arizona technology startup valuation is $3.9 million.• There were 2,741 patents awarded in Arizona in 2015.“Arizona is well positioned to claim its place in the national playing field of competitive technology markets,” said Steven G. Zylstra, the Council’s president and CEO. Computer systems design, semiconductor manufacturing, and aerospace product and parts manufacturing represent roughly half of the annual wage totals in the state of Arizona — and many of those wages are being earned in Greater Phoenix.According to CompTIA, the metro area saw a net gain in tech jobs of 3,660 between 2016 and 2017, with nearly 50,000 tech occupation job postings in 2017, and nearly 30 percent growth in “emerging tech” job postings.As recently as 2016, the Greater Phoenix Economic Council and semiconductor industry consortium by A D A M B RU N STTech+Talent is a Magical CombinationTE CH N O LO G Y + T A L E N TTech+Talent Tech+Talent G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC E 43SEMI produced a report on the microelectronics cluster that first bloomed there 60 years ago with the arrival of Motorola and has gone on to become, as the report puts it, the region’s core technology driver.“Motorola and other companies were lured by the proximity to California, the favorable weather, low land cost, and as part of a national defense strategy,” said the report, noting the arrival of big names that became Lockheed Martin and Honeywell. Those big players not only helped build engineering curriculum at the University of Arizona in Tucson, but were the guiding lights in the creation of Arizona State University and its professional engineering school. ASU welcomed 109,000 students onto campus and online in August 2018, including a freshman class of 13,000 that represented a 12 percent jump from the year before. The students matriculating from campus to the job market today know that the days of the corporate electronics giant have evolved to something entirely different and, to many, more promising: an industry ecosystem built of small and medium-sized companies and startups.As the GPEC/SEMI report noted in 2016, by 2013 only eight microelectronics firms in the region had more than 1,000 employees. Meanwhile, employment at companies with fewer than 50 employees grew by 45 percent between 1990 and 2013, while employment at large firms shrank by 34 percent. Those trends only continue, meaning an increasingly rich cluster that not only serves the big companies’ supply chain needs, but branches off into other, complementary areas, including software. The area is home to 5,678 tech business establishments.Here are some high-tech highlights:IntelThe biggest of the big, Intel in 2017 announced plans to invest more than $7 billion to complete Fab 42, the most advanced semiconductor factory in the world. The factory in Chandler will directly create nearly 3,000high-tech, high-wage jobs, and is expected to indirectly support more than 10,000 long-term jobs in Arizona. The complex will produce microprocessors to power data centers (see sidebar) and hundreds of millions of smart and connected devices worldwide.HoneywellForeign Trade Zones (FTZs) are often thought of as low-tech places to hold goods. But in Greater Phoenix, they play a crucial role in the success of Honeywell International, the region’s second-largest employwer after Intel. The company operates four sites in FTZ No. 75 that, thanks to the program’s alternative site framework option, sit in Deer Tech Means DataAccording to CBRE’s U.S. Data Center Trends Report released in August 2018, demand from large cloud users drove more than 177 megawatts of net market absorption in the first half of 2018. “We do not expect to see a slowdown in demand from cloud users in the near future, as end-users continue to migrate their IT needs to the cloud to save costs and for added flexibility,” said Pat Lynch, senior managing director, Data Center Solutions, CBRE. “Tight market conditions in Silicon Valley have forced occupiers to expand into other markets, notably, Phoenix, which has record levels of construction underway.”Greater Phoenix had net data center absorption of 32.5 megawatts during the year’s first half, with 61.4 megawatts of space under construction.44 G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC EValley, Tempe and Phoenix Sky Harbor International Airport (home to Honeywell Aerospace Global Headquarters). A fifth site may be added soon, once a minor boundary modification process in the FTZ is complete.The four sites employ close to 7,000 people in Phoenix and Tempe at an average wage of $96,300, which is 173 percent higher than the county median wage.As the company was not realizing any of the usual property tax benefits related to FTZs, it applied to receive a property reclassification for future capital investment at sites within the FTZ and commissioned an economic impact analysis from Applied Economics. Among the findings:The four Honeywell sites in the FTZ create an annual economic impact of $3.41 billion in Maricopa County.The company’s operations directly and indirectly support an approximately 13,969 jobs and generate $1.03 billion in annual personal income in the county.In 2015, Honeywell spent an estimated $183.3 million with Maricopa County-based vendors, supporting an estimated 1,666 additional jobs and $102.4 million in payroll at local vendor businesses. Cox CommunicationsAnybody with cable knows Cox, which two years ago moved into expanded space at Blackhawk Corporate Center in the hot Deer Valley submarket. Among approximately 20,000 Cox employees nationwide serving more than 6 million residences and businesses in 18 states, 3,200 (16 percent) are in Arizona.The company is doing its part for the entire metro’s tech infrastructure too, activating thousands of wifi hotspots in the same metro area where it chose to launch its first market-wide gigabit internet service (offering Greater Phoenix customers speeds 100 times faster than average). Phoenix in 2016 was among 16 “Smart Gigabit Communities” nationwide that, alongside 55 research universities, are working as living labs of testbeds for smart gigabit applications.Arizona State University’s Fall Welcome ceremony in August 2018 included more than 3,000 freshmen being welcomed to the Ira A. Fulton Schools of Engineering, which have generated 96 patents and 17 startups in the past three years.Photo courtesy of Arizona State UniversityG R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC E 45Benchmark Electronics2017 was the big moving year for this company, a microelectronics engineering and manufacturing firm that announced plans to relocate headquarters to Tempe from Texas and add approximately 500 new jobs in Greater Phoenix.“Microsoft, Amazon, GoDaddy and now Benchmark have all found a home here in Tempe,” said Tempe Mayor Mark Mitchell.The firm broke ground for the new HQ in November 2017. Among those present were Doug Ducey, Arizona Governor; Paul Tufano, Benchmark President and CEO; and Sethuraman Panchanathan, executive vice president, Knowledge Enterprise Development and chief research and innovation officer at Arizona State University.“With the groundbreaking of Benchmark’s new headquarters and 500 new jobs headed our way, eyes from New York City to Silicon Valley are once again focused on our state,” Ducey said. “Benchmark’s selection of our state is further proof there is no better place than Arizona to start or scale a business, or test and develop new technology.”The company has already joined forces with Arizona State University through a strategic partnership to foster an innovative ecosystem that benefits students and businesses. Benchmark plans to leverage the impressive talent produced by ASU’s Ira A. Fulton School of Engineering and W. P. Carey School of Business in its hiring efforts.“Our partnership with Benchmark is another step toward the outstanding collaboration between business and education we have fostered at our university,” said ASU President Dr. Michael Crow.Construction is expected to be completed in early 2019. The new HQ will house the corporate leadership team and key corporate functions. Benchmark’s Internet of Things (IoT) Center of Innovation will also transition to the new location. $23.1 billionEstimated direct contribution of the tech sector to the Phoenix economySource: 2018 Cyberstates report from CompTIA46 G R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC Eun fact: Greater Phoenix has more people than nearly half of the states in the country. At more than 4.7 million residents, it ranks 11th among cities in population as it continues to add 100,000 people a year. On those numbers alone, Greater Phoenix provides a cherished asset for mega-scale manufacturers: an abundant workforce.Filling that fundamental need was a prime consideration for Nikola Motor Company, an ambitious, electric truck maker, when it made the decision in January to move from Salt Lake City to Phoenix.“There are four million people here in Phoenix,” says CEO Trevor Milton. “That’s more people than in all of Utah. We’re going to hire a couple of thousand people and we needed a place where we could find the right kind of worker.”Nikola is a startup already valued at more than $1 billion that promises full production of a hydrogen electric semi-truck by 2021. Nikola has more than $11 billion dollars in pre-order reservations, including an 800-truck order from Anheuser-Busch. That’s ten times as many electric trucks as the beer-maker ordered from Tesla, Nikola’s primary rival.Nikola has moved into a new headquarters in downtown Phoenix that will employ some 300 people. Crucially, the company plans to sink more than $1 billion into a 1-million-sq.-ft. manufacturing center south of the city, with workforce of 2,000 workers or more. In choosing to locate in Phoenix, Nikola joins more than 4,000 advanced manufacturers operating throughout the region, says Chris Camacho, president and CEO of the Greater Phoenix Economic Council. The sector is ramping up throughout Greater Phoenix, especially in the enclaves of Chandler, Gilbert, Mesa and along the I-10 corridor that A D V A N C E D MA N U F A C T U R I N G Workforce and supportive business climate lure major manufacturers.by G A RY D AU GHT E R S FArizona-based Nikola Motor Company has a pre-order from Anheuser-Busch for 800 hydrogen electric semi-trucks.Source: Nikola Motor CompanyG R E A T E R P H O E N I X : T HE C O N N E C T E D P L AC E 47leads to Tucson.The region’s advanced manufacturing ecosystem includes:• Intel: The chip manufacturer employs 11,000 people in and around Greater Phoenix and has launched a $7-billion project in Chandler that’s to yield what the company calls the world’s most advanced semi-conductor facility.• Honeywell: The company’s aerospace division has its headquarters in Phoenix. Honeywell is Arizona’s ninth-largest employer with 9,000 workers at various facilities across the state.• Boeing: The aerospace giant employs 3,700 people in Arizona. It makes Apache attack helicopters and has cybersecurity and drone operations at Mesa’s Falcon Field.• Orbital ATK: The defense contractor has a launch systems group in Chandler, a space systems group in Gilbert and a defense systems group in Mesa. Orbital is building a new campus in Chandler along the Price Road corridor, a burgeoning hub of advanced manufacturing.• NXP Semiconductors: The chip maker, which announced a major expansion of its Chandler operations in 2017, employs around 2,000 people.Other notable manufacturers in Greater Phoenix include Huhtamaki, BAE Systems, UTC Aerospace Systems, Medtronic and NMG Aerospace.The Greater Phoenix Economic Council says that nearly 140,000 people work in the city’s manufacturing industries. An impressive talent pipeline serves to support that robust workforce, which makes Greater Phoenix that much more attractive to companies like Nikola.“You’ve got Arizona State University here, which is the largest public university in America,” says Milton. “And the great thing about ASU is they have programs where the workforce coming out of there is already trained in fuel cell batteries. They just come right in. They intern here and they begin work here. So, you’re not transplanting people from all over the country. You’ve got tens and tens of thousands of students here locally that are coming out of college ready for a job. It makes it very easy to recruit.”In addition to ASU, Greater Phoenix has ten community colleges, three of which have banded together to meet the needs of the region’s advanced manufacturing sector. Maricopa Community College District formed the Arizona Advanced Technologies Corridor in 2017 with input from Boeing and other private companies. The group is creating a standardized technology curriculum meant to prepare students for the manufacturing jobs of the future.“We have a lot of know-how here with the current labor force,” says GPEC’s Camacho, “but in addition to the labor force that exists, we have really strong talent pipelines coming out of the two-year technical schools. Our community college district has 196,000 students and a specific emphasis in programming across aerospace and advanced tooling. We have hyper-specialization amongst our community colleges, and that’s really helping to attract industry because they’re very nimble partners.”Nikola’s Milton says the company looked at 30 sites in nine states before choosing Arizona.“Every governor rolled out the red carpet,” he says. “We needed somewhere that’s very pro-business. We have full support from the governor, from the governor’s economic team, from the whole staff. It’s just one phone call away.” “You’ve got tens and tens of thousands of students here locally that are coming out of college ready for a job. It makes it very easy to recruit.”— Trevor Milton, CEO, Nikola Motor CompanyNext >