Nestlé USA has announced to invest $675 million in building a 630,000-square-foot beverage factory in Glendale. The facility is scheduled to open in 2024 and create more than 350 jobs.  

“Nestlé’s investment for their sustainable and innovative beverage manufacturing facility is a valued addition to Arizona’s manufacturing industry, creating quality jobs in Glendale while making a positive impact in the community,” Arizona Commerce Authority President and CEO Sandra Watson ,

In hailing Nestlé’s decision to invest in the Valley, Ariz. Gov. Doug Ducey the increase in manufacturing in the state.

“Nestlé selecting Arizona is great news,” Ducey said. “Manufacturing in our state is surging and Nestlé’s decision adds to this momentum, as well as bringing diversification to this fast-growing sector of our economy.”

gathered by the ACA shows that manufacturing in Arizona has seen considerable growth and now makes up the second largest industry in the state. 

According to Nestlé, the Glendale facility will be its most technologically advanced factory and distribution center and will provide an ideal location to reach consumers in the Western states. The factory will strengthen its manufacturing capabilities in order to meet an increased consumer demand and changing dairy market.

This comes after a recent report by Bloomberg Intelligence, which that the plant-based food market could surpass $162 billion in the next decade. If estimates are correct, this will be a 451% increase from when this market was valued at $29.4 billion in 2020.

Daniel Jhung, president of beverage for Nestlé, said, “Beverages play an increasingly important role in the lives of consumers, a trend that’s been accelerated by the pandemic and is expected to continue to grow. This investment illustrates our continued commitment to leading and growing categories where we play, providing consumers with a variety of high-quality, innovative products to meet their needs.”

Beginning this summer, the company will be hiring workers for the factory, including positions in professional staff, manufacturing and production leaders, technical staff, and engineers.

to the ACA, Nestlé could receive up to $7 million in state tax incentives for newly created jobs. 

“We appreciate the partnership from state and local officials and look forward to contributing to the local economy and Glendale community for many years to come, including through the creation of over 350 jobs,” Jhung said. 

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Pima Community College unveiled its new automotive tech center in downtown Tucson with a goal to help meet high demand for skilled technicians in the industry, including Arizona’s growing electric and autonomous vehicle manufacturing sector. 

The opening of the Automotive Technology and Innovation Center is just the start of a by the district to expand technical training to produce tech workers in other fields and stimulate the local economy. 

It’s also the realization of a long sought-after goal for Chancellor Lee Lambert, who came to the district in 2013. 

“I think there’s many of you in this community, I know especially the dealers and all the other automotive folks, you’ve been waiting for this moment,” Lambert said at the recent ribbon cutting for the center. 

Programs in diesel, electric and autonomous vehicles 

Located at the school’s downtown Tucson campus, the two-story, 50,000 square feet center will support programs in diesel, electric and autonomous vehicles and increase training for specific brands such as Ford, Fiat-Chrysler and Subaru. 

Students can study engine diagnosis and repair, electrical fundamentals, steering, alignment, brakes and other programs. 

Education paying off for grads 

Automotive technicians who complete a two-year Automotive Technology Associate degree earn over 20 percent more, on average, than a technician without a degree, college officials said. An automotive technology degree also is a step towards other careers in the field, whether as a dealership manager, mechanic, salesperson or specialist focused on improving the future of automotive technology, school officials said.

Technicians in Arizona are earning an average $22.41 per hour, about 8 percent higher than the national average, according to employment website .  

Severe auto tech shortage 

There are plenty of positions available for grads. By 2024, the industry is projected to be short by approximately 642,000 automotive, diesel, and collision technicians, according to a issued by the Phoenix-based TechForce Foundation last year.

Citing both increasing demand for professional techs and a declining supply of new techs entering the industry, the study concluded that the technician shortage continues despite a slight uptick in new post-secondary degrees and certificates for diesel technicians.

Other Centers of Excellence: aviation, IT, healthcare, hospitality, and more 

Under Lambert’s vision, Pima is developing other Centers of Excellence in applied technology, information technology, health professions, public safety and security, hospitality and tourism, and arts and humanities. 

The centers pair state-of-the-art facilities with industry partners to prepare students for new generation careers. Here’s a look at a few of them:

Aviation technology 

Located at Tucson International Airport in dedicated hangar space, the new Aviation Technology Center is part of the Center of Excellence in Applied Technology. The Center, which will make it possible for the college to double the number of students currently in the program, is under construction and slated for completion by early 2022.

Health professions 

The Center of Excellence in Health Professions is based at Pima’s West Campus and provides state-of-the-art training in multiple healthcare programs including nursing, surgical technology, respiratory care, medical laboratory technology, dental studies and more.

Information technology/cybersecurity

Located at the East Campus, the program is centered around the Arizona Cyber Warfare Range, the only “live-fire” cyber range at a community college. The range is operated by students and volunteers and provides a safe zone where IT professionals, community members and students can explore cyber attacks and defenses. 

Public safety and security

This center features fire science and emergency medical services, law enforcement and administration of justice, and transportation and logistics.

Pima partners with industry and government including the U.S. Air Force to provide Medical Readiness Agency () to train airmen as nationally credentialed paramedics in an expedited program.

In a partnership with TuSimple, Pima also created the country’s first certificate to upskill truck drivers in autonomous truck operations — Autonomous Vehicle Driver and Operations Specialist Certificate.

For more information about these and the other centers, visit:

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Made in Arizona. It’s a tag that’s becoming more familiar as the state’s manufacturing base grows. Once heavily reliant on real estate development for its economy, Arizona now boasts more manufacturing jobs than construction. 

To celebrate this diverse and rising sector, Governor Doug Ducey declared April “Made in Arizona Month” to encourage everyone to buy homegrown products from tortillas to semiconductor chips.  

С��ñֱ��app spoke to one of the state’s leaders in the industry about the sector’s evolution and impact, Mark Gaspers, chairman of the board of the Arizona Manufacturers Council (AMC), the voice of the industry.

Gaspers, who is senior manager for Boeing’s State and Local Government Operations in the Southwest, gave his take on the industry’s investment in Arizona over the past decade.  

Here’s what Gaspers had to say: 

Q: How has the manufacturing landscape in Arizona changed in the past decade?

A: A recent report shows that Arizona exports increased by over 51 percent from 2010 and 2019. During that time, manufacturers added 28,000 new jobs, an 18.7 percent increase. By 2019, there were 5,157 manufacturing businesses and 177,300 manufacturing jobs in the state.

Our success is not by accident. Arizona’s legacy companies paved the way for the innovative manufacturing and technology growth we’re seeing today.

Others played a role in pushing forward policies that have attracted new companies and accelerated growth for our long-term Arizona manufacturers. Elected leaders, communities, the AMC, the Arizona С��ñֱ��app, trade associations and the Arizona Commerce Authority under Sandra Watson’s leadership.

Some of the policies that have proven effective are a 75 percent reduction in real and personal property taxes for Arizona Foreign Trade Zone users, refundable tax credits for manufacturers creating jobs and investing in Arizona, and a 100 percent sales factor that reduces corporate tax liability for high wage and fiscal benefit exporters. 

Arizona also created additional depreciation, reducing the taxable value of an asset, and sales tax exemptions on purchases of manufacturing machinery, equipment and electricity used in the manufacturing process.

Education is another reason for our growth. We’ve seen rapid expansion of university research infrastructure and we have robust career and technical education programs with industry collaborating on workforce needs. 

Today, these policies have diversified our economy and the breadth of the manufacturing sector. If you look at our council membership, it reflects a range of sectors and products from the Boeing AH-64 Apache to Karsten Manufacturing Ping Golf Clubs and Sub Zero appliances, to name just a few.

Q: Which sectors are seeing the most growth in Arizona?

A: We’re seeing a historic level of investment by the semiconductor industry. Plans for massive investments by Intel and TSMC (Taiwan Semiconductor Manufacturing Company) are a sign of great things to come. Not only are these companies hiring employees and investing here, they are attracting new companies and suppliers to Arizona. 

Intel’s presence, for example, resulted in $8.58 billion for our economy in 2019. And that’s before its recent of a historic $20 billion investment for two new Arizona fabs in Chandler.

We’re also grateful for Arizona Senator (Kyrsten) Sinema’s leadership in the passage of the bipartisan , which is intended to restore America’s leadership in semiconductor manufacturing. That immediately impacted Arizona’s economy as it welcomed Intel’s plan of expansion.

Arizona has always been a leader in the aerospace and defense sector, and we continue to see growth and investment by Boeing, , , and as well as medium and small companies. There’s also a robust chain of suppliers with proximity to military testing facilities such as . 

To put the extent of the aerospace and defense supply chain in context, take Boeing’s average annual spend with just Arizona suppliers— $1.4 billion per year. That’s roughly two times the economic impact of the last Super Bowl in the state every year.

Q: What does the future look like for Arizona’s manufacturing sector? 

A: The future is bright and that means jobs today and opportunities for students tomorrow. One reason I am so excited for the future is because of the innovation and collaboration we see from our education partners. 

We are fortunate to have Maricopa Community College District represented on our Board of Directors. Maricopa’s partnership with other institutions is a prime example of collaboration by education with industry. Maricopa County Community College District, Central Arizona College and Pima Community College partnered together to develop a unified, industry-recognized curriculum specifically designed to teach the skills needed for high-paying, high-tech advanced manufacturing jobs. NAU recognized this innovation and also partnered with these schools. 

We have outstanding university partners that are focused on the needs of industry as well.

Arizona State University’s Fulton School of Engineering is the largest engineering college in the country. 

The University of Arizona leads the country in research in several technologies including space, hypersonics, and quantum computing.

Embry-Riddle Aeronautical University’s Prescott campus is a crucial pipeline for the future engineering and aviation workforce of tomorrow.

Q: Any concerns for this sector that need to be addressed through state or federal policies?

A: We have seen increased investment here because the state is promoting a globally competitive environment that invites capital, promotes innovation, and furthers investment in research and development. Concerns for the sector would be if these policies were dismantled. 

Additionally, the competitive landscape is not static. We should continue to build upon our policies that encourage companies to invest in research and development in Arizona.

We support continued investment in our education system but do have concerns for our smaller manufacturers impacted by the decision of Prop. 208. We are hopeful that this legislative session yields support to our small businesses. 

Workforce remains a top concern for manufacturers. In addition to our education partners’ eye to the future, their ability to rapidly respond to shocks such as the pandemic are important to all of us as Arizonans. Employment in the manufacturing industry declined by 4.6 percent at the start of Covid, but has seen a return.

We are watching with great interest the debate on Capitol Hill regarding tax reform, labor and environmental issues. 

Q: How is manufacturing helping Arizona’s economy?

A: An underappreciated aspect of manufacturing is the benefit it imparts on all other sectors of our economy. It is an industry that generates significant economic activity well beyond primary manufacturing operations. 

A report by the Rounds Consulting Group states that for every dollar of manufacturing value that is added, another three dollars and sixty cents of value-add is generated elsewhere in the local economy. Additionally, each 1,000 direct manufacturing jobs creates another 1,542 secondary jobs in every other industry for a total of 2,542 jobs.

Other sectors are benefiting, too, from agriculture to health care to retail and transportation. 

As we see in the case of TSMC, large manufacturers that have more of their supply base located in the state magnifies this multiplier effect on the economy. And as we attract higher wage positions within manufacturing with regional and other engineering centers, the impact of the multiplier effect increases as well. 

Arizona’s manufacturing sector has fared remarkably well both prior to and through the 2020 recession. In Arizona, year-over-year growth in manufacturing employment was growing at about 5 percent per annum coming into 2020, thanks in large part to recent state and federal regulatory and tax relief. 

Further, while all states lost manufacturing jobs in 2020, Arizona’s losses appear to be about half the rate observed in other states, and the state continues to attract the interest of potential new manufacturers, which bodes well for resurgent growth in 2021 and beyond.To read more about the AMC, visit: .

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Freeways traversing through Phoenix metro’s West Valley have created four major and emerging business corridors for healthcare, entertainment, manufacturing and technology.

These corridors are not only raising the region’s population but its status as well, said key players from each who spoke to economic development, business, government and education leaders in the West Valley Tuesday at an event hosted by WESTMARC, a public-private partnership whose mission is to promote the region. 

“The projects that are coming in, the names that are coming in, are really teeing us up for that next level because they are big names, they’re household names, and they’re attracting other companies to make investments in the West Valley,” said Sintra Hoffman, president and CEO of , whose members include public officials from the 15 communities, the business community and the educational sector in the West Valley. 

Nearly 200 attendees registered for the virtual event entitled, All Freeways Lead to the West Valley, to hear updates on how each corridor is developing. Featured speakers were Kevin Phelps, city manager of Glendale; Courtney Ophaug, CEO of Banner Estrella Medical Center; Christine Mackay, community and economic development director for Phoenix; and Jeanine Jerkovic, economic development director for Surprise. 

More than half of new growth to occur in West Valley

Over the next two decades, nearly half of all growth in Maricopa County is expected to occur in the 3,000-square-miles known as the West Valley. Currently, there are about 1.7 million residents. Much of the population growth and investment pouring in is being driven by these four corridors. 

Here’s a snapshot of each corridor:

Entertainment and Sports Corridor: Loop 101 freeway in Glendale 

Fifteen years ago, the State Farm Stadium was built in the middle of a large patch of vacant farm land near the 101 freeway and Glendale Road in Glendale. 

Today, it is a major entertainment and sports hub packed with bars and restaurants, the Gila River Arena, and other “experiential” venues, attracting 12 million visitors each year, Phelps said. 

More recent development includes the completion of the $400 million, 1.2 million square-foot near 93rd and Northern Avenues near the stadium that is owned and operated by the Tohono O’odham Gaming Enterprise. 

For family fun, the, a public 11-acre lagoon and water park with an accompanying resort, is under construction just south of the stadium. The unique project by ECL Glendale, LLC, is expected to open by the next time State Farm Stadium hosts the Super Bowl in 2023. Among the features: a beverage bar that floats above the ground and the “largest helium balloon in the world.” Other “experiential” retailers are signing up to build near the site, Phelps said. 

In an area once slated for Park-N-Drive spots on the northern end of the city alongside the freeway, luxury car dealerships are cropping up, Phelps said. He turned down $11 million in funding for the parking projects to attract more lucrative uses for the property.  It paid off. It is now home to BMW, Volvo, Jaguar and Land Rover dealerships and will  be joined by a fifth dealership soon to be announced, he said. 

Looking ahead, the city is focusing on attracting multi-story, multi-family residential to support dozens of restaurants and other businesses in the corridor.   

Medical Corridor – I-10 and McDowell Road 

One of the most developed areas is a healthcare corridor near I-10 and McDowell Road. Over two decades, it has developed into a 30-mile long corridor that includes a diverse array of healthcare providers, said Ophaug, CEO of

Currently, 36 percent of the healthcare workers in Maricopa County live in the West Valley, she said, a testimony to how important the investment has been for the region. 

Banner Estrella operates hospitals, urgent care centers, imaging centers, home health and hospice care, and ambulatory surgery, primary care and specialty clinics throughout West Valley, she said. 

Other major and smaller healthcare organizations in the corridor include Abrazo Health, Palm Valley Rehabilitation, Phoenix Children’s Hospital, Copper Springs behavioral health hospital, Northwest Lab services and many more. 

Looking ahead, the need for more healthcare providers will be an issue that needs to be addressed as 60,000 new residents are projected to move into the West Valley in the next five years, Ophaug said.

Technology Corridor: Loop 202 near South Mountain 

An area that is emerging as a tech corridor is a 22-mile extension of Loop 22 near South Mountain, said Mackay, director for Phoenix.

Mackay said the city is focused on attracting advanced manufacturing, data centers, aerospace and defense, emerging technology, advanced business services and corporate campuses to the corridor. 

Some of the projects underway are Trammell Crow’s commerce center with assured tenants including Allstate Insurance Company and a distribution and corporate headquarters for Spencer’s TV & Appliance.

With population growth booming in nearby Laveen with young families with steady incomes, they are clamoring for more retail and dining options as well, she said. 

Manufacturing Corridor – Loop 303 

The Loop 303, which flows in an arc that connects Interstate 17 to Interstate 10, is emerging as a manufacturing corridor, said Jeanine Jerkovic, economic development director for Surprise. 

Recently, purchased 1,129 acres of State Trust Land near the 303 and Highway 74 to build a $12 billion factory.

Other major projects include CRG, Park 303, Woolf Logistics and West 303 Logistics. 

In addition to logistics and manufacturing, new service industries are cropping up like the new Costco on Waddell Road just off the 303. The area has also seen significant growth in Class A office development and housing, Jerkovic said, including “high-end” homes, a fairly new phenomenon.  

Surprise is growing up and is no longer just a place to just “visit your parents or grandparents,” she said.

To watch the full presentation, go to:  

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Arizona Gov. Doug Ducey on Tuesday signed into law H.B. 2321, a bill to increase the current cap on the Qualified Facilities Tax Credit program from $70 million annually to $125 million annually.

The bill passed the state Legislature on Monday with broad, bipartisan support. 

In testimony before the state Senate Appropriations Committee last week, the head of the Arizona Commerce Authority called for the expansion of the tax credit program that she says has been central to the state’s ability to attract employers and create jobs over the past decade.

Sandra Watson, the president and CEO of the ACA, told committee members that to H.B. 2321 would enhance the state’s competitiveness. 

“Our goal is to ensure that we continue to increase Arizona’s [economic] momentum,” Watson said. “These changes to the Arizona qualified facilities program will help us do that.”

The Qualified Facilities Tax Credit

Under the Qualified Facilities Tax Credit, which was first implemented in 2012, qualifying companies must make significant investment in the construction of a new facility or an existing one and generate new high-quality jobs for manufacturing, research or the company’s headquarter operations.

To qualify for the tax credit, a majority of the full-time jobs created must pay above-average wages and all new full-time employees must receive health insurance covering at least 65% of the premium.

In 2019, the program’s tax credits represented , which totaled more than $3.5 billion.

Jim Rounds, president of the Rounds Consulting Group, said that for every dollar invested into the program, there has been $2.30 in manufacturing investment, providing Arizona taxpayers with a return-on-investment of $1.30 to state tax revenue.

Increased manufacturing investments in Arizona

Since the 2008 financial crisis, Arizona’s manufacturing sector has grown considerably, with the state establishing itself as an attractive location for manufacturers. 

In the 2010s, manufacturing output in Arizona . In 2019, the , for the first time.

Despite the global pandemic, over the past year Arizona has attracted massive investments from , , , and many other manufacturers for new plants in the state.

Earlier this month, ElectraMeccanica announced that after a year-long review of potential sites, it would establish its American base in Mesa, .

The ACA has already reached the program’s $70 million cap for this year due to increased manufacturing investments in the state, according to Watson. 

Watson stated that the ACA is currently speaking with additional manufacturers who are ready to invest in the state, contingent on the program’s cap being increased to $125 million this year.

Citing a study produced by the Rounds Consulting Group, Watson said “If Arizona is unable to extend the [current] qualified facilities cap, there is an estimated opportunity cost of 20,000 jobs and $187 million in tax revenue in just one year.”

The bill also will extend by 10 years an existing law that aids manufacturers investing more than $500 million in either Maricopa County or Pima County or $50 million elsewhere in the state in offsetting the costs of public infrastructure improvements.

The amendment to H.B. 2321, was introduced by Sen. Sine Kerr, R-Buckeye, onto a bill sponsored by Rep. Ben Toma, R-Peoria.

On Monday, the bill passed the Senate with a vote of 22-6 and the House with a vote of 40-19. 

Business community advocates the Arizona С��ñֱ��app of Commerce & Industry and the Arizona Manufacturers Council support the bill. They argue that the tax credit and the infrastructure improvement law have been essential parts of the state’s overall economic development strategy.

Also registering in support of the bill were major manufacturing companies as well as the Greater Phoenix Economic Council, Greater Phoenix С��ñֱ��app of Commerce and representatives from cities, including Glendale, Phoenix and Chandler.

“We applaud the Arizona Legislature and members from both parties for their swift action to raise the cap of the Qualified Facilities Tax Credit and extend a program that helps manufacturers offset the costs of public infrastructure improvements. These programs have allowed Arizona to quickly become a top destination for business relocation, expansion and job-creating investments,” Arizona С��ñֱ��app Interim President and CEO Garrick Taylor said.

“We thank Representative Ben Toma and Senator Sine Kerr for their leadership on this important issue, and we commend Gov. Ducey for quickly signing the bill into law and solidifying Arizona’s globally competitive position,” Taylor said.

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The Arizona Commerce Authority is putting out a call to Arizona manufacturers hurt by the pandemic. It has a program to help. 

Companies hit hard by disruptions, layoffs, furloughs, loss of business and other setbacks due to Covid-19 are encouraged to apply for emergency assistance through the agency’s . 

Through the partnership, companies can receive subsidized or reduced rates for assistance in areas like rebuilding customer demand, overcoming supply chain disruptions, reassembling their workforce, and identifying new markets. 

“There’s close to 5,000 manufacturers in Arizona and a lot of them need help but most of them don’t know that this kind of help is available to them so they don’t seek outside resources, especially the small companies that need it most,” said David Garafano, executive director of the program.

Many small manufacturers suffering setback 

Garafano said small manufacturers have been hardest hit. The goal is to bring them back to their pre-pandemic levels. 

“In some cases we’ve seen companies that have seen their demand completely dry up. For example, when all of the airlines stopped flying, a lot of the aerospace work in the manufacturing supply chains stopped,” he said. “We saw furniture companies where 80 percent of their demand just evaporated. It was gone.” 

Among the services MEP can assist companies with are:

• Strategic planning and identification of new markets
• Rebuilding customer demand
• Overcoming supply chain disruptions
• Financial and cash flow management
• Lean manufacturing and continuous improvement
• Staffing, training and workforce development
• Maintaining a safe workplace in a COVID-19 world
• Cybersecurity risk assessment and compliance planning

Bargain rates for top level expertise and analysis 

Through the MEP program, companies pay reduced rates for top level expertise to help them improve their business and operational performance. Customized solutions and hands-on assistance are provided by a network of third party service providers and the program’s team of seasoned manufacturing and professionals.

“The one thing that’s so much fun about the AZ MEP is that we’re just here to help,” said Garafano, who has more than 30 years experience in manufacturing and business in leadership positions with companies such as AT&T, Lucent Technologies, Celiant, Andrew and ON Semiconductor.

This emergency assistance is being made possible through the federal CARES Act. Arizona is receiving $730,000 to help these struggling companies get back on their feet. So far, $350,000 has been approved for 118 companies. 

Why manufacturing is so important to Arizona 

Arizona has seen steady uphill growth in the sector since 2013. One of the biggest benefits of that growth has been higher paying jobs. 

In 2019, there were an average 177,000 manufacturing employees with an average annual compensation of $87,387, according to the National Association of Manufacturers (NAM).  

Manufacturing is also a revenue producer for the state. Manufacturers produced $20.93 billion in manufactured goods exports in 2019. Of that, $9.84 billion was from free trade agreement partners like Mexico and Canada. Small businesses comprised 88 percent of all exporters.

The bulk of manufacturing output in Arizona comes from three sectors: computer and electronics, aerospace and other transportation equipment, and fabricated metal products.

Pandemic changed landscape for manufacturing 

Many sectors have seen dramatic disruptions including Arizona’s most profitable, aerospace and defense. 

So far, companies seeking assistance have needed a variety of services including rebuilding their workforces and finding new uses for their operations and equipment as demand has dried up, Garafano said.  

“Probably one of biggest things we’re doing with these companies is a lot have been hurt financially by the pandemic and they don’t always have a CFO or a higher level finance person, so we’re bringing in CFO people to do analysis on the company and help them understand their cash flow,” he said. “They were healthy and the pandemic made them unhealthy, so we can help them build a plan to get healthy again.”  

Relief needed to make it through the new year    

Allison Gilbreath, executive director of the Arizona Manufacturers Council, said there is a great need for aid for the industry right now. Not only are many industries flailing but other federal covid relief programs are about to dry up.  

“The manufacturing industry in Arizona was hit hard by the Covid-19 pandemic,” Gilbreath said. “Our members were faced with tough choices in 2020 and most manufacturers anticipate pandemic-related challenges well into 2021.”

For more information or to apply for assistance through the MEP program, go to:

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A top staff member of the U.S.-China Business Council visited Arizona this week to offer her expertise on trade relations between the United States and China, partly in reaction to disputes over tariffs between the two countries.

Arizona exported about $1.2 billion worth of goods to China in 2018, and about $1.1 billion worth of services in 2017, according to a , an organization that advocates for U.S.-China trade.

“Our mission, broadly, is to encourage policies both in the United States and China that are good for U.S. companies that do business with China,” said Anna Ashton, senior vice president of government affairs at the .

The national trade association has 225 member companies with business interests in China, most of which are large companies that have been operating in the country for about 20 years.

“China is a much more powerful country, both economically and militarily, than it used to be,” Ashton said. “It’s not inappropriate for us to be going through a process of rethinking exactly what that relationship should look like.”

But current policy being proposed by the Trump administration is worrying USCBC and its members, Ashton said.

“Even if were removed tomorrow — all of them — we would have a lot of other policies and proposed policies in the works that would make it much more difficult for American companies to continue doing business with China and in China, because there’s a ton of policy being promulgated to deal with perceived national security issues as well as human rights issues in China,” she said.

Those policies have that might not be considered by the people proposing the legislation, she said.

In response, the USCBC has been reaching out to states and business associations, including state chambers of commerce, to make them more aware of the issues in Washington and to ensure their voices are heard when it comes to foreign trade policy.

“We feel like it’s really important for states and state chambers to be aware of what’s going on in Washington and also to make sure that they are contributing their voice to the policy conversation in Washington, that they’re making sure that their own states’ interests — commercial interests, economic interests — are being looked after as these policies are being promulgated,” Ashton said.

Arizona’s own interests are significant in that regard. According to Ashton, when considering both exports and imports, China edges out Canada as the state’s second-largest trading partner .

Arizona’s biggest exports to China include semiconductors, aerospace products and navigational and measuring instruments, while the most lucrative services include travel, education and industrial processes.

The state’s export of goods to China has grown by 45 percent since 2009. More notably, the export of services has grown by 260 percent since 2008.

Ashton said she hopes the phase one deal preliminarily reached between the U.S. and China will improve the outlook for this trade relationship.

“We know that there is a large purchase agreement for China to buy U.S. goods, and the figure that the U.S. has cited is at least $200 billion more over the next two years than the annual purchase amount in 2017, which was $128 billion — almost doubling the purchases of U.S. goods each year for the next two years,” she said.

That might not be possible, though, Ashton said.

“I’m interested to see how that’s going to happen, because I think the easiest way for us to reach that figure would be for China to be able to buy a lot of high-value, high-tech goods, but those are the kinds of goods that we’re actually increasing restrictions on [the Chinese] buying,” she said.

China has yet to confirm that number.

Ashton said, even if the bulk of the phase one agreement is focused on purchase mandates, “that’s okay,” because it has stopped the tariffs enacted in December 2019 and reduced the tariffs enacted in September 2019.

“If it greases the wheels for both sides to be more regularly at the table with each other, talking about the issues that the United States trade representative [Robert Lighthizer] identified in the first place in their — things like tech transfer, IP [intellectual property] protection and enforcement, subsidies to state-owned enterprises, and other things that make the playing field un-level for foreign companies in China — then that’s a good thing,” Ashton said.

Overall, USCBC members believe there needs to be a greater focus by the Trump administration on working with U.S. allies, including the European Union and Canada, to put pressure on China to make the changes that need to be made, she said.

“The steel and aluminum tariffs that affect a lot of our trading partners — many of those trading partners are countries that we used to be working together with to address challenges in China,” she said. “We’re hoping that there will be a more multi-lateral approach.”

Ashton said she thinks increased awareness could help ensure polices are crafted more carefully with regard to U.S. trade interests.

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History of Mexican manufacturing

In the mid-1960s, Mexico launched the Maquiladora Program as an assembly platform for United States manufacturing. 

Under the North American Free Trade Agreement, or NAFTA, the program grew, and by 2006 it employed 1.2 million workers.

In 1990, Mexico established the Programa de Importación Temporal para Producir Artículos de Exportación (PITEX), which by 2006 included 3,620 firms as well as all motor vehicle assembly plants and most of their parts suppliers in Mexico by 2006.

In 2006, the Mexican government merged the two programs to create IMMEX — the Industria Manufacturera, Maquiladora y de Servicios de Exportación.

“Mexico’s contribution of high quality at a lower cost has made it a primary source for manufacturing in a variety of industries, including electronics, aerospace and automotive,” according to NAPS International, an organization that specializes in outsourced administrative and compliance management services. “The IMMEX is a program that enables foreign companies to operate in Mexico under a preferential, low-tax cost structure, while still taking advantage of Mexico’s lower-cost labor.”

According to the University of Arizona, 82 percent of maquiladora plants are located in border states — including Sonora, Mexico — while only 35 percent of PITEX establishments were located in border states.

By creating IMMEX, the Mexican government introduced a single entity responsible for more than 60 percent of Mexico’s total manufacturing employment.

In 2014, IMMEX included more than 6,000 establishments with more than 2 million employees, according to UArizona. The program’s third-quarter revenue in 2014 was roughly $7 billion, making it the second-most important source of foreign currency in Mexico after the exportation of crude oil.

However, IMMEX does not just help Mexico; it also helps Arizona and the U.S.

“The significance of the IMMEX sector for Arizona’s economy is primarily as a destination for Arizona manufacturing products and as a market for Arizona business services,” Vera Pavlakovich-Kochi, senior regional scientist and associate professor of geography at UArizona. “About 30 percent of maquiladoras in Sonora are owned by Arizona parent companies and through a production-sharing model remain competitive in global markets.”

The maquiladora industry

According to NAPS, the Maquiladora Program originally started as a way of alleviating unemployment in the U.S.- Mexico border region.

Since 1965, Mexican maquiladora factories have been run and owned by foreign companies that manufacture products in Mexico and export them to other countries. The factories operate under preferential tax and fiscal programs established by the Mexican government and the foreign company’s nation — primarily the U.S. — which allows most production equipment and materials to temporarily enter Mexico tariff-free.

In 1985, maquiladoras were the largest source of foreign exchange in Mexico, but the industry did not truly boom until after NAFTA was approved in 1994.

According to Made in Mexico, Inc., maquiladoras can save international companies up to 75 percent on labor costs for several reasons:

• The entry-level wage for low-level jobs in Mexico is approximately 25 percent less than the hourly wage paid to workers in the U.S.,
• Mexico has a standard work week of 48 hours,
• Companies can have fast and easy startups with little capital investment, turning projects that would be cost-prohibitive in the U.S. into lucrative possibilities.

And Sonora is the Mexican state leading the way.

According to Mexican company Tetakawi, the state has a climate “ripe for investment” because of its location as well as its labor market.

“Sonora’s propinquity to the U.S., large pool of qualified bi-lingual, Mexican labor, competitive infrastructure, and considerably lower manufacturing operating costs are catching the interest of investors. Sonora represents [and] is characterized by a multitude of reputable and up-and-coming opportunities for businesses, both foreign and domestic,” the company said on its .

Sonora’s principal industries are aerospace, automotive, metal mechanical, mining, renewable energy, electronics, agribusiness, medical and informational technology.

Nogales, Sonora, just across the border from Nogales, Arizona, leads the state in manufacturing, with the largest number of maquiladoras in Sonora. The border city has roughly 34,000 jobs and more than 100 manufacturing plants.

Computer and electronic product manufacturing make up the majority of the industry in Nogales — about 23 percent — and next come apparel manufacturing and transportation equipment manufacturing, including parts for the aerospace industry, according to UArizona.

On the other side of the border, Arizona manufacturing has been influenced by maquiladoras.

“About 35 percent of Nogales, Sonora, maquiladoras are owned and operated by out-of-Arizona parent companies (including those in California); about 11 percent has parent company in Phoenix or Tucson, while only 20 percent of maquiladoras have parent company (or an outpost of parent company) in Nogales and Santa  Cruz County,” UArizona .

To learn more about Sonora’s manufacturing sector,

IMMEX and maquiladoras under the USMCA 

In 1994, the U.S., Mexico and Canada approved NAFTA — the world’s leading free trade pact.

NAFTA led to growth in many industries, including manufacturing, among the three countries.

The U.S.-Mexico-Canada Agreement (USMCA), which would modernize NAFTA in several ways, could have a significant impact on manufacturers in Mexico, primarily those in the automotive industry.

The automotive industry

Under the USMCA, passenger vehicles and light trucks must have 75 percent of the car’s contents made in North America by 2023.

The U.S. and Mexico will also be maintaining a side agreement that protects both from tariffs on $108 billion worth of automotive parts, and an allowance of 2.6 million cars shipped across the border, according to .

Creating new labor value content

Another provision in the USMCA states that 40 percent of automotive products must be made by workers who earn at least $16/hour. Mexico agreed to give its workers the right to seek union representation as well as other labor protections to comply with the increase in automotive labor.

E-commerce and digital trade

Another part of the USMCA addresses e-commerce regulations, digital trade and intellectual property to bring the agreement into the 21st century.

Under the new agreement, Mexico and Canada would raise their de minimis shipment value levels to $50 USD in Mexico and $40 C in Canada. Duty-free shipment values will increase to $117 USD for Mexico and $150 C for Canada.

The new de minimis levels will make it easier for digital and e-commerce companies to reach new markets in both Mexico and Canada, which will benefit both small businesses and consumers by allowing them to import and export more goods without requiring a formal customs transaction, according to “,” a paper published earlier this year by the Arizona-Mexico Commission, the Arizona С��ñֱ��app of Commerce and Industry, and the Arizona С��ñֱ��app Foundation.

All three countries’ legislative bodies must ratify the agreement, something Mexico has already done. U.S. House of Representatives Speaker Nancy Pelosi said the U.S. will be addressing the agreement in Congress soon, but has wavered on whether Congress will act before the end of 2019.

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The Arizona Manufacturers Council held its inaugural Made in Arizona manufacturing tour last week.

The Arizona Manufacturers Council (AMC) invited a bipartisan delegation of state lawmakers and industry leaders to tour five manufacturing facilities and a community college as part of its Made in Arizona bus tour.

The two-day event kicked off Oct. 22 at Sub-Zero, where Gov. Doug Ducey gave opening remarks about how the state’s thriving business economy attracts both big and small manufacturing companies.

“From technology and food products to aerospace, defense and beyond, more of the finest products in the world are proudly being made in Arizona,” Ducey said. “I want to send the message to the world’s manufacturers who are searching for the best place to build their products: Arizona is the place for you.”

Next, the delegation visited PepsiCo in Tolleson; Boeing in Mesa; Benchmark Electronics in Phoenix; Raytheon in Tucson; and the Pima Community College Aviation Technology Center in Tucson.

“The Arizona Manufacturers Council thanks all of these innovative companies for opening their doors to show off how their products are improving lives and creating jobs,” AMC Executive Director Allison Gilbreath. “This Made in Arizona tour gave us a small glimpse into the exciting things that are happening in Arizona’s thriving manufacturing sector. From kitchen appliances to helicopters, Arizona is on the cutting-edge of manufacturing technology, creativity and quality.”

Among the state legislators was state Rep. Joanne Osborne, R-Goodyear, who served as the lead legislative coordinator for the tour.

“I am so pleased that there was such enthusiasm among my colleagues on both sides of the aisle to learn more about the pioneering manufacturing occurring in Arizona, and what we as lawmakers can do to help the sector grow,” Osborne said. “The more we can visit with job creators to learn about their challenges, their workforce, and their plans for the future, the more responsive we can be in crafting smart policies that encourage job growth in manufacturing and across the entire economy.”

State Senate President Karen Fann and House Speaker Rusty Bowers joined the bipartisan delegation of 18 lawmakers, which Gilbreath said was especially encouraging.

“Not only did we have an outstanding turnout of state legislators, but we were honored to welcome the leaders of the two legislative chambers,” Gilbreath said. “My hope is that this tour was educational for all of the lawmakers involved and that it will result in future policy reforms that will prove beneficial to the manufacturing sector and spur job growth.”

The trip was part of the AMC’s celebration of Manufacturing Month, which also included the group’s in early October.

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Raytheon, one of the largest defense manufacturers in the world, is already the eighth-largest employer in Arizona. But because of the growing demand for its products and services, the manufacturing firm is expanding within the state.

The defense contractor hosted Gov. Doug Ducey at an event Oct. 2, announcing that the company will add another 1,000 jobs to the state economy over the next few years. The additional jobs will bring Raytheon’s total number of Arizona employees to roughly 14,000 and make it the state’s sixth-largest employer.

“We’ve consistently grown — we’re now at more than 13,000 employees statewide, and that’s due to increasing global demand for our products,” said John Patterson, director of public relations at Raytheon. “We’re at a period right now of unprecedented global demand for the products we make and the services we provide, and that’s reflected in increased hiring numbers and growth that you’re seeing across the board for us — in all of our programs and all of our product areas.”

by Arizona State University’s Seidman Institute, Raytheon generates a $2.6 billion annual economic impact in Arizona. Over the past three years, Raytheon’s economic impact has grown by $500 million — nearly 24 percent — due to job expansion and increased sales. As the company continues to expand in Arizona, so will its economic footprint.

“Remember that we have more than 500 suppliers statewide, and nearly half of them are located right there in Maricopa County,” Patterson continued. “So as we grow in Tucson, so does the work that we offer to our suppliers around the state, and that helps to create new jobs, it creates new revenues.”

The company has donated $1 million to philanthropic causes around the state. Raytheon employees volunteer thousands of hours every year in state classrooms, helping to tutor and mentor the next generation of engineers.

Patterson said Raytheon plans to continue hiring from the state’s universities, including Arizona State University, the University of Arizona, Northern Arizona University and Embry-Riddle Aeronautical University. In fact, later this year, Raytheon will be hosting its first ever “Raytheon Day” at NAU, sending company executives and recruiters to the campus for an in-depth recruitment experience.

The bulk of the company’s new jobs will be in engineering positions, but Patterson noted that the company is hiring for positions across the board, including supply chain and contract management.

In his statement at Raytheon, Ducey described the manufacturing firm as “one of our state’s most valuable assets.”

“We are grateful to Gov. Ducey for creating such a pro-business environment in the state,” Patterson said. “His pro-business policies have created an environment where companies like Raytheon have the confidence to invest and grow, and we see that as an excellent partnership.”

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