Metro Phoenix Business Climate

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Business executives whose companies have recently established a presence in Metro Phoenix talk about the region’s strengths and weaknesses. Guests include Doug Schendt, Power-One; Scott Jenkins, Chief Financial Officer for DIRTT Environmental Solutions and Barry Broome, president and CEO of the Greater Phoenix Economic Council.

Ted Simons: Companies that chose to expand in the valley are an important measure of the area's business climate and tonight we hear from two companies that recently made that move. Power-On, the world's second largest manufacturer of solar powered inverters, opened a state of the art design and manufacturing facility in Phoenix earlier this year. And Dirtt Environmental Solutions recently did the same. Dirtt designs and manufactures green building products for commercial interiors. Joining me now to talk about the strengths and weaknesses of the Valley's business climate are Doug Schendt, Vice President of Technical Operations for Power-One, Scott Jenkins, Chief Financial Officer for Dirtt Environmental Solutions, and Barry Broome, President and CEO of the Greater Phoenix Economic Council. Good to have you all here, thanks for joining us. Alright, Doug let's start with Power-One, talk to us about your company, its base originally started in California?

Doug Schendt: It's currently headquartered in California, a publicly traded company.

Ted Simons: What do you do, and what got you here?

Doug Schendt: Actually the company started in 1973, selling power management solutions. We're still in that business. We got into renewable energy in 2006 in Europe and that's where we've really seen growth in the business. Last year we did a billion dollars for the first time ever as a company. 70% of that was in renewable energy, 30% in power solutions. So we're looking to expand the company globally. Last year we opened sites not only in Phoenix but in Canada and in China to support the regional growth in those areas.

Ted Simons: Why Phoenix?

Doug Schendt: Phoenix, well it's an interesting story. We started with about 14 sites in the U.S., through a number of criteria, the Power-One with a consulting company that we used, we narrowed that down to the first selection, eight different states in sites, final selection three states and three sites, and obviously the final choice was Phoenix. A lot of factor around that- incentives, market proximity, real estate availability, resources, those types of things. A long list of things that were sorted through in the criteria, and certainly PEC was a part of helping us make that decision. A lot of Q&A setting up incentives, meeting government officials, real estate people, contractors, so GPEC was right with us through all of that.

Ted Simons: Scott, describe your company. Canadian-based, correct?

Scott Jenkins: Canadian headquartered but we like to think of ourselves as a North American company. Calgary, Canada serves as our home base. Founded in 2005, so we're a young company growing very, very fast, not quite as big as Power-One but we hope to get there in the next 20 years, sales of about $120 million annually. Our second U.S. location is right here in Phoenix, we actually expanded to Savannah, Georgia, in 2009. For us, very similar to Power-One, access to markets. For us, 30% of our market is within 500 miles of the Greater Phoenix area. For us, we looked at the southwest to add to our southeast U.S. facility that has now more than doubled. When we spoke with GPEC and they introduced to us some of the local business leaders, members of the Canada-Arizona business council, some local officials, the case for Phoenix and the whole Valley became quite compelling.

Ted Simons: Barry, these two companies, obviously your group targeted them, found possible success with them, got that success. What did you see? Why were they targeted?

Barry Broome: Well, this is very interesting. When we built the solar platform and we've tried to help people understand that this is really about sustainability your carbon free industries. So Power-One is a major supplier to the solar industry. But it's also a major supplier to the renewable industry in wind. It's a company, if you heard the growth, 70% of its growth in 2006 has been in this renewable space and it's now done a billion in sales, I think they are the number two publicly traded company in the world in this space. We're looking forward to the headquarters following them into the market. But also Dirtt is, you know, basically going to play a big role in making construction and materials in the construction industry. You have a solar market, a renewable market which is also growing in Arizona. You also eventually, sooner rather than later I hope, will go back to being a major construction-based industry. You will now have Dirrt being able to supply technical expertise to the construction industry and how that's more sustainable. Both of these companies, that are growing in the space that we've targeted in, one out of California and one out, Canada is a major objective of GPEC in the region. And of course California is a major objective. Both of those companies came together in a nice timely fashion.

Ted Simons: You mentioned criteria and a checklist, you've kind of narrowed things down final three, these sorts of things. A lot of folks in Arizona, we're like everyone else, we've got some economic issues here and folks are seeing services and things cut back. The quality of life issue, obviously incentives play a big part, business climate, growth plays as big part. What about quality of life? How seriously does a company look at something like that?

Doug Schendt: It's something we've looked at. It's certainly on our list and it plays as big role. We've targeted people from Arizona and the Phoenix area as employees. A few of us have relocated to be here. It's all been possible for everybody. I think that the people that are here are real happy with the quality of life. I know the people in California like to come here too.

Ted Simons: Same question for you. We hear obviously there are business concerns and it sounds like those concerns were met. What about the vague sort of concerns?

Scott Jenkins: Well, for us, one of the attractive factors for the Valley, the greater Valley, is access to skilled labor. Like we were talking about, we're manufacturing sustainable construction solution for the commercial markets and we need some talented people. There's a lot of skilled labor in this market and good young folks willing to work hard. It's easy for us to attract skilled workers. We take a lot of pride in our sort of corporate culture, feeding our employees every day, bringing people through our plant and showing it off and having a lot of pride what they do and what we do, and that fits well with the Greater Phoenix kind of civic culture, as well.

Ted Simons: An educated and skilled workforce sometimes gets lost in all the numbers and the bottom lines. How important is that factor?

Barry Broome: I'll tell you the Power-One story. There were a couple of things in quality of life, one of the senior executives on the Power-One site selection team had lived in Scottsdale in the 1980's for several years. He was looking at- do I want to live in Scottsdale or Dallas? He had lived in Scottsdale and had a greatly experience here. It was really nip and tuck because we were convincing the company that this was a big solar market but they were looking at Texas, which had a big wind market, and we started to go back and forth, is the wind market or the solar market going to be a bigger future? What was the differentiating point was the value proposition that came out of Arizona State University. It was almost a coin toss. We brought the technologists out of Arizona State University, and what led to the company coming here was what they thought was some of the compelling research coming out of Arizona State University. In Dirtt's case a lot of it was the two-year technical talent that we could deliver out of the community colleges. Maricopa Community College was a big talent delivery system for Dirrt. We had some compelling research opportunities with Arizona State University that was compelling for Power-One. Sometimes you're in a really even decisions and something like an exciting story at Arizona State or Maricopa Community College can be the difference between turning it your way.

Ted Simons: Now that you're here, now that you see the landscape, now that you're working, what would you like to see the state do to improve after attractiveness to business?

Doug Schendt: There are a couple things. We've had a little bit of a challenge when it comes to finding people with high-power, heavy-power experience. A lot of people with power experience in the region, but not typically testing the types of loads that we're doing. And you know, we're getting help on the next one, the incentive programs right there. A bit difficult to navigate. We've been learning a lot about them, GPEC certainly helped us, the people at the Arizona Commerce already helped us, the governor's office, and they're seeing some things that we're seeing and looking at streamlining some things, so it would be very beneficial.

Ted Simons: Very quickly, what would you like to see?

Scott Jenkins: We'd like actually for the state officials for their own facilities to continue to keep moving along and making their own facilities sustainable and moving out with civic facilities and make Arizona a true hotbed of sustainability. We're trying to take conventional construction and flip it on its head. We want to see that done right here now that it's our home.

Ted Simons: Alright, very good gentlemen great discussion great to have you here.

Doug Schendt:Power-One; Scott Jenkins:Chief Financial Officer for DIRTT Environmental Solutions; Barry Broome:president and CEO of the Greater Phoenix Economic Council

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