Big ifs confront big rebound for economy here The Chandler Arizonan

Big ifs confront big rebound for economy here

Big ifs confront big rebound for economy here
City News
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BY PAUL MARYNIAK
Executive Editor

Arizona and the East Valley will recover from the pandemic-fueled recession and become global economic giants over the next 10 years if business and political leaders invest in infrastructure and education – and strap on their seatbelts for lightning-fast change.

That was the gist of three presentations June 3 to the PHX East Valley Partnership, an influential group of business, education and community leaders.

Holding their annual meeting virtually for the first time to observe social distancing, they heard sobering but upbeat forecasts from Arizona State University President Michael Crow, Greater Phoenix Economic Council President/CEO Chris Camacho and Dennis Hoffman of ASU’s W.P. Carey School of Business.

While Camacho and Hoffman – economist/director of the Carey School’s L. William Seidman Research Institute – provided analyses of how quickly the state and region might rebound from the recession, Crow starkly outlined the challenge ahead.

“What’s going to happen in the future is all things are going to accelerate – technological change, economic change, social change, cultural change, biological change. They’re all going to be accelerated,” Crow said.

“What that means, then, is that if you want to win economically, if you want to be competitive going forward, your agility is going to be really, really important.”

All three speakers stressed that an educated, nimble workforce – coupled with a huge investment in transportation and hi-tech infrastructure – are critical to a durable and vibrant post-pandemic rebuilding of the regional and state economy.

“The agility of your workforce will be even more important; for them to adapt to technological change, even more important; your ability to deal with disruption, even more important; your ability to be resilient, even more important,” Crow said.

“And if you aren’t those things and if you’re not a part of building businesses that do that, prepare for that and make that happen, you won’t be in the front wave of economic opportunity or in the front wave of economic growth,” he added.

To illustrate the need for “highly agile, highly adaptable, technologically sophisticated” businesses and institutions, Crow suggested how Arizona could have responded to COVID-19 if it had been better prepared.

“If we had high-speed internet connectivity to every home, we could have found ways to take economic advantage of that,” he said.

“We could have accelerated educational outcomes across the entire population,” Crow continued.

He cited a group of ASU students who built a network of 3D printers to produce personal protective equipment for anyone who needed it, adding: “If you can do that, then you could build a completely distributed manufacturing network across the entirety of Arizona.

“You could be a part of new, advanced manufacturing with people running small shops in their homes. You could be involved in all kinds of distributed manufacturing, distributed systems, distributed everything, distributed commerce.”

“That doesn’t take away from core businesses or core opportunities or restaurants, clubs or shops or businesses or stores because you’re driving up the economy,” Crow said.

Camacho said that as the market reopens, “we’re all paying attention to consumer confidence” and that “as a consumer-driven economy, we need people to spend money.”

That is especially important, he said, because the 114,000 small businesses in Arizona employ over a million people, warning some cities are “expecting worse conditions than they’ve actually experienced thus far.”

Camacho spotlighted several emerging trends – some encouraging and some troubling.

He said manufacturing, financial services and professional services “may have a shorter recovery term” while transportation and airports will continue to struggle.

If there is no significant COVID-19 spread, however, “we do believe greater Phoenix and the East Valley in particular are going to fare very well in this next decade.”

He said his organization’s conversations with 1,000 large companies indicate “a massive redistribution of headcount” that will benefit regions offering “modern infrastructure, high-quality labor pools…and more affordable quality-of-life amenities and housing” as well as transportation access to top markets.

He foresees Phoenix, Southern California and northern Mexico forming a new “America’s triangle” that will become a major global economic force.

“Labor and modern infrastructure are going to be the two key differentiators
in this next wave of corporate growth,” he said.

That means, he said, “we must maintain a pro-business approach to how we invest in education, how we modernize our tax code” since Arizona’s “lack of natural disasters” already has many companies looking in the state’s direction.

“I don’t think there’s a better market in the United States with all of these key pieces, these key ingredients that will allow us to compete,” Camacho said.

“We have to unequivocally continue to invest in modern infrastructure, but also continue to invest in” the education system, he said.

While other markets continue to try to contain the pandemic, “companies in those markets are really trying to grasp what this remote-worker model is going to look like in the future.”

That means Silicon Valley companies in the future could employ East Valley workers without the need to relocate them to California, he said.

Still, Camacho said, the pandemic has created uncertainty in the Valley’s office market.

“They’re still uncertain as to whether you’re going to see mass subleases coming on the market,” he said, saying it’s unclear if companies will need less space because more people will work remotely or if they will need more space because of social distancing.

“I do believe this pandemic has really matured the mindset of corporate America,” Camacho  said, “and we just need to maintain our very judicious approach of how we’re making intentional investments in the right areas while we’re maintaining a pro-business approach on taxes and the regular office environment.”

Hoffman outlined how a greater emphasis on education in Arizona in the last 20 years has generated 250,000 more college and university graduates than there would have been if the state had not radically broken from a century of looking at higher education as a luxury for the privileged.

By making higher education more accessible to more high school graduates, he said, the state has yielded an estimated $26 billion in spending power it otherwise would have never seen.

He also echoed Camacho: “Chris talked about the fact that people in Silicon Valley are going to be working remotely. So why not live in the East Valley and work for a Silicon Valley firm? Some of you out there want their businesses to move here. They will. If we attract, create and retain young and talented wage workers, businesses will continue to show up on our doorstep.”

Crow noted that ASU distributed 17,000 degrees last month – a record – and said the university will be working on a hybrid approach in the fall semester that will enable students to return to safer, redesigned campuses but also enable them to tap into classes online.

And he also delivered a sobering reminder to his virtual audience:

“The virus is a thing that comes along with an eight-billion-person planet. The virus comes along with complexity. These kinds of viruses have been predicted for some time. There’s been several that haven’t had the kind of impact that this one has had. This is the next one, not the last one.”

“Our reaction to all of this was pretty much the result of really poor planning, really poor understanding, a really
poor grasp on what a global pandemic could be.”

To see the presentations: video.ibm.com/recorded/126845193.

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