October 18, 2019  |  Hayley Ringle

Arizona has been home to manufacturers for at least 70 years, dating to when Motorola Inc. first moved to the state. While often overlooked at the national level for decades, the state’s manufacturing industry have quietly grown as semiconductor firms and aerospace and defense companies continue to expand.

With mainstay manufacturers such as Intel Corp. and Raytheon Co. continuing to hire, along with a growing number of smaller businesses growing or moving to the state, the manufacturing sector has built up a workforce with nearly 180,000 employees, according to U.S. Bureau of Labor Statistics data for August. Now, the rest of the country is starting to pay attention.

“I think one of the benefits that Arizona has is its business climate,” said Steve Zylstra, president and CEO of the Arizona Technology Council. “I think our business climate is one of the main attributes that makes us competitive with other regions of the country.”

Keeping business friendly
The state’s business climate includes low corporate taxes, one of the best research and development tax credits in the nation, a low cost of living and real estate prices that are not nearly as expensive as other big cities, Zylstra said.

And it’s only getting better, said David Garafano, senior vice president of manufacturing programs at the Arizona Commerce Authority.

Since the past two governors essentially placed a moratorium on regulation, it has been a boon for manufacturers, Zylstra said. “I think that’s what’s happening in California and one of the reasons a lot of those companies are moving here to Arizona,” he said.

Benchmark Electronics is held up as a poster child for a manufacturer that picked up and moved to the state in 2017 from Angleton, Texas, where it was founded 40 years ago. Mike Buseman, executive vice president of global operations for Benchmark, said the now Tempe-based electronics component manufacturer chose the Valley because of the business, tech-friendly setting, access to talent from the local universities and quality of life.

Workforce development
Arizona State University has the biggest engineering program in the country, with 24,000 students enrolled, which helped lure Benchmark. The state also has other skilled talent graduating from Grand Canyon University, Northern Arizona University and the University of Arizona, meaning there are plenty of new grads to grab for local jobs before those students consider moving out of state.

Despite the growth of talent, there’s still a gap between the number of available jobs and the skilled workers available, which is a weakness not just in the Phoenix metro area but across the U.S., Zylstra said.

“It’s not unique in any way to Arizona, but it still inhibits growth, because if you can’t find the talent you won’t grow,” he said. “I think that continues to be the No. 1 issue. A lot of us are focused on workforce development initiatives.”

“That’s one way Arizona has always filled the workforce demand, is by people moving to the state,” Zylstra said. “You’ve got to be working on both of those ends, attracting talent from other places and growing your own talent.”

Building partnerships
Hiring workers is manufacturers’ toughest challenge across the country, especially with more than 500,000 open manufacturing jobs throughout the U.S., said Dawn Grove, chairwoman of the Arizona Manufacturers Council.

With thousands of available high-paying, high-tech advanced manufacturing jobs along the Interstate 10 corridor, local community colleges were encouraged to partner on a new certificate to create a viable workforce to fill those positions. The new automation technology industrial stackable certificates and degrees are now available the prepare the future workforce in Pima, Pinal and Maricopa counties. And that partnership will likely play a key role in staffing for fledgling vehicle manufacturers Nikola Motor Co. and Lucid Motors that plan on hiring thousands of workers for proposed production facilities in Pinal County.

Manufacturing is what economists call a base industry, with every manufacturing job creating three or four other jobs, Zylstra said.

“It’s a critical industry,” he said. “And in spite of what people have said for many years now, the manufacturing industry is growing here in Arizona.”

 

To read the article in its entirety, visit the Phoenix Business Journal.