A PUBLICATION OF THE TRENDS ARIZONA DEPARTMENT ECONOMIC OF ARIZONA ECONOMIC SECURITY

• Summer 2001

Slowing Economy Limits Tax Cuts; 2001 Session ocused Mainly on Back-Burner Issues

In terms of business and economic nally passed. Before the Legislature legislation, the 2001 session will go took office in January, Tucson eco- down more for what was not passed, nomic development officials and the than what made it through the pro- Arizona Partnership for a New Econ- cess. A lack of funds and a politically omy, a public-private board created split Legislature — for the first time in by Gov. Jane Hull to study ways to a decade — accounted for the lack of develop the state’s technology indus- significant business bills passed this try, were touting a series of proposals 2001 BUSINESS AND LABOR costing $20 million to $30 million. Among these were: venture capital LEGISLATION REVIEW NEWS ANALYSIS for start-up technology companies; funding to study and promote indus- “harmful” legislation from becoming past year. However, business was try “clusters” (e.g., optics) that are ex- law. In some instances, it was a gov- able to fend off a number of con- pected to lead to high-paying jobs; ernor’s veto — which set a record sumer-protection laws, which were lower business taxes; and incentives (28) in 2001 — that prevented several considered too harsh by business in a for telecommunications infrastructure less-than-friendly bills for business time of economic uncertainty. and technology training centers.1,2 from getting onto the books. Among One indication of poor economic But by the end of the first session of these were proposals to give civil conditions in Arizona was that one of the 45th Legislature, few of the major rights protections to gays and trans- the governor’s major proposals at the economic development and business sexuals, and to levy hefty fines on beginning of the session had to be proposals made it through the legisla- companies that do not provide haz- pared back dramatically when it fi- tive process. 9or example, five ardous materials management plans tax-cut proposals totaling nearly $500 and inventory statements to local fire million — primarily helping corporate departments. and small business — were passed by In addition, there were a half-dozen IN THIS ISSUE the House of Representatives, but other bills that business fought never came up for a vote in the Sen- strongly that did not make it through ate (see Table 1). Ultimately, the re- the legislative process. These in- Volume 25 No. 2 ality that the state (and national) cluded proposals to make business economy’s continual slide kept any of responsible for destroying customer Page those bills from making it to the gov- records, adding health benefit re- Back-Burner Legislative Issues . ernor’s desk, where they likely would quirements, and increasing unem- have met the veto pen. Rose to ront in 2001 ...... 1 ployment insurance benefits and tying Still, business interests had to con- them to the cost of living. IndustryUpdate ...... 8 sider the session a success in many “ ‘The bills that we need to kill we ways because of their ability to keep were able to kill,’ ” said Michelle 2001 BUSINESS AND LABOR LEGISLATION REVIEW

Covel, Arizona director of the National 9ederation of Independent Businesses, Table 1 said in a Tucson business journal. “ Major Tax-Cut Legislation That ailed in 2001 Session ‘But it was a big struggle this year to Estimated Cost try to educate people and make them Bill Overview Over Biennium Outcome understand the unintended conse- 3 quences of some of these bills.’ ” Across-the-board Passed in House; Covel was referring to the time and HB2125 cuts in individual $98.4 Million ailed in Senate income taxes Committee cost of these requirements, particu- larly for small business. “ ‘Lawmakers didn’t seem to understand that small Cuts corporate income tax; Passed in House businesses are fundamentally different HB 2475 lowers threshold for $123.2 Million ailed in Senate from big business, and they have family tax credit inance Committee deep pockets like the big guys,’ ” Covel said.4 Offer option to multi-state Passed in House; HB 2477 corporations to base $39 million ailed in Senate On the other hand, some of busi- income tax on sales or Committee ness’ wins equated to defeats for la- keep current system bor, which has made some gains in recent years. Probably the biggest plus for labor, however, was a num- Eliminates transaction Passed in House; HB 2576 privilege tax on telecom- $118.8 million ailed in Senate ber of improvements for state work- munications, utilities ers (including universities) and active members of the state retirement sys- tem. The Legislature included in its Increases standard deductions Passed in House; HB 2616 for singles and married $101 million ailed in Senate budget a 10 percent pay raise to state couples workers over the next two years, and passed several bills offering increased health and pay benefits for retirees. Sets the assessment ratio for Lower taxes ailed in Senate SB 1097 secondary property taxes of commercial Committee Business at 10 percent of full cash value property Because of the dearth of tax cuts in 2001, legislation that normally would not be considered “major” rose to the Source: Arizona Capitol Times, March 2, 2001; Arizona Legislative Internet Site top this session. Among areas that (www.azleg.state.az.us) received more attention involved in- dustries such as construction, finance, idential development has been creep- and take-off zones while allowing in- and insurance. ing up on three sides of Luke Air creased development in other areas,” After tackling growth issues the past 9orce Base in Glendale, the largest reported the Arizona Capitol Times5. two sessions — Growing Smarter and 9-16 training base in the country. (Also see “Economic Development” Growing Smarter Plus — the Legisla- State and local officials worried that for related material.) ture focused on less explosive, yet too much encroachment would make In 1995, the state established the Ar- important, issues. the base less viable, and therefore an izona Military Airport Preservation One issue that has come to the fore- easier target for closure. Committee for the purpose of encour- front in recent years is encroaching Enactment of SB 1525 expanded on aging the preservation of the growth around military installations. laws passed in last several years to long-term viability of Arizona’s mili- With the closure of Williams Air 9orce protect military installations, by re- tary airports and protecting the pri- Base in Mesa in 1993 and federal quiring advance warning (at least 60 vate property rights of property plans to shut down more bases days) to military and public officials owners in the vicinity of military air- around the country, the state has of encroaching development by vari- ports. The law also required all polit- grown increasingly concerned about ous governing bodies. In addition, ical subdivisions in the vicinity of a how growth around bases can affect the law “re-charted the locations military airport to adopt land-use their viability and the economic im- around the base that can be devel- plans and adopt and enforce zoning pact on local areas with the loss of oped and increased the restrictions regulations that assure development thousands of jobs. Case in point, res- against development within landing compatible with the high noise and

2 Arizona Economic Trends 2001 BUSINESS AND LABOR LEGISLATION REVIEW

ments; increases and modernizes accident potential generated by mili- consumer protections; and autho- tary airport operations. Legislation rizes payment of finder fees.10 adopted in 2000 required the Attor- ney General to enforce planning, zon- One controversial real estate pro- ing and sound requirements within posal that didn’t make it into the law territory in the vicinity of military air- books would have put tighter regula- ports and established civil penalties tions on home owners associations. for noncompliance. SB 1368, which was passed by the Senate and defeated in a House com- The Legislature also passed a num- mittee, would have a created a ber of laws relating to the regulation method to appeal a decision by a of the real estate and construction in- home owners association ().11 Several dustries. Several bills provided in- interest groups who felt the bill was stances when liens can be attached to insufficient and favored developers, property, another dealt with the sub- plan to bring up a bill in the 2002 division of land for sale, and another New Law Limits Construction Around Arizona session to create a state agency or de- tightens regulation of unlicenced con- 12 Military Bases partment to license HOAs. One of- tractors. ficial said “since the HOA can review One bill (SB 1500) allows real estate and overturn this decision only li- brokers to place liens on commercial received a separate, lower prior- censing management companies and buildings when commissions for leas- ity for construction liens.8 HOAs would allow for proper en- 13 ing space have not been paid. This • HB 2023 allows the sale of an im- forcement of HOA code. type of law, which is in effect in 16 proved lot in a subdivision where Perhaps the biggest success for other states, has been attributed to a five or more sales were previ- business in 2001 was its ability to reduction in lawsuits over unpaid ously made by the seller, subject fend off legislation considered harm- 6 commissions. “ ‘When the commis- to prescribed conditions, without ful, particularly to small business. “ sion dollar amount is under $20,000, having to satisfy subdivision pub- ‘We played a substantial amount of if you sue, your court costs are going lic report requirements. defense,’ ” a lobbyist for the Arizona to eat it up,’ ” said Mike Moloney, Small Business Association was president of the Commercial Real Es- • HB 2371 requires unlicenced per- sons performing construction quoted in an Arizona Daily Star arti- tate Institute in an article in the Ari- cle.14 “ ‘There were a slew of bills in- zona Capitol Times.7 work to include the words “not a licensed contractor” in their ad- troduced that were problematic Another bill (SB 1409) made a sig- vertisements. Currently, persons (but) none made it all the way to the 15 nificant number of changes to the performing construction work for governor’s desk,’ ” said Lee Miller. Recreational Vehicle Long-Term less than $750 are not required to Among bills stopped was a proposal Rental Space Act, which outlines get a license from the Registrar of to increase the maximum weekly un- landlord and tenant rights and re- Contractors. About 2,000 com- employment insurance (UI) benefits sponsibilities and provides legal rem- plaints are made against to $250 and index UI benefits to the edies for disputes. The new law unlicenced contractors each year, consumer price index (see “Labor,” spells out the time period (90 days) according to a state Senate 9act below). Another bill tried to make that the landlord must give to a ten- Sheet.9 business responsible for getting rid of ant if a lease will not be renewed, as client’s personal information; while • HB 2395 makes numerous well as requires the tenant to give a another proposal wanted to extend 30-day notice to a landlord if a rental changes to the statutes regulating real estate timeshares to update civil rights protections to homosexual agreement will not be renewed and workers (see “Labor,” below). the RV space will be vacated. and streamline existing timeshare requirements and practices, en- Among pro-business legislation de- Among other real estate and con- hance consumer protections and feated was a bill to make consumers struction legislation passed: authorize payment of finder fees. bound by software licensing agree- • SB 1468 gives companies that do The legislation, modeled after Illi- ments once the shrink-wrap on a site improvements on construc- nois’s real estate timeshare laws package was broken. The bill was tion sites a higher priority for and Arizona’s subdivision laws, considered anti-consumer because liens, starting when work first incorporates modern variations of there is no way to review a software starts or materials are furnished. the timeshare product; stream- license until the packaged is open, Previously, site preparation work lines existing timeshare require- thus forcing a consumer to buy the

Summer 2001 3 2001 BUSINESS AND LABOR LEGISLATION REVIEW

product before they agree to the Table 2 terms of the license. Major Business/Economic-Development and Labor/Occupational Bills Passed in Another pro-small business bill that 2001 Legislative Session failed would have allowed companies to deduct the cost of health insurance Business/Economic-Development Legislation from state income taxes. “ ‘Small business owners can’t afford it any- • HB 2205 — Appropriates $3 million over next two fiscal years to fund “New Economy” more, and people will be in the posi- initiatives proposed by the Arizona Department of Commerce, including the study of spe- tion of finding it on their own,’ ”said cific economic clusters the state is supporting under its GSPED plan. Rep. Carol (R)-Tucson, in an article in the Arizona Daily Star.16 • HB 2527 — Extends (until July 1, 2006) and makes numerous changes to the state’s En- terprise Zone program. Economic Development

As was the case with business • HB 2024, HB 2395, HB 2023, SB 1409 — Several major bills affecting real estate regu- tax-cut proposals, much of the eco- lation, including changes to the functions of the Arizona Department of Real Estate; regu- nomic development agenda for 2001 lation of real estate “timeshare” properties; sales of subdivided land; and changes was pared back or eliminated due to affecting landlord and tenant rights of recreational vehicles. a poor financial horizon. Although heading into the session, there were Labor/Occupational Legislation high expectations by economic devel- opers and others promoting invest- • SB 1295, SB 1100 — Several bills, including state budget, gave improved wages and re- ments in various projects — venture tirement options and benefits to Arizona state workers and retirees. capital, industry clusters, tax credits, school-to-work programs — by the • HB 2412 — Board of Medical Examiners (BOMEX) was given increased authority end of the session those hopes were to discipline physicians, including increasing the minimum amount of fines, and dashed by circumstances beyond to display complaint history on the BOMEX Internet site. their control. “Though some eco- nomic stimulus measures made it • HB 2024 — Numerous changes to functions and duties of the state Department of Real through the battle overall eco- Estate and regulation of real estate workers. nomic development took a backseat this session,” said a Tucson business newspaper.17 nies.20 Neither bill made it to the ture or capital infrastructure ... we According to the head of the governor’s desk, however, as concern don’t get it.’ ” As it turned out, addi- Greater Tucson Economic Council, over a weakening state economy con- tional funding would have likely been Arizona attracts only 1 percent of the tributed heavily to their defeat. pared anyway because of continued deteriorating economic conditions. venture capital given to companies in About $3 million dollars was appro- the Silicon Valley area of California.18 priated by the Legislature over the One area of economic development “ ‘We have here in Arizona everything next two fiscal years for several New we need except one thing — lack of which did receive support —although Economy projects. Most of the money less than originally proposed —was investment capital,’ ” said Ed will be used to assess “telecommunica- Denison, president of Azsoft.net, a the expansion and retooling of the tions infrastructure needs throughout state’s enterprise zone program, which group promoting Arizona Internet the state.”21 Additionally, some of the companies.19 began in 1989. HB 2527 extended the funds will be used to study some of enterprise zone program until July 1, Among two venture capital bills the state’s 11 industry clusters, which 2006, tweaked the policy’s popular proposed during the session, one (HB were developed nearly a decade ago tax-credit sections, and allowed for the 2578) would have provided $100 mil- by GSPED (Governor’s Strategic Plan addition of six zones. There are cur- lion from the state’s general fund as for Economic Development) as a way rently 26 designated (22 active) enter- security to investors in insurance to promote industries that would bring prise zones in the state. companies, banks, and other financial higher-paying jobs to the state. At the institutions that lend venture capital, time of the bill’s passage, Denison 9irst, the program now allows while another (SB 1462) offered $150 said, “ ‘We’re pretty good at funding manufacturers to have 10 percent of million in tax credits for insurance stadiums and putting ball teams in, but their enterprise zone operations companies that invested in privately when it comes to putting in technol- involved with retail sales, whereas no run, state-certified capital compa- ogy infrastructure, learning infrastruc- portion of the business could be in

4 Arizona Economic Trends 2001 BUSINESS AND LABOR LEGISLATION REVIEW retail sales previously. HB 2527 workers with 20 or more years of originally proposed to allow up to 50 service. percent of operations in retail sales, In a related piece of legislation, SB but was whittled down to 10 percent 1243 provided funding for the De- in committee. In addition, the new partment of Public Safety to hire 116 law allows tax credits to continue for additional officers. Concern over the a business even if it is in area that lack of officers to patrol metropolitan loses its enterprise zone designation freeways led to the bill’s passage. and even if the business is losing Outside of state government, how- money. Also, as a way to help rural ever, labor issues did not fare well. areas of the state, the program has Logo for Arizona’s Partnership Among labor-sponsored bills that fell tiered the minimum investment for a New Economy by the wayside were: requirement to qualify for tax credits. Resembles a Jigsaw Puzzle Whereas a $2 million investment was • SB 1244, which would have re- needed to qualify for tax credits quired companies with 200 or more employees to give work- previously, the new law reduces the Labor amount to $1 million for businesses ers 180 days advance notice of a locating in cities with a population The success of the 2001 session for plant closing or layoffs due to the between 10,000 and 80,000, and labor interests can be divided into movement of jobs to a “low-wage $500,000 in cities with a population two categories. On fiscal issues af- foreign country. Called the “Ari- less than 10,000. fecting Arizona’s 42,000 state employ- zona Jobs Protection Act,” the bill sees, labor interests appeared to have resembled the federal Worker Ad- As a sign of cooperation and the a pretty good year. On the other justment and Retraining Act influence of NA9TA (North American hand, on fiscal issues and social is- (WARN) passed in the late 1980s, 9ree Trade Agreement), Arizona sues affecting workers as a whole, la- but would have also required broadened its ties with the state of bor interests fared poorly. companies to pay for health-care Sonora, Mexico. With passage of HB costs, job training, and pension 2521, the number of state agencies Prior to the session, state employees benefits for 18 months. The bill, cooperating with the Arizona-Mexico knew things were looking up when which was unable to get out of Commission expands from six to 12. media reports were quoting the gover- the Senate Commerce Committee, Started in 1959, the Arizona Mexico nor and legislators as saying that pay pitted business against labor in- Commission collaborates with public raises were among the top priorities terests. Business complained the and private sector leaders to initiate for the legislative session.24 After 10 bill would “hamper the ability of and implement binational projects for years of receiving little or no attention corporations to make decisions” the residents of the Arizona-Mexico in terms of wage raises, state workers and labor argued that 450,000 border region. had reason to believe their economic jobs have been lost nationwide plight would be of concern to even 25 While legislation was passed to help due to various trade pacts. lawmakers that normally aren’t sympa- preserve the state’s military bases from HB 2087, vetoed by the governor, thetic to government spending. • encroaching development (see which would have extended Ari- “Business,” above), the other side of Not only did Arizona’s two-year zona’s employment discrimina- the coin was not tackled this session. budget include two 5 percent pay tion protection to persons with “The law (SB 1525) appeased many, raises or $1,500, whichever is larger, mental impairments. Arizona is but didn’t address the problems of for existing state employees, but a one of only three states that do agricultural landowners who can’t sell number of retirement benefit en- not provide employment protec- their acres for development,” the hancements were passed by the Leg- tion for persons based on a men- Arizona Capitol Times reported.22 A islature. A group of laws enacted: tal disability. In her veto bill with $3 million in state funding gave state employees the right to message, the governor stated that was introduced during the session to work in another state job 12 months the provisions of the bill may be compensate property owners for land after receiving retirement benefits; interpreted as a waiver of the that could not be developed near provided increased pay and state's sovereign immunity from military bases. The legislation failed. health-care benefits for existing retir- federal court suits that allege a vi- However, a bill to fund a $1 million ees and expanded retirement pro- olation of the Americans with study to determine what type of grams for existing state workers; and Disabilities Act. 9urthermore, the compensation should be given to increased the multiplier (from which governor was concerned the po- these landowners did make into law.23 benefits are determined) for state tential costs of this bill to Ari-

Summer 2001 5 2001 BUSINESS AND LABOR LEGISLATION REVIEW

In addition, the law requires that a zona's employers may not be Table 3 26 physician profile listed on the board’s completely recognized. Pay and Benefit Improvements for Internet site include all medical mal- • SB 1225, which would have made Arizona State Employees and Retirees practice settlements within the last it illegal for companies doing busi- five years that involves a payment to ness in Arizona to discriminate 5 percent pay raise in April a complaining party. And the law against workers and job applicants 2002 and April 2003 spells out the type of inappropriate based on sexual orientation and conduct a physician cannot engage in gender identity. Business interests √ State retirees allowed to with his/her patient. Also, SB 1306 criticized the bill on several fronts, work in another state job 12 requires that the board will immedi- with the major reasons against the months after receiving retire- ately suspend a license and begin an legislation being a fear of addi- ment benefits investigation of a physician upon tional litigation and forcing reli- learning that physician has been dis- gious groups to hire someone Increased pay and health- ciplined by another jurisdiction for who find the behavior offensive. care benefits for existing unprofessional conduct. And SB 1310 The bill was passed by the Senate, retirees and expanded retire- requires BOMEX to consider previous 27 but died in House committee. ment programs for existing non-disciplinary and disciplinary ac- • SB 1017 and SB 1018, which would state workers tions when determining disciplinary have increased unemployment in- actions against a licensee. Finally, SB surance (UI) benefits (currently a √ Increase in multiplier (from 1315 requires that all health-related maximum of $205 a week) and which benefits are deter- boards record a roll-call vote on disci- tied future annual increases to the mined) for state workers with plinary actions. consumer price index (see “Busi- 20 or more years of service The Legislature didn’t “pick” on ness,” above), and eliminated the only physicians. There were a num- one-week waiting period for eligi- ber of bills affecting a variety of several bills designed to keep doctors bility for unemployment benefits health-related occupations — optom- with questionable backgrounds from for individuals who were required etrists, emergency medical technicians practicing their profession in Arizona.30 by their former employer to attend (EMTs), veterinarians, nursing care The bills were sparked, in part, by the at least one week of uncompen- workers, and behavior-health licens- publicity surrounding a doctor’s sated training as a condition of em- ees — and health-related boards. botched abortion procedure that led to ployment. If SB 1017 had become HB 2190 revised practices of the state law, UI benefits would have in- the death a woman and a series of ar- ticles in The Arizona Republic that de- Board of Optometry and modified li- creased over the next three years censing procedures for optometrists. to a maximum of 50 percent of the tailed that 100 patients had died in Arizona during the past decade from Among the bill’s provisions were the state’s average weekly wage. questionable medical care, but only designation of three types of renewal Chuck Huggins, secretary-treasurer one doctor lost his license.31 “Even in certificates available for the use and of the state branch of the AFL-CIO, instances when the medical board’s non-use of pharmaceutical agents and said the legislation was needed be- staff recommended a doctor be disci- the requirement that a licensee hold all cause Arizona’s maximum benefit plined, more than half the time the patient records for at least two years af- ranked 48th out of 50 states and board chose to let the doctor off with ter the last examination. two territories in 1999.28 A lobbyist no punishment,” the Republic article for the Arizona Chamber of Com- To help offset a shortage of emer- said.32 merce, however, said business gency medical personnel, the Legisla- would have to increase the current With passage of HB 2412, BOMEX ture passed SB 1308, which relaxes unemployment insurance tax was given increased authority to dis- rules for receiving Arizona certifica- (about $0.85 on the first $7,000 of cipline physicians, including increas- tion. The new law gives basic EMTs an employee’s salary), because the ing the minimum amount of fines — and paramedics, who are currently legislation would drawn down the from $300 to $1,000 — that can be registered with the National Registry state’s UI fund to too low a level. 29 imposed by the board. The bill also of EMTs, six months to pass statewide gives the board’s executive director standardized training and testing pro- Occupations the legal authority to dismiss any cedures. SB 1308 passed with an Following up on last year’s move to complaint if an investigation found it emergency clause so it would take ef- strengthen the disciplinary powers of to be without merit. Previously, the fect immediately. the Arizona Board of Medical Exam- complaint had to go before entire HB 2010 made several changes to iners (BOMEX), the Legislature passed board had to dismiss the complaint. the regulation of veterinarians. The

6 Arizona Economic Trends 2001 BUSINESS AND LABOR LEGISLATION REVIEW

new legislation gives specific defini- Teichgraeber, The (Phoenix) Business Journal tions for “gross incompetence” and Internet Edition (phoenix.bcentral.com/phoe- nix), April 27, 2001. “gross negligence” by a veterinarian, changes the required national (but 3. “Business group satisfied with legislative ses- not state) exam for licensure, changes sion,” Tim Hull, Inside Tucson Business Internet rules governing the time frame for Edition (www.azbiz.com), May 7,2001. notifying law enforcement of animal abuse and dog fighting, and allows 4. “Legislation was mixed bag; Lobbyists sought to anyone to report suspect animal stave off bills on unemployment pay, gay rights,” abuse by a veterinarian. Jonathan J. Higuera, Arizona Daily Star Internet Edition (www.azstarnet.com), May 21, 2001. A shortage of long-term care nurses (e.g., retirement homes) propelled the 5. “Hamilton Plans Bill to Assist 9armers At Luke,” Legislature to pass HB 2626, which al- Beth Lucas, Arizona Capitol Times,” Aug. 31, lows persons as young as age 16 to be 2001, p. 4. employed in direct-care positions, pro- Several Bills Dealt With vided the person meets the qualifica- 6. “Industry lobby planning to play political ‘de- Disclosing Information tions for certified nursing assistants. fense’,” 9rank Turco, The (Phoenix) Business Jour- on Physicians to the Public nal Internet Edition (phoenix.bcentral.com/ This rescinds the prior requirement by on BOMEX Internet Site phoenix). the Department of Health Services that direct-care personnel of residential 7. “New Law Helps Commercial Brokers Secure care be at least 18 years of age. sellers. Some telemarketing sellers Commissions,” Dave Mass, Arizona Capitol Times, June 22, 2001, p. 8. Trying to protect citizens from over- had believed the definition of “seller,” zealous employees, two occupational as interpreted by them, exempted 8. 9act Sheet for SB 1468, 9inal Revised, Arizona groups receiving a lot of attention this them from these requirements and re- State Senate, April 12, 2001. past session were security guards and strictions, according to a Arizona Sen- telephone solicitors, which are two of ate 9act Sheet.34 9. Summary for HB 2371, Arizona House of Repre- the fastest-growing job categories in sentatives , April 27, 2001. Arizona (and the nation).33 As might be expected with the number of changes affecting real es- 10. 9act Sheet for HB 2395, Arizona State Senate, In HB 2453, the Legislature enacted tate transactions (see “Business” March 23, 2001. several major provisions to keep tabs above), there was also legislation this on security guards (particularly armed session affecting the regulation of real 11. “Proposal Would Create New State Department,” guards). The law requires uniformed estate occupations. HB 2024 made Beth Lucas, Arizona Capitol Times, April 13, 2001, p. 4. armed guards to carry visible identifi- numerous changes to functions and cation cards; doubles the amount of duties of the state Department of Real 12. Ibid. firearms training from 8 to 16 hours Estate. Among these are: allowing a and requires the Department of Pub- broker’s license application be sub- 13. Ibid. lic Safety to adopt rules governing se- mitted electronically, letting a sales- curity guards; and stipulates that person to be employed by more than 14. “Legislation was mixed bag; Lobbyists sought to within 48 hours of a security guard’s one broker as long as their categories stave off bills on unemployment pay, gay rights,” arrest, a security guard must notify of employment differ, and gives the Jonathan J. Higuera, Arizona Daily Star Internet Edition (www.azstarnet.com), May 21, 2001. their employer and DPS of the arrest. Department the power to suspend li- In addition, the law established an censes of salespersons and brokers 15. Ibid. 11-member Private Investigator and who are convicted of a felony or is Security Guard Study Committee to incarcerated, paroled, or under pro- 16. Ibid. examine issues affecting security bation for a conviction.35 guards and private investigators. 17. “Cluster funding edges way into state budget,” In SB 1254, the Legislature limited Tim Hull, Inside Tucson Business Internet the time that solicitors can call per- Notes: Edition (www.azbiz.com), May 1, 2001. sons in Arizona, prohibiting outgoing 1. “Jump-starting the New Economy,” Teya Vitu, 18. “High-tech supporters get little help at Legisla- calls between 9 p.m. and 8 a.m., as Tucson Citizen Internet Edition, ture,” Ed Taylor, East Valley Tribune, May 7, well as codified federal law that pro- (www.tucsoncitizen.com) Dec. 14, 2000. 2001, p. B1. hibits abusive telephone marketing practices to include all telemarketing 2. “Tech leaders criticize state budget plan,” Tara (continued on back page)

Summer 2001 7 M A N U F A C T U R I N G Industry Update

Asia by the end of the year, eliminating about 30 Val- Phoenix Metro Area ley jobs. Three-9ive produces liquid crystal displays for cell phones and other high-tech devices. Manufacturing Citing reduced demand and lower prices for its car-safety A German producer of optical tools entered the U.S. mar- products, TRW eliminated 100 positions (through attri- ket in June by opening a distribution operation and call tion) in mid-July at its two Mesa plants. The job cuts are center in Phoenix. 9rankfurt-based Breitfel & Schliekert, part of an overall cost-cutting strategy announced in March which has annual sales of $15 million, will ship its 1,400-plus that would eliminate 1,000 positions worldwide. As part of products from a warehouse owned by Horizon Logistics and the realignment, TRW is consolidating its two Mesa plants Distribution. 9ormer opticians, who will answer sales and into one operation at 11202 E. Germann Road. TRW ex- technical questions, are staffing the call center. pects the process to be completed in 2002. Chandler, the hub of the Valley’s semiconductor indus- Another transportation-safety company, Goodrich Corp., try, took a few more employment hits in early summer expects to see an “inflation” in its employment. Maker of with the announcement of additional layoffs at Speedfam- evacuation slides for planes, Goodrich was awarded a $300 IPEC and Amkor Technology. Semiconductor toolmaker million contract to design and build inflatable slides for the Speedfam, which laid off 220 employees (18 percent of 9rench Airbus A380 double-deck airliner, expected to begin its worldwide workforce) in March, cut an additional flying in 2006. Goodrich’s Aircraft Evacuation Systems 120 jobs. Pennsylvania-based Amkor, which packages and facility at Broadway Road and 7th Street in Phoenix, which tests semiconductor products, laid off 2,000 employees employs 320 workers, is expected to add 40 more people worldwide, primarily at its production sites in the Philip- because of the contract. pines and South Korea. However, an unspecified number of job cuts also took place at its Chandler location, where Motorola sold its Intergrated Information Systems Amkor employs 450 administrative, research, engineering, Group to General Dynamics Corp. in early August, and sales workers. Amkor cut about 25 jobs at the Chan- then announced a few weeks later it is shutting down its dler site over the first three months of the year. semiconductor operations in Mesa over the next 2½ years. General Dynamics purchased the 2,700-employee Due to weak sales, Newell Rubbermaid Inc., parent division, which makes space and communications equip- company of Rubbermaid, announced it will lay off 3,000 ment for the U.S. Defense, for $825 million in cash and lia- people (about 6 percent of its worldwide workforce) over bilities. Virginia-based General Dynamics, which employs the next three years and consolidate duplicate manufactur- 49,000 and expects to have sales over $12 billion this year, ing facilities. No specific information was given about makes a variety of defense products — from nuclear sub- the job cuts, including if it will affect Rubbermaid’s Phoe- marines to armored vehicles. The company said it didn’t nix-area manufacturing operations. Rubbermaid, the expect to lay off any Motorola employees. Motorola’s largest division within Newell Rubbermaid, makes a variety Semiconductor Products Division, which employs about of home plastic products. 7,000 in the Valley, makes chips for computers and cellular If you see a funny-looking white object circling the Valley phones sky in the near future, don’t call the U9O hotline. It’s Valley fixture Dial Corp., which makes soaps, laundry probably a test flight of a gyroplane, whose manufac- detergents, and Armour canned meats, is up for sale. The turer intends to open a 200,000-square-foot manufac- Scottsdale-based company recently reported better-than-ex- turing facility in Glendale by spring 2002. Salt Lake pected earnings — after coming close to bankruptcy — City-based Groen Brothers, which builds the odd-looking and is expected to fetch about $2 billion. Most likely suit- combination plane and helicopter (it has a propeller on the ors are foreign companies looking for manufacturing oper- top and middle), intends to move its manufacturing opera- ations in North America. Dial employs 1,300 worldwide, tion to the Glendale Airport, 107th Avenue and Glendale including about 600 at its Scottsdale corporate and research Road. Currently employing about 30 people at a Buckeye operations. test facility, Groen expects to initially hire 300 workers As part of a consolidation plan, electronics manufacturer for the production facility. The company, which is await- and distributor Avnet Inc. is moving a Tempe assembly ing 9ederal Aviation Administration approval for its latest plant to the Dallas suburb of Grapevine, Texas. About version of the gyroplane, the Hawk 4, has 140 orders total- 150 Valley jobs will be lost, with local employees being ing $105 million. Potential customers are law enforcement, given the option of relocating to Texas. The plant closure utilities, and tour operators. follows announcements of layoffs of about 500 Valley In a cost-cutting move, Tempe-based Three-ive Sys- employees in May and 600 workers outside of Arizona in tems plans to move a production line from Arizona to mid-August. Phoenix-based Avnet, the world’s second

8 Arizona Economic Trends largest electronics-components distributor, employs about structure. Since the softening of the communications field, 13,000 worldwide and 3,000 in metro Phoenix. JEMB shifted directions to office space. Maxwell Productions, a Scottsdale DVD manufacturer, Despite a slumping economy and the usual summer slow- expects to triple its workforce to about 200 by the end down, the Valley housing industry continued to sizzle. of the year. Located in a 100,000-square-foot building at The metro area set a monthly record (6,450) for home resales the Scottsdale Airpark (8521 E. Princess Drive), the in July. Through the first seven months of 2001, home re- one-year-old company will need employees in a variety of sales (37,275) were up 10 percent from a year earlier. professional, technical, and service occupations. Maxwell, Lower mortgage rates and a move away from higher-priced which makes 120,000 digital versatile discs a day, is one of new homes have contributed to the strong growth. six U.S. companies that produce DVDs. Trade Construction A Dallas-based food distributor and grocery store owner, About one-third of Del Webb’s corporate employees which divested itself of the ABCO supermarket chain in the in Phoenix received pink slips following its buyout by past year, is now looking to expand operations in the Michigan-based Pulte Inc. About 250 of Webb’s 4,200 wholesale grocery business. leming oods is acquiring worldwide employees work at its 135,000-square-foot cor- 100 percent ownership of the Arizona ood4Less chain, porate headquarters on 24th Street near the Arizona which will enable the 9leming to aggressively expand op- Biltmore. Del Webb’s operations has become one of five erations of the wholesale grocery chain in the Southwest. divisions, known as the Del Webb Group, under Pulte. Only two years ago, Tempe-based MicroAge Inc. em- inance, Insurance, and Real Estate ployed 4,600 and had $6 billion in annual revenue. After seeing its over-the-year first-quarter net income fall Today, after filing for and emerging from Chapter 11 bank- by nearly 70 percent, discount broker Charles Schwab let ruptcy protection, the company has 30 workers whose go more than 630 employees at its Phoenix-area oper- primary function is managing its assets and paying off about ations in late April. Representing nearly 18 percent of its one-fifth of the $400 million owed to its creditors. MicroAge, Valley workforce of 3,600, the layoffs were part of a 13 which sold off three of its former subsidiaries —Pinacor Inc., percent nationwide reduction by the San 9rancisco-based MicroAge Technology Services, and MicroAge Teleservices — company. A generous severance package — including has an estimated $80 million in cash and assets. pay, educational support, and stock options — was given The opening and closing of several furniture chains to laid-off workers. in the Valley highlight a number of developments in Scottsdale-based inova Group Inc. emerged from the retail trade sector. Starting with the good news, an bankruptcy protection after securing a $5.6 billion loan upscale Danish furniture maker catering to the 25- to from Berkadia LLC. The commercial lender filed for Chapter 40-year age group, Bo Concept, will open two stores in 11 bankruptcy protection in March, shortly before reporting the Valley (Scottsdale in October; Chandler in March 2002). losses of nearly $1 billion for the year 2000. Berkadia LLC, The company — which has 85 stores in 19 countries, but which will hold a 50 percent stake in 9inova, is a partnership only four locations in the U.S. — uses computer 3D soft- of Berkshire Hathaway Inc. and Leucadia National Corp. No ware to help design rooms with its sleek, modern furniture. information was available about how the new agreement Two other furniture chains with a major Valley pres- might affect inova’s employment. ence, however, have filed for Chapter 11 bankruptcy protection. Tempe-based Sun Valley Waterbeds, parent About 200 call center workers were terminated by company of Bedroom Superstores, and California-based Prudential inancial Services in early August at its Krause’s Custom-Crafted urniture, expect to keep northeast Phoenix offices. Prudential, which is evaluat- open their half-dozen Phoenix-area stores while liquidating ing its customer service procedures for its property and ca- less profitable stores out of state. However, if the chains sualty operations, also has centers in New Jersey and don’t come up with an approved reorganization plan, they Tennessee. At one time the company employed more than may be forced to liquidate their local operations. New 700 at its Phoenix operations, which opened in 2000. Jersey-based Burlington Coat actory will open three The former high-end retail complex known as the outlet stores at Valley malls this fall. Burlington will re- Scottsdale Galleria has landed its first two tenants — place a Montgomery Ward at the Desert Sky Mall in west New York Life Insurance’s regional offices, with 150 Phoenix and open two stand-alone operations — at Super- employees, and the Scottsdale Culinary Institute. stition Springs Mall in Mesa and Paradise Valley Mall in Owned by New York-based JEMB Realty Group, the newly north Phoenix. One shopping center that isn’t thinking named Galleria Corporate Centre (4343 N. Scottsdale Road) of expanding is iesta Mall, which has been put up for has undergone a couple of transformations the past year af- sale less than a year after a major remodeling by its owner, ter languishing as an expensive “white elephant” for several L&B Realty Advisors in Dallas. Competition from newer years prior to that. When the broadband boom was at its malls and power centers in Scottsdale, Tempe, and Chan- height, the 690,000-square-foot Galleria was expected to dler is a major reason for the sale of the 1.1 mil- become a “telecom hotel,” offering space for Internet infra- lion-square-foot mall at U.S. 60 and Alma School Road.

Summer 2001 9 Sears closed three Valley Homelife stores —in Mesa, $40 million in backing from a Wall Street investment firm Scottsdale, and Glendale —as part of a nationwide shutdown — said it expects to have a dozen schools operating in of the 128-store furniture chain. Although the Chicago-based the Phoenix area and employing 500 within five years. retailer said it was closing the stores “temporarily,” all 2,000 (Chancellor also plans to open one charter school in Tuc- store employees and most of the corporate staff were laid off. son this fall.) Arizona currently leads the nation in charter schools with more than 400 serving 55,000 students. The fewer the merrier? Two Valley beer distributors have merged to form one of the largest beer wholesalers Thanks to Arizonans’ continued bad spending habits, no in the Southwest. Zeb Pearce Cos. has acquired Miller layoffs are expected when a Phoenix-based credit-coun- Brands of Phoenix, which will give Pearce about one-half seling service merges with a similar company in Houston. of the Phoenix-area market with annual sales of 14 million Consumer Credit Counseling Services Southwest, cases. No layoffs are expected at the merged company, which employs 60 at a call center in north Phoenix and ad- which will have a workforce of about 450. ditional personnel at nine Arizona offices (five in Maricopa County), will merge with Money Management Interna- A number of news stories relating to the Valley surfaced tional. The combined companies will employ 160 and out of International Council of Shopping Centers conven- have an active client base of 70,000. The non-profit coun- tion in Las Vegas in late May. Among the biggest news seling services are funded through voluntary contributions was that Wisconsin-based Kohl’s is planning to open at by banks and other financial institutions. least 10 stores in the Phoenix-area over the next several years. Likely sites for the fast-growing discount depart- With more than 200 call centers employing more than ment store are: Desert Ridge Marketplace, northeast Phoe- 30,000 people in the state, it’s sort of surprising that Ari- nix; Agua 9ria Towne Center, Glendale; Gilbert Gateway zona’s first bilingual customer-service operation only Towne Center; and Loop 202 and Power Road, Mesa. De- recently opened for business. Bilingual Soluciones, veloper Vestar will build all of these centers. Scottsdale which was started by four Hispanic business executives, ashion Square (Scottsdale and Camelback roads) landed has about 30 employees at its west Phoenix facility (5026 the Valley’s sixth Macy’s to replace the 235,000-square- W. Indian School). But the company expects to add an- foot site formerly used by Sears, which exited the mall ear- other 100 employees at that site by the end of this year lier this year. Westcor Cos., which owns the Chandler and is eyeing 71,000 square feet of space at the former and Scottsdale 9ashion Centers, has two power centers in Maryvale Mall — which housed U.S. Census Bureau opera- the development stage and is expanding/renovating tions — which would allow for growth of an additional several others. Westcor is pre-leasing a planned 1 mil- 2,000 positions. lion- square-foot Gilbert Crossroads center, Williams A national consultant released a report showing the Val- 9ield and Greenfield roads, and the 620,000-square-foot ley as the eighth most expensive metro area for call Scottsdale 101, Scottsdale Road and Mayo Boulevard. center operations. The Phoenix metro area had higher And the Phoenix-based shopping center developer plans to average weekly wages ($524) for call center employees renovate four other properties — Arrowhead Towne than operations in cities such as San Diego and Dallas. Center, Glendale; Superstition Springs Center, Mesa; Desert With more than 100 call centers, the Valley became attrac- Sky Mall, west Phoenix; and Paradise Valley Mall, north tive for such operations after the state passed favorable leg- Phoenix. Planned at Arrowhead and Desert Sky, new an- islation for the financial services industry in the late 1980s. chor stores; at Desert Sky and Paradise Valley, expanded Because of the higher costs, in the past few years, compa- movie complexes; and at Superstition and Desert Sky, out- nies have started locating their call center facilities in rural door “village” retail shops. areas of the state. Services American Express Co., which has more than 9,500 Val- A subsidiary of Toyota Motor Co. that handles financing ley employees, will eliminate 4,000 to 5,000 jobs world- and leasing of Toyota and Lexus automobiles will open a wide beginning in the third quarter of 2001 as part of a customer service center in Chandler this October. Toy- company-wide reorganization plan. The cuts come on top ota inancial Services’ Western Region customer-care of plans announced earlier this year to eliminate 1,600 po- center will employ 400 workers at the new San Tan Cor- sitions. American Express, which had a 76 percent drop in porate Center, 3200 W. Ray Road. Half of the employees over-the-year earnings in the second quarter of 2001, will will be new hires, while half will relocate from the com- target the newest cuts in areas where the Valley has a pany’s other offices. The move to Chandler is part of the major presence, such as business travel and technology. company’s plan to consolidate its administrative functions No information is available on how many positions will be at three sites, with the other two being Baltimore, Md., and affected locally. Cedar Rapids, Iowa. Among health care news items, another nursing center is A Miami, 9la.-based charter- and private-school opera- going out of business, while a west Valley hospital plans a tor said it will open three schools in the Valley (two in major expansion. Good Samaritan Regional Medical Phoenix; one in Gilbert) this fall, employing about 100 Center is closing a skilled nursing-care facility on its people. And Chancellor Academies — which received downtown campus that employs about 100. Officials

10 Arizona Economic Trends cite financial problems due to lower Medicare payouts by tion was given for the closure. Despite the shutdowns, the federal government as the major reason for the closure. however, Tucson has more than 130 optics companies em- How quickly fortunes can change. Only a few years ploying about 4,500. ago, John C. Lincoln Hospital — Deer Valley (Interstate In mid-August, Chicago-based Sara Lee Corp. completed 17 and Loop 101) was on the verge of bankruptcy. But fast the purchase of The Earthgrains Co., which employs population growth in the north Valley has led to recent about 450 people at a bakery in Tucson (827 E. 17th St.). strong revenue growth, so the hospital announced it will There is no information on how the acquisition of double its bed size to nearly 200 as part of a $30 million Earthgrains — which makes products under the Rainbo, expansion. Construction will begin in 2003. Grant’s 9arm, and IronKids brand names — will affect em- Government ployment at the Tucson bakery, or the 500 sales and dis- The ederal Reserve opened its new cash operations tribution workers in the region covering Tucson. With the center in Phoenix in September, while the U.S. Postal purchase, Sara Lee, with $17.7 billion in annual revenue, Service opened several new branches and announced becomes the second leading producer of bread products. it will build a $14 million airmail center near Sky Harbor The Tucson metro area needs to increase its skilled International Airport. The 66,000-square-foot ederal Re- manufacturing workforce by nearly 50 percent over serve facility will employ about 50 people. The win- the next several years to meet the demands of companies dowless, high-security building at 47th Avenue and moving or expanding in the metro area, according to McDowell Road will house excess cash for banks, savings Mayor Bob Walkup. More than a dozen manufacturing & loans, and credit unions in the state. Somewhat less im- companies are considering moving to Tucson, and posing will be the three new post office branches that with a relatively low unemployment rate the Tucson area is opened this summer: Crimson Road and Southern Ave., hard pressed to find enough individuals to take advantage Mesa; Bell Road and Parkview Place, Surprise; and 2550 E. of specialized training at Pima Community College and the Rose Garden Lane, north Phoenix. The 145,000-square-foot Southern Arizona Institute of Advanced Technology. Cur- airmail center at 24th Street and Buckeye Road, expected rently, about 10 percent of Pima County’s 372,000 workers to open in ebruary 2003, will be six times larger than are in manufacturing. Walkup says that needs to increase the post office’s current Sky Harbor facility. to 15 percent, or an additional 18,600 workers. Mining Tucson Metro Area Although 80 workers were laid off at a Tyrone, N.M., mining and leaching operation, for the time being, Phelps Manufacturing Dodge plans no layoffs at its Sierrita copper and molyb- Several small manufacturing operations are planned denum mine in Green Valley, about 50 miles south of or recently opened in the Tucson area. Boston-based Tucson. In January. Phelps Dodge notified 2,500 workers PerkinElmer Inc. purchased a three-year-old laser scanning at several mines in Arizona and New Mexico of the possi- and imaging company and expects to expand its opera- bility of layoffs due to escalating high energy costs. tions. 9ormerly known as Sonoran Scanners, the Tucson Construction company developed a new technology that allows publish- ers to create a plate for printing directly from a computer, Marana Golf Inc., which recently purchased The Links at instead of using more costly and labor-intensive filming Continental Ranch, plans to build 12 additional golf holes, and markup procedures. The workforce is expected to 400 apartments, and 300 homes on 90 acres of land to triple from 10 to 30 in the near-term at its new Oro Valley the east near Interstate 10 and Cortaro Road. Marana Golf offices. ACO Systems of 9armingdale, N.Y., a maker of is owned by San Xavier Rock and Materials, which plans to computer and telecommunications cabinets, opened a re- move its sand and gravel quarry next to the golf course in gional manufacturing and distribution operation to order to accommodate the new development. serve its customers in the West. The 14,000-square-foot fa- Over the next two years, more than 1,000 workers will cility at 6210 S. Country Club Road is expected to employ be needed to work on a 575-room, $162 million resort about 10 people by the end of the year, then grow six-fold — the largest in Tucson. Canadian-based Starr Pass Prop- over the next three years. Expecting to “cook up” bigger erties LLC recently received financial backing from an un- profits, Beyond Bread Bakery and Café will open a second named lender to build The Marriott at Star Pass. The store and bakery in late fall at Monterey Village, 6260 E. luxury hotel — which will occupy 1,600 acres and include Speedway. The three-year-old company plans to add 30 a 66,000-square-foot convention center, a 25,000-square- workers to its existing workforce of 50. foot spa, up to 25 retail shops, 36 holes of golf, four pools The news wasn’t so good for about 150 employees (pri- and 10 tennis courts — will be the first resort built in Tuc- marily engineers) of three Tucson optics companies. son in 14 years. When it opens in January 2004, the hotel Shutting down operations are Chorum Technologies, will employ a staff of almost 700. Etec Systems and Schott Donnelly, with Etec accounting Westcor Partners of Phoenix came to a historic agree- for more than half of the job losses. No specific informa- ment with Pima County and Catalina foothills residents on

Summer 2001 11 a planned 271,000-square-foot upscale shopping center open three new locations by the end of 2002. All three at Campbell Avenue and Skyline Drive. Members of the stores — Broadway and Houghton Road, Golf Links and Skyline/Campbell Community Coalition — which was Kolb roads, and Broadway and Campbell Avenue — will formed two years ago to fight La Encantada — will not feature Wells 4argo Bank branches. only have a voice in the project, but negotiated several Also hoping to make its presence felt, Chinese restaurant concessions from Westcor: open space on one-third of the chain Panda Express expects to open 10 free-standing lo- property’s 37 acres, buffers from retail shops of up to 200 cations in the Tucson area within the next several years. feet, and $1.4 million from Westcor toward improvement of The Pasadena, California company, which has three satel- the Campbell-Skyline intersection. Construction of La lite branches in the Old Pueblo – at the University of Ari- Encantada is expected to start in about a year, with an zona and the 4oothills and Tucson malls – recently opened opening set for mid-2003. its first free-standing store at the Cornerstone shopping Trade center. Each free-standing store employs about 20 people. amily Dollar, a national discount retailer, opened its Services fourth and fifth locations in Tucson, with plans for An Illinois-based teleservices company will open a five more stores this year. The Charlotte, N.C.-based 63,000-square-foot call center to handle clients of a chain, which has 4,000 stores in 39 states, has 33 locations high-speed Internet provider. APAC Customer Ser- throughout Arizona. 4amily Dollar, with sales of $3.1 bil- vices Inc., which expects to hire 450 and full- and lion, plans to open 500 stores throughout the country in part-time workers, will service incoming sales calls. En- 2001. try-level workers will make around $8 an hour, plus bo- Park Place mall opened a remodeled food court,a nuses. APAC is moving into a facility at 1650 S. Research 20-screen movie theater, and several retail stores the early Loop formerly occupied by 4irst Data Corp., which closed part of August. Housed in several buildings that are remi- its operation and laid off 1,100 workers last year when a niscent of a Spanish marketplace, the food court features contract ended with MCI WorldCom. 4or more informa- about a dozen eateries, while a Sam Goody music store tion, call 1-800-776-2722 or go to their Internet site: across a courtyard sits next to the Century 20 Park Place http://www.apaccustomerservices.com/careers. movie complex. The food court and theater upgrades are The recent expansion of Tucson’s state enterprise the second phase of $50 million-plus improvement for the zone — to include most of the city — will lead to an ex- mall, formerly known as Park Mall. pansion of jobs by call-center operator Anfi Inc. The Two competing national retailers are in the process of de- Bloomington, Ill.-based company will open its second veloping “big-box” stores in the Tucson metro area that Tucson customer-service center at 333 E. Wetmore Road would employ about 400 people. As part of a 218,000- in May, hiring up to 300 workers. Anfi, which operates a square-foot shopping center, Home Depot won approval call center on Escalante Road in southeast Tucson that em- from the city council to build a 160,000-square-foot store ploys 850, will receive a $3,000 tax credit over three years near the corner of Broadway and Pantano Road. And for each new position it creates at the Wetmore operation. Lowe’s Home Improvement will open its first store in The positions must pay at least $8.58 an hour, provide half Tucson next summer when it replaces a former Montgom- the cost of health insurance, and offer 1,750 hours of work. ery Ward store at 4147 N. Oracle Road. The planned The Tohono O’odham Nation was expected to open a 150,000-square-foot store will employ 175 people. Lowe’s new $52 million, 185,000-square-foot casino and enter- has nine Arizona stores, eight in the Phoenix metro area and tainment complex in October that will add 700 workers one in Yuma. to its current workforce of 800. Called Desert Diamond, Chicago-based General Growth Properties Inc. has the complex on Pima Mine Road east of Interstate 19 fea- cornered the market on Tucson-area malls when it pur- tures 1,500 slot machines, a 2,000-seat auditorium that dou- chased Tucson Mall for $180 million. General Growth, bles as a bingo hall, 30 poker tables, meeting rooms, and which owns and recently spent $50 million to renovate restaurant. The Indian nation’s older gambling operation Park Place mall (see above), purchased the 1.3 mil- on Nogales Highway, also known at Desert Diamond, will lion-square-foot shopping center, which features six depart- become strictly a slot machine operation. Average annual ment stores and 172 specialty shops. Because it now owns salary for the tribe’s gaming workers matches Pima Tucson’s two largest shopping venues, General Growth County’s average, about $24,000. may be able to attract new national retailers to the metro By acquiring Tucson-based Sunquest Information Sys- area. tems, U.K.-based Misys will be able to offer a full-range Also looking to corner the market in Tucson is of health-care software products. Misys purchased Safeway, which at the beginning of 2001 had 11 stores 700-employee Sunquest Information Systems because of its (second most) in the metro area. But the northern Califor- leadership in hospital management software. Misys, which nia-based chain acquired and converted seven ABCO will not change Sunquest’s plans to add 90 workers the stores in Tucson into Safeway stores and is planning to last six months of 2001, already produces information

12 Arizona Economic Trends systems for doctors’ offices, pharmacies, and laboratories. Payson plant, then finish the process (applying an outer The acquisition is subject to government approval. coat) at its Mesa facility. Average starting salary for Payson Another Tucson-based (but soon-to-be Phoenix-based) employees will be around $9 an hour, plus full health in- health-care company is faring much worse. In order to surance, the company said. stop the bleeding of red ink, health maintenance organiza- Tears of joy were shed by former Delphi Automotive Sys- tion Health Net laid off an unspecified number of tem’s workers when it was announced a California aero- workers in early July. In addition, the HMO will move space company had bought the ort Defiance cable its corporate headquarters to the Valley and consider and wiring plant. The Delphi facility on the Navajo Na- eliminating Medicare coverage. Health Net, which has tion had closed in late March, laying off 91, as part of more than 300,000 members, lost more than $64 million in worldwide restructuring plan by the automotive parts 1999 and 2000.Government maker. The new owner, Ducommun Inc. of Long Beach, To help pay for a nearly $4,000 per-employee raise and a said it will hire all of the laid-off workers, with an eye $10 million budget deficit, the Tucson Unified School toward adding more personnel. Tucson’s largest manufac- District eliminated more than 100 (filled and unfilled) turer, Raytheon Corp., was a major customer of the Delphi positions. Approval of a proposition in November 2000 plant and will now contract with Ducommun for wir- that banned bilingual education forced the layoff 122 ing-harness work at the facility. teacher assistants and an unspecified number of temporary Construction employees.Miscellaneous A number of building projects in various stages of The Pima County Workforce Investment Board development were recently in the news. The Camp debuted a web site for job seekers and employers in Verde Town Council approved development plans for late July. The opening of pimaworks.com, which fea- three parcels of land near Interstate 17 and Arizona tures job listings, skills assessment, training information, 260. Work on the project, which is expected to include and other resources, comes at an appropriate time, when restaurants, hotels, and convenience stores, could be unemployment is on the rise in Tucson and other areas of under way within a year. Lake Havasu City investors the state. Several optics companies recently closed, are attempting to line up stores for a 240-acre regional eliminating 150 jobs, and a plastic-injection molding mall/“power center” where Home Depot is currently manufacturer (Plastic Moldings) closed up shop recently building a 140,000-square-foot store (State Route 95 near after opening a plant in 4ebruary. the municipal airport). An announcement about the pro- ject’s status is expected by the end of July. Phoe- nix-based Westcor Cos. has reduced by three-fourths the Balance of State size of its planned 90-acre expansion of lagstaff Mall. Manufacturing Lack of city funding for infrastructure costs — through a sales tax — has led to the elimination of a 50-acre business Higher electrical costs forced North Star Steel to elimi- park and half of a 40-acre retail shopping village (including nate 45 jobs (about one-fifth of its workforce) at its a 10-screen movie complex). Still planned is a Wal-Mart Kingman operation in early May, the company said. “supercenter.” Yavapai County supervisors gave North Star has not made steel since December 7, 2000, be- preliminary approval to a 700-acre project in Paulden, cause of the high cost of power. The company is concen- called Rancho Cielo, that will feature more than 1,250 trating all of its efforts on making steel concrete reinforcing single-family residences built in nine phases. 4ormerly bars that it sells to the construction industry. known as Headwaters Ranch (because of its closeness to Expansion by three cold storage and salad-process- the Verde River headwaters), Rancho Cielo will also in- ing companies in Yuma is expected to create 550 new clude a golf course and commercial area. Work on the full- and part-time jobs by this fall. Advanced Cooling golf course will begin within a year. Systems plans to construct a 73,500-square-foot cold The Lake Havasu City Council approved a major re- storage facility at Avenue 3E and 40th Street; next-door sort project on 104 acres formerly occupied by the city’s neighbor Newstar resh will build a 102,000-square-foot airport and 60 acres owned by the state. Limmus Corp. plant, with about one-third devoted to salad processing of Phoenix and Roby Billard will develop the five-year and the rest to cold storage; and Natural Selection oods project that includes two hotels with a total of 750 rooms, plans to erect a 138,000-square-foot plant at 36th Street a 50,000-square-foot convention center, 125 to 160 con- and Avenue 3E that will begin as a cold-storage facility, but dominiums, retail shops, and an 18-hole golf course. then add organic salad processing. Transportation, Communications, and Public Utilities Phoenix Golf Ball Co. is moving the “core” of its business to Payson, which will result in 20 new jobs The board of the Arizona Electric Power Cooperative, when a 20,000-square-foot facility at Sky Park Industrial which serves southeast Arizona, agreed to spend up to $30 Park opens in about a year. The Mesa-based company million to build a 40-megawatt generating plant at its will manufacture the rubber core of its golf balls at the Apache Generating Station near . The natural gas-fired

Summer 2001 13 plant is expected to be on-line by late summer of 2002. An 8.4 percent cut in Mohave County’s budget that be- Trade gan July 1 could lead to layoffs and a reduction in ser- vices. The county’s Sheriff’s Office, which has already What’s it worth to have a Wal-Mart supercenter in a closed jails in Mohave Valley and Lake Havasu City and a community? To the city of Prescott, $6 million. In order to substation in Golden Valley, may need to make further lure a Wal-Mart from the nearby Yavapai Prescott Indian cuts. Reservation (4rontier Village Shopping Center), the Prescott City Council agreed to pay back the world’s largest depart- Due to the Army’s plans to consolidate its personnel ment store $6 million in sales taxes collected at the store operations, ort Huachuca is adding slightly more over the next dozen years. The new supercenter will be than 100 civilian jobs, of which about half will be hired located at the corner of Highway 69 and Prescott locally. The Army’s Western Civilian Personnel Operations Lakes Parkway. No information was available on the Center at the fort will hire 102 workers, while the fort’s Ci- number of employees the new store will need, as well as vilian Personnel Advisory Center will hire four. About 50 an expected completion date. of the positions will be filled through transfers from other Army personnel locations. Prescott Gateway Mall, which is expected to open next March, announced Barnes & Noble will lease 25,000 square feet in a separate building adjacent to the mall’s Statewide food court. Westcor Co., the mall’s developer, has been pursuing the national bookstore chain for a year. Mining Services Higher electricity costs, lower copper prices, and consoli- Yavapai Regional Medical Center (YRMC) will build dation contributed to an 18 percent drop in the mining Prescott Valley’s first hospital within the next 18 to 24 industry’s direct economic impact to the state in 2000, months. Prescott-based YRMC will locate the facility — according to a study released in late July. Mining employ- which will include at least 50 beds — on 27 acres adjacent ment fell by 2,000 last year to a level of 7,500, about a 40 to the Del E. Webb Outpatient Center on Windsong Drive. percent drop from 1996 levels, according to the Arizona YRMC also operates a hospice, and physical rehabilitation Mining Industry. Shutdown of BHP’s mining operations and enhanced imaging facilities in Prescott Valley. near Oracle, and layoffs at Phelps Dodge and Asarco accounted for the drop in employment. If the price of The hiring of a full-time nursing professor at the Northern does not rebound, industry analysts believe there could be Arizona University-Yuma campus is expected to lead to the further deterioration in the industry. And that has already training and employment of additional nursing per- started to happen (see related stories). sonnel for Yuma Regional Medical Center. The medical $inance, Insurance, and Real Estate center, which desperately needs nurses for its intensive care unit and operating room, will pay the salary of the Wisconsin-based M&I Marshall & Ilsley Bank has professor. The full-time teaching position is expected to al- agreed to purchase ifth Third Bank’s operations in low the school to enroll more students in its bachelor’s de- Arizona. After M&I completes the merger, it will have 25 gree program. Another source of nurses is Arizona locations throughout the state, including new branches Western College (in Yuma), which awarded 31 students in Sedona and Prescott. Some of 4ifth Third’s branches with associate’s nursing degrees this spring. Most of the will be closed, but all but 5 percent of its workforce will be graduates are expected to work or receive training at retained, M&I said. Cincinnati-based 4ifth Third sold its Ar- YRMC. izona interests in order to concentrate on its Midwest oper- ations. About 100 telephone sales workers in Lake Havasu City lost their jobs when creditors of its parent company, Epic Trade Resorts, filed for Chapter 7 bankruptcy. Epic Resorts owns Phillips Petroleum is expected to liquidate an unde- time-share properties in Lake Havasu City (London Bridge Re- termined number of Circle K and Phillips 66 stores af- sort), Scottsdale (Scottsdale Links Resort), and several other ter its $7 billion merger with Tosco Corp. is approved. cities around the country. Other employees at Epic’s proper- According to a story on the Internet site of the British busi- ties were not affected by its creditors’ bankruptcy. ness publication
inancial Times, about $1 billion in assets Government will be sold by Phillips. Oil refiner Tosco, which recently laid off 200 employees (primarily within its Tempe mar- Despite a 4.2 percent drop in its yearly budget – due to keting department), owns 6,400 Circle K stores. A Phillips fewer capital-spending projects — Coconino County will spokesperson said it will sell stores where there is an over- increase its full-time staff by more than 30 during fiscal lap in the market. year 2001-2002. The county will employ more than 1,050 full-time workers, if all of the new positions are filled. In- Over the next year, the Albertson’s supermarket chain formation on the type of jobs being added was not avail- said it will close 165 stores in 25 states and eliminate 20 able. percent of its administrative and managerial jobs. The clo-

14 Arizona Economic Trends sures, which will cause the loss of about 1,600 jobs, will af- prison near because of uncertainty over its expected use. fect not only its Albertson’s supermarkets, but Osco drug Mohave Correctional Properties LLC of Edmond, Okla., stores, Jewel 4ood Stores, and several other smaller opera- started building a private prison in October 2000 near the tions. Albertson’s, which has about 50 grocery stores and new Griffith Energy Plant off Interstate 40, but stopped 80 drug stores in Arizona, has not said if any stores or jobs work when it found out that two potential users (the state will be affected in Arizona. or federal government) have different needs (1,000 vs. Services 1,500 beds). Also, it will be late summer before a half-dozen communities in Arizona and Southern Cali- A statewide shortage of 3,000 registered nurses pro- fornia learn where three planned federal prisons to pelled Gov. Jane Hull to form a task force to study solu- house foreign nationals will be located. Then, an envi- tions to the problem. A survey by the Arizona Hospital ronmental impact study will be needed, followed by about and Healthcare Association pointed out several reasons for a year to build the prisons. 4inally, sometime this summer, the nursing shortage, which is a problem across the nation. the Navajo Nation will select a private company to Among the major reasons for the shortage are: burnout build a facility for 10,000 Native American prisoners from a high patient-to-nurse ratio and long hours of work; jailed throughout the United States. A site in Chinle, opportunities for nurses in other less-stressful and Shiprock, or Tuba City has yet to be chosen for the me- higher-paying occupations; lack of incentives and higher dium- to minimal-security prison that will bring $20 million pay needed to attract younger workers in the field. A re- a year in revenue to the local community selected for the cent survey by the Bureau of Health Professions showed prison. Is all this clear? nearly 500,000 nurses are not using their licenses, com- pared to about 400,000 in 1992. Two Air orce bases in Arizona are expected to pick up about 80 military and civilian personnel in October. Ac- Chandler-based Nationwide Vision, which employs 400 cording to U.S. Senator John McCain, Davis-Monthan Air people at 40 locations (primarily in the Phoenix and Tuc- orce Base in Tucson will gain 65 airmen, while Luke Air son metro areas), is expanding its operations through- orce Base in Glendale will pick up eight airmen and out the state. The company is investing $2 million to nine civilian workers. The increase in personnel may be open new stores in 2002 in lagstaff, Yuma, Lake City, a good sign for the bases, said McCain, as the Defense De- Bullhead City, and Kingman. Started in 1985, Nation- partment gears up for another round (third) of base closings. wide had $31 million in revenue in 2000. Among the com- It’s expected that 25 percent of the nation’s bases will be pany’s largest occupations are optometrists, shut down in an effort to save government expenses. ophthalmologists, and opticians. Mining A federal judge ruled that Arizona’s Indian gaming compacts are illegal and stopped the governor from ne- Tucson-based Asarco laid off 110 of its 625 workers at gotiating any new gaming compacts. The ruling was its Mission mine in Green Valley, about 30 miles south brought about by a suit by filed by the state’s horse- and of Tucson. Low coppers (65 cents a pound) were blamed dog-racing industry, which claimed the Indian compacts vi- for the mid-August cutbacks. The layoffs will not affect olate the state’s constitution because it gives the Indian Asarco’s other operations in Arizona — Silver Bell north of tribes a right to run casino games and not businesses out- Tucson and the Ray Complex near Hayden. AET side of the reservation. It’s not expected that the ruling will affect current gaming on 15 Indian reservations in the state until, and if, the decision is affirmed by a federal Appeals Court. In the meantime, the state Legislature is ex- pected to take up the issue. According to a recent report by the University of Arizona’s Udall Center for Studies in Public Policy, state Indian gaming employs more than 9,300 workers and has an economic impact of more than $450 million. Government While the shortages of nurses and construction workers are a problem, those situations are much less complicated than the outlook for prison personnel. 4irst, a shortage of corrections workers is threatening to keep a large part of the state’s newest and most sophisticated prison in Buckeye empty. However, even if there were workers lining up for jobs at the Arizona State Prison-Lewis com- plex, lack of state funds will keep one-fourth of the 4,150 inmate beds unfilled for the time being. Mean- while, work has stopped on a partly finished private

Summer 2001 15 28. “Unemployment Payouts 2ormula At Heart Of Legislative Session State Debate over Payroll Taxes,” Bill Coates, Short on Tax Cuts, Arizona Capitol Times, March 23, 2001, p. 8. Revenue Growth 29. Ibid. (continued from page 7) 30. The Board of Medical Examiners is responsible 19. “1 bill to fund start-ups passes, 1 fails,” Scott for protecting the public through the licensure and regulation of approximately 15,000 physi- Arizona Economic Trends is published quarterly by Thomsen, Associated Press, published on Tucson the Arizona Department of Economic Security, Re- cians and 700 physician assistants statewide. Citizen Internet Edition (www.tucsoncitizen.com), search Administration, by authority of the Wag- March 6, 2001. BOMEX receives more than 1,000 complaints ner-Peyser Act and through funding provided by the each year. According to BOMEX, approximately U.S. Department of Labor. Reproduction of Arizona 2,887 physicians have received more than one Economic Trends for commercial use is prohibited 20. Ibid. by Section 39-121, Arizona Revised Statutes. Per- complaint and 1,832 have received three or mission to reprint this publication, or parts of it, for 21. “High-tech supporters get little help at Legisla- more. non-profit use may be granted upon written request (see below for address). ture,” Ed Taylor, East Valley Tribune, May 7, 2001, p. B1. 31. “Medical board faces reform,” David Parrish, The Research Administrator Dan Anderson Arizona Republic Internet Edition Managing Editor Ron Simon Editor Brent Fine (www.azcentral.com), Dec. 15, 2000. 22. “Hamilton Plans Bill to Assist 2armers At Luke,” Publication Assistant Rosemary Jones Beth Lucas, Arizona Capitol Times,” Aug. 31, The purpose of Arizona Economic Trends is to 2001, p. 4. 32. Ibid. provide an update and analysis of state and county employment and economic data, as well as informa- tion on state and national programs and policies that 23. Ibid. 33. Security guards are projected to grow 5 percent affect the nation’s and Arizona’s labor markets. In- a year in Arizona over the next decade, while cluded in this publication twice yearly are Research 24. As one of several examples: “Hull: Raise state telemarketers are in a group expected to grow Administration’s two-year projections of employ- workers’ pay,” Mike McCloy, The Arizona Re- 8.8 percent annually the next 10 years. Source: ment, unemployment, and labor force for Arizona and its major sub-state regions. public Internet Edition (www.azcentral.com), Arizona Occupational Employment "orecasts, U.S. residents may receive this publication free of Jan. 6, 2001. 1998-2008, Arizona Department of Economic Security, Research Administration, August 2001. charge by writing to: Arizona Department of Eco- nomic Security, Research Administration, P.O. Box 25. “Bill penalizes firms who close in state and 6123, Site Code 733A, Phoenix, AZ 85005; or by move overseas,” Howard 2ischer, Capitol Media 34. 2act Sheet for SB 1254, Corrected 2inal Revised, calling (602) 542-3871. Subscribers who do not wish to continue receiving the publication are asked to in- Services, printed in East Valley Tribune, 2eb. 1, Arizona State Senate, May 7, 2001. dicate so in box below and mail to above address. If 2001, p. B2. your address has changed, please mark box and return 35. “Commerce Committee,” 2001 Legislative Sum- mailing label with correct address to above address. 26. Senate 2act Sheet of HB 2087, 2inal Revised, Ar- mary, 2orty-2ifth Legislature, 2irst Regular Session, ❏ Would like to subscribe published by Arizona State Senate, pp. 19-20. AET izona State Senate, May 14, 2001. ❏ No longer wish to subscribe ❏ Change of address 27. “Senate panel Oks anti-discrimination bill,” — Brent "ine Name ______Howard 2ischer, Capitol Media Services, printed Arizona Economic Trends Editor in East Valley Tribune, 2eb. 1, 2001, p. B1. Street Address ______City, State, ZIP ______

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