The year went by so fast, and it’s time to review Arizona business 2006 from A to Z.
Apollo, arguably Arizona’s most successful company, stumbled with an options-timing scandal and skepticism on Wall Street about whether it can continue to deliver stellar growth. Key executives were booted, but shares lost nearly half of their value before making a slight recovery. In a year when the company bought the naming rights to Cardinals Stadium, it also suffered a blow to its prestige when the University of Phoenix lost Intel’s tuition-reimbursement support. Ouch.
Bill Harris joined the new Science Foundation Arizona, coming from his success in Ireland. With seed money from the Legislature and private sector, the SFA will deliver a critical boost to building a research-based Arizona economy.
Central Park East fell through. The proposed downtown Phoenix skyscraper at Central Avenue and Van Buren Street was one of several announced with great fanfare that quietly died, victims of land speculation and a flagging condo market.
Downtowns, nevertheless, continued to make big gains around the region. Scottsdale’s Waterfront and booming downtown Tempe were big indications of demand for quality urban settings. Downtown Phoenix marked the opening of the ASU campus and University of Arizona medical school. The first phase of the convention center opened. And the convention hotel and two condo towers got under way.
Election results were less dramatic in Arizona than in the rest of the United States. But two more Democrats in the House may help the state gain badly needed federal money. And defeat of an anti-gay-marriage ballot proposition sends a positive signal of tolerance, which is essential to attracting talent.
Federal regulators continued to pound on the Palo Verde nuclear station, and Arizona Public Service Co. chief nuke exec Jim Levine retired. Correcting Palo Verde’s problems will be essential to APS’ case that the state will need more nuclear power in the future.
Google moved into a corner of the ASU campus in Tempe. Anyone expecting a huge employment base may be disappointed. Google is working around the world to find the smartest people to hire. If Arizona passes the grade, bigger things might happen. If Google stays, it sends a positive signal to other knowledge companies.
Housing entered its long-feared correction, and the slowdown was evident throughout booming central Arizona. Don’t look for a substantial recovery until late 2007, or even 2008. Commercial real estate enjoyed a modest advance.
Intel, facing continued competitive pressure, rolled out its long-awaited restructuring amid much worry among the company’s 11,000 employees in Chandler. Ten percent of the global workforce will be eliminated. Intel sold a unit to Marvell Technologies, which will keep 400 employees in Chandler.
Jerrys made notable transitions. Jerry Colangelo, for years the most influential business leader, stepped further back from the big issues. It’s our loss. Swift Transportation founder and Phoenix Coyotes sugar daddy Jerry Moyes made a bid for the trucking company that ousted him. The deal appeared to be going nowhere as 2006 ends.
King Growth stayed on the throne as Arizona’s economic development strategy. The state passed 6 million people to become the fastest-growing in the union. Meanwhile, the costs of growth kept growing, too, and Arizona continued to lag by most measures of economic quality and competitiveness.
Local-yokel boosters denied an influential national survey that showed Arizona dead last among states in their support for education. They denied another survey about crime in Phoenix. Next they’ll deny the temperature gets above 95 degrees in August.
Mesa voted down a property tax and continues to muddle along, its infrastructure and economic capacity far below what is needed for a city more populous than Minneapolis. The condition is a drag on all of metro Phoenix. It risked losing Boeing as a housing developer nearly encroached on the company’s test flight path. One bright spot: new and impressive police chief, George Gascón.
No animal testing was a battle cry in Chandler as Covance fought opposition to set up a lab there. Attracting Covance is a major piece of building a bio cluster here, and like or not, few medical breakthroughs come without this testing.
Opportunity Corridor remained mostly a hollow promise by Phoenix Mayor Phil Gordon (or, to put it more kindly, an aspirational statement). The Phoenix portion along the light-rail route remained a linear slum. Yet its potential is on display once you cross the Tempe border into a major office cluster.
Phelps Dodge tried to become a major nickel concern. When that fell through, it ended up in a merger with Freeport McMoRan. The good news: If the deal happens, the headquarters will stay in Phoenix.
Qwest made a remarkable comeback from its near-collapse in 2001. Sadly, it will never be the civic leader that it once was.
Ray Woosley at C-Path in Tucson, Jeff Trent at T-Gen in Phoenix, George Poste at the Biodesign Institute at ASU – the leaders of the state’s bio efforts made big progress in 2006, especially through collaboration. One example: landing a piece of developing a national cancer atlas. One danger flag came in the fight over a downtown Phoenix hospital between Banner and Maricopa Integrated Health System.
Sustainability remained the biggest issue we’re doing little about. Global warming, higher energy prices and water scarcity will slam Arizona. But they also represent major business opportunities.
Tourism completed its rebound from the downturn that followed the 9/11 attacks. New resorts are going up in Scottsdale and Paradise Valley, and the convention center in Phoenix will become a size and quality to host lucrative major trade shows.
US Airways was still digesting the merger with America West when it went back for more: an audacious, hostile bid for Delta Air Lines. Whether the headquarters stays here or moves to Atlanta is among the things on the line.
Venture capital continued to disappoint. You can say this lifeline is doing fine if you are satisfied with the status quo: an economy based on housing and big population increases. Building a diverse, research-based economy will require much more VC. And Arizona continues to badly trail its competitors.
War demands kept Arizona defense contractors profitable. Since 2001, the value of defense contracts in the state increased 91 percent, to $9.4 billion last year, and this year looks lucrative as well. About 1,400 workers went on strike at Raytheon Missile Systems in Tucson. Raytheon employs about 11,000 in southern Arizona.
Xenophobia is one way to describe the attitude of many Arizonans to illegal immigration. The harsh rhetoric and policies toward migrants fail to take into account their contributions to the economy or to go after the American employers that hire them. Yet illegal immigration does carry huge downsides, including the violence in Phoenix, a national hub of smuggling, and education and health care expenses. It’s our most complicated issue.
Young’s Farm wound down its operations near Dewey, holding the last Memorial Day Pie Festival. It’s a symbol of both lost rural character and the state’s diminishing agricultural sector. The family lost a fight to keep the land for agriculture, and it will be developed into houses, offices, blah, blah, blah. Too bad I already used the letter "S," or it could stand for Arizona’s shortsightedness.
Zila completed its revival and shifted focus to developing cancer-detection technology. The Phoenix-based company is an example of biotech’s promise. A key challenge in 2007 will be enhancing the state as a magnet for private bio capital.
