Doing the same thing over and over and over while expecting a different result is one part insanity and two parts bad planning. It is time to get out of the recliner and take charge of our own destiny. Waiting for Uncle Sam or the State is simply not a logical option. Does the Federal or State Government have the financial resources to build infrastructure, put up brick and mortar or fund short or long term business ventures? No, they cannot, at least not without incurring additional debt. And many argue they should not. That leaves “US”.

Like an addict drawn to their obsession, we as a state continue to hope for a rebound of the construction industry to ease our economic pain. Arizona needs to wake up to the fact the days of wild, booming subdivision growth are gone, at least for now. Leaving politics aside, Arizona is no longer the ‘dream destination’ for homebuyers, job seekers and new employers. With an economy that was flourishing with double digit growth – everything worked. There were plenty of jobs, mostly in construction and construction support industries.

Today we have an entirely different picture. Nationwide, there are enough homes in foreclosure, on the brink of foreclosure, or already foreclosed to meet market demand for up to three years. According to Marshall Vest, economist at the University of Arizona, there are currently enough homes on the market in Arizona to accommodate an entire decade of population growth. The only thing that will turn this around is job growth. And to continue relying on the construction industry for job growth when the market is saturated with housing stock and empty commercial space will only continue to suffocate our economy.
What we need are non-housing and construction related jobs. To get these jobs, we clearly must change the way we think. We can take our cues from countries abroad in Europe, Asia, and South America, or right here in North America. “Creative clusters” or nurturing the process of taking ideas into research, then to development, and finally to actualization have been going on for several years – everywhere else. The economic pillars chosen by our State leadership are – Solar, Aerospace and Defense, Technology and Innovation. All three are important, and all three already have a strong foothold in our economy.

But what about Rural Arizona? What about the border cities? Neighboring states have set aside funds for border issues, dedicated resources and strategically partnered with cities, counties and private industry . Arizona lags far behind California, New Mexico and Texas in competing for bulk and container trade with the third largest trade partner of the United States – which is Mexico.

A recent example? Santa Teresa, New Mexico, the size of Bisbee by population, has landed a $500MM multi-modal port facility. Union Pacific expects to hire 3,000 to 4,000 employees, not temps, not build-out employees but real full time jobs with benefits. Using a modest 2.5 economic development multiplier, the net effect to New Mexico is well over $1BB in new money circulating in their economy.

This didn’t happen on its own. The New Mexico equivalent of our state land department traded land with Union Pacific to assist them in securing a suitable site for the facility. The state government sweetened the deal by passing a locomotive fuel tax exemption. Arizona, on the other hand, apparently has a different view. When a rail road company approached the Arizona State Land Department (ASLD) to purchase a large parcel of land for a similar facility, the ASLD responded they didn’t feel this was the ‘highest and best use’ of the land! The ASLD felt it would make too much of their remaining land holdings undesirable for housing, retail and resort development. So the railroad countered with an offer to purchase a much larger parcel and set aside wide buffer zones to offset the perceived devaluation of adjacent lands. The ASLD refused the offer, saying the railroad would be speculating and then in a position to profit at a later date from the sale of the vacant land. So which is it ASLD?

From this example alone it is painfully clear that the state needs to examine and revise its current policies if we are truly serious about job creation. There is plenty of private money out there waiting to be invested. And, while Arizona is now offering such benefits such as a 30% reduction in Arizona’s corporate income tax rate, reduced commercial property assessment ratio, a 15% increase in personal property exemptions, and income tax credits of up to $9,000 for each qualifying new job, these incentives alone will not create any impact for very long. What about incentives that would create an immediate impact, such as a $500MM cash infusion and several thousand jobs into the Arizona economy as our smart neighbors to the east recognized?

Along our border we should be looking more closely at how we can incentivize the creation of assembly and manufacturing opportunities. With Rail and the I-10 corridor the SEAGO Region is well positioned to leverage their access to a workforce (both unemployed and under-employed); available education partners in Eastern Arizona College, Cochise College, and the University of Arizona; moderate climate; proximity to the international border to bring trade in from the Port of Guaymas by rail or truck through Douglas, Naco and Nogales.

Opportunities abound, but for how long? Now is the time to diversify our economy – even refocus on core economies such as cattle, cotton and copper. The studies are in, and good plans are languishing on the shelves throughout our region. We encourage you to join us today on this odyssey. Take an active role with us and leave the doldrums behind. By banding together as a Council of Governments, we can get the attention of business and industry leaders and state and federal decision makers. Working cooperatively together, we can leverage the combined voice of our city, county and regionally elected officials and be heard.

Please let us know if you have questions, answers or solutions! Write economicdevelopment@seago.org.

 CCSBDC received recognition as one of three in the state that met all of its goals for the year. The areas considered for recipients of awards are most jobs created, loan facilitation, capital formation, assisting startup, new hires and retention.

The Center’s director, Mark Schmitt received a statewide award recognizing him as having the most economic impact among Arizona SBDC Counselors. When asked about his strategy in assisting to build local businesses in a down economy, he responded, “Partnering with great organizations like SEAGO enables the SBDC to leverage resources to fulfill our mission to support Arizona’s economy to assist small businesses to achieve success. A large part of our success is due to the efforts of SEAGO and their shared commitment towards the common goal of creating economic impact in the region.”

.SEAGO’s Economic Development Planner, A’kos Kovach works closely with Mr. Schmitt and his team to strengthen small business skills by providing information and infrastructure. Kovach enthusiastically congratulated Mr. Schmitt and his staff: “It has been my honor to work with many SBDC centers and their state logistics team. Mark Schmitt is uniquely qualified to serve in his role and his professionalism speaks volumes for the entire SBDC program. Mr. Schmitt is a problem solver and consensus builder.”

SBDC’s services are available to businesses in Cochise County. To reach Mark Schmitt, call the Small Business Development Center at Cochise College at (520) 515-5478.